Water & Wastewater News Roundtable 2007

Despite the roar from the municipal water and wastewater industry about the lack of funds for infrastructure, Water & Wastewater News’ roundtable participants seemed to agree that the money is “out there,” it is just a matter of finding the right source. The real issue, they suggest, seems to be the need to educate ncity officials and plant managers on innovative financing. nthe public on the true cost of providing water and wastewater treatment services. “Education,” in general, kept surfacing as a key part of the solutions to the problems posed in questions at the March 6 event in Dallas, Texas. That’s not to say that education will convince people that they need to change the way they think about water. At the conclusion of the roundtable, one participant remarked: “That was a very interesting round of discussions. It got me thinking about many things. Not sure we resolved anything or came to any conclusions, but it was good food for thought.” We offer the following information not as an endpoint, but as a beginning of many interesting discussions on topics that are important to you. Feel free to weigh in on any of these topics and others by sending e-mail to lwilliams@1105media.com. The roundtable transcript has been edited for length and style.

Show Me the Money
Water users in the United States have paid very little for a long time. Now communities are raising rates, passing bond issues, taking out state revolving fund loans, and developing asset management strategies to comply with federal regulations. Do you think these strategies will address the billion dollars’ worth of repairs and replacements needed for America’s aging infrastructure, and do you think the federal government should provide more support?

CURTIS: here was a recent article about the city of San Angelo, Texas, in desperate times right now with regards to their total infrastructure falling apart, and they’re having to add $4 or I think it’s $5 a month to everybody’s water bill and $8 for sewer. Bucks a month is causing an enormous uprising for many in the community because they’re unaware of the magnitude of what they have to address. I think there is definitely going to have to be more from the federal government as well in providing additional funding, especially with the state revolving funds. But that is even being cut from what we’ve seen in the latest budget proposal from the administration. So I think it’s falling well short of what is the immediate need, and it’s only a small portion of what needs to be done on what is available of funding out there.

HUGHES: There needs to be a way to educate the consumer on what they’re getting for their fees, because if they had to go dig up their sewer and fix it all the time, all of a sudden that $8 or $20 or whatever gets really cheap, and it’s not so bad. So there needs to be some kind of an education method where people realize what they’re getting for their fees.

BEARDSLEY: I think that AWWA [American Water Works Association] and WEF [Water Environment Federation] are doing a better job of lending information out and working with government.

GEORGER: I get the impression that there’s plenty of money and resources out there for financing. I think it gets back to public education. But in brief meetings with Siemens, Kruger, I’m sure IDI, GE, they’re all looking at—correct me if I’m wrong, guys—but financing these projects or financing just the equipment at rates similar to the state revolving fund. So I think inexpensive money is available. People just don’t want to pay the extra couple of dollars a month. We’ve gone into several plants showing a blower technology that we know will cut their bill 20 percent in some plants, if not 40 percent, and we can’t sell it. E-

DeCAMPLI: Siemens Water Technologies has a tax-exempt municipal leasing program. You can get the money really quickly, usually in 30 to 45 days. You can finance the equipment and other soft costs. You can fund the construction and the engineering costs along with it. So I’ve seen a move to municipal financing. And through the federal government, the state revolving funds and the bonds, they’re always going to be there, but these are local issues. I mean, these are regional, state, and local issues that we have to address in our water management programs.

GEORGER: These municipalities are set in their ways. When you start introducing these new financial packages, even though they’re substantiated and proven, it’s a real paradigm shift for them. They’ve got to bring in their attorneys and their accountants, and they’re afraid to take that step and do something differently. They fall back on the municipal laws of competition. You know, I can’t sole-source any product. If you guys are funding it, that locks in your equipment. You know, there’s a real fear for that kind of financial package.

WINFREY: I’m speaking now of GE Finance, but there’s a lot of money available in the United States that is looking for a safe place to go. One of the things GE Finance has done is formed a partnership with a private developer in Atlanta where they provide 90 percent of the money and none of the operating expertise. All the liability is his. They feel like that is a huge market for backing private companies that own design/build, own and operate plants with very limited liability, and the liability all goes to their partner. It kind of gets public pressure off of them [city officials]. They’re not going to get voted out of office the next election if they do that, where if they raise the rates $7, oh, heck, you know, things are horrible.

MANESS:With regards to most municipalities, again, the city/state mentality, it’s bringing them to the table. Last year, I had a [presentation to make] in New Mexico, and I had a board, a joint-use board, almost as big as this many people [12]. And I got up and talked about, gee, financing. And I had so many people just shaking their heads, I mean, physically shaking their heads no at me. Like, “Don’t even want to hear it, don’t even bring it to us.” I was sent some stuff on private activity bonds [PABs], and there seems to be a lot of legislature supporting PABs where, say, these major companies and their big banks, and they’ve got a lot of money—that they could get credits. And that the interest paid on these bonds would be tax exempt. Or they’d get credit, the municipality would. The state revolving fund, the U.S. Department of Agriculture, there’s a lot of load on them, that’s for sure. And we can’t forget we’re at war too, and we’ve had some major disasters. So the government is pretty well-tapped. I mean, there are some major projects that I’m looking at that were appropriated in the Clinton administration, and the Bush administration continued the appropriation. But the money is just not there. These are major, major water projects. They’re getting funded at small percentages. And at just the rate of escalation, the cost of the project, they’ll never get there. They just can’t catch up. So yeah, I think municipalities are going to have to become open to more innovative forms of financing. You know, you look at the numbers, whether it’s pipe or infrastructure or water or wastewater, through the year 2019 I think the congressional board determined, we’re looking at basically $25 billion a year in infrastructure for all of this.

MYERS: What I noticed last year was even if you did have money allocated for a project, there wasn’t a single job that we were a small part of that didn’t go over the budget. So even if you do have private financing, you know, state revolving funds or however you’re going to get your money, if you come in and your project is over the budget, how do you go back? You either have to cut out part of your design or see if you can allocate more funding. And so then that puts you back in kind of a Catch-22. So I mean, we’re talking about funding projects, but how do you keep growing your infrastructure if your budgets that you’re making may be two, three years in the works before you finally go to bid on a project. It’s not going to cover the cost of what it’s actually going to be when you install the project.

Fear of the Unknown

GEORGER: I think on the municipal side—and correct me if I’m wrong—it’s still just a lot of talk at this point. We’ve got to find a way to sell it. And I think some of the fears are if we use the word "privatization," people don’t want outside entities owning and operating their equipment. They’ve tried that, and it didn’t work. They may not want to be in debt to major equipment; you know, the GEs and Siemens and the big people of the world. We’ve got to put those fears to bed.

MILES: They don’t like the debt, but the taxpayers don’t like the burden of paying for it. You know, when you talk about the cost of sewering homes in the United States now, you’re looking at about $28,000 per household. So they need a way for a long-term funding program to [finance these projects] and some kind of abatement program or something that you’re going to pay over time for every homeowner to do a lot of this stuff. The financing people are pretty creative, and cities and towns are used to this stuff now. They’re really not footing the bill on taxpayers as much as they can. They’re trying to defer costs through creative financing.

DeCAMPLI: Again, I just think we need to do a better job. You call it fears, I think it’s just misperception. And I think we need to do a better job in educating the marketplace. When you do the math, it [a product] pays for itself under a lease program. With a sludge dryer, you can look at the handling cost of taking that sludge, handling that sludge, transporting it to the facility, and paying your tipping fees at the landfill versus buying a sludge dryer for a million dollars and having it pay for itself in seven years. So there is no additional outlay of money. You look at that lease payment and you look at what it cost you before to buy and store—it’s a wash.

GEORGER: Yeah. It is a huge misperception, and it’s an unsubstantiated fear. You know, it’s not like it’s been tried and it didn’t work. It’s new, and we really have to educate people better, and they have to understand it before we can sell that package.

DeCAMPLI:We have a good example in Colorado where a community was growing very rapidly, and they needed to provide drinking water to a development community. They don’t have time to mess around with the state revolving fund. So we sold them a membrane plant under a lease program, financed the engineering costs and the construction costs, and they got a membrane plant to filter their drinking water.

GEORGER: The sad part is it works when it’s an emergency. They can find a way to make it work when there’s an emergency. But if there is time, you go through state funding, and your job you want completed in a year takes five years.

DeCAMPLI: Another thing you can do with taxexempt leasing is you can work on a job that’s over the budget by pulling some equipment out of that project and paying for it through a leasing program so that the municipality doesn’t have to go back to square one and redesign and re-establish the funding.

CURTIS: I’ve been in the business since ‘82, and San Angelo has had water issues ever since. And it’s just finally reached critical mass whereby there are 33,000 users down there, metered customers; 22,000 were without water for about a month.

COX: At Christmas time.

BEARDSLEY: So it goes back actually to what many of us have said throughout this—education and proper marketing and creative financing is really where you need to be and what we need to strive for.

MILES: The Passaic Valley Sewerage Commissioners is a good example. They spend a lot of effort educating the community on their water and wastewater issues, even when it comes down to residential consumption and wastewater. These guys actually go in the schools, you know, educate people. So the next time these kids are home, and one of the parents is cooking bacon or something of that nature and is getting ready to just take that bacon grease and put it down their drain. But the kids are actually stopping the parents from doing things like that, saying “No, no, you can’t do that.”

CURTIS: Las Vegas Valley Water in Las Vegas has an excellent program as well. They’re in the middle of a desert, and it’s pretty much a known fact that there’s no water there. It’s just everybody has to be piped in. They do a good job, I think, of educating their consumer about their product with respect to why they’re doing the things that they do, like you can’t water your lawns and all these other things. It’s amazing. You’re in the desert and there’s no water, but yet it’s one of the fastest growing communities in the entire United States. It still keeps growing.

What Is “Reasonable”?
Water and wastewater treatment customers want reliability, best life-cycle costing, and service and tech support. Can this be delivered today at reasonable costs?

GEORGER: I think the problem now is they think they’re already getting that. They have reliable water, they have wastewater discharge. The water may taste a little funny seasonally, but why pay more? If I don’t like it during February, I’ll buy some bottled water. They don’t see the need yet to spend a little more to protect themselves.

WINFREY: And most of them think a reasonable cost is $10 a month less than they’re spending right now. And right now the United States has probably one of the lowest water rates of anybody in the world. France or England spends three to four times what we do. So we just have to realign people’s thoughts on what is a reasonable cost, and droughts are probably the driver or lack of water is going to be the driver that does that, or some kind of tragedy someplace.

MILES: I think what it falls into is cities and towns are looking at doing now is like a pay-as-yougo type of deal. My kids are in public school, but I still have to pay a bus cost. You have to pay an added cost for sports and other activities, whether your child’s a musician or something. So I’m starting to see that there’s a trend now for pay-as-yougo type of programs where a lot of people are screaming "foul" because our generation is used to having all that encumbered into what we pay our taxes for—private trash pickup and municipality and dumping fees and transfer stations and wastewater. I think that we are in for a rude awakening as tax-paying Americans.

BEARDSLEY: And if I want to water my lawn and if I want to use fertilizer and pesticides on my lawn, then I should pay more. There should be some stipulation for me to pay more for the harm that I may be doing to the economy or for the extra water that I may be using. And conversely, if somebody else is not watering their lawn and they are being more conservative, maybe there should be a credit there. So it should work both ways.

COX: How many times have you been driving down the street and somebody’s sprinkler is on at midnight dumping water out in the middle of the street. I mean, every municipality, if you’re a licensed irrigator, you can be fined for not installing the correct spray heads going the right direction at the right gallons per minute. But nobody ever fines anybody. Now, I think in some areas they’re getting to where they’re enforcing the water sensors and freeze sensors in the wintertime and things like that. But that all kind of goes hand- in-hand with it. It’s bad to be overcharged for stuff, but it’s also irritating for people doing what they’re not supposed to get away with.

MILES: That’s an important point, because what we’re talking about here is municipality versus, again, free enterprise. Free enterprise is profitdriven. Municipalities are cost-driven. They want to continue to reduce their costs so that they don’t have to burden the taxpayer anymore. I’ve had different ways where I showed a municipality, well, if you use this product, let me show you the revenue streams, I can get you back to your tipping fee. “Oh, no, no, no. We’re not allowed to make money.” I say, well, you are, and you can put it into a general fund and reduce the tax burden in other areas. And I’ve had many conversations with many legal city attorneys on this, but they’re in different departments, whether it be their department of public works or their water department, they don’t know these rules. So it’s almost kind of like a communication gap there. City attorneys understand that they can make money and they can put it into a general fund or they can put offset costs in or aborted costs in. And these other people are not looking at technology that way. They’re looking at it as a break-even scenario where they have to start looking at it more on a private enterprise basis, on a profit-margin—or profit-sharing basis with the taxpayer.

MANESS:Well, Ed, I think that a lot of municipalities do look at their water/wastewater revenues as end of the general fund. It’s just maybe not necessarily profit per se, but that pays for a lot of things in the community in general. I face a lot everyday talking to city administrators and just saying you can reuse this water, you can charge something. I mean, right now you’re dumping it back in the river or whatever in your NPDES [National Pollutant Discharge Elimination System] permit. If you can capture this water and—let’s just say you treat it, municipal water is a dollar, you know, whatever, and you can charge 70 cents or whatever. Well, you know, we just don’t have a market for that. We don’t have a market for that, because you don’t have the product. If you had the product, you know, then you can—I think, you know, again, it just comes back from education so much.

Too Many Rules, Too Little Enforcement?
What regulatory trends do you predict for the
water and wastewater industry? Do you think there will be less enforcement on the local, state, or federal levels, for example?

WINFREY: In terms of wastewater, I would say there’s more stringent nutrient removal. You have the Chesapeake Bay Initiative, the Puget Sound Initiative. All over the country, and the Colorado River, they’re expecting much greater nutrient removal of total nitrogen, phosphorous; very, very low limits. In fact, I would say that these limits have been set because the technology is now available to accomplish them, and it wasn’t a few years ago.

COX: I think we’ll see a lot more energy pushed toward the enforcement side of this. We’re in the stormwater part of it. And with the NPDES initiatives and the things that go into effect there, I think they’re going to be a lot stronger controlled. What we have found in our industry is there are a lot of stormwater management systems in place, but in a lot of instances they barely meet spec, they’re not being maintained, and they’re simply not effective. And I think with all of the changes coming up, you’re going to see stricter enforcement, and the charge of policing is going to be passed around a little better. The government gave it to the states, the states gave it to the cities, and it ends up with the contractor, and he just puts the cheapest thing in the ground he can find. So I think you’re going to see a lot of this strengthen as we go forward.

BAILEY: You know, another sort of macro issue at play here also is different regulation of the way we do business. There have been significant changes that have taken place over the last three years or so, Sarbanes-Oxley probably being the most significant one. And I know for us at ITT Flygt, it has significantly increased our cost of doing business. And there are lots of pressures on all of us these days to look at our processes and how can we make internal improvements so that we can keep the quality of our products and services high and deal with all these cost increases. So I’m looking for more regulation in the way we do business.

MANESS:We have a lot of nutrients, we’re feeding a lot of algae. We’re having new algae that we haven’t necessarily seen in certain water bodies. Those algae are generating toxins. Of course, those toxins get into the water-treatment plants, so we have to deal with those. So I think it’s a very large issue in terms of wastewater deposits, say, fertilizers from agriculture into our water bodies, what those in turn induce in terms of algae and whatnot, and then regulation into water treatment. Part of the problem with some of this is we’ve got a lot of regulations now. When I started in the business back in the mid ‘80s, we had basically a turbidity limit for water treatment and something called trihalomethane. And there was hardly any way to even measure it back in the mid ‘80s. And now we have a stack of regulations like this. Policing is going to be major. There’s a lot of—the way we require that certain values are measured, say, on DBPs [disinfection byproducts]. It’s only a couple of times a year depending on the system size. So people can pretty much determine when they’re going to sample, turn things off to make it better. So the policing is going to be a very difficult thing.

BEARDSLEY: Maybe it’s not so much adding more regulations as it is enforcing the regulations that are already in place. And either way, there’s going to be a cost additive. That’s the downside. And as long as everybody—and I think there’s a marketing effect of that also, because water is becoming a scarce resource. But the cost that’s associated with that has to be marketed correctly so that everybody understands that they’re going to have to be paying more.

MILES:Well, I spend a lot of time working, like I said, mainly in the sanitary and combined sewer issues in the United States and seeing what the U.S. EPA has done as far as trying to come up with different programs to prevent infiltration of other things that can cause blockages and lead to sanitary sewer overflows. But they’re in epidemic proportions. Now the EPA is starting to take the gloves off, and they’re starting to fine major cities, because when we talk about a sanitary or combined sewer overflow, we’re not just talking about human waste; we’re talking about toxic waste, things like medical waste and mercury-loading and everything else that is in a sewer. So they’re starting to levy some pretty heavy fines. So [the cities] sign what they’re calling consent decrees, promising to start doing what’s necessary to repair the damaged sewer, expand the capacity of the sewers, fixing the tributaries leading into the mains, and things of that nature, to try and prevent this from happening.

Technology Trends All of you are in the business of providing products and services to the water and wastewater industry. What do you think are the future trends, say in the next five years in the industry in terms of technology?

REYES: I can say on wastewater transport, our customers are already asking for products that dovetail into ways to monitor and collect data so that they have an opportunity to find out where they stand today. There are some smaller towns out there that are being proactive in addressing this issue, and those are the types of products I see that are really going to take off in the coming years.

COX: I think you’re going to see the industry go away from total suspended solids [TSS] and go to the total maximum daily load [TMDL] that a body of water can tolerate and still maintain its integrity, because it’s more of a measurable unit. With the TSS, the various BMPs [best management practices] could adjust the way they tested for that to make their particular unit do what they said it would. I think in the TMDL it’s not going to be as easy to manipulate the numbers, and I think it’s going to be something that you could regulate a lot easier, and hopefully at that point all the manufacturers can figure out a way to get together and come up with a set of testing standards.

BAILEY:We at Flygt see a general trend toward more energy efficiency, specifically with regard to wastewater pumping and collection systems. We see more efficient pumps evolving. We see more significant opportunity in the design and use of electric motors. It’s possible to build an electric motor, for instance, that has a power factor of right close to 1.0. So that means that the motor is going to more effectively use the power grid. You’re not going to be having wasted reactive power. That may be an opportunity. Another way to increase efficiency is to come up with ways of designing pumping systems, say that reduce power consumption. An example is like a duplex pumping station, where each one of two pumps is designed for peak flow. That’s kind of wasteful, because you’re pumping peak flow whenever a pump turns on. So one of the simple things that we have come up with to help communities save power is to put in a jockey pump, just a small pump to handle the flow— and this is a retrofit thing. But it’s moving in the area of energy consumption. And then finally, the last area where we see spectacular potential is in smart control systems, where you look at what you’re asking these systems of pumps and motors to do.

REYES: In the past, cities have had just networks of independent, standalone wastewater pumping stations operating individually. What we’re offering are ways and ideas to have these things communicate to one another to reduce energy consumption by having them operate when it’s efficient. In other words, not having a particular pump station pump into a force main where it’s dead-headed and basically doesn’t have an opportunity to move water because of the pressure from that force main. So having these individual stations now talk to one another, collect information, reduce energy consumption by eliminating some of the waste, the wasted energy, the wasted pumping effort, reducing maintenance, just all of those things combined.

MILES: I think in the last five years, I’ve seen a tremendous increase in technology monitoring and measuring and early warning systems for stormwater or sewer overflows. I’m starting to see a lot of new technology in the activated sludge beds that are going out there. I’m starting to see and become a lot more cautious on how we’ll end up applying any kind of waste, whether it’s municipal solid waste or whether it be wastewater sludge. The big thing that’s happening right now is in the waste-to-energy sector. We’re starting to find better ways. Instead of a mass burn incineration, you’re starting to see technologies called gasification, which can eliminate almost down to nothing a lot of this waste that’s collected, whether it be municipal solid waste or activated sludge or sludge beds and composting to produce energy.

DeCAMPLI:We’re seeing a tremendous opportunity for integrated technologies. So to address population growth, regulations, and energy efficiency, integrated technologies, meaning the addition of RO [reverse osmosis] with membranes, with disinfection or in nutrient reduction. So we’re adding polishing filters to biological processes or membranes to biological processes. Municipalities know that they need to not just meet today’s regulations but meet the demands of the future. And the same we see in biosolids for integrated technologies where we’ll have— you know, we’re not just selling a centrifuge or a belt press, we’re selling maybe a centrifuge or a belt press with a sludge dryer. And then in addition to that, we’re providing the gas storage for the anaerobic digester so that they can convert that methane gas to energy. In California, there’s huge tax savings, I think it’s $3,000 per kilowatt for fuel cell conversion— to fuel cell and less for microturbines. So we’re seeing a lot more opportunity in waste to energy, taking that product and making it a marketable product through sludge drying and selling it as fertilizer, et cetera.

MYERS:We’re seeing a big trend in desalination. Right now there are studies going on in southern Texas, Florida, and southern California. Desalination beforehand was, you know, pretty much you had to use an RO type technology, which hasn’t always been that energy efficient. But there have been new technologies associated with RO. Upfront processes associated with the RO also that have allowed it to become more energy efficient, allow it to be cheaper as far as capital costs, and still be able to give you the quality of water that you’re looking for coming from either an ocean source or open-water sea body or something of that nature.

WINFREY:Wastewater reuse is also an area, and that ties in with the enormous lack of water that we’re going to see in the next 20 or 30 years. And not only because they need water, but there are places that you don’t think of as being drought-stricken. Toronto gives 30 cents a liter, an upfront one-time cost for reuse of water in the LEEDS [Leadership in Energy and Environmental Design] green buildings, and that’s because the infrastructure is enormously expensive to update in older cities. We’ve got four or five buildings in downtown New York City that reuse the water, and there’s essentially zero discharge. That’s not driven by drought; although, that’s a part of it. But the main thing is the cost of the infrastructure that they go on with. I think in the American Southwest if you get west of Texas, you can hardly get a permit to build without at least having looked at reuse possibilities. That’s not to say they always use them, but they have to have looked at it. I think that’s going to be nationwide in a very short order, and the LEEDS movement is just taking off. The green building movement is just accelerating enormously. And it’s going to have to be—right now it’s very hit or miss as far as incentives for green buildings. That’s going to have to be a more united effort on that.

HUGHES: Something we’ve been seeing is actually a return to some extent actually of some of the older technologies that have kind of fallen out of favor with time. We’re seeing a resurgence and interest in incineration. There was a paper done a few years ago out on the West Coast at WEF where an engineer took apart all the different components of what it cost as far as a drying disposal sludge versus incineration. Turns out you can gain a lot of carbon credits by incineration. So we’re seeing some tweaks on some old technology to enable it to meet the new regs, and the future looks good even for the old technologies.

Product Growth
What do you see as the big growth areas for products?
For example, would you consider membrane technology a strong leader?

DeCAMPLI: I think that the growth rate for membrane technology is about 10 to 12 percent. And if you look at conventional technology, it’s about 4 to 6. But again, you look at the base of how many conventional filter plants there are out there and then how many membrane plants there are, and there’s a huge imbalance. So mem- brane technology is taking hold, but there are still a lot of conventional plants existing today.

MYERS: There’s a huge growth that we see in membranes, but yet that’s still segmented to certain areas. You’re not going to see that, say, in the wide open areas somewhere in the middle of Southwest Texas, where it depends on operators, the level of comfort they have. If you look at the West Coast, they have all these degrees and what level you are as an operator and how your pay schedule and everything else is. Well, you don’t have that everywhere across North America. So I think it has a lot to do with your education and what your permits are for your local area that really drives our technologies.

CURTIS: We see people looking for products that don’t continue to compound the challenges of maintaining water quality. Things such as corrosivity, how a product is affecting the corrosivity of your internal infrastructure of a pipeline, are the contaminants being emitted from it? A lot of the materials that are being put into some of the drinking water systems; for example, like lead is a big issue, and they’re trying to get all the lead out. So those kinds of products are— that I see with respect to the manufacture of various components, that’s where I see possible growth areas on how to not continue to compound our water-quality issues.

MANESS: What I think we’re going to see, in general, is just more water treatment. In counties just west of Fort Worth, [Texas,] it’s all groundwater out there, and they’re already concerned about the growth and the drop in the aquifer and just where they go. Now, you put this kind of population load on that, and I’ve listened to experts say, well, those drops in the aquifer, they’re natural, they always do that. But I think eventually we’re just going to overtax them because there are going to be more wells and there’s going to be more load. So we’re going to be looking at greater impacts on, say, surface water sources. And there’s just going to be more treatment in general. [The city of Dallas’] combined drinking water capacity is 900 million gallons per day. Its wastewater treatment capacity is 260 million gallons per day. If we would just take that 260 million gallons and treat it and insert a purple pipe, because that’s the irrigation or reuse piping, if we would just engage that, the mitigation of the draw on our fresh water sources, if you will, would be incredible. But there’s a whole bunch of regulation that goes with that. I cover nine states and I’ve met with regulators in certain states and we talk about reuse, and the regulators don’t like the purple pipe. They’re really afraid that purple pipes run through neighborhoods and the contractor is going to come in and hook up the municipal system to the purple pipe and—you know.

WINFREY: In Cary, North Carolina, they have repiped the whole city for reuse water and sell it—everybody is looking for increased revenue, and they’re selling it at a discounted rate from a potable water. You’re going to see more and more of that as cities look to discount some of the cost of treatment but also to decrease their water use.

COX: On the stormwater side, we’re trying to take it to the next level to find better ways to address the upcoming hot buttons, like turbidity and phosphorous and some things like that. We just introduced a new cartridge filter type BMP that’s multiple layers of a sand media type system encapsulated in geotextile fabric and is able to accomplish some 50 percent reduction in turbidity. And we’re able to address the total phosphorus count as well. So we’re moving away a little bit from the hydrodynamic separator type systems in an effort to just capture it. We can’t do anything about the bacte- ria or the personal-care issues that you mentioned or things like that, but we are trying to ratchet it up to the next level to do a better job in a more efficient manner.

Let Someone Else Do the Job
What are the growth areas for services? For example,
some cities are outsourcing their stormwater management to consulting firms.

COX: That is true. You would think it would cost more to pay somebody to do it, but when you look at the fact that if you’re a city, a county, or a state and you actually have to set up a crew or a division to do that, the first thing you’d have to do is hire a cadre of engineers to understand what you’ve got to do, then train the people to do it, then make sure it’s getting done, and then figure out what to do with the materials or the contaminants that you pull out of there. So I think you’re going to see a switch to where people are outsourcing that. You’ll see companies come into existence that are more than just the vacuum truck that goes around and pulls the contaminants out of the hydrodynamic separator system. I think it’s cheaper for municipalities, especially on a small basis. If you have a town of 10,000 or so that’s falling into the Phase categories of the NPDES mandates now, you’re probably going to find where they want to outsource this, and they could have a company that would be a regional stormwater management or disposal type company.

MILES: I agree. I really feel that it’s getting to be more prevalent now that you’re starting to see outside engineering companies coming in and handling wastewater issues as well as water issues. A company that works in the city of Boston just had a re-compete for their bid to continue to work for the city of Boston. And they are very innovative. They have to stay on top of new and best affordable technologies, and they have to be able to propose to the city problems or issues like that. So I think it’s a much more efficient— and actually, in the end run, I think it’s more cost efficient to see some of these engineering companies working with the cities and towns now to handle most of their problems.

HUGHES: We all know the issues are lots of towns and lots of cities, people can take the samples when they want to—to help them get the results they want. We know people that do that. And I think there’s going to be more of a push for these privatized firms to do independent studies so they get the real numbers, so otherwise no one knows what to design for.

Out of Fashion
You talked about incineration coming back, but are there other ways that we’re treating water or wastewater that might become obsolete in the next five or10 years?

MILES: I think land application is one area under heavy scrutiny right now. I think there are areas in Florida that used to land-apply quite a bit. They [people] move into areas where they had land-applied for years, and they just found that that land is unusable for human habitat or building or anything of that nature. So I think they’re becoming a little bit more conscientious. I know that New York City land-applies most of their municipal solid waste as well as everything else from their treatment plants in places like Ohio and Pennsylvania and Virginia. And the state of Virginia has just said, “We don’t want to anymore.” So I think they’re trying to protect their areas from foreign infiltration of other people’s sewage and sludge and waste. EPA is coming up with a lot of new rules and conditions for land application and making it a lot harder.

GEORGER: You would think today there would be a lot more obsolete products out there. I don’t think there are. I think consultants are still tempted to pull the old specs, the old drawings and still do things the old-fashioned way in dealing with their clients, their owners. I think it’s a real hard—somewhat hard push and struggle for these new technologies and regulations to become players, because they’re looked at as equals. And typically, these new technologies are more expensive.

BAILEY:Having been a consultant before I know we share the same paranoia about being the guinea pig and trying something new and it doesn’t work, and, you know, you really don’t have anything except your cash flow and you’re out of business in six months if that’s interrupted. It’s tough for consultants to take that first step.

MILES: I’m going to step out on a limb. The United States is not really the best place to launch new technology. There is terrible red tape here. The European community—as far as wasteto- energy, incineration, gasification—is so further advanced than we are in the United States because we tend to take that Yankee mentality where it has to be proven out in so many different ways that they won’t take a chance. Reusable water is one of them, your purple-pipe syndrome. I mean, they’re worried about such small, little things affecting them down the line. Waste energy, incineration, we threw that off the books years ago because of the Clean Air Act and the CO2 [carbon dioxide] and everything else that we were emitting into the air as in the gasification—or the global-warming issue that is everybody’s topic today. But all of these factors now have very, very strict emission controls. But the same mentality is still out there. New technologies are not readily adaptable in the United States.

MANESS: Sometimes it doesn’t seem like things are in sync. We have regulations which are driving, say, more advanced technologies, and we have consulting firms that are saying, “We need to stick with what we know.” You look at the regulations, and we have so many requirements now under LT2 [Long Term 2 Surface Water Treatment Rule] as to how to measure the performance of a membrane. And if you were to take that same criteria and put it on a conventional plant for a granular media filter, there’s just no way. There’s no way you could prove any kind of integrity with that existing technology. I think that, again, it’s the U.S., things just kind of come in time.

Business as Usual?
What are the trends for how you as manufacturers conduct your business? For example, are you working directly with city engineers or with consultants?

HUGHES: All the above. At least from my standpoint, it seems in many cases we’re working with both whenever possible. It’s good. An educated customer is a customer that’s going to make a better decision, and he’s also going to provide any information to make the right decisions. No disrespect meant to any part of the engineering community, but every once in a while there’s information out there the city has that doesn’t trickle down and in many cases it may actually conflict with the information that the engineers have. And unless—as long as the people running the city plants, the water plants, the wastewater plants, they’ve got a longterm view, and often—in my career, I started about as low on the rung as you can. I’ve been in a lot of treatment plants in a lot of places. And sometimes you get information from a guy down there turning the wrench that the plant managers and the engineers have no idea is going on, and that may be one of the pivotal things you need to know for proper design.

MILES: I think as manufacturers, we’re obligated to educate a lot of different groups. We can’t just count on the engineers to take our products to fruition. You basically have got to educate the municipalities and towns and government and get the political aspect of it too to try to drive it that way, to keep the engineering firms to continue to look at new and better global technologies. And it’s very costly to do that. But it’s important. It’s an important way of doing business I think now in the United States. And I think this kind of forum and this kind of venue is a good way to do that.

REYES: I think that’s especially key when you’re trying to introduce new technology, whether it be proven in Europe or in other parts of the world, it still has to be Americanized, it still has to work here. And by talking to the stakeholder, the end user, the guy who has to live with this thing from day to day, getting him to feel comfortable and confident with that situation, he has a lot of stroke, and he has the ability to go back to the consulting engineers and help them provide the services or prod- ucts that he really needs to move forward. We’ve had a great deal of success working that way with the end users.

COX: It’s a bit of a balancing act or juggling act when you get all the parties involved from the government entity that the job may be going to—from the engineer who has to draw it up to the contractor who has to install it, work with it, whatever. The contractor, to some extent, may know there’s a better way to do it, but his hands are tied because of the dollars that are available. The engineer has to be careful what he’s doing because he’s signing off on it saying this is the way to go. When is he going to say, “I know, but that doesn’t work,” or, “it won’t work on a long-term basis”? And the city is sitting there with just so many dollars to play with. So as manufacturers, we all have to wear two or three different hats depending on are you out in the field with the contractor or are you in the engineering firm or with the consulting engineer. So it’s interesting, but if you get back to the government regulations, that could help all of us a great deal because that gets rid of a lot of the gray areas. It gives the cities a reason to do what they’re doing, the engineer can feel more comfortable with what he’s doing, and then the contractor, to some point, has to go along with the regulations. But it’s up to us, like Ed said, to educate all of them.

BEARDSLEY: I agree with that. And my comfort level is quite high working within the confines of the United States. When you stretch and market outside the United States, particularly in the Asian community, the regulations, which are my comfort zone, tend to go by the wayside there, not from my standpoint, but from their standpoint. And I find myself conducting business differently, yet I have my own company that I’m supposed to be protecting and my own U.S. laws that I’m supposed to be working within. But outside these borders, it’s different. And you have to conduct business the way you would here, and that’s not preferred beyond these borders in many countries. It makes it very interesting.

BAILEY: Another way of looking at that question is ways of doing business, not so much ways to go to market or sell. Basically customers, users want low prices. But they also want dependable products, and they want reasonable, responsive service. The problem is that low prices frequently are a bit of conflict between that and their other demands. And, you know, we’re in an environment of continuously increasing the cost of doing business— government regulation, a litigious business environment, rapidly increasing material and labor costs. And I think a lot of that’s due to China and that Asian expansion over there. But what’s happening to companies is that we’re having to improve our processes to deal with these cost increases. And the processes to which I’m referring include product design, product production, distribution, inventory control, order entry, service shop procedures, your whole business. And the way we’re doing it at ITT Flygt is with VBSS [Value-based Six Sigma, University of Michigan]. And we’re gaining significant efficiencies in our business procedures and processes. That, in turn, allows us to increase our prices more slowly while we’re improving our responsiveness and the dependability of our products and everything else. That’s the way we’re dealing with that trend. But we do work both with consulting engineers and city engineers and the guys at the plant level that actually turn the wrenches and know the real world, and we try to help connect all those dots so that people are talking to each other.

Offshore Means Ample Opportunity
We didn’t finish talking about potential business
opportunities in foreign countries.

BEARDSLEY: [Other countries] are basically funded by their federal government. Of course, you have to work through that red tape. The thing that’s nice is you can provide product there, or at least my product, and you don’t have to have intrinsic safety approvals.

HUGHES: Because Degremont is a worldwide company, our four companies here in North America are pretty much equipment and process lines. In the rest of the world, we’re design/build. Occasionally something comes up from abroad and our design/build group bid it and they lost it and we get a call from the other end. I guess our company point of view is that you’re going to see a lot more design/build in the rest of the world, but we’re really not doing design/build here because it doesn’t seem to work as well.

MYERS: I just got through having meetings last week with a couple of different consultant firms, and there’s a huge flux of teams, huge teams going out to Australia right now to handle the drought situation. I know of three huge consulting firms that are some of the largest in the world that have sent teams of people over there right now. So even though it’s in Australia, they’re still coming back to our normal channels here. So I’m working with these companies for projects in Australia, which I do not cover. Even though we have a design/build team working there, everything is being funneled back here to me because they’re within my normal territory.

DeCAMPLI:We set up an R&D center in Singapore to handle the Asian market. But at the end of the day, the China economy I think will be by 2020 the second biggest, but the U.S. economy will still be three times larger. So we have to put it all into perspective, and the opportunities in North America are still our primary focus.

Competition and Other Cost Factors
As far as manufacturing processes go, are your
material costs increasing? Is safety more important than it used to be?

BAILEY: Absolutely. In our operating company [safety’s] just exploded in its urgency in the last few years. It may be some combination of government regulation and our litigious culture, who knows, but it is forcing companies to take proactive measures. And there’s a whole environmental safety and health—we just call it ESH—that’s an industry unto itself now. You can go out and hire consultants in most goodsized towns to come in and take care of that function for you. But it’s a good thing. It protects customers and employees. But it also adds cost, and it’s one of those issues that we have to deal with.

CURTIS:As a U.S.-based U.S. manufacturer competing in a global world of competitiveness with importers who are bringing in materials into our primary market from the United States and North America, it’s a constant battle maintaining competitiveness with respect to the various burdens as a U.S. manufacturer has to comply with, to the point that, yeah, we’ve even hired a specific person to address the issues of all the aspects that are affecting worker safety, from everything from the air they breathe to how to handle products and their processes. This has a definite impact on our business abroad. We still are continuing to fight to maintain U.S. manufacturing and generating U.S. jobs. We feel that it’s still an important aspect to our controls to ensure that we can control it rather than farming it out, but yeah, it’s becoming ever more and more burdensome to the point that it’s a big cost factor, one that you have to adjust and monitor.

MANESS: Safety has definitely improved. One of the first things [field service people] do is put their harness on, just walking around. You know, they could be doing any little thing, and they’re tied off. And I think there’s just a greater focus on safety. It’s a good thing.

Old Age Meets the Workforce
The workforce of treatment facilities is aging, and
the industry is concerned about a manpower shortage. Why do you think this is happening, and what should we do about it?

DeCAMPLI: There was a 50 percent decrease in engineers graduating over the past years. So that’s a big issue. There aren’t as many children entering the engineering field.

Why do you think that is? Is it money?

DeCAMPLI: Probably. Probably, if you look at the salaries in comparison to some of the other markets. The projections are that there’s going to be an increase in about 45 percent over the next 10 years. So if you had a 50 percent drop over the 15 past years in engineers graduating and then the need in the next years of a projected 45 percent increase, there’s a big imbalance there. And then the municipalities are facing the same thing with the aging workforce. And the association, the American Water Works Association, has a strategic committee set up to talk about it, but I don’t think any programs have materialized. And I think WEF is addressing the issue as well from just talking about it and trying to do more in education. But I don’t see a whole lot of action as a result of those talks.

BEARDSLEY: It’s not a sexy livelihood. And it probably, in relation to other professions, doesn’t pay quite as much. But neither does education and teaching, and yet we’re churning out a lot of teachers every year and there’s a need there. So from an education standpoint and teacher standpoint, that particular sector is doing something right or there’s a need that’s known, because the people who are graduating, the kids that are graduating know that they’re not going to make as much as a lawyer or a doctor or a civil engineer. So something along the same lines needs to be done within the water industry, because I would think that somebody within that industry might make more than a first- or second-year teacher coming right out of college.

HUGHES: I know of engineering firms looking for people. Most of the students by the time they’re starting their senior year, many of them already have their job lined up because there’s that much of a lack of new engineers. And I know that one of the major engineering firms— I was talking to one of their high-ranking officers at a show last fall, and he told me they were looking for a thousand engineers, just one firm. And they’re not finding them.

MILES:Well, I’m surprised, because water and wastewater and environmental issues are one of the long-term safe jobs, almost, you could say, because we’re always going to have issues in those sectors. So I was surprised at that stat.

DeCAMPLI:Me too. I think that there are some ideas floating around, like go to the automobile industry, go to the steel industry. And a lot of these workers that have lost their jobs for manufacturing, plant shutdowns, et cetera. You know, do a targeted campaign in those pockets to show people that there are opportunities in the environmental engineering field. Again, I don’t know how many of these things are actually being accomplished.

HUGHES: I think the loss is not just environmental; I think it’s across the board, not engineers, period. Because it’s not easy. Take the easy route.

MILES: But this imbalance probably will correct the salary—the income issue too, because I can remember back when I was in high school and thinking about what I wanted to do, I thought being an engineer, you’re going to make a lot of money. And I remember guys coming out of school about the time I graduated, they were. They were starting at the time [with] what were really good salaries, and I think that’s kind of tapered off some. What about operators? What I understand is that their pay scale has gotten better as time has gone on.

DeCAMPLI: Right. And there are also additional requirements for continuing education units. I think the requirements for certification from the plant operational level are getting more intense. So that’s an issue there as well.

MILES:Do you think it’s because maybe that we are collectively as manufacturers manufacturing more technologically advanced equipment? We’ve become a plug-and-play society, and maybe there’s not the need for that big high salaried engineer anymore?

MYERS:Well, that’s a good point to bring. I had a visit in Nebraska about three weeks ago, [and] met with the plant superintendent who came from Illinois. His plant needed a lot of optimization. So we were trying to help him kind of go over a game plan and everything else, but his staff didn’t want to do that. They just had a pump break, and they had to buy a new pump. It was a six-week wait and a certain amount of money. I just found out last week he just got fired because he was trying to rock the boat too much to do something in a more proactive means to keep the plant running optimized instead of fixing something when it broke. So—but that goes back to just different regions, if you’re running some place on the East Coast or the West Coast, I’m pretty sure they’re a little bit more on top of how the plant operates. However, you’ve got a lot of lagoon applications that have to go mechanical because of new permits and stuff like that, and like you mentioned, that requires a little more education. Maybe these people don’t want to do it, but yet they’re real good friends with soand- so who got them a job, and so they stay there. So yes, as you keep increasing your technology to put in the field, I don’t know if your operators are going to do the same.

MILES: How many of us have kind of found somebody that might be young enough and intelligent enough to understand new technology and embrace it versus trying to talk to somebody who’s from a different generation, an older generation, that’s really just looking for their pension in a couple of years? I think that is a big factor. And then when you do find that one person who will try to bring it upstairs, there’s so many tough hurdles from him to get it that he’ll eventually just fall into that complacency situation of just doing his daily job.

DeCAMPLI: I think as a result of that we’re seeing a new construction. Engineers are building in more automation, more remote monitoring, more preventive maintenance contracts, so that it’s maintained properly and less maintenance is required down the road. So we’re seeing it being addressed really upfront in the design of the old plants.

REYES: That’s the sort of value some of our customers are looking for that maybe they don’t have the qualified staff or the time to take care of these things. And that’s just another form of outsourcing— by putting in intelligent components and having the manufacturer quite possibly provide them with maintenance reports or facilities reports or whatever sort of data reporting.

HUGHES: Actually, I work up in the Provinces, and they’ve got a very interesting situation where they have established new guidelines for all their certification over the past two years, and it’s to the point they can’t find the people who can pass the certifications to run the plants. So they’re actually rebuilding. They’re going back and building more regional plants and running a lot more pipes, because that’s the only way they can get the water from Point A to all the consumers.

WINFREY:One of the things that you were talking about, the regionalization of the quality of operators, relates directly to the enforcement of the regulations. If enforcement is lax, the guys can get away with cheap operations, and that just drives the whole industry wage down. In states like you were talking about, where you’ve got high-quality operators, the money is a lot better for them because the downside is the city can get whacked with a large fine. One of the problems, though, is a lot of those states have got a real top-heavy, older, aging operators’ list, and getting young operators is a problem there.

Someone Else Can Run the Plant
About 10 years ago, people in the industry were worried about privatization. What do you think about that now, and what kind of work in the industry is being outsourced to the private sector?

CURTIS:Well, I think there have been case studies already that have shown evidence that it’s not necessarily going to work all the time. Atlanta is a prime example whereby they turned over the entire water operations and wastewater to a privatization firm and failed. So I think that there are certain services that will continue to be outsourced because of just efficiencies or inefficiencies of the water facility. Also there’s the case of acquisitions of ownership by the large water utility companies that to begin with, they were the ones in France and Germany, RGD in Germany to Lyonnaise des eaux in France. And it just depends on whether or not they start acquiring more and more water providers in the United States. I think the United States is unique in the sense it is municipally run, for the most part, of all the water utility companies, although there are privately held, privately owned water providers, mostly in the East and the Northeast.

MILES:There’s not enough money. Privatization is really free enterprise. Free enterprise is all profit- driven. OK? Municipalities run like the nonprofit entities. There’s the burden to the taxpayers to cover the cost. If I want to build a treatment facility, I’ve got to make the money— bottom line.

Conservation Buy-in
What trends do you predict in the area of water

WINFREY:Obviously, water reuse. But there also has to be some coordination. There was an instance last summer of a homeowner who called the state and asked for dry-weather landscaping help to tell him what to plant. He planted it, and the city came around and fined him because his lawn was greater than three-quarters of an inch, or whatever the allowed grass is supposed to be. He had to dig it all up and resod it. There has to be some coordination where there’s a statewide or some higher level to support water conservation.

MILES: I think you’re going to start seeing more on-premise or onsite water treatment type of things to where you can take some of your water and re-treat it. I know there are technologies now in some countries close to the equator that can capture rainwater now and use it as potable water or use it for other different things, cooking.

GEORGER: I think too you’re going to see permanent levels of conservation in place. Where I live in Texas, [the city] started with a Stage 1 and a Stage 2 and a Stage 3 [water conservation measures], and then they backed off. Well, I think it’s been almost two years now where it’s been a Stage 3, but I can’t see it ever dropping down. So I think once they get people used to conserving, it’s going to become a law or a mandate, which will help.

CURTIS:Until there becomes either a catastrophic event, like what we discussed earlier about San Angelo and how 22,000 homeowners were out of service, or until the price of the true value of water goes up, I don’t think we’re going to see severe conservation. But right now I contend that water as a value is way undervalued.

WINFREY: Getting back to education, though, look at smoking. When the federal government in the ‘70s really went on a campaign—all the TV for kids, all the kids’ shows had antismoking, and they really went—it took maybe 30 years, but the rate of tobacco consumption went down enormously. And I think something like that could be done with water and will have to be done.

CURTIS: It’s not going to get solved tomorrow.

MANESS: It’s a long-term program.

The 2007 Roundtable was edited by L.K.
Williams, Water & Wastewater News editor; head shots by Melanie Chartrand; transcription by Janet Argo of Preferred Legal Services, Inc.

This article originally appeared in the 06/01/2007 issue of Environmental Protection.

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