Page B of POGO's "The Politics of Contracting: Bajagua's No-Bid Deal"



However, in correspondence to USIBWC after their legislation passed, Representatives Filner and Bilbray directed the agency to abandon plans to upgrade the SBIWTP, despite the fact that their legislation allowed for the upgrade:

It is not the intent of Congress that the United States enlarge the advanced primary treatment capacity at the International Wastewater Treatment Plant (IWTP) to handle volumes beyond the current 25 mgd.  And additional capacity beyond the 25 mgd of advanced primary treatment now being treated at the IWTP is to be treated through all treatment levels at the Mexican facility.  Accordingly, the IBWC should not anticipate the need to request funding to design, construct, operate or maintain additional treatment works beyond the currently operating 25 mgd advanced primary treatment plant within the context of Title VIII to S. 835 [which became Title VIII of Public Law 106-457].  Further, the Act should not be interpreted to imply that funding for expansion of advanced primary is authorized or appropriated. (Appendix B)

The USIBWC’s 2005 Record of Decision states that funding for upgrading the SBIWTP was abandoned by Congress because of Public Law 106-457:

Congress declined requests by USIBWC and EPA to authorize the necessary funding for implementation of [the CMA ponds], instead passing the Title VIII of Public Law 106-457, the Tijuana River Valley Estuary and Beach Cleanup Act of 2000, authorizing secondary treatment for the SBIWTP’s effluent in Mexico pursuant to a public-private partnership arrangement.22

Drawing on Other Avenues of Influence

After the legislation became law, Bajagua still had to overcome the obstacles discussed above before the company could get the contract. The company also had to overcome EPA, DOJ, and USIBWC objections to the company’s plan. To help this process along, Bajagua utilized the revolving door: The company hired former policymakers, who had influence in the various spheres relating to the deal, to lobby on its behalf. Bajagua hired an Ambassador to Mexico; a State Department officer who had also been a policy director in the White House Office of the Special Envoy for the Americas; a chief policy aide for the San Diego County Supervisor23; a director of the San Diego Metropolitan Wastewater Department; the legislative director of a Representative who later introduced legislation helping Bajagua; and a former Representative who had introduced the original legislation helping Bajagua.

  Ambassador James R. Jones and Eric P. Farnsworth

James R. Jones was Ambassador to Mexico from 1993 to 1997.  While in that position, Ambassador Jones “assisted U.S. businesses with commercial ventures in Mexico.” Jones is now co-Chairman of Manatt Jones Global Strategies, LLC, and a partner at Manatt, Phelps & Phillips, LLP.

Ambassador Jones24 and Manatt, Phelps & Phillips, LLP, were hired as a lobbyists in 1999 by Poseidon Research Corporation,25 a partner with Agua Clara, LLC (Bajagua’s predecessor company) in its wastewater treatment plant venture.26  Ambassador Jones was hired by Poseidon “to work with the governments of Mexico and the United States to situate a secondary water treatment plant for the San Diego region in Tijuana, Mexico.” They lobbied the U.S. House of Representatives, the State Department, the EPA, the USIBWC for Poseidon from 1999 through 2001.27

Eric P. Farnsworth was an officer at the State Department, and a policy director in the White House Office of the Special Envoy for the Americas from 1995 to 1998.28  He joined Manatt Jones as a managing director in 1998. Farnsworth is currently a member of the Advisory Committee on International Economic Policy, and a vice president of the Council of the Americas.

Because of their prior roles as U.S. government officials in Latin America, Ambassador Jones and Farnsworth have great capacity to lend weight to the deal Bajagua is trying to broker in Mexico.

Ambassador Jones and Farnsworth registered as a lobbyists for Bajagua in 2001 under the auspices of Manatt Jones, then re-registered again under Manatt, Phelps & Phillips, LLP in 2002.29 Ambassador Jones and Farnsworth lobbied the House of Representatives, the State Department – Ambassador Jones’ and Farnsworth’s old stomping ground – and the USIBWC on behalf of Bajagua for “Approval to build [a] water treatment plant in Mexico”30 and later for “Building a water treatment plant in Mexico.”31

In 2003, Manatt, Phelps & Phillips, LLP, filed a termination report ending its lobbying activities as of December 31, 2002.32  However, according to a July 2003 State Department email:

Ambassador Jim Jones (former Ambassador to Mexico and we learned today former US Congressman) and his associate from Manatt Jones Global Strategies, which is a powerful Washington lobbying firm, met with [the State Department’s coordinator of US/Mexico border affairs] Dennis Linskey today to advance the Bajaagua [sic] project. (Appendix H)

Given this assertion, it appears that Ambassador Jones and Farnsworth may have been in violationof the Lobbying Disclosure Act of 1995 (2 U.S.C. § 1605) by lobbying the U.S. Government without disclosure of their activities.

 Brian Bilbray and Benedetto Advocacy and Communications

Craig Benedetto worked as chief policy aide overseeing all county operations for Representative Bilbray when he was San Diego County Supervisor. Benedetto has also been Vice President for Public Policy at the Greater San Diego Chamber of Commerce, and has held other positions in San Diego’s political arena.33

Benedetto is president of Benedetto Communications, Inc., a public relations, marketing, and government relations firm he opened in 1999. He has handled Bajagua’s press since at least 200034 (Bajagua’s website directs press inquiries to Craig Benedetto and his firm35) and has been a lobbyist for the company in the local San Diego area since 2001.36

Former Representative Brian Bilbray (R-CA) was one of the original sponsors of the Bajagua legislation.  After losing his congressional seat in 2000, Bilbray was hired in 2001 by his former employee Craig Benedetto to lobby the White House and State Department for Bajagua. The only time Benedetto’s firm has lobbied the federal government was when Bilbray lobbied for Bajagua.

In 2001, Bilbray was called to testify before Congress about the Bajagua legislation, but did not identity himself as a lobbyist for Bajagua.  Bilbray told the San Diego Union-Tribune, “I wasn’t there because I was being paid [as a lobbyist], I was there because I had spent 20 years fighting the issue [of untreated sewage].”37
 
 Francis David Schlesinger

David Schlesinger was the Director of the San Diego Metropolitan Wastewater Department from 1990 to 2001. While with the Department, he supported Bajagua and helped the company work out technical aspects of the project. (Appendix B)

On May 15, 2001, Representative Filner paid tribute to Schlesinger in the House of Representatives as Schlesinger was retiring from the Department.  Both Representatives Filner and Schlesinger had worked together on a number of San Diego-related projects.  Representative Filner stated: 

Dave’s talents were also critical to last year’s Congressional approval of the Bajagua project to treat Mexican sewage.  Dave helped to develop the innovative public-private partnership that promises to solve a 50-year-old problem plaguing San Diego.  We always relied on Dave’s “sense of the possible” – both politically and technically – to get over the many obstacles we faced over several years. (Appendix B)

After his retirement from the Department in 2001, Schlesinger went to work for Bajagua as its Director of Operations. He is responsible for “coordinating all aspects of planning, design, environmental review, project acquisition, and overseeing work by our engineering, legal, legislative, and public outreach consultants.”38  Schlesinger has lobbied the City of San Diego for Bajagua since as early as 2001, the year of his retirement from the San Diego Metropolitan Wastewater Department.

 Matthew R. Simmons

Matthew R. Simmons worked for Representative Hunter “for ten years,”39 ending up as Representative Hunter’s legislative director, as well as the staff person in charge of working on water issues.40

Simmons left Representative Hunter’s office in late 2000 or early 2001 to work as a lobbyist for the Ferguson Group.41 From 2001 through 2005, he lobbied the House of Representatives and the Senate on behalf of Bajagua on the “IBWC Proposed Bi-National Wastewater Treatment Facility.”42 According to his year-end lobbying reports, Simmons “Facilitated Congressional oversight regarding the implementation of Public Law 106-457.”43

In 2005, Simmons went to work for the Consultants Collaborative, Inc. (CCI) as its Vice President of Governmental Relations.44  CCI is both an engineering consultant and a lobbying shop, and it took over the Bajagua lobbying contract at the same time. CCI’s founder and President James D. Simmons (no relation to Matthew Simmons) is one of the two managing members of Bajagua.

Shortly after Simmons began lobbying for Bajagua, Representatives Hunter became Bajagua’s “champion.” In December 2001, he grilled USIBWC Commissioner Carlos Ramirez at a hearing on the implementation of the Bajagua legislation, and stated that he “strongly support[s] the implementation of PL 106-457, Title VIII and the construction of the Bajagua project.” (Appendix I)  In 2004, Representative Hunter amended Public Law 106-457 to make it more favorable to Bajagua. (Appendix A)   CCI lists Representative Hunter as a reference on its website.45

Vice President Dick Cheney

The company even had connections to a higher power: In addition to hiring well-connected lobbyists, Bajagua also tapped into the power of the White House. Bajagua was able to turn to Vice President Dick Cheney for help when the company wanted to seal the deal. According to current and former government officials, the Vice President facilitated interagency discussions which broke a stalemate and resulted in a decision in favor of Bajagua’s proposal.

Documents and emails obtained by National Security Whistleblowers Coalition (NSWBC) Senior Advisor Professor William Weaver show that Bajagua solicited, and received, the help of Vice President Cheney to pressure the USIBWC to award Bajagua a sole-source contract.

Vice President Cheney met with Bajagua on at least two occasions, once in October 2002 and again in September 2003. In an October 2002 letter thanking the Vice President for meeting with the company about its wastewater proposal, Bajagua also asked him for help facilitating the project:

This project accomplishes something that the US, and Mexico, have been trying to do for sixty (60) years and will be a big environmental win for the President, for Mexico and for San Diego.  If we can find a way to proceed with the IBWC they will be heroes and so will President Bush.  All we ask is a productive forum to work out the details of the process.  At this point IBWC has refused to meet with us for reasons that are not necessarily accurate.  Would you consider arranging a meeting(s) to facilitate a successful result.  Any and all help will be greatly appreciated and once again we thank you for all you have already done. (Appendix F)

Emails show that Vice President Cheney met with Bajagua again in September 2003: “[N]ote coincidence – Bajagua met with VP Cheney yesterday and White House met with Hunter.” (Appendix H) 

At the time of Vice President Cheney’s second meeting with Bajagua, the Justice Department “expressed anxiety at having learned that Bajagua had gotten into high levels at OVP and State (Noriega).” (Appendix H) “OVP” stands for “Office of the Vice President” and “Noreiga” is the State Department’s Assistant Secretary of State for Western Hemisphere Affairs Roger Noriega.

In correspondence with POGO, former USIBWC Acting Commissioner Robert Ortega wrote that it was “understood that the Vice President’s office had directed” a 2003 meeting, organized by the White House’s Council on Environmental Quality (CEQ) “to coordinate the US agencies (OMB, DOJ, EPA, IBWC, etc.) to resolution of execution of the PL106-457.” (Appendix H)   

After the meeting, DOJ, EPA, and USIBWC changed their positions regarding the Bajagua proposal. For instance, Ortega wrote that, after the meeting, there was a shift in the Justice Department’s opinion regarding the legality of granting Bajagua a sole-source contract:

Prior to the Bush administration, the DOJ as represented by attorney Randall Humm was in agreement with IBWC that Bajagua could not be issued a sole source contract. I believe there were a few filings with the Surfriders and the California State Water Quality Control Board to this effect. Afterwards, [the] above [2003] meeting was called and DOJ represented by John Cruden took the opposite view of sole source contracting with Bajagua and strongly tried to convince the IBWC. (Appendix H)

In September 2004, then-USIBWC Commissioner Arturo Duran wrote to CEQ Chairman Connaughton letting him know that USIBWC, EPA, DOJ, and CEQ had all met and agreed to identify the Bajagua proposal as the Draft Supplemental Environmental Impact Statement preferred alternative.46 (Appendix G)


 Conclusion

Americans believe in the important role competition plays in maximizing return for the dollar and in reducing favoritism. But the Bajagua deal illustrates that contracting is not insulated enough from political pressure and lobbying: in this case, Congress clearly swept aside the notion of competition and not playing favorites.

There is no reason for the U.S. government to avoid competition for ownership and operation of wastewater treatment plants, whether they are located in the U.S. or in other countries.  However, Bajagua had effectively stacked its political deck and was able to put the squeeze on when it needed to. This resulted in getting legislation designed to deliver a sole-source contract to the company drafted and passed. Going even further, some Members of Congress and current and former government employees went to bat for the company after the legislation passed, pressuring or lobbying several government agencies to move faster and actually award the contract to Bajagua.

As a result of all the political finagling, the SBIWTP never gained a secondary treatment capability. And because the Bajagua treatment project has been mired in diplomatic, bureaucratic and financial trouble, the San Diego-Tijuana region continues to have unacceptable levels of pollution in the South Bay.

POGO’s Recommendations

1. In full consultation with the Mexican government, the USIBWC should postpone awarding a sole source contract to Bajagua and draft and release a request for proposals (RFP) and open up the process to a reasonably time-limited competition.  Because the environmental assessment process has already been conducted twice, the RFP should mandate that proposals match the alternatives for secondary treatment analyzed during the last round of environmental assessment.  Also, to ensure that proposals for secondary treatment on the U.S. side of the border are considered, authorization for funding should be granted to U.S.-located alternatives.  Ironically, at the present time only a project on the Mexican side of the border can receive U.S. funding.

2.  The ban on lobbying by former Members of Congress and their staffers should be extended beyond the current one-year limit.

3.  Lobbying disclosures should go beyond identifying the general governmental body lobbied (e.g. the White House, the State Department, the House of Representatives): they should include the name of the official or elected representative lobbied and the meeting dates.  Furthermore, lobbyists should be required to identify themselves as lobbyists if they testify before Congress.

4.  Legislatively earmarking federal appropriations for sole-source or non-competitive contracts should be prohibited. 

5.  To avoid appearances of impropriety, members of Congress should not accept campaign contributions from contractors that they promote.

6.  Members of Congress and congressional staffers should not go to work for companies that they regulate or oversee while they worked for the government.




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updated:Friday, April 21, 2006