CONFLICT OF INTEREST, CRONYISM DOG HYDROGEN HIGHWAY

CALIFORNIA FOCUS
FOR RELEASE: TUESDAY, MAY 27, 2014, OR THEREAFTER

BY THOMAS D. ELIAS

    “CONFLICT OF INTEREST, CRONYISM DOG HYDROGEN HIGHWAY”

          Looking for a new reason to distrust a state government that won’t even expel legislators when they’ve been indicted or convicted?

          Then examine $46.5 million in grants announced by the state Energy Commission in early May for building refueling stations to serve the hydrogen-powered cars due to appear on California roads as early as next year. These grants thoroughly pollute the coming hydrogen highway.

          Fully 58 percent of the money – $27.5 million – will go to one company if the commission gives its final approval. Action was due May 14, with the commission’s agenda estimating it would need just 10 minutes to dole out the funds.

          What’s wrong with that? The company getting all that cash – from vehicle license fees – is FirstElement Fuel, which has never built or managed anything. Its co-president is Dr. Tim Brown, until last Oct. 1 a senior scientist in the Advanced Power and Energy Program at UC Irvine.

          While there, Brown was the principal designer of the Energy Commission’s map for placement of hydrogen stations, most to consist of pumps added into existing service stations. Under a contract with UCI, Brown also trained Energy Commission staffers on how to use the material he developed for the commission. Some of those staffers evaluated grant applications this spring.

          If these obvious conflicts of interest aren’t problematic enough, there’s also the fact FirstElement filed a 900-page grant application barely four months after Brown left UCI. It included commitments from more than 20 service stations to allow FirstElement to install hydrogen pumps. Officials of competing companies say it’s unprecedented to recruit so many stations and develop a 900-page proposal in so little time.

          About one week after this column revealed in early March that Brown had applied for tens of millions of grant dollars under a system he essentially designed, the Energy Commission requested a written opinion from the state Fair Political Practices Commission on whether Brown was in conflict of interest. In its 40-year history, the Energy Commission never before requested such an opinion.

    That opinion emerged as a rubber-stamp document filled with legal sophistry. Example: “Dr. Brown was an employee of UC Irvine while operating under a contract with the Energy Commission. The research and education that the Energy Commission gained during that contract might have informed (his grant application), but we cannot say the contracts are the same or even that one necessarily led into the other,” the FPPC said. Translation: the state’s ethics watchdog says Brown can receive the state money because it can’t prove he drew the map to benefit himself. Even if this was possible.

          Of course, the state Supreme Court in 1980 ruled that conflict of interest laws are intended “not only to strike at actual impropriety, but also to strike at the appearance of impropriety.” The FPPC cited this passage, but then paid it no heed. FPPC general counsel Zackery (cq) Morazzini refused to answer questions about the ruling, as did Brown, his attorney and Energy Commission officials.

          Then there’s the fact that FirstElement’s proposal exposed the new company as something like a surrogate for the large international commercial fuel firm Air Products and Chemicals, which saw grants of its own pulled back by the Energy Commission after this column in 2012 revealed a pattern of cronyism in that year’s awards.

          FirstElement’s proposal says the company is a “consortium 

of partners,” with financing from Toyota Motor Sales and all 

equipment and hydrogen fuel to come from Air Products, which 

will also install the pumps. Executives of Air Products and Toyota 

for years have attended meetings of the California Fuel Cell 

Partnership (annual dues: $87,000) with Energy Commission 

staffers. This was part of what led to the earlier allegations of 

cronyism.

          So contrary to the FPPC’s convoluted opinion, the large new grants to Brown and FirstElement reek of conflict of interest and a revival of cronyism.

          Which means that if the Energy Commission, as expected, gives final approval to the announced grants, Californians will have a dirty hydrogen highway and one more multi-million-dollar reason to distrust state government.

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     Email Thomas Elias at tdelias@aol.com. His book, "The Burzynski Breakthrough: The Most Promising Cancer Treatment and the Government’s Campaign to Squelch It," is now available in a soft cover fourth edition. For ‘more Elias columns, go to www.californiafocus.net