Stephen Sheldon, the Orange County Water District’s elected representative from Irvine, continues to use his government position to benefit Poseidon Resources, Inc., the corporation that wants to build an ocean desalination plant in Huntington Beach.
By doing this, he may be risking the consequences of violating conflict of interest laws.
The OCWD manages the county’s groundwater basin and provides drinking water for 2.4 million residents by selling it to 19 municipalities and special water districts in the county.
The OCWD staff and board of directors are currently leaning heavily toward making ocean desalination part of its “water portfolio” through a business relationship with Poseidon.
Sheldon, a candidate for reelection in November, spoke in favor of Poseidon’s proposed project at a joint planning committee meeting of OCWD and the Municipal Water District of Orange County (MWDOC), held on July 23.
The Poseidon plant would cost about $1 billion and produce 50,000 acre feet of desalinated water a year.
In a plan conceived by OCWD and Poseidon, that desalinated water would replace the same amount of untreated imported water that the district currently buys from the Metropolitan Water District of Southern California (through its retailer MWDOC) for $593 per acre foot. That water is pumped into the groundwater basin.
Poseidon’s desalinated water would cost over three times as much, about $2,000 per acre foot, according to OCWD’s chief engineer, John Kennedy.
Until at least last December, according to Sheldon’s most recent Statement of Economic Interests (SEI), he worked as a consultant for Faubel Public Affairs, a partner of Communications Lab which lists Poseidon as a current client on its website.
Public officials who use their position to influence a government decision that affects them financially have an illegal conflict of interest under California’s Political Reform Act (CPRA) and California Govt. Code 1090.
But during the joint meeting, Sheldon tried to argue that Poseidon’s project would add to the county’s groundwater supply. In fact, as other water officials from OCWD and MWDOC pointed out repeatedly at the meeting, Poseidon’s water would not increase the county’s water supply—above or below ground—by a single drop.
“We’re just really replacing the amount of imported water we need to bring into the region,” OCWD’s Executive Engineer, John Kennedy, explained to Sheldon.
The Surf City Voice previously reported that during a May 21 OCWD board meeting Sheldon advocated for Poseidon and voted to send out Requests for Proposals to several consulting firms to analyze financing options for its desalination project, including direct OCWD funding and ownership.
Sheldon said “No comment” after that meeting when I asked him why he participated in the Poseidon vote. Then he chased after me as I left, only to demand that I tell him if I had electronically recorded his answer.
During a subsequent board meeting, however, Sheldon accused me of misrepresenting the facts about his relationship to Poseidon.
There was no conflict of interest, he said, because public officials are relieved of any potential charges related to a source of income that was discontinued a year or more in the past.
That’s true, but Sheldon’s SEI indicates that relief from potential conflict of interest charges won’t come until December, 2014, at the earliest. That’s because his SEI doesn’t indicate a termination date for his business relationship with Faubel; nor has Sheldon submitted an amendment to it since it was filed last April.
Theoretically, Sheldon could argue that Faubel Public Affairs and Communications Lab are separate businesses, despite public comments by CEO Roger Faubel and Lab founder Brian Lochrie confirming their close business partnership.
Lochrie, a former Faubel employee, started Communications Lab a year ago last April after leaving Faubel’s office with most of his staff and marketing clients, including Poseidon, according to a story at the time in the OC Register.
Lochire took his new entourage to another office in the same building, just down the hall.
Since Sheldon has not clarified his relationship to Poseidon (he did not accept an offer to meet or speak with this reporter at greater length), and any clarifying legal action against him is unlikely before election day, the voters must decide if the wall separating Faubel and Communications Lab is invisible and if Sheldon is being honest about being free of conflict.
But Sheldon’s election opponent, Newport Beach City Councilperson Leslie Daigle, may not be so shy about Sheldon’s Poseidon connection as well as his numerous other ethical and legal dilemmas.
Apparently, her campaign has been using a Facebook account called Steve Sheldon Watch to post links to documents detailing Sheldon’s numerous personal trials and tribulations, including hundreds of thousands of dollars of state and federal tax liens, contract violation lawsuits, and a divorce claim by his wife that he is stealing from his child’s $1 million “off-shore” trust account.
Two of the Facebook posts relate directly to Sheldon’s job as an OCWD director.
One of those posts questions Sheldon’s relationship to Poseidon based on in his 2012 SEI filing—in which he states he directly consulted for Poseidon, asking, “Is that legal since OCWD is studying if they want to buy Poseidon’s desalinated water?”
The other OCWD related post, “nothing but the best for Sheldon,” links to his OCWD expense reports and questions his $1,048 stay at the Ritz Carlton hotel in Los Angeles.
Daigle told the Daily Pilot that she was running against Sheldon because of the OCWD board’s involvement in frivolous lawsuits and its attempt to build a power plant.
Sheldon was one of three OCWD directors, including Denis Bilodeau and Roger Yoh, who as members of the district’s Water Issues Committee (WIC), met secretly with several members of the Anaheim Chamber of Commerce in October, 2013, to smooth the way for building the power plant on 20 acres of OCWD property in the so-called Ball Road Basin in the city of Anaheim.
Many Anaheim residents are opposed to the proposed power plant and want to use the lands for parks and recreation purposes.
The WIC meeting arguably violated California’s open meetings law, known as the Brown Act, so the Anaheim Chamber of Commerce protested. To prevent a lawsuit, the OCWD Board of Directors voted to promise to “cease and desist from prior challenged conduct.”
But the agenda for one of many secretly held OCWD Executive Committee meetings exposed by the Voice through a public records inquiry, reveals that the directors may have broken their legally binding promise.
The Executive Committee agenda for June 10, 2014, contains a discussion item about how to gain leverage for rezoning the Ball Road Basin—if a proposed deal with Competitive Powers Ventures to develop the power plant fell through—by supporting grant requests by Anaheim for developing pocket-parks.
“I believe we could leverage cooperation on these types of soft issues in return for the City helping us kill SB 26 and helping us rezone Ball Road Basin to commercial usage if the CPV deal falls through”, OCWD General Manager Mike Marcus wrote.
The OCWD seems to have backed off its efforts to build a power plant in Anaheim for now, but this month its board of directors voted to study building one in Fountain Valley instead as part of its Long Term Facilities Plan.