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Intervenor Compensation: Proposition 103 In CaliforniaRoger Butow Salem-News,.com
Have NGOs Taken A 1988 California Insurance Revolt And Turned It Into A Cash Cow?
(LAGUNA BEACH, CA) - When I first read the column about “Intervenor Compensation” (IC) and its relationship to proposed Monterey California desalination plans, I thought that I’d entered the Twilight Zone or at minimum gone beyond the Outer Limits. It seems a crime in progress, and the first thing a detective asks himself is "Qui bono?"...Well, look who's profiting!
Is this really about eco-protection or E-Z $$$ and NGOs fluffing up their portfolios? Are eco-NGOS just using marketing strategies like "positioning" to appear to be responsible stewards? Is there a trend, a tendency in pro-environment government administrations to rubber-stamp IC claims filed by eco-NGOs?
For your viewing pleasure, I give you the mother lode of episodes:
I’ve seen and heard a lot on my 15-year eco-watch, yet this pulling back of the drapes, this highly compensated intervention strategy kind of gave me the creeps. It has an eerie, freaky and other-worldly feeling to it. Never having known or heard of it, maybe I could have milked the system long ago and retired to Hawai’i if I had!
I’m curious about desalination in general, I knew the Monterey field was getting crowded with several competitive alternatives being brought forth, making it more confusing to analyze the candidates….. and so of course even more controversial. Once again you go looking for one thing and BANG! Up jumps something never observed before on your radar screen.
It all started with an initiative, a seemingly well-intentioned insurance reforms provision to be administered by the existing California Department of Insurance (CDI). We know it as Proposition 103, Prop 103 for short.
It was arguably a response to the vox populi because insurance premiums for life or health, businesses homes, cars, and boats, etc. were being challenged statewide as exorbitant. The background noise came during the economically stressful period after the mid-October 1987 stock market crash.
This may have made sense back then, unlike whatever monster is running amok now. Burdened individual insurance ratepayers, technically considered consumers, and the ubiquitous advocacy groups we grow like weeds challenged the state to intervene and create a permanent protection department regulating, reining in and keeping honest the insurance industry via enforcement---Including penalties like, guess what: IC.
And make no mistake, we are known, actually infamous, for our weed. A regulatory oversight mechanism morphed into an anything goes (or pays) Wild West funding circus. Now everything considered even tangential to utilities and/or the environment is fair game.
Unfortunately, I'm not sure if it’s what we natives grow and smoke, what we drink or the foul smog we breath, perhaps the polluted urban streams and runoff we swim in, but at times our voices and speech patterns do get slow, slurred, vague and unintelligible.
Prop 103 has been interpreted and implemented in a twisted, vague, almost intentionally biased or ambiguous manner. It's rife with holes, something you could drive your über-progressive “Smug Alert eco-PC Toyonda Pious” (South Park) through, that any idiot con artist can push mounds of faux-sincere paper, take a ticket and stand in line for the gravy train to come round the CPUC bend. She’ll be coming around the mountain when she comes, boys!
According to the Pacific Institute, there are presently 17 desalination plants on the drawing boards in California. That’s 17 individual venues, and each will draw the NGO IC flies like a pile of fresh dog poop, albeit gold-laden poop. The payoff nuggets are in there, like desalination itself it's simply an extraction problem.
They’ll bill the state, and the ratepayers in the area under siege will pick up the tab once adjudicated---Not in a level playing field courtroom with depositions and sworn testimony, but by a sole designated arbitrator process, by appointed not elected bureaucratic officials.
In this column, we'll call it Pr$p 103 for obvious reasons we'll be exploring together.
Because the rules of the IC road are so loosey-goosey, so lax, petitioners need not be locally based or be personally impacted. This sets the haut cuisine Pr$p 103 table for NGOs that desire more media attention-----plus more income than their members dues contribute.
With 17 projects, this is practically a perpetual motion machine or ATM with no withdrawal limits for the immediate future. If this present drought cycle continues, look for more desalination projects to emerge as there are also water wars under way between the North/Inland Central Californians vs. Southern Cal. Talk about a positive growth, job creating industry!
Note to self: I wonder if the NGOs carpool or caravan due to the increased workload, share hotel rooms communally, brainstorm in transit? Where are the per diem travel expenses buried in the final determinations? Are attorneys for IC NGOs billing $450/hour while riding in their vehicles alone, listening to speed metal through their headphones? The regulatory aspect was supposed to preclude redundant petitions and payments, or at minimum require money-saving collaborations.
California and its fiat-by-ballot, its proposition conundrums, their pluses and minuses, have been discussed and dissected very well in a Laer Pearce book recently published: “Crazifornia”.
Laer is a great deal more savvy about these emerging strategies he alludes to than most in his public relations field. He’s also committed to thorough and painstaking research. Say what you will, the man does his homework, and it wouldn’t surprise me to see IC gets its own dedicated, in-depth chapter if there’s a Crazifornia II.
The CPUC, under the CDI umbrella, undertook administrating Pr$p 103 once passed in November of 1988. Talk about the Law of Unintended Consequences! It’s been amended several times subsequently, but each one seems to open more fl$$dgates....and now it appears to have careened out of control once set loose upon the land. Attempts at reform hit walls, lobbyist walls put up and paid for by NGOs to keep the gravy train rolling. Just about anybody, that is “everybody and their mother” as we used to say, can lay claim to a piece of the public hearing and IC pie.
Here’s the posted guidelines, see if you can follow the bouncing ball to the pot of gold at the end of the rainbow, the wide latitude and room for mischief and money trough this created. Note especially the gamut of potential handouts it allows:
Here’s the updated verbiage I captured at its most prominent proponent’s website, Consumer Watchdog, where the 20 year anniversary of Pr$p 103 press release was posted in 2008.
I would ask readers to ask themselves: Exactly how did CW arrive at these estimates, their metrics, or why they allege that they alone are successfully responsible? These are problematic questions not being openly discussed and are apparently unchallenged claims:
Prop 103: California Insurance Reform
“In 1988, Californians revolted against excessive auto, homeowner and business insurance premiums and passed Proposition 103, a ballot measure written by Consumer Watchdog founder Harvey Rosenfield to rein in insurance companies. Using the provisions of Prop 103, Consumer Watchdog has lowered rates and saved Californians over $62 billion the last two decades.”
A whopping total of 15, count ‘em, 15 NGOs have lined up in the “IC $$$ chow line” thus far. The Public Trust Alliance (PTA) received $111,950 in the 1st round. Others, not necessarily even locally-connected, have seen the billboard, the WELCOME mat out and $$$ potential writing on the Pr$p 103 wall in Monterey. In July of 2012 the NGOs presented legal invoices for attorneys anywhere from $375/hour to $475/hour to the CDI.
For more in depth reconn about the players I went online to the PTA website http://www.publictrustalliance.org trying to figure out who they were and where they were based. When I hit the “Contact” link in the menu bar, a blank page came up. There is a notation of ©“2010 Public Trust Alliance. All Rights Reserved” at the bottom of each page. And it lists several credentialed staff members, but that contact information hole considering the circumstances raises a yellow caution flag in this instance.
Using 3 different search engines, PTA often came up on the same page as LTA. Coincidental or intentional? That’s just it, readers, once you’re in sticker shock it’s the “not-knowing” that is disturbing. And who can’t help but notice the psychological marketing aspect, embedding the enticing word “Trust” in the title? And the abbreviation PTA that's got a familiar paternal ring to it.
Which is one of my points: Who are these NGO reps and why does it take a double-digit number of lawyers to do the work of what 2-3 $150/hour counselors with $50/hour paralegals, along with some $100/hour bio-consultants could accomplish? Pr$p 103 administrative watchdogs are supposed to discourage if not outright forbid such piling on activities.
BREAKING Intervenor Compensation NEWS:
CONSUMER WATCHDOG to be investigated by Legislature next?
As posted by KQED News on 10/05/2012
Article by Will Evans THE BAY CITIZEN
"A consumer group that has reaped millions of dollars in fees from insurance companies thanks to a state initiative (Prop 103) it wrote is facing a new wave of criticism from Democratic and Republican political consultants and lawmakers.
Under the intervenor system, the group bills for the time of its attorneys and experts and – when a hearing in Sacramento is involved – travel expenses. The group’s lawyers must be reimbursed at the market rate for attorneys in San Francisco and Los Angeles, a CDI spokesman said. Founder Harvey Rosenfield’s hourly rate is $650; others in the organization bill at hourly rates from $300 to $525."
The Surfrider Foundation (SF) was originally formed and appropriately named to address a well-defined NGO niche, has been building up its coffers via test crash dummies like IC as evidenced in the Monterey fiasco. The agreed upon presence of gold in seawater is 0.2 to 2mg/ton of gold.
Turned out the gold wasn’t “in them thar hills,” it was right down at the beach with $uzie $urfrider collecting $ea $hells by the $ea $hore. Well, SF and its fellow travelers have certainly exceeded that low-yield ionic into literal gold expectation via IC regardless.
Guess who gets stuck holding the final bloated bill? Those poor suckers, those California American Water (CAW) ratepayers on the Monterey Peninsula who probably thought that the cavalry had come to save the day. The Devil’s in the details, and because 3rd party NGOs allege they’re altruistically helping, then the hardship or drain on their in-house funds and resources justifies this course of reimbursement. Yeah. Right.
The means justifies the end---Especially if the upfront scoots wind up in your favorite NGO’s employee benefits package. So regardless if it’s a confrontation about air, gas, water, electricity, sewage, land, phone, etc., then you’re becoming an unintended, naive NGO “bl$$d donor”. Maybe Count Dracula type vampires instead of Frankenstein’s Monster are a more appropriate metaphor? They come in the night, make promises in the dark, but wait’ll you get the tab.
Seems like one of the obvious contradictions is that in the short term, what’s getting drained are the very consumer pocketbooks Pr$p 103 was intended to protect. The Mafia is renowned and resented for grabbing protection money before you open for business. So what’s different about this?
SF initially used the mantra “Respect The Beach,” they’ve dubiously widened their net to bring more money in, maybe they should change it to “Respect The $$$” or “Respect The Bling” on those cheap license plate rims they give their hundreds of thousands of members for a $100/year contribution.
OC Weekly writer Matt Coker unearthed this information back in April of 2009:
“In 1997 Surfrider Foundation reported revenues of about $1 million. In 2007, the most recently available year on the nonprofit disclosure site Guidestar, Surfrider reported $4 million in revenues. During that time, staff salaries have increased by more than 500%, expenses by nearly 400% and public donations have jumped from $337,000 in '97 to $3 million a decade later.
SF founder and ultimate soul surfer Glen Hening has warned that as Surfrider has become more mainstream, it has pulled away from its original purpose. ‘The idea was to really say something serious about the values of serious surfing as it benefits our society,’ he said in 2006.”
And c’mon, any idiot knows that they use newbie or intern attorneys, paralegals and/or legal aides. There is no way, José, that SF or any of these NGOs pay them $450/hour. Maybe more like $150/hour, which with a 2/3 to 1/3 split makes them more like eco-pimps than protectionists. Regardless, probably their attorney(s) are on a retainer of some kind, but even if full-time employees $150/hour it's about $300,000/year, probably commensurate with SF Executive Director Jim Moriarity’s income----Benefit packages not included.
Aren’t these NGOs already staffed, the salaries or compensation included in their own projected budgets? If so, isn’t this classic over-charging or even double-billing, exactly what Pr$p 103 was intended to curtail? The system seems out of control, borders on a license to steal, can be invoked to leverage NGO donations:
Let's say for sake of discussion that the SF uses the 2/3 split it keeps after paying their attorneys to pay internal expenses for all of their programs and payroll. This means that utility ratepayers are subsidizing whatever legal proceedings that the SF or other non-local NGOs prioritize. The ratepayers supposedly benefit in the long run, but have absolutely no choice about how the IC recipients spend their hard earned money.
SF balances its budgets, fulfills its now humongous mission goals on the backs of tax and ratepayers. It's using a general population in unsavory ways. That means that SF just rolls over the $$$ into yet more money-making IC ventures. So one legal challenge, one series of negotiations becomes seed money for the next, it brings to mind a Medicare fraud scenario.
Ocean desalination objections and concerns have become pretty much boilerplate, off-the-shelf, cookie-cutter, cut-and-paste confrontations. Three issues dominate at this juncture: Intake impacts to marine life. Exhaust detritus discharges have highly concentrated briny waste, they need wider dispersion dynamics to mitigate marine life impacts or hauling to waste disposal sites. Plus high energy costs, that old carbon footprint issue that I agree needs addressing.
What's missing in the IC decisions is that NGOs can cannibalize, can simply change the name of the desalination proposal in the header, change the page numbers, run it through WORD DOC and they're home. Done deal. Truly, at this stage, it is NOT rocket science, the lines are clearly drawn, the objections redundantly written. A high school science class, with average computer skills and online access, could do this. Maybe we've stumbled across a way to supplement the financing of our cash-strapped school systems?
One omission by SF was glaring: They didn’t provide a 2010 year-end, total asset report. With all of these proposed ocean-related desalination projects, things are looking up, but we the public can’t look in, how’s that for warm and fuzzy transparency?
Ever wonder why these confrontations and pricey settlements occur? NGOs might be scamming the system at the conclusion, or take “Go away” money upfront, or a variation thereof. Things do get settled out of courtrooms once a legally mandated “Notice of Intent” is filed, many final, undivulged fiscal resolution documents sealed permanently as well. In the case of Monterey, did local grass roots NGOs even cry out, ask for a lifeline, for legal or technical help they couldn't get already themselves?
The SF isn’t the only one scraping in the serious bucks in Monterey if the numbers are correct, just the largest share of the p$t. Think of the huge mounds of probably identical and redundant submissions to be gone through, the CDI trying to discern dummied time cards/billable hours, fraud from fact. The person in charge at the CDI, the Solomon who decides the exact amount of rewards is the Administrative Law Judge (ALJ).
In this instance the king is a queen: Ms. Karen Clopton. Although her staff is about 100, the IC doesn't come out of state funds. Keep in mind that her office is the messenger, the one who informs the utility dinged that their staff must explain the increases to ratepayers. So everybody in the food chain during a down economy stays busy (gratefully employed),
They even have a Public Advisor division with standardized forms and personal assistance. State employees who'll help you fill out those forms, even provide prior successful examples as templates. Petitioners simply allege that (a) You'd experience "significant financial hardship" if you're not reimbursed, and (b) You've made a "substantial contribution through effective participation." This system, like the road to Hell, is paved with good intentions......a great concept that assists the little people on fixed incomes who are the directly impacted customers, but for the large veteran IC NGOs it's got a strange resemblance to corporate welfare.
During the 1st cycle of payments in Monterey, many of NGOs were locally organized and earnest, but many were outsiders paying an unannounced perhaps even unwanted house call. The payoff comes from an odd claim: IC recipients participation results in (ultimately) lower rates and savings for customers. One assumes that general "fair argument standards" prevail as in CEQA, but that's also a slippery slope and open to interpretation of wide latitude.
Once you drill down into the original Pr$p 103 and subsequent amendments and legislative additions, it’s disturbing to observe how broadly written and interpreted it’s become. It’s a kind of catch-all, yes protecting consumers, but also lots of elbow room, fertile ground for big $$$-caching. Pun intended.
Which is why recently in San Diego a lot of grumbling and legal challenges over Pr$p 103 misuse and abuse is going down, getting beaucoup coverage. Apparently, there’s to be an audit----which I have dubious hopes for considering the plethora of lobbyists and corporate interests who dread such an investigation.
Here’s an August 17, 2012 posting at The Watchdog (SD Union-Tribune) by investigative journalist Jeff McDonald:
S.D consumer group triggers audit of state program
“Assemblyman Henry Perea, D-Fresno, sought the review after learning that former UCAN executive director Michael Shames applied to receive $330 an hour under the California Public Utilities Commission’s Intervenor Compensation Program.
Shames left UCAN in June after The Watchdog reported he collected hundreds of thousands of dollars in secret bonuses. He subsequently formed a new advocacy group called the San Diego Consumers’ Action Network, and last month applied to state regulators to receive payment for that work.
UCAN is an organization that has the second-highest total in compensation of all intervenors, at just over $3.4 million,” Perea told the Joint Legislative Audit Committee last week.
However, it has filed for dissolution in federal court amid allegations of secret bank accounts, illegal payments and an imposter lawyer. The allegations are the subject of a federal grand jury subpoena.
The state audit was approved on a 9-1 vote. It is expected to take up to nine months to complete and will cost at least $466,000, not including administrative expenses and consultants.
The review also will consider whether the work of intervenors is redundant to that of the Division of Ratepayer Advocates, an office of the state utilities commission.”
Appropriately named “Shames”, 'cause he should be? Or howsabout “UCAN”---As in YOU CAN get away with stings like this. No kidding, hey, I don’t make these ironic names up!
Some might view the entire nightmare of Intervenor Compensation as a government-supported form of extortion or blackmail that came from justifiable resident reform desires 25 years ago. The two primary examples I gave may in fact only be part of the scheme, hard to believe there's only one bad apple in the barrel. Shames might become the one and done ceremonial, sacrificial lamb, made an example of by being imprisoned in some posh white collar facility. San Diego did set the bar pretty low by giving us Barry Minkow, Jack Abramoff and other classic scum.
And please SF members or employees, don't blog troll me or instigate online assaultive campaigns. This isn't a hatchet job or hit piece, you want to be eligible for that kind of serious cash cow money wave, you paddled out here, then be prepared to take the consequences of the roller coaster ride.
Correct me if I'm wrong, but in an interview given shortly before his death on November 5, 2000 that I read subsequently (LA Times?), that arch druid, that quintessential eco-protectionist David Brower was asked about starting then quitting so many non-profit organizations on an approximate 10-year cycle. He'd then go out and help start another one.
If memory serves he said something to the effect that he found after about 10 years or so the 501 c 3 public benefit eco-corporation exhibited little accountability to membership and initially founded goals. These NGOs had run their course, outlived their original purpose and were beginning to strongly resemble the very capitalist, anti-environment corporate structure they battled and castigated. Bloated staffs, bloated budget, they lose sight of their original mission statements. I assume that he and Glen Hening (co-founder of SF) would have found compatibility and resonance in each other's company.
Do individual consumer watchdogs really have those multi-billion $$$ bona fides, the sole product of their unique efforts, or is it really a summation, a totality and each takes 100% credit? It's like the movie-turned-play, The Producers, where they sell investors 10,000% of a play they believe will fail. One must wonder why it's taken dozens of purportedly highly paid attorneys at the top of their game up in Monterey to extraordinarily achieve what exactly? Seems like Monterey ratepayers saved a lot of NGO bacon budgets through indirect, non-earmarked IC donations.
It has been said that failure is an orphan but success has a thousand fathers. There's a case to be made that IC participants might have cooked the success books. They might have exaggerated the savings to consumers they lay claim to, but without DNA testing all still allege to be the sole parents of those disputable sums. My research reveals that there's no laws enjoining, forbidding or prohibiting them from filling out claims as long as they (a) Cover their asses with preemptive defense paper, and (b) Don't get caught. Hey, like they say, it never hurts to ask, huh?
If it were genetically (statistically), irrefutably proven they provided an indefinite long term legitimate public service, then yes, requests for funds have merit. Unfortunately, the who-gets-what takes place in murky places.
Legendary UCLA Coach John Wooden, in one of his usual Midwest no nonsense moments of wisdom said : "Never mistake activity for achievement." This quote fits our conundrum too: "It's not what you do, it's how you do it." According to his worshiping players and staff he meant both basketball AND life itself. Of course this implies a moral sense perhaps not in play during IC pleadings.
There is legitimate concern regrading exploitation, I'm simply asking pertinent questions as someone who might already be paying. Or in the case of two pending Orange County desalination proposals, future inflated rates because of IC. We have one in Huntington Beach, one in Dana Point, both will augment my own water delivery providers here in Laguna Beach.
Regardless, howsabout Surfrider look in the mirror just south of me in picturesque San (I am not a crook Tricky Dicky) Clemente and repeat after me: "Respect The People!"
The tip of an iceberg is generally accepted as the smallest, least visible portion. The body, capable of ship-sinking endangerment, largely remains hidden from view. IC hijinks only add to the public’s suspicions about shadowy nether regions and failed regulatory compliance they don’t normally explore. Then again who said that being a non-profit really means that no one profits?
FYI: If a project near you has some interesting enviro-aspect(s) that you think is/are worthy of Salem-News.com coverage and our readers attention, feel free to contact me with a very brief synopsis. Water-related “Blue Interventions” are my specialty!
Launched in 2010, Odd Man Out is the creation of Roger Bütow and his OMO columns are written exclusively for Salem-News-com. Born and raised in the LA Harbor area, son of a German immigrant father, he moved to Orange County in 1965 and has lived in Laguna Beach since 1972. In 1998, he began his professional career in environmental review processes (CEQA, NEPA, MND, MND and EIR/EIS). He's a rare mix of cross-trained builder, writer and consultant as he brings his extensive construction experiences dating back to 1972 into his eco-endeavors. He has tremendous field and technical expertise in successful watershed restorations, plus wastewater, urban runoff, water quality monitoring/improvements and hydrologic mechanisms. He's built everything from commercial spas to award-winning private residences, and provided peer review and consultant analyses for single homes, subdivisions and upscale resorts.
His resumé is extensive, try an online GOOGLE search of his personal journey and historical accomplishments. His consultation fees are reasonable and if you've got a major project that alarms you, that needs creative intervention, then he's your man. His credentials and "CV" can be provided upon request.
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