A Sewer Runs Through It
(page 1 of 3)
The murky tale surrounding the Bajagua Company and its controversial plan to clean up the Tijuana Estuary
In the 1980s, U.S. engineers decided to put a Tijuana wastewater-treatment plant on American soil to deal with the long-standing problem of Mexican sew age flowing onto southern San Diego County beaches. Twenty-five years later, the contamination continues, and a beleaguered federal agency, four politicians—including two local congressmen—and a cadre of politically connected investors are wallowing in the muck of a multimillion-dollar conundrum. Their private-industry fix, a controversial company called Bajagua, has yet to break ground on a plant in Tijuana.
SOMETHING IS ROTTEN in the state of California, and the smell goes all the way to the White House. For 10 years, a bitter and polarized South Bay debate has festered over a controversial San Marcos company, Bajagua Project LLC. At the center of the morass is Tijuana sewage and a federally operated international treatment plant that’s been called a failure by people on both sides of the polemic.
The story surrounding the Bajagua boondoggle takes more turns than the road to Big Sur and weaves through the contemporary collision of politics and big business. Bajagua appears to have courted favor with Vice President Dick Cheney’s office—one of the central cogs of the George Bush administration that’s outsourced and sole-sourced a record number of government contracts to the private sector. The company’s plan is to build and operate a treatment plant in Tijuana, through a 20-year, fee-for-service contract with the U.S. International Boundary and Water Commission (IBWC), the federal agency established in 1944 to work with Mexico on binational water issues. Bajagua says it will clean up contamination that’s hounded the Tijuana Estuary for the better part of a century.
Fighting the company is a consortium of environmentalists and engineers who say Bajagua’s plans are an unnecessary distraction, carrying an undisclosed price tag (up to $780 million) that will line the pockets of a group of well-heeled investors but delay work on the real issue: the pollution of South Bay beaches and ocean water. Proponents of the plan—which include the San Diego chapter of the Surfrider Foundation and the bulk of Southern California’s delegation from the House of Representatives—tout it as the only option on the table capable of dealing with the Tijuana waste that threatens the health of Southern Californians. They call Bajagua’s detractors naysayers who have no good plan of their own and harbor a secret agenda against privatization of public infrastructure.
The genesis of the controversy is the IBWC-run International Wastewater Treatment Plant (IWTP) in San Ysidro. The first phase of that facility went online in 1997, but the second phase (to treat effluent to secondary standards) hasn’t been finished, due to budgeting delays and lawsuits. The plant was mandated by a federal treaty to clean 25 million gallons per day of Tijuana wastewater to secondary standards; effectively, it’s only done half its job for the 10 years it’s been operating.
Bajagua wants to front the capital to build a new plant across the border on Mexican soil—which would receive primary treated sewage from the IWTP, clean it to secondary standards and pump it back to the IWTP for discharge through an ocean out fall. Bajagua would then be paid back with interest—plus a $16 million developer’s fee—over the next 20 years. Apart from the fact that a binational agreement is involved, the plan isn’t unique. A number of Mexican cities are engaged in 20-year contracts with private operators that have fronted the money to build municipal infrastructure. In the United States, private companies have operated public water and waste water facilities for years.
The debate, scabrous from the beginning, has become far-reaching. In 2006, it was the focus of a major investigation by the Washington, D.C.–based watch dog group Project on Government Oversight, and in January of this year, it spilled onto the front pages of The Wall Street Journal. Camps on both sides of the issue have become entrenched, and the viability of the entire project is tenuous. Its fate hangs on Congress’s delayed 2008 budget. The president’s proposed budget includes $66 million to finish the secondary treatment phase of the plant at San Ysidro, and if those funds are appropriated, the Bajagua plan will likely be killed. Democratic Representative Bob Filner has vowed to fight that appropriation.
ENRIQUE LANDA, formerly of Mexico City, is an architect who lives in Rancho Santa Fe. He’s a developer with deep pockets and building experience on both sides of the border. Jim Simmons is his partner in the Bajagua company. Simmons came west with the Navy 40 years ago and has become an aggressive developer and land consultant in North County. He was on the 1980s San Marcos City Council that opened that city up for redevelopment, and he’s been a contentious proponent of several of the city’s large development projects. Depending on one’s point of view, he’s either a captain of commerce who helped turn a blighted outpost into a successful urban hub, or he’s one of the turn-and-burn developers who’ve made San Marcos another American eyesore of strip malls and traffic congestion.
In the late 1990s, the two men, with Boston business lawyer and venture capitalist Irwin Heller (and several other junior investors), put a proposal on the table: Their company, then called Aguas Claras, would pay to build a treatment plant on the Alamar River in east Tijuana. The U.S. government, through the IBWC, would pay them a yearly fee for building and operating the plant (the price cap was later set at $39 million a year). In 1999, the proposal was officially denied by the IBWC and the Environmental Protection Agency.
The Clinton-era EPA cited several reasons for the decision. Chief among them was that the plan called for an arrangement with Mexico that didn’t exist. Debra Little, a former acting commissioner of the IBWC and longtime head of procurements for the agency, says the commission was perplexed by Bajagua’s proposal—not only had no government agency ever attempted such a bilateral project, it didn’t know where to begin engaging Mexico on the topic. And she thought, as did many others, the plan just didn’t make sense.
Bart Christensen, a senior engineer with California’s Water Quality Control Board, has questioned the wisdom of the project from the beginning. Cleaning wastewater to primary standards on this side of the border, then pumping it miles away to Tijuana for secondary treatment and then back to the U.S. side for discharge through the outfall, would be redundant and wasteful, he says. Installing secondary-treatment aeration ponds at the IWTP in San Ysidro (which have already been designed and await funding) would be far less costly and would accomplish the same goal, Christensen says.
Meanwhile, the IBWC was sued by environmentalists and the state of California. The lawsuit demanded the agency take some kind of action to bring the treated water it was discharging into the Pacific up to secondary levels (which it was designed to do). Congress wasn’t giving the agency a budget to finish the second phase of construction at the San Ysidro facility, however, and the IBWC found itself in the worst kind of pinch. A succession of six commissioners since 2000 (in the previous 45 years, the agency had seen only five commissioners) has felt intense pressure from all sides but has been unable to solve the problem.
In 2000, Gary Siroto, a lawyer with Encinitas-based Coast Law Group (part of Bajagua’s legal retinue), drafted language for a bill to be introduced to Congress by Representative Filner, which directed the IBWC to enter a fee-for-services contract with a private entity that would build a treatment plant in Mexico —the Bajagua plan. The bill barred open bidding and was attached, through the work of Representatives Filner and Brian Bilbray, to a much larger omnibus bill, the Estuaries and Clean Water Act of 2000—Public Law 106-457. Siroto’s draft, the “Tijuana River Valley Estuary and Beach Clean Up,” was earmarked to eight other sections of the bill that dealt with, among others projects, cleanup efforts in the Chesapeake Bay, the Long Island Sound and the Lake Pontchartrain Basin in Louisiana. The bill enjoyed strong support from those other regions and passed the House and the Senate in October 2000. That December, it was signed into law by President Clinton.
As early as 1996, Landa and Simmons, their family members and fellow investors had begun showering campaign contributions on a bevy of Southern California politicians—particularly Representatives Filner and Bilbray. By 2006, Filner had received more than $60,000 in contributions. Representative Bilbray was voted out of office in 2000 and then went to work for Bajagua as a paid lobbyist. He later testified before Congress regarding Public Law 106-457 but failed to mention-that he was, at the time, working for Bajagua. (Through a spokesman, Bilbray says there was no conflict of interest in the situation, as he was testifying as the sponsor of 106-457 legislation and not as a Bajagua representative.)
THE PASSAGE OF THE LAW added a new squeeze to IBWC’s already schizophrenic situation. The agency found itself mandated by Congress to ratify a new treaty establishing a water accord between the IBWC and CILA (its Mexico counterpart), with Mexico to accommodate a plant the commission had already deemed infeasible and a bad idea. It had no money from Congress to finish the secondary ponds at the existing international facility at San Ysidro and was floundering under increased pressure from a federal court to bring IWTP effluent up to secondary standards by September 2008.