Fort Smith Board to consider DOJ consent decree modification plan

The city of Fort Smith has received a long-awaited consent decree modification from the U.S. Department of Justice (DOJ) which, if approved, provides the city more time and flexibility to make sewer system repairs. The proposal does not address up to $25 million in possible penalties against the city.

The Fort Smith Board of Directors is set to review the proposed modification at a Tuesday (Feb. 24) study session.

Acting City Administrator Jeff Dingman noted in a memo posted Monday (Feb. 23) that the DOJ sent the proposed modification late Friday. Dingman said the document has been reviewed by the U.S. Environmental Protection Agency (EPA) and the Arkansas Attorney General’s office.

Jeff LeMaster, communications director for Arkansas Attorney General Tim Griffin, said the office is reviewing the proposed modifications.

“We have advocated for a modification to the Obama-era consent decree to give the City of Fort Smith more flexibility,” LeMaster said in a statement. “We are reviewing the most recent proposal.”

CONSENT DECREE HISTORY
After decades of failing to maintain the city sewer system, EPA and DOJ officials executed a consent decree in 2014 with the city of Fort Smith that required certain improvements to the city’s sewer system. The federal agencies were acting under provisions of the U.S. Clean Water Act initially established in 1972.

The city has estimated that the total cost of consent decree work could approach $800 million. The early estimate was that consent decree work would total about $480 million. The city reports that it spent about $136 million between 2015 and 2024, and spent about $49 million prior to 2015.

In May 2020, the EPA and the Arkansas Department of Environmental Quality (ADEQ) agreed with the city that sewer improvement work will be “inordinately expensive” and gave the city another five years from the initial 12-year mandate to complete the work.

In May 2022, Fort Smith voters passed a 0.75% sales tax from Jan. 1, 2023, to Dec. 31, 2030, with 83.3% of the revenue going to federal consent decree work on the city’s water and sewer system, and 16.7% directed to the police department. Funding for consent decree work to date also has come in part from water and sewer bill increases, which were up 167% between 2015 and 2022.

Fort Smith voters in May 2025 approved by a wide margin a sales tax reallocation plan to provide $360 million over 30 years to fund federally-mandated sewer system work.

‘FAVORABLE’ TERMS
In his memo, Dingman said Paul Calamita, an attorney with Richmond, Va.-based AquaLaw whom the city hired to help work with federal agencies on consent decree relief and changes, believes the modification plan is “favorable” and the board should approve it.

“This modification is what the city has been working towards since the inception of the consent decree,” Dingman noted in the memo. “This modification is the reason the city worked through the difficulties of developing a 10-year financial plan which included commitment to sales tax elections, issuing sales tax bonds, and adjusting sewer rates all while continuing to assess and remediate sewer system deficiencies and capacity issues. Upon favorable discussion at the study session, staff will ask that the board place a resolution on the March 3 regular meeting to consider approval of the proposed Agreement and Order on Modification to the Consent Decree, or substantively similar document.”

Following are some of the draft modification summaries Calamita provided, according to Dingman.

• 11.5 year extension of the original 15-year deadline to complete all consent decree work. The deadline is extended from Jan. 1, 2027, to June 30, 2038.
• Revises the requirement for the city to remediate specific numbers of sewer lines and manholes each year to a three-year average requirement. “This will give the city important flexibility to prioritize its work rather than having to drop higher priority items to remediate an arbitrary number of sewer lines/manholes,” the memo noted.
• Makes it a condition of the modified consent decree that the city increase sewer rates by 3.5% annually through 2030, as the city has already done by ordinance.
• Requires that the city raise rates in the years beyond 2030, as necessary, to comply with consent decree requirements unless there are other sources of funds to offset the need for rate revenue.
• Requires the city to submit a financial management plan within 180 days after the court enters the modification. The plan will be updated in each annual report.
• There will be added stipulated penalties if the city fails to timely submit an annual report.
• The EPA agreed to revise its dispute resolution procedure to set a time limit — “shot clock” — on the agency to submit a statement of position should it disagree with a dispute raised by the city. “This is a critical change that makes the Fort Smith CD consistent with virtually every other CD. Without the shot clock on EPA, the Agencies could prevent the city from obtaining judicial review of disputes,” the memo noted.

POSSIBLE PENALTIES
There is no language in the modified consent decree addressing penalties the city faces for previous consent decree violations. In August 2024, Calamita warned the board and city staff that they face between $15 million and $25 million in penalties.

“Because we are not in compliance, everyday (the city is met) with numerous deadlines that were contemplated for a program that would finish in 2026,” Calamita said in August 2024. “Those deadlines are cumulative, and we literally are on the hook for thousands of dollars a day of stipulated penalties.”

Calamita is recommending that the board approve the modified consent decree and then address “stipulated penalties without deferring agreement on time extension and technical matters.”

Dingman’s memo notes that Calamita will attend Tuesday’s study session and discuss the proposal, “with the exception of one item still to resolve.” That item notes: “Modifications to the Consent Decree pursuant to this Agreement and Order are to be applied prospectively only after the Effective Date of the Agreement and Order. Unless resolved by the Court’s Order of March 19, 2021 (Docket No. 45), agreement or payment, prior violations of Consent Decree terms remain subject to potential stipulated penalties under the Consent Decree.”

Specifically, the item is about the potential penalties for sanitary sewer overflows (SSOs) sought by the EPA. The March 2021 order by U.S. District Judge P.K. Holmes III indicated the city should be given five more years to address the SSOs.

“Our position is that if we had added five years to the requirements, we would have met them in time, and no stipulated penalties would have been warranted (other than for actual sewer overflows),” Josh Buchfink, the city’s public relations manager noted in response to questions from Talk Business & Politics. “We are waiting for DOJ’s response to our proposal to memorialize Judge Holmes’ decision in this paragraph. Aside from this single paragraph, the city’s negotiating team and the federal agencies agree on the terms of the modification. Currently, the EPA has not issued any kind of penalty demand, so the total amount is not confirmed.”

Link here for a draft of the consent decree modification.