In the world of water, it’s wise to follow the money

Western Area Water Supply (WAWS): Williston Regional Water Treatment Plant Construction in 2014. Credit: Vern Whitten Photography
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There’s an old saying in journalism – “follow the money”.  That phrase inserted itself into America’s lexicon and popular culture during the movie “All the President’s Men”, a film portraying the events of Watergate.  Since then, that phrase has been taught or talked about in most basic media classes.

Following the money is a basic exercise that uncovers a sizable amount of information, creating questions aplenty and infuriating lots of people. Those are a couple of reasons journalists and reporters alike don’t utilize this tactic.

Furthermore, many media companies have large advertising contracts with many of those who are affected during a basic “follow the money” exercise.  That can make owners, management and editors steering clear of jeopardizing those lucrative contracts.

Today, in North Dakota, following the money on the Western Area Water Supply Authority (WAWSA) tells quite a story, even while leaving many questions unanswered.

Here are the two basic numbers most taxpayers will retain and focus on – $150M and $469M.  These numbers are the original projected price of WAWSA, $150M, and the current estimated cost, $469M.  That’s right, the WAWSA project is now well beyond three times the original quoted price to the North Dakota taxpayer without a conclusive final cost in sight.

The next thing most people do, as part of this exercise, is find out who WAWSA is. According to WAWSA’s website, they are state sponsored water company and political subdivision that provides water services to rural residents, communities and industries.  WAWSA services Williston, Watford City, Ray, Tioga, Stanley, Wildrose, Crosby, Fortuna, Noonan, Columbus and Ross.  They also list Burke, Divide, McKenzie, Mountrail and Williams Counties as their service area.

One of the reasons following the money works wonders for journalists and reporters is because it involves numbers.  Numbers don’t lie and are void of emotion, whereas people are passionate.  And passion can often induce behaviors of determination, tunnel vision and groupthink mentality.

So what are a few of the numbers that jump out?  In previous editions of this five-part feature, we referenced “legal fees” and “threatening letters”.  Judging by the amount paid to Vogel Law Firm, they have performed quite a bit of legal work for WAWSA.

According to WAWSA financial records, since 2011, Vogel Law Firm has received almost $1.5 million from WAWSA in legal fees, including $250,000 for each of the last two years.

The next number that jumped out, and keep in mind these are in no particular order, is WAWSA executive director Jaret Wirtz’s salary.  Wirtz received a total of $162,167 in 2016. That’s a salary of $148,077 and bonus of $14,090.

The reason this number jumped off the page was because it ranks higher than many prominent officials’ salaries.

Comparing WAWSA’s executive salary to several other prominent state positions

WAWSA executive Director Jaret Wirtz                                   $162,167

North Dakota State Engineer  Garland Erbele                     $154,500

Attorney General of North Dakota Wayne Stenehjem         $143,685

North Dakota Governor Doug Burgum                                   $116,999 (2013 data)

North Dakota Secretary of State Al Jaeger                             $96,794

North Dakota Treasurer Kelly Schmidt                                   $96,972

Northwest Water Authority Director Tim Frieje                   $93,492

Additionally, there is $50,000 for lobbying.  The WAWSA board is using public money to lobby to the state.

According to the Secretary of State’s website, John Olson, Olson Effertz Lobbying and Consulting, is registered as the lobbying firm for WAWSA.

And then there was the number that jumped off the page the highest.  According to Wirtz, WAWSA has paid approximately $48 million to engineering firm AE2S, often referred to as Advanced Engineering and Environmental Services.

Another number affiliated with WAWAS and AE2S that stood out as well was the number one.  That is how many engineering firms bid on the multimillion dollar project. One firm and one bid.  That’s incredible for multiple reasons, but probably the most amazing is the fact the state accepted the bid with only one company bidding.

“AE2S wrote the study, they wrote the RFP (request for proposal), they were the only organization to bid on the contract and they are still the beneficiaries of that contract,” Harms said. “When that project (WAWSA) was approved in 2011 and the Western Area Water Supply board made, I think, a tactical mistake to award a contract with only one bid.”

According to Steve Mortensen, president of the Independent Water Providers, as well as many others, AE2S’s involvement with the project is a bit more than the state or WAWSA’s board would have you believe.  In fact, Mortenson believes AE2S is the one driving the WAWSA ship in North Dakota.

“There was a group out of Watford City, I believe that is where it all started, and I believe it was driven by an engineering firm AE2S,” Mortenson said. “They wanted to build a water system out here and pay for it with selling water to the oil industry.”

Mortenson continued saying the WAWSA group got together and went to the state legislature, requested $150M to create a potable water system in the Bakken, but a lack of vision and oversight grew the project to an astounding $469M.

“This thing just ran amuck,” Mortenson said. “Every January AE2S would come in and ask for another increase.  There was never a set increase at the beginning of this project. It was just a charge-as-you-go-project.”

The Crude Life Media Network sent an e-mail to AE2S indicating there were questions about AE2S’s lobbyists, the WAWSA project and requested to interview president Charlie Vien.  Not only is Vein AE2S president and co-founder, he is also a registered lobbyist with the state of North Dakota.   AE2S declined to comment or participate in the five-part series on WAWSA, citing they are only the “Engineer of Record” and “a technical advisor”.

Furthermore, an e-mail reply from AE2S’s Heather Syverson, marketing specialist, attempted to remove or absolve themselves from responsibility and redirect the conversation away from AE2S.   Syverson’s email also omitted if Vein was available or whether he was the proper person to interview and delegate the interview internally within AE2S.

Syverson’s e-mail reads – “John Olson of the Olson Effertz Lobbying and Consulting firm is the registered lobbyist for WAWSA and he would be able to speak to your subject matter.  Although, you may want to reach out to Jaret Wirtz, WAWSA Executive Director, as all media inquiries about WAWSA should start with him. AE2S is the Engineer of Record and a technical advisor to WAWSA, so we will defer to Jaret (Wirtz) on matters related to the project.”

A return email was sent informing AE2S that Wirtz had been interviewed (and was our first interview for this story) and asked once again to speak with Charlie Vein regarding WAWSA and AE2S’s lobbyists.  Specifically, the email informed Syverson that in addition to Wirtz, conversations were had with WAWSA board members, the State Water Commission, the city of Tioga, several state legislators and some independent water providers.  With the exception of Wirtz, AE2S’s name was uttered many times, often as the key influencer on the project. In some cases, as the real captain of the WAWSA ship.

AE2S has not given The Crude Life Media Network any communication or comment on the project since their one single return email on Tuesday May 4, 2017.

With the project over triple the original projection, Wirtz’s salary and bonuses are not the only dollars being questioned under the leadership umbrella.  AE2S’s involvement is being called out by many familiar with WAWSA and its project.

Mortenson, a lifelong Williston resident, said he met with Steve Burian, CEO and CFO, AE2S, about the project, and said Burian couldn’t understand why the Independent Water Providers were upset with WAWSA.

“I said Steve – you are the Western Area Water Supply,” Mortenson said. “You guys are the ones running the show here. You present everything to the board and it’s just yes yes yes yes yes.  It was the engineering firm who totally drove the bus on this thing.”

A former WAWSA Board Chairman and a key promoter on the project, North Dakota House Representative Denton Zubke sees it differently when it comes to AE2S.

“When you talk engineering costs in a water project, they will run, and you can look at industry standards, anywhere from 11-to-16-percent,” Zubke stated. “When you are talking design and all that process, they are a bit higher when you are talking about just awarding the contract and monitoring that contract for a little bit lower.”

Zubke continued his defense of the amount WAWSA has paid AE2S for a the water project – despite the fact it has tripled in cost.

“If we have put $300-and-some-million in projects in the ground, you are going to have $40-some-million in engineering costs,” Zubke said. “There’s just no way around it.”

According to the USDA’s Rural Development guidelines for engineering fees in regards to rural water projects, a $100,000 project would suggest a 13% fee.  The chart is a sliding scale decreasing the percentage as the project amount increases.

The USDA recommends a 5.6% engineering fee for projects over $13,470,000, where the WAWSA project would fall into.

For more complex projects, the USDA guidelines can add additional percentage fees for site specific construction (2-to-3%), renovation of existing facilities (2%) and expansion of existing facilities (2-to-3%).

Increasing engineering costs and percentages aside, Mortenson believes the State Water Commission should have consulted with an independent engineering firm during the WAWSA project.

“Talking with Mike Dwyer, who is on the Water Coalition, they should have had an independent engineering group study everything that was presented to the State Water Commission,” Mortenson said.

Dwyer is a water law expert with over 37 years specializing in water issues and water projects in North Dakota.  Dwyer also has represented the North Dakota Water Users Association, North Dakota Water Resource Districts Association, the North Dakota Irrigation Association, the Upper Missouri Water Association, the Southwest Water Authority, the Souris River Joint Water Resource Board, and the North Dakota Water Education Foundation.

In addition to questioning why AE2S continues to have engineering carte blanche, Mortenson believes there is another conflict of interest too.

“AE2S being the main engineers of this project, also provide industrial water services to the oil companies, they have another spin off group that is in charge building pipelines for the oil companies,” Mortenson said. “You talk about a conflict of interest.”

AE2S designs and help manage the water system, which is funded in large part by public dollars, they access to help other clients in the oil industry.  In essence, they are paid on both ends.

According to AE2S’s website, AE2S also owns affiliated companies AE2S Nexus, AE2S Construction, and  AE2S Operations.

Mortenson was quick to point out the number of lobbyists AE2S has on the payroll.  According to the Secretary of State’s website, AE2S has eight lobbyists registered with the state of North Dakota, including CEO Steve Burian and president Charlie Vein.  Prompting questions and insinuations that there is more tax dollars being used to lobby the state for more tax dollars.

Duane Sand, president, North Star Water, Bismarck, believes using taxpayer money for business and lobbyists to influence lawmakers is a slippery slope that cuts off an official’s access from citizens and focuses their attention on a select number of businesses.

“The guys fly into Bismarck in the AE2S million-dollar Pilatus Airplane, and using taxpayers’ dollars they lobby legislators for more taxpayers dollars or for their clients that compete with taxpayers,” Sand said.

Whether the anecdotal evidence of the who the real captain behind the WAWSA ship is, or Representative Zubke is right that everything is normal, one can question why the WAWSA board would approve such a massive project with only one bidder.  Furthermore, questions linger why the WAWSA board of directors would continuing using the current leadership and an engineering firm that could be off by nearly triple the original projection.

And, in a story that has as many questions as answers, the State Legislature, the Water Commission and the Industrial Commission have all neglected to place adequate restrictions on a project that has documented issues paying its bills, with no final WAWSA costs in site.

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