News Release

Public Records Reveal Shadow Government Controlling the Metropolitan Water District of Southern California

“Secret Society” organized in 2009 to direct water rates and other decisions at California’s largest public water district; activities coordinated with MWD’s executive management
March 12, 2012

Documents obtained under the California Public Records Act from the Metropolitan Water District of Southern California and a majority of its member public water agencies and cities have revealed that those agencies joined together in a secret shadow government to control water rates and other decisions at California’s largest public water agency and to discriminate against the San Diego County Water Authority and its ratepayers.  The members of the group have made their objectives explicit, referring to themselves as the “Secret Society” and the “Anti-San Diego Coalition,” among other monikers.

The impetus for the Secret Society was to preserve a discriminatory water rate structure and improve financial advantages its ringleaders enjoy under MWD water rates, including a rich package of financial subsidies they receive from MWD for their own local water supply projects.  The records show the group routinely has been able to dictate outcomes to MWD’s Board of Directors.

“MWD is supposed to be governed by its duly appointed governing body: a 37-member board of directors appointed by Metropolitan Water District’s 26 member agencies,” said Michael T. Hogan, chair of the San Diego County Water Authority’s Board of Directors.  “But, for more than two years, major decisions at MWD have first been determined by a shadow government operating in secrecy, outside the public’s view, and then rubber-stamped by a majority of MWD’s Board of Directors.”

The documents – kept secret by the group until disclosure was forced through Public Records Act requests – paint a disturbing picture of how decisions are made on major programs and projects that impact the lives of 19 million Californians who depend upon MWD for all or part of their water supplies.  MWD has an annual budget of $1.8 billion and serves a six-county region with an annual economy valued at greater than $1 trillion.

The documents reveal:

  • The weighted vote of the Secret Society’s membership – including its ringleaders: the powerful city of Los Angeles Department of Water and Power, the Municipal Water District of Orange County, Western Municipal Water District and West Basin Municipal Water District – is more than enough to assure passage of any vote by the MWD Board of Directors.
  • Membership in the group is by “invitation only” – and expressly excludes the San Diego County Water Authority.
  • Membership – and access to the voting power the group wields – is on a dues-paying, “pay-to-play” basis.
  • There is no public notice or opportunity for the public to view or participate in Secret Society meetings because they are kept secret.  As a means to keep its activities secret, it established “private” email addresses for participants and a “secure web link” to avoid public disclosure of its communications.
  • The group has met dozens of times since 2009.  Until it discovered information about its existence was “leaked,” the group kept formal meeting agendas and minutes that closely tracked the meeting agendas of the MWD Board of Directors.  Later, it directed that “sanitized” meeting agendas be maintained.
  • Although MWD is legally bound to act only through its Board of Directors, the Secret Society of member agency managers decides MWD policy, which it then disguises as recommendations of MWD Board members.  In reality, the MWD Board does not exercise any oversight of the Secret Society’s recommendations, but simply approves those recommendations.
  • Numerous activities of the group are coordinated with the executive management of MWD, including its general manager, Jeffrey Kightlinger.
  • The group is also supported by paid consultants, including a former MWD general manager and assistant general manager:
    • Ron Gastelum, of Cordoba Corporation, was hired as a strategic advisor to the group, and is paid $7,500 a month by the Secret Society.  Gastelum was general manager of MWD from 1999 to 2004; prior to his appointment as GM, Gastelum was one of the city of Los Angeles’ four MWD Board members.
    • Malcolm Pirnie, a subsidiary of Arcadis, manages the group’s meetings and serves as a liaison between the Secret Society and MWD staff to implement direction by the Secret Society.  The Malcolm Pirnie team is led by Ed Means, the former assistant general manager of MWD.  The group pays Malcolm Pirnie $7,333 per month.
    • At the same time that Cordoba Corporation and Malcolm Pirnie were helping members of the Secret Society find ways to secure financial advantages through MWD “policy” decisions it could advocate, both companies were also under contract with MWD.  Notably, Malcolm Pirnie’s parent company, Arcadis, is under contract with MWD to advise the Board of Directors on the very same issues it managed for the Secret Society – namely, proposed water rates and charges to be considered through MWD’s rate structure and “official” public Long Range Finance Plan process.

Many of the group’s activities targeted the San Diego County Water Authority in an effort to preserve a large share of the revenue stream that currently subsidizes the projects and water supply costs of the group’s agencies, especially the ringleaders that receive the lion’s share of subsidy contracts; six new such subsidy contracts are on MWD’s Board of Directors agenda Tuesday, March 13 – the most ever considered in a single MWD Board meeting. 

MWD’s rate structure is already the subject of a lawsuit brought by the Water Authority in 2010, currently pending trial in San Francisco Superior Court.  (For more information, see www.sdcwa.org/mwdrate-challenge.) 

The San Diego County Water Authority is releasing 500 pages of documents obtained under the Public Records Act today that expose the activities of MWD and the Secret Society because MWD is poised to adopt water rate increases for 2013 and 2014 that use the same discriminatory rate structure formula that enriches the Secret Society’s member agencies at the expense of the Water Authority and the 3.1 million people it serves.

Among many other activities, the records show that members of the Secret Society secretly commissioned a so-called “independent” economic study of the costs of the Water Authority’s long-term water transfer with the Imperial Irrigation District – now in its 10th year –  and supplies it receives through the lining of the All-American and Coachella canals.  The purpose of the $50,000 study was to discredit the Water Authority.  (For more information, visit www.MWDFacts.com)

“Just last week, the Water Authority launched a new website to give the public the facts about what’s really happening at MWD,” Hogan said.  “In words that now ring especially hollow, in a news statement just four days ago, MWD attacked the website and the Water Authority, boasting that MWD has ‘open and transparent public forums and discussions’ and a ‘deliberative process where all member agencies attempt to work collaboratively to resolve differences.’  These records show quite the opposite is true at MWD.”

The existence and activities of the Secret Society, coordinated with MWD, appear at odds with provisions of a 1999 state law, SB 60 (Hayden), passed in response to an earlier episode of deceptive and misleading activities by MWD and nine of its member agencies.  That law required MWD to establish an Office of Ethics and to adopt ethics policies that prohibit MWD or any of its member agencies from forming “…any association or structure or identification that is likely to mislead the public as to the association’s true identity, its source of funding, or its purpose.”

For more information about this developing story, visit www.MWDFacts.com.  Updates will be posted.

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