Deep Questions Arise Over Portland’s Corporate Water Takeover

A simmering water war is about to come to a boil over the fate of historic, well-loved public reservoirs in Portland, Oregon. At the heart of the controversy is a breakdown in public trust that reflects the dangers of corporate-led water privatization schemes in the United States and around the world.

In an emotionally charged public meeting on November 18, 2014, Portland residents bombarded two of their city commissioners with questions about what they believe is a cronyism-driven plan to kill the elegant, gravity-fed, open water reservoir system that has reliably served their city safe, clean drinking water for more than 100 years.

The plan to disconnect the five Mt. Tabor and Mt. Washington reservoirs and replace them with costly covered reservoirs was triggered by a 2006 Environmental Protection Agency (EPA) ruling – called LT2 – mandating the protection of public water against a lethal parasite, Cryptosporidium.

However, “Crypto” has never been detected in Portland’s water system, and the pristine Bull Run Watershed is not considered at risk of contamination.

In fact, Portland’s unique reservoirs exemplify a wise-use resource plan, blending utility with natural preservation and public recreation. Built during the Progressive Era, according to the local group Friends of the Reservoirs, they were “designed within the ethics of the City Beautiful movement, which brought about a period of American development that purposefully made public works beautiful as a means to raise living standards.”

The decade-long battle over these “crown jewels” in Portland’s commons is reaching its crescendo. In 2004, the reservoirs were listed on the National Register of Historic Places. A coalition of local organizers is now making a last stand to win a deferral until the EPA releases its revision of the LT2 ruling, expected in mid-2016.

Meanwhile, the City of Portland is racing to move forward with its development project, even while under fire of increasingly uncomfortable allegations.

Most troubling are charges of decades of revolving-door cronyism surrounding Joe Glicker, a vice president of CH2M Hill, the company awarded the contracts to build the new covered reservoirs for Portland. Not only was Glicker a former chief engineer of the Portland Water Bureau (PWB), he also worked as a core consultant with the EPA to write the very LT2 rules that now require these massive “emergency” water infrastructure projects. It’s a conflict of interest that has local water rights advocates’ heads spinning and steaming all at once.

Glicker’s hand in crafting the LT2 ruling helped create an unfunded mandate that opened new markets for his company, while blindsiding cash-strapped municipalities across the country.

While the EPA is no stranger to allegations of corrupt corporate influence over water protections, typically the purpose is to gut regulations for industrial polluters, not to invent onerous regulations to serve notorious developers like CH2M Hill.

A dominant international player winning enormous government-contract infrastructure projects, CH2M Hill has also developed an abysmal ethics and safety record. Multiple federal charges to date include mismanagement, kickbacks, conflict of interest, violation of the Clean Water Act, reprisals against whistleblowers, criminal fraudulence and longstanding engineering lapses (more on this below).

The company’s troubles in Portland have already begun. Since 1998, Portland water authorities have been penalized by the state 13 times for water quality violations totaling $763,500. In April 2014, they were fined over $40,000 for allowing a contractor to repeatedly dump toxic levels of chlorine into a local creek due to cracking and leaking at the new 50-million-gallon Powell Butte buried reservoir. The project, led by CH2M Hill, immediately ran nearly $4 million over budget, exceeding the contract limits.

“It certainly seems questionable that our city continues to award contracts to a corporation that has repeatedly, and on numerous fronts, engaged in criminal activity and wrongdoing at the expense of taxpayers and commonwealths,” said local activist Johnny Dwork.

Rights advocates estimate the Portland water projects could cost up to $1 billion over time, raising costs for residents who already pay some of the highest water rates in the country, while degrading the quality and safety of their drinking water.

At the boisterous November 2014 meeting, Portland’s city officials continued to insist they’d done everything possible to avoid compliance with the “Crypto” ruling, while frustrated citizens disagreed, pointing to actions that still might be taken to win a deferral, like the one granted to Rochester, New York. Alleging a lack of government transparency and back-room dealing to defeat their efforts, activists chanted and waved signs in front of City Commissioner Nick Fish, reading “SOMETHING IS FISHY IN CITY HALL.”

For these Portlanders, the future of their public water is too important to ignore the many unanswered questions that keep surfacing.

Cronyism

Why was one controversial individual, Joe Glicker, allowed to participate in decision-making at the EPA and then directly benefit from the resulting new infrastructure requirements, in an obvious conflict of interest?

Portland water justice advocates describe Glicker as the “favorite cozy consultant” of the Portland Water Bureau (PWB), where he spent 14 years as public policy director, then as chief engineer. At the same time, Glicker’s wife, Lisa Obermeyer, was principal engineer for Montgomery, Watson, Harza Global (MWH), another mega-development corporation dogged with construction problems and conflict-of-interest allegations. MWH was the beneficiary of multiple large Portland water infrastructure contracts during that period, and the trend continued. After Glicker left the PWB, major capital improvement design contracts followed him like a shadow as he too moved into a top executive position with MWH, and later with CH2M Hill.

Drawing public ire early on, Glicker launched a campaign in 1993 to professionally discredit Oregon water quality expert Doug Larson who was questioning logging practices in the Bull Run Watershed. Larson sued the city for defamation and harassment. He was awarded $73,000 and a public apology at a City Council meeting. Nevertheless, the PWB promoted Glicker later that year.

Glicker was also the author of an eyebrow-raising paper entitled, “Convincing the Public That Drinking Water is Safe” – a lesson for government and industry in marketing and propaganda strategies to manipulate the “irrational” fears of the public.

“Without an allegation of a problem, there is no event, and therefore no story,” Glicker writes. “Studies have shown that presenting the same risk information in different ways (say in terms of numbers of persons saved instead of numbers harmed) will influence how the situation is perceived and what actions will be taken. Potential losses seem larger than potential gains.”

This penchant for manipulation concerns local activists, who believe that in this case the overblown and “irrational” fear of Crytosporidium is being used to line the pockets of Glicker’s corporation.

Last year’s sensationalized story of a teenager urinating in the Mt. Tabor reservoir certainly increased the public sense of danger – though the offensive trickle could not have reached the water. The subsequent announcement to dump 38 million gallons of water made international headlines.

Corruption

Why is the unethical and criminal history of CH2M Hill not factored into contract award decisions?

CH2M Hill’s website states: “The enterprise, dating back to 1946, is built on honesty, ethics, and morals.”

Not according to the Federal Contractor Misconduct Database, which currently lists 12 of CH2M Hill’s violations and total misconduct fines amounting to $23.3 million. Some say this is a slap on the wrist for offenses including fraud, overbilling and encouraging employees to falsify time cards, unreported radioactive waste spills, knowingly exposing employees to deadly nuclear byproducts, and personnel demonstrating a “profound inattention to detail and reluctance to report events.”

Much of this took place during their years-long criminal racket at the Hanford Nuclear cleanup site, fleecing the taxpayers while receiving nearly $1.4 billion in federal stimulus funds.

According to Source Watch, CH2M Hill is racking up a rap sheet that extends far beyond Hanford and includes not only conspiracy to defraud the government but bribery, revolving doors, crippling construction problems, and serious safety and health violations – most notably, exposing the desperate survivors of Hurricane Katrina to poisonous formaldehyde in their FEMA trailers.

A leader in the water privatization industry, CHM2 Hill has recently expanded to pioneering fully outsourced US “contract cities.” This new, extreme privatization model serves a special clientele: affluent, mostly white and conservative enclaves interested in withdrawing their tax support from impoverished surrounding communities of color by incorporating as independent cities.

First tested in Sandy Springs, Georgia, in 2005, CH2M Hill signed a five-year contract to provide a comprehensive package of government services: everything from trash collection and wastewater management to administering and securing the courthouse – all for-profit.

Three more wealthy suburbs quickly followed suit in the next two years, signing contracts with CH2M Hill – which has since been sued for attempting to dodge open records laws.

Finally, CH2M Hill owns the dubious honor of multiple citations in Naomi Klein’s Shock Doctrine along with other infamous corporate “free-market” predators like Halliburton and Bechtel. CH2M Hill has enjoyed lucrative no-bid contracts in post-Katrina New Orleans, post “Shock and Awe” Iraq and post-tsunami Sri Lanka. These are the chaotic, unregulated wastelands so profitable for the disaster capitalism complex.

As described by Klein:

The ultimate goal for the corporations at the center of the complex is to bring the model of for-profit government, which advances so rapidly in extraordinary circumstances, into the ordinary and day-to-day functioning of the state – in effect, to privatize the government.

Complicity

Why are the Oregon water authorities complying with the vested interests of Joe Glicker and CH2M Hill when the EPA is revisiting the scientific validity and potential harm of the LT2 ruling in 2016?

The EPA announced in 2011 that it will reconsider the scientific validity of LT2’s reservoir coverage and treatment requirements during its Periodic Retrospective Review of Regulation in 2016.

The LT2 ruling was ostensibly spurred by an outbreak of Cryptosporidium in Milwaukee, Wisconsin, in 1993, stemming from sewage or cattle feces contaminating a water purification plant, a scenario not possible in the protected Bull Run Watershed.

“City Council’s push to cover Portland’s open reservoirs will create more public health problems for residents than it solves,” argues Scott Fernandez, a Portland microbiologist and water chemist. Fernandez writes that open reservoirs have demonstrable health benefits while covered reservoirs allow toxic, carcinogenic disinfection chemical byproducts to accrue in the water. Other known problems include nitrification, cancer-causing radon and heavy metals.

“Portland’s Water Bureau has chosen the most destructive, least community-supported option available for compliance with a federal rule,” said Stephanie Stewart, the land use chair of the Mount Tabor Neighborhood Association.

Corporatism

Is Oregon Gov. John Kitzhaber planning to change laws in order to further privatize public infrastructure?

While researching CH2M Hill’s undue influence over their local reservoirs, Portland activists were shocked to discover the existence of a plan to push a government-industry coordinated privatization agenda on the entire West Coast.

The West Coast Infrastructure Exchange (WCX) was launched collaboratively by Oregon Gov. John Kitzhaber and CH2M Hill, though the corporation has since recused itself from an official partnership position.

Now comprised of governors and state officials from California, Oregon, Washington and British Columbia, the WCX is quietly developing a regional “public-private partnership” (PPP) model to fast-track private financing and development of infrastructure – everything from schools, bridges and highways to energy, waste and fresh water systems.

Citing the crippled tax base of so many US states, the WCX notes with regret that crumbling public infrastructure and future development needs can no longer be met by the public sector.

The WCX places the blame on burdens like health-care and pension costs while failing to mention decades of neoliberal policies, tax cuts, corporate welfare and trillions in off-shore wealth hoarding that dug the deepest trenches of the crisis.

Although their language is often vague, the point is made clear that while private financing is ready to fill the budget gap, laws will have to be changed to facilitate a for-profit future, particularly government regulations that don’t “serve the needs” of the private sector.

What could those possibly be?

The problem with PPPs: Water Wars, Climate Change, and the Public Good vs. Profit Motive

The fast-growing “public-private partnership” model is a friendly marketing euphemism for privatization of public resources and assets, which can take many forms.

PPPs have become rampant in the water sector where corporations and investment banks including JP Morgan Chase, Goldman Sachs, Citigroup, the Carlyle Group, Allianz and many others are aggressively buying up the world’s declining fresh water supply and infrastructure in what is being called a “liquid gold rush.”

The trouble is, privatization of water is never popular. Most people are instinctively repelled by the idea of a profit motive controlling the world’s most precious and threatened natural resource.

The UN has upheld access to water as human right. Yet according to the World Health Organization, nearly 2.6 billion people lack a simple “improved” latrine and 1.1 billion people have no access to any type of improved drinking source of water.

In this crisis environment, the World Bank and International Monetary Fund have spent decades pushing water privatization as provisions of their Structural Adjustment Programs, exploitative loans for impoverished or economically “shocked” regions.

But the push to privatize water is now being countered by a powerful backlash to reclaim it for the public sphere, called remunicipalization. It doesn’t roll off the tongue, but it’s a word we’ll be hearing more often as the world’s water wars heat up in the coming era of climate change.

In the last 15 years, there have been at least 180 cases of water remunicipalization in 35 countries, according to the Transnational Institute. The most famous case is Bolivia, where a violent public uprising literally drove Bechtel from Cochabamba in 2000. In France, which had the longest history of water privatization, numerous cities have reclaimed their water, including Paris in 2010.

Remunicipalization is growing as water privatization plans have failed to provide the promised service, quality and affordable price to ratepayers. Negligence, profiteering, lack of public control and lack of transparency are leading governments to cancel private water contracts, even before they expire – a litigious process that can cost taxpayers millions. Governments considering privatization, like New Jersey, should consider the possible repercussions and costs before they sign their water away.

“The one thing that imposes accountability on a private company is vigorous market competition with many sellers and buyers,” writes attorney and labor rights advocate Ellen Dannin in her article “Privateers Make a Water Grab.”

“Infrastructure privatization seems to take on the role of a public entity, but because it is a monopoly, it has no competition and no market accountability. There is also no public sector accountability, such as open meetings acts, freedom of information acts, or other forms of oversight, because privatization means the asset is private.”

According to social justice advocates, public-public partnerships (PUPs) are the solution. Food & Water Watch reports that, while privatized water service has been shown to obstruct the human right to water, research shows that municipalities can deliver safe, affordable water to residents by pooling resources and eliminating the profit margin that is mandatory in privatized water delivery.

To learn more about PPPs, PUPs and remunicipalization, check out the following websites and reports:

In the Public Interest

Here to Stay: Water Remunicipalisation as a Global Trend

The Remunicipalisation Tracker

Troubled Waters: Misleading Industry PR and the Case for Public Water

Privatization of Water Services in the United States

Crumbling Infrastructure, Crumbling Democracy: Infrastructure Privatization Contracts and Their Effects on State and Local Governance