Posted on 12/26/2001 4:34:19 PM PST by snopercod
SACRAMENTO -- Desperate to stabilize California's energy supplies, state officials last May hired Livermore energy consultant Mark Baldwin to develop the state's natural gas reserves. Baldwin's work is now proving controversial: He helped arrange a gas storage contract between the state and one of his private clients, in possible violation of conflict-of-interest law.
The state's contract with Wild Goose Storage is relatively small, just $256,000. But it raises -- perhaps more clearly than any other case that has surfaced -- the larger question of whether California did enough to ensure the independence of private consultants such as Baldwin when it quickly negotiated $43 billion in gas and electricity contracts earlier this year.
In Baldwin's case, state officials concede that they knew of his connection to Wild Goose even before the deal was negotiated. Not until months later, though, did Baldwin publicly reveal the relationship in required disclosure forms. Baldwin continues to work for California under the terms of a $2 million contract with his firm, Interstate Gas Services.
``What troubles me is the total insensitivity of everybody to the apparent conflicts which permeate Baldwin's behavior with respect to Wild Goose,'' said Roger Brown, a former enforcement chief for the state Fair Political Practices Commission who now represents consumers and environmentalists challenging state power contracts.
Baldwin, president of Interstate, declined repeated requests for an interview but cited an Aug. 15 letter he sent to the state. In it, Baldwin said his firm had acted ``with the highest standard of conduct'' and ultimately ``resigned from any direct participation'' in the Wild Goose deal ``owing to the potential conflict of interest.''
Controversy goes on
The broader controversy over state energy consultants has continued to rage, even as the energy crisis has calmed. Attorney General Bill Lockyer's office is investigating possible conflicts of interest, and a state audit last week said the Davis administration needs to strengthen monitoring of potential conflicts among energy consultants.
The state Power Authority recently cut short a $1 million contract with Navigant Consulting -- the firm that state officials say put them in touch with Baldwin -- after news stories raised questions about its potential conflicts.
But in an interview last week, Gov. Gray Davis scoffed at a question about whether his administration has failed to be a watchdog on conflicts, deeming the inquiry ``horse-pucky.'' Davis did concede, however, that the Department of Water Resources might have failed to ``dot every i and cross every t.'' When problems arose, he said, he insisted everyone file conflict reports and fired two consultants with conflicts.
At the heart of the Baldwin controversy is a pair of questions: What is the nature of Baldwin's relationship to Wild Goose, a subsidiary of the much-larger Alberta Energy Co.?
And just how deeply engaged were Baldwin and several others at his company in crafting the deal between Wild Goose and the state?
Under a section of the state Government Code, consultants such as Baldwin are barred from having a financial stake in contracts made by them in their official capacity.
Officials alerted early
In the Aug. 15 letter, Baldwin said his firm had told state officials from the time of their first meeting in April that Wild Goose had been and continued to be a client of Interstate Gas Services. But in July, two months after his contract with the state was signed, Baldwin filed a required disclosure form saying he had no economic interests that might pose a conflict.
Not until Oct. 9, after public scrutiny of consultants had increased because of news stories, did Baldwin file a revised statement spelling out his interests in the gas industry.
The statement formally acknowledges that Baldwin is president of Interstate, with an interest in the firm of more than $1 million. He also listed several sources of income to the firm during the previous year. IGS had received at least $10,000 from Calpine, the city of Palo Alto and Wild Goose, it states.
But there is at least one indication that Wild Goose's connection with Baldwin is closer than the typical arm's-length relationship between consultant and client. The Wild Goose Web site lists Baldwin and another Interstate official among contacts for those seeking more information about the company.
Baldwin's work on behalf of the state is only a little more clear. State officials hired him, in part, because they hoped to buy and store enough gas to tide them over in times of shortage.
The contract said IGS would help find storage options, but it also contemplated that those opportunities might provoke conflict questions. If a conflict arose, Baldwin's firm would serve ``as facilitator and not a final negotiator'' in whatever contracts were reached.
And two months after the contract began, the state signed a deal with Wild Goose, which stores gas in abandoned underground fields in the small farming town of Gridley, about 60 miles north of Sacramento. The state is now storing enough gas there to supply more than 40 percent of San Jose's population for about a month.
In the letter, Baldwin stresses that he did not negotiate the price the state was paying to store gas with Wild Goose. But he concedes that his company, at the request of the state, asked Wild Goose to ``prepare a firm storage proposal.'' IGS also fielded questions from the state about the deal.
Others recall role
Others recall Baldwin's role differently.
One Navigant consultant, Catie Elder, told the Mercury News that Baldwin negotiated the Wild Goose deal. She referred further questions to her supervisor, Robert Yardley, who later said he didn't know the details of Baldwin's involvement but that Elder ``may have misspoken.''
Paul Amirault, a Wild Goose vice president, initially described what happened with Baldwin this way: ``He matched us up and let us negotiate the terms.'' But in a later telephone interview, he said Baldwin's role was limited to ``facilitating a response'' to the Department of Water Resources' request for information.
Department of Water Resources officials also downplay the part Baldwin had in the Wild Goose contract. ``We knew to take precautions that he wasn't involved in any decision-making as far as the Wild Goose contract is concerned,'' said department spokesman Oscar Hidalgo.
Still, state documents suggest that Baldwin was involved in the deal. The contract between Wild Goose and the state indicates that notices are to be sent to Baldwin's attention at IGS. And in contract attachments, other IGS employees are listed as contacts.
Consumer attorney Brown said almost any role for Baldwin would have been too much. He is required, Brown said, ``to disqualify himself from all participation in the steps leading up to or making of the contract if he has an interest in it.''
Brown rejected the notion that the state's knowledge of Baldwin's potential conflict ``somehow made whatever he did OK.''
``The Political Reform Act and his agency's conflict code requires that the public be informed of his interests, and the public is the ultimate overseer,'' he said.
Contact Mark Gladstone at mgladstone@sjmercury.com.
I'm so sorry! I never realized you were one of the annointed with such unique and ubiquitous insight! Why that's almost god-like! What an ominous responsibilty and heavy burden you bear! It must tax you so to have to try so desperately to keep all the rest of us on the straight and narrow. Yep! I guess us other pilgrims ain't makin much progress, compared to yer highness!!! (dang, it's almost too much fun, needlin you!)
All a person has to do to get your goat, is simply find out where you tied it! HAPPY NEW YEAR from an old goat!
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