Case 20: Power to the People

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The Western Power Company operates an energy-producing project, composed of a series of reservoirs and powerhouses on federal land, which is now up for relicense. Recent federal rulings state that a municipal power agency may take over an energy-producing project if the agency can show it will operate the project as well or better than the private company, and Municipal Electric Company files a competing application to take over the project.

The project lies in the territory of a tribe of Native Americans, who have had a troubled relationship with Western Power and other private utilities. Western Power hires Jones Cultural Consultants to investigate the concerns of the community and make preliminary recommendations; Municipal Electric hires Lambert Anthropological Consultants for the same purpose. Strict secrecy is imposed on all the studies, and only after protests is the Indian community able to obtain both sets of reports. The relationship between the Indian community and Western Power deteriorates further, and the community demands land and revenues from the company if the project is relicensed to Western Power. Drawing back from the conflict, Jones Consultants resigns. Having nothing to lose, Municipal Electric takes a more open approach with the community and, as a result, Lambert Consultants finds it easier to act as an intermediary.

A second round of studies, involving intensive ethnographic research and negotiation on recommendations, is required of each company. Western Power has difficulty finding anthropologists to complete their study and, after the Indian community states that it will accept Lambert Consultants as Western Power's representatives, approaches the Lambert firm to do the study.

Western Power and Municipal Electric each want a separate series of negotiations and "deals" with the community, and the Lambert directors find themselves in a dilemma. Their primary loyalty is to the Indian community and they worry that events might cause them to leave a group they have worked with for several years. They are not sure their firm can abide by the secrecy requirements posed by the two companies and wonder whether the struggle between the two will help or harm the community. The Lambert directors have considered the following options:

1. Accept both offers and, no matter who wins, make sure the community benefits from the competition;

2. Predict which company is likely to do the most for the Indians and accept their offer;

3. Continue working for Municipal Electric because it has been more open and willing to cooperate with the Indians;

4. Approach the two companies and suggest a single study and recommendations package, thus removing the Native American issue from the competition, even though this might diminish the benefits to the community.

Comment

John Peterson, Mississippi State University:

Since the Lambert directors have worked with the Indian community for several years, it is understandable that they maintain loyalty to them. But the abstract does not seem to indicate any sense of loyalty by the directors to a past client, Municipal Electric. The open approach adopted by Municipal Electric in the first round of studies was apparently in accord with the advice of Lambert Consultants and made their task easier. In fact it is this success with both their client and the community which raises the question: Can Lambert take on a second competing firm as a client? The Indian community apparently sees no problem here. The Lambert Directors wonder if their firm can abide by secrecy requirements posed by the competing two companies while working for both. Obviously they cannot. The problem is not just the secrecy requirements. Lambert has successfully carried out the first stage study for Municipal Electric under secrecy requirements. But Lambert cannot work for two competing electric firms on studies that must remain secret. I believe that working for competing firms is a more basic problem than the secrecy requirements.

The statement of options by the Lambert directors does not seem to recognize that the firm can probably only carry out a study and make recommendations. The actual negotiations will probably be out of Lambert's control and should be beyond their responsibility unless they are specifically employed by one of the parties to actively negotiate for them. Since the two electric firms are in competition, each firm must do their own separate negotiation with the Indian community on the basis of study recommendations. The Lambert firm should make it clear to the community (as well as the electrical firms) that their role must be limited to a study and recommendations. The negotiations over these recommendations must be the responsibility of the community and the individual firms. I believe it unrealistic to believe that either electric firm will involve a consulting firm in actual negotiations beyond the study and recommendations.

The primary concern for Lambert should be how to carry out the best professional study and recommendations to reflect the true concerns of the community; it is the quality of the study which will best represent their concern for them. Lambert, Municipal Electric, and the Indian community were all pleased with the open approach developed in the first stage study.

I recommend that Lambert suggest a joint open study and recommendations as a first choice along the lines of option (4). But first, Lambert should make sure that Municipal Electric has no objection to Lambert investigating the possibility of a joint study and recommendations package under joint funding by both power companies. This must be an openly negotiated agreement between Lambert, Municipal Electric, and Western Electric, with the concurrence of the Indian community.

If this proves impossible or unacceptable to Municipal Electric, I believe that Lambert should follow option (3) and continue working with Municipal Electric.. Not only has Municipal Electric been more open and more willing to cooperate with the Indian community, but also this would continue a successful client relationship.

Option (1), working for two competing firms, is impossible. An attempt to do this would only discredit Lambert in the eyes of both concerns. The idea that Lambert can manipulate the results is naive.

Option (2) also reflects an unrealistic view of the ability of the firm to predict the outcome of negotiations and a subsequent licensing process. For Lambert to switch from having Municipal Power as a client to Western Electric without cause would, in my opinion, tend to discredit Lambert as a reliable consulting firm. Since Lambert has already worked successfully with Municipal Power as a client in the first stage study, the consultants will probably have greater success and more influence in continuing to work with Municipal Power in as open a study as circumstances permit.

Comment

Sue-Ellen Jacobs, University of Washington:

In this dilemma, it is stated that Lambert Consultants' "primary loyalty is to the Indian community." I interpret this to mean that they will do whatever is possible to assure that the community benefits from the competition. If that is what is meant, then of the four options offered, they must accept number (1), after having discussed this openly with the appropriate members of the Indian community.

Given the Lambert firm's "loyalty" to the Indian community and their desire to retain a good working relationship with "a group they have worked with for several years," a fifth option would include portions of (1) and (4), developed in collaboration with members of the community; namely, approach the two companies and suggest a single study that will directly involve members of the Indian community and the two companies, and allow no secrecy restrictions. The open competition that might result from this could be very advantageous to the community. Offers of greater revenues, acreages , capital improvements, and so on, might be laid on the bargaining table by each company while the second round of studies is being undertaken. This could make for an interestingly dynamic, but tolerable shift in some aspects of data within the study. I would expect that the single recommendation package to be presented to all three "parties," before it was turned over to the federal agency in charge of licensing, would include descriptions of various scenarios resulting from the proposals from each company. These scenarios can only predict, not guarantee, benefits or effects that might accrue to the Indian community.

It is just possible that each company's planned project (i.e., what will be given to the Indian community in exchange for being able to lease the resources in the "tribal territory" that is simultaneously designated "federal land") would confer equal benefit to the Indian community. However, in the case of energy-producing projects there are often heavy costs, in the form of adverse ecological, community, individual, and other effects, that clearly outweigh anticipated benefits. A report that reveals details of such costs might lead each company, in turn, to up the ante on land, energy, and water, economic benefits that would accrue to the community and individuals in the short and long run, simultaneously stressing how these added benefits outweigh or mitigate adverse effects.

The single study would have to break out the costs/benefits associated with each company's approach to the project so that the Indian community can reach the most informed decision, and then be involved in the final deliberations concerning licensing of one or the other company. A final recommendation would be that if a single study is acceptable to all parties. Lambert Consultants initially set up two in-house teams to begin the second study phase from the point of view of each company. At a given point in time, the two teams join to share research data and formulate the recommendation package.

Having survived a similar situation, I appreciate the quandary and stress the dilemma poses. Regardless of the option chosen, the researchers are going to be working under a great deal of pressure in effort to produce the best research and the fairest recommendations. The degree to which the Indian community is dependent on Lambert Consultants' "best guesses" for promotion of their best interests is the degree to which the firm must commit its best resources. Options (2), (3), and (4) clearly would not allow such a commitment.

Reader's Response

John N. Seaman of MacLean, Seaman, Laing and Guilford in Lansing, Michigan, wrote:

"The ethical dilemma presented in this issue of the Anthropology Newsletter is interesting, because of the puzzling disregard by the commentators of the legal obligations of the Lambert consultants. The proposal to accept both offers is not permissible unless, after disclosure of all the facts, both competitors agree. It is a violation of the basic principle that an agent cannot serve two masters. Furthermore, entering into a contract with either utility involves another conflict of interest, if the consultant does owe its primary loyalty to the Indian community.

"Finally, as agents of a utility, the consultants have not got the right to bend the results in favor of the Indian community.

"The whole thing is no different from a lawyer who would not set out to represent three clients, all of whom have conflicting interests. He would probably soon find himself disbarred."