Steve Sheldon’s Unethical Culture Challenged by Legal Complaint




By John Earl, cross-posted from Surf City Voice.

OC Water District Director Steve Sheldon scurries off when caught by the author hobnobbing with Poseidon brass after a meeting on their proposed HB plant:

The Fair Political Practices Commission has been asked to investigate a business relationship held by Orange County Water District board member Stephen Sheldon to determine if it precludes him from deliberating on a proposed ocean desalination plant.

The complaint alleges that Sheldon [right] appears to be using his business relationship with consultant Roger Faubel, owner of Faubel Public Affairs, to shield his financial links to Poseidon Resources, the company that wants to build a $1 billion ocean desalination plant in Huntington Beach.

The OCWD manages the groundwater in the Santa Ana River basin used by 19 cities and water agencies, referred to as producers, in central and north Orange County.

If the plant is built, Poseidon wants to sell the OCWD 56,000 acre feet of desalinated drinking water yearly for 30 years as a replacement for imported water the District currently buys from the Municipal Water District of Orange County at about a third of the cost of Poseidon’s water.

The OCWD is currently considering various options for doing business with Poseidon, including full financing of the desalination plant.

Sheldon’s potential legal problem is that public officials are prohibited by California’s Political Reform Act from influencing legislation or policy decisions that affect their own financial interests or the financial interests of employers they worked for in the preceding year.

The complaint was submitted last week by Debbie Cook [left] who is a former mayor of Huntington Beach and an advocate for greater transparency by Orange County’s water agencies. She also occasionally contributes articles to the Surf City Voice.

Sheldon reported that, under his own consulting business, Sheldon Public Relations, he worked directly for Poseidon until April, 2013. In 2014 he reported that he consulted until at least December of 2013 for Faubel, who, in turn, has consulted for Poseidon since 2003, regularly from at least 2006, according to public records.

In each case, Sheldon reported earned income of between $10,000 and $100,000.

In her complaint, Cook alleges that, “It appears that Director Sheldon is attempting to evade detection of his conflicts by filtering monies indirectly through Faubel Public Affairs.”

Even if the services Sheldon provides through Faubel don’t directly benefit Poseidon, Cook says in her complaint, “it is reasonably foreseeable that his company will benefit indirectly if this project is approved.”

Cook points to a comparable situation that occurred for Sheldon, as an OCWD director in 2006, when he asked the board’s legal counsel for an opinion (Sheldon Advice ltr) about his relationship to the Irvine Company, which he consulted for at that time.

The Irvine Company wanted the OCWD to annex land it was going to use for residential development in the cities of Irvine, Orange, and Anaheim. Sheldon wanted to know if he could participate in OCWD discussions on the matter.

The annexation would have provided lower water rates for those residential developments than would have been charged without annexation for imported water.

Even though Sheldon’s own consulting company, then called the Sheldon Group, was only indirectly involved, OCWD’s legal counsel advised that his indirect financial interest in the Irvine Company precluded him from participating in the decision making process.

The Surf City Voice first reported in May that Sheldon appeared to be dancing around the law in order to influence OCWD proceedings in favor of Poseidon.

Sometime in 2013, presumably but not necessarily after he left Poseidon in April of that year, Sheldon was hired by Faubel [right] who resigned, under a cloud of suspicion related to his own Poseidon conflict, from the Santa Margarita Water District’s board of directors, in April, 2013.

A year after Sheldon’s consulting job with Poseidon ended, he quietly indicated that he no longer had to recuse himself from discussing the company’s proposed desalination project during OCWD board meetings.

Although Sheldon reported his business connection with Faubel Public Affairs, he did not disclose the fact that the company was doing business with Poseidon in partnership with a spin-off company, Communications Lab, run by his long-time business associate Brian Lochrie.

As explained in an OC Register story, Lochrie would now be handling the Poseidon account from his new office, which is located just down the hall from Faubel.

But the spin-off was in name only, as Faubel and Lochrie remained business partners and pledged to keep working together, closely, in the future.

Since that time, Faubel and Lochrie [left]  have appeared in sync at various OCWD board meetings, when the Poseidon desalination proposal was discussed, and Sheldon has participated in Poseidon related discussions by the board since last April.

Including on Nov. 12 during a joint meeting of the OCWD board of directors and representatives of the producers, who pay a recharge fee in return for pumping water from the groundwater basin.

The joint meeting was called to discuss costs for Poseidon’s desalination project and to get feedback from the producers.

Representatives of south county water agencies outside of OCWD’s jurisdiction were also present.

During introductions at the joint meeting, Faubel identified himself to over a hundred attendees as a consultant for Poseidon.

That declaration, noted in Cook’s complaint, confirms Sheldon’s potential Poseidon conflict of interest.

The FPPC has received Cook’s complaint and will determine within two weeks whether to investigate Sheldon’s case or not, according to a letter the agency sent to her.

It remains to be seen whether Sheldon will face legal sanctions or not. He could be fined $5,000 for each violation, but perhaps the FPPC’s ruling on the legality of his actions will be nuanced enough to prevent that.

Still, it takes a lot more than being barely legal for a public official to prove his or her transparency and accountability to the public.

Sheldon caught with Poseidon VP Scott Maloni (waving) and another Poseidon CEO

At least that’s the official view of the Metropolitan Water District of Southern California, the largest water district in the world, which emphasizes going beyond the letter of the law to create an “ethical culture that demands a certain decency that can’t be legislated or outlined in an administrative handbook.”

Sheldon’s self-grown unethical culture is the last thing that the Orange County Water District needs now as it struggles to deal with its own issues of transparency and accountability (frequently reported on by the Surf City Voice).

After the meeting, Sheldon caucused with Poseidon Vice President Scott Maloni and another Poseidon CEO in the parking lot. When he noticed that this reporter was approaching his group with a camera he turned and walked quickly to his car.

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About Surf City Voice

John Earl is the editor of the Surf City Voice. Frequent contributor Debbie Cook, a former Huntington Beach Mayor, is board president of the Post Carbon Institute.