Fort Smith consent decree modification meeting could happen before Thanksgiving

A consent decree modification meeting between City of Fort Smith and federal officials could happen before Thanksgiving but it could be as late as the second quarter of 2025 when an agreement is finalized on an order that could cost the city between $600 million and $800 million.

Fort Smith City Administrator Carl Geffken told Talk Business & Politics the modification has been submitted to the EPA and DOJ, but the city has not yet received any feedback and doesn’t yet have a meeting location or date set.

“We do not have a date or location for the EPA/DOJ meeting yet. That will be arranged after we receive comments to the changes proposed by the City to the modification submitted by DOJ/EPA. We anticipate a meeting, either virtually or in person, to occur before Thanksgiving,” he noted in the email interview.

Those attending the meeting representing Fort Smith are expected to be Mayor George McGill, Geffken, City Attorney Jerry Canfield, Utilities Director Lance McAvoy, at least one member of the Fort Smith Board of Directors, and Paul Calamita, an attorney with Richmond, Va.-based AquaLaw, and consultant to the city with the consent decree effort. Geffken said several directors have asked to attend.

“I hope the meeting will be for at least one full day, unless we come to an agreement sooner, because DOJ, EPA, the State, and the City want to bring this to a close and focus on getting the work completed,” Geffken wrote.

Calamita has told Talk Business & Politics that it could be up to 90 days after an offer is made before the EPA and DOJ issue a decision. If an agreement is reached, it will then require a 30-day public comment period. After that, it would require approval by a federal judge assigned to the consent decree order.

THE CONSENT DECREE
After decades of failing to maintain water and sewer infrastructure to federal standards, the city entered into a federal consent decree with the U.S. Environmental Protection Agency (EPA) and U.S. Department of Justice (DOJ) in late 2014, with the decree officially beginning Jan. 1, 2015. The consent decree, when initially enacted, required the city to make an estimated $480 million worth of sewer upgrades in 12 years.

The city spent around $49 million prior to enactment of the consent decree, and spent $87 million on consent decree work between 2015 and 2019. Between 2020 and 2023, the city spent $64.1 million on consent decree work. The total for the work, including prior to 2015, is around $200 million.

The problem is, the estimated cost of the work required to meet the full measure of the federal mandate is $635 million, with some estimates discussed approaching $800 million. Also, the city faces a possible $25 million penalty if state and federal officials do not approve a city plan to modify the federal consent decree.

‘SEEKING FLEXIBILITY’
Geffken said primary changes in the modification are focused on asking for additional time and 
“seeking flexibility to fund the consent decree.”

“Language was added to allow the City (to) reduce the rate increase to a minimum of 3.5% if money were raised through other means to fund the consent decree, such as sales taxes, grants, and refinancing current bonds. We have examined all of these options and they will be able to mitigate rate increases,” Geffken noted.

Following are some of the changes requested in the modification proposal. (Link here for a PDF of the modification request.)
• All stipulated penalties for missed deadlines under the original consent decree will be considered settled and federal and state authorities will not demand payment of potential penalties for missed consent decree project deadlines prior to a modification agreement.

• The city shall complete remedial measures on a minimum of 45,000-line-feet of sewer lines and 140 manholes by Dec. 31 of each calendar year and detail the work in an annual report.

• The city shall complete remedial measures on a total of 150,000-line-feet of sewer lines and 500 manholes by Dec. 31, 2027, and a cumulative total of 300,000-line-feet of sewer lines and 1,000 manholes by Dec. 31, 2030, and a cumulative total of 450,000-line-feet of sewer lines and 1,500 manholes by Dec. 31, 2033.

• Within 180 days after any modified agreement is approved, the city shall submit a financial management plan to the EPA for the consent decree work. The plan shall be reviewed by the city at least once a year and will be updated when necessary.

• The Dec. 31, 2036 completion date is based on “a number of mutual assumptions about key factors including but not limited to program costs, availability of State loan funds, the cost of debt financing, the extension and increase in the dedicated sales and use tax, system growth, and contractor availability.”