Compliance with Clean Water Act could cost Fort Smith more than $350 million

The city of Fort Smith has invested $201.2 million since 1993 on wet weather sewer improvements and another $150 million or more could be poured into improvements before the city atones for violations of the federal Clean Water Act – bringing the grand total for compliance with the law to $351.2 million.

Deputy City Administrator Jeff Dingman said the city has been under an administrative order from the U.S. Department of Justicen (DOJ) since the early 1990s directing the city to make improvements to comply with the Clean Water Act. He said the city may be placed under a DOJ consent decree that would require even more system work.

"The city has been under the administrative order (since) 1989, I think. But it's really been the last eight years or so that we've had these current ongoing negotiations on this consent decree action," he said.

DIRECTIVES V. CONTRACT
Steve Parke, director of utilities at the city, explained the differences between an administrative order and a consent decree as being a directive versus a contract.

"The consent decree is a pending action. And essentially what a consent decree does is it takes things in more of a contract format. (For example), the parties agree in the future that on schedules and stipulated penalty payments if you don't meet schedules, those types of things. It's an enforcement matter," Parke said. "So an administrative order is kind of a directive. You will go out and and do these things and do your best to get them done. A consent decree will come about if the agency either felt you weren't making appropriate progress or adequate progress. I guess if they thought your improvements were not sized properly. Those types of things."

Parke has said publicly as recently as December 2013 that city wastewater runoff date back to the 1970s. In the same article on The City Wire, Dingman explained that some of the problems leading to the administrative order included drainage into the Arkansas River.

"In the past, there have been areas of town where untreated water has gone into the streams and the river in violation of the Clean Water Act. That's the whole deal. We've (had) untreated water going to streams and rivers in violation and we have to prevent those."

Dingman recently told The City Wire that drainage into the river is no longer the primary problem.

"The current system, the deficiencies are based on age of pipe and that sort of thing. And we still can't guarantee that we're not going to have overflows. We still have recurring (problems) like a particular manhole in an area, (we) still know of several of them that will overflow if we receive a certain storm event, a certain amount of rainfall within a certain amount of time. So, those are becoming more and more infrequent as we address capacity issues in the lines."

But he said until all overflows stop, the city is still looking at violations of the Clean Water Act.

"The Clean Water Act says, 'Thou shall not overflow,' and you know, if we know of areas in town that have recurring overflows — infrequent or not, then we are not in compliance. So we're not going to be in compliance until we can address those," Dingman said.

CONSTRUCTION AND CONTRACTORS
Projects completed or under construction using the $201.2 million spent since 1993 include equalization tanks on Grand Avenue, as well as improvements to the Massard Wastewater Treatment Plant, the construction of two overflow storage tanks at Jenny Lind Road and Zero Street, construction of the Mill Creek Pump Station, as well as equalization tanks under construction on Navy Road near the Port of Fort Smith and the Arkansas River.

A variety of companies have been awarded construction contracts associated with $95.004 million in improvements just since 2008 to July of this year, Parke said, with Neosho, Mo.-based Branco Enterprises taking in the most at $46.434 million. Fort Smith-based Forsgren was awarded contracts totaling $16.076 million during the same period and Topeka, Kan.-based BRB Contractors was awarded contracts totaling $12.93 million. Contracts awarded to the three companies total $75.439 million, or 79.41% of contracts awarded during the last five and a half years.

Dingman said further capital and infrastructure improvements will be needed once a consent decree is filed by the Justice Department, details of which he said are still confidential at the direction of the DOJ, he said. While he said the DOJ will not allow disclosure of working documents — Dingman said Justice Department officials collect all notes and paperwork from any negotiation participants at the end of each in-person meeting — the consent decree will have specific benchmarks the city must meet in its efforts to comply with the decree.

According to Dingman, the city will comply with the decree in two areas: capital improvements and ongoing operations and maintenance.

THE LIMITED PIE
The capital improvements are why the cost for complying with the consent decree could meet the $201.2 million total already spent to this point. As for how long the city will have to comply with the order, he said it is under negotiation and it is ultimately at the discretion of the Justice Department.

"I mean, as far as getting the capital projects done, it's all going to depend on what the final decree says we're required to do. I mean, if we are able to put more capital investment in and less (operations and maintenance)… the pie is only so big, right? The more of that pie we can use initially for investing in capital needs, the more quickly we can get in compliance with our system," Dingman said.

"But the other piece of the pie has to be.. the pie is all how much we can afford, right? So if we're using a big chunk of it to address the capital needs and the infrastructure, then we have less of the pie to use towards ongoing maintenance. But as soon as we can get as much of it as possible, as much the collection system as possible in compliance, then that pie that's available for operations and maintenance gets bigger, you know? So I don't know, it's all a balancing act at this point."

Since the pie is only so big, the city will have to increase sewer rates to cover costs associated with complying with the consent decree, Dingman said. But it depends on how much time the DOJ gives the city to comply with the consent decree how much rates could go up and how quickly. It also would impact how much debt the city could possibly incur in the short term to comply with the order.

"And the right answer will depend on the timeframe. The timing of it is the variable that's going to impact the rest of it. And so can we afford the debt we need to incur to correct all the problems? Well, the answer if we have 20 years to do it is yes. If we have five years to do it it, no. So that's the variable that's going to possibly drive the whole thing,” Dingman explained.

He also said the DOJ is considering the city’s “arguments on affordability” for water and sewer bills in “a particular area.” He also pointed to specific maintenance issues as being a big factor in how much the city can afford.

"If we're required to inspect 50% of the system every two years, so we cover 100% of it every two year cycle, that's going to be unaffordable to our city. We can't get anywhere close to that. We're going to have to have a smaller percentage over a larger amount of time. Those are all points that are still being negotiated."

POSSIBILITY OF FINES
Dingman said the city has not had to pay fines for violation of the Clean Water Act, but he said those would be spelled out in the consent decree, as well, possibly adding additional cost if the city cannot comply during the prescribed timeframe.

City Administrator Ray Gosack has not shied away from the rate increases, noting in a July memo to the Board of Directors that sewer rates "will likely be necessary in order to begin implementation of the consent decree requirements for wet weather sanitary sewer system improvements."

Neither Dingman or Gosack have publicly said what the rate increases could be, only that the increases would be phased in versus a quick rise. Asked whether it would be more cost effective for the city to pay fines in the short term in order to buy more time to comply with the consent decree, Dingman said it was a scenario that has so far not been discussed among city staff.

"No, just because we're negotiating in good faith to try to get a consent decree that's acceptable. I guess at some point, you may have to look at that, but presumably we'll get to a consent decree that … I mean, that's the whole point of these negotiations is to try to get as many of these points agreed upon before the consent decree is lodged by the Department of Justice."

With negations ongoing between the city and the Justice Department, it is unclear when a consent decree could be handed down and the timeframe for getting out from under it. But Dingman and Parke confirmed a conference call was scheduled to take place Wednesday (Aug. 6) regarding the consent decree with an in-person meeting scheduled for later this month in Fort Smith. Gosack said July 22 that the city expected to begin spending on any compliance measures associated with the consent decree as early as next year.