January 29, 2007

SMELL TEST
How Politics Influenced
A Big Clean-Up Deal

IMPERIAL BEACH, Calif. -- As Tijuana has boomed, fueled by industrial expansion, something else has also surged: the flood of raw sewage the Mexican border city sends gushing downhill into neighboring California. Less than 60% of the city's sewage is being treated at all, and that only to minimal levels, leaving tons to flow into the canyons and surf of Southern California.

To stem this growing mess, the American government has chosen an unusual solution. Without any competitive bidding, the U.S. gave Bajagua LLC, a start-up company with no experience in treating waste water, sole authority to build and operate a treatment plant in Mexico.

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Scot Paltrow

Imperial Beach

The tale of Bajagua's success in getting the contract involves, among other things, well-timed campaign contributions to local members of Congress and other political figures. The firm also enlisted people with crucial connections as lobbyists. And when that didn't prove enough, Bajagua obtained backing from Vice President Dick Cheney and the White House, which cleared away opposition by federal agencies, several former senior federal agency officials say.

The Bajagua plan ("Bajagua" is a contraction of the Spanish "baja," for Baja California, and "agua," water) has prevailed even though, when it was first proposed in the late 1990s, it faced opposition from all of the relevant federal agencies. Records show that the State Department, the Environmental Protection Agency, the Justice Department and the Clinton White House's Office of Management and Budget dismissed the proposal as inadequate and impractical, and said it would violate existing law and treaties. Opponents of the plan say it won't stop the main causes of the waste and garbage flowing across the border.

An ocean beach sign in Imperial Beach, Calif.

Bajagua's tale shows how plans for federal public-works projects could be diverted by a small group of lawmakers, who were able to push contracts toward big campaign contributors. It also highlights the political difficulties posed by the pollution flowing into the U.S. from burgeoning Mexican border cities.

Recently, the project's backers have missed important deadlines, and officials are questioning whether the company has taken vital steps it claims already were achieved, including obtaining commitments for financing, essential permits and land. The federal government's contract with Bajagua calls for cancellation if the plant isn't built and running by September 2008, leaving the company only 19 months to build and open a plant. As a result, U.S. and Mexican officials have begun to express concern about whether it can succeed. Bajagua's principals say they are on track.

In an unusual step, the U.S. committed itself without appropriating money for the plant, and the final cost isn't known. The federal agency in charge estimates the total cost to the U.S. will be between $580 million and $780 million.

Coastal southern San Diego County lies at the bottom of a drainage system that originates in Baja California mountains in Mexico, feeds into the Tijuana River flowing through the heart of Tijuana and down into the ocean at Imperial Beach, Calif. As it passes through Tijuana, the river picks up raw human waste, battery acid, old tires, household garbage and toxic chemicals. From hilltop squatter settlements surrounding Tijuana, meanwhile, more sewage flows directly down canyons into San Diego County.

Beaches as far north as northern San Diego County are affected, but Imperial Beach, a favorite California surfing spot, has borne the brunt of the pollution. All or parts of the beaches along Imperial Beach and the estuary just to the south of it were closed for 198 days in 2006, according to the San Diego County statistics. The pollution causes health hazards, a weakened local economy, low home prices and harm to endangered wildlife, according to public-health experts, local business owners and others.

Raw sewage and garbage flow from hilltop slum neighborhoods in Tijuana, Mexico, across the border into the U.S. via Smuggler's Gulch canyon, after rain on Nov. 27.

In the dry season, a system of special drains often catches the waste flowing through the Tijuana River (which would be dry without waste water) as well as the sewage running down the canyons. These pump the waste to a treatment plant in San Ysidro, Calif. But the drains are overwhelmed in the November-to-April rainy season and sometimes in the dry season too.

The problem was obvious on a late November day, when the San Diego-Tijuana area had its first rain of the season. After only a few tenths of an inch of rain, the raw sewage flow was too much for a drain in the river bed. Water covered with floating garbage and white foam from detergent, and filled with raw human waste, washed into the Tijuana Estuary on the U.S. side, soon reaching the ocean. Health officials closed the beach at the mouth of the Tijuana River.

Justin Jeter has surfed around the landmark Imperial Beach pier for 20 years and says he can't resist going in when the surf is up. But he adds that lately he has suffered frequent sinus and ear infections, which, like many surfers, he attributes to the pollution.

A recent study in the journal Applied and Environmental Microbiology by Richard Gersberg, professor at San Diego State University's Graduate School of Public Health, and colleagues documents high levels of hepatitis A virus and human intestinal viruses in ocean water off the mouth of the Tijuana River and at the Imperial Beach pier after seasonal rains.

The pollution also affects the estuary, a 2,531-acre wildlife reserve, sandwiched between the border and Imperial Beach, through which the Tijuana River empties into the ocean. Joy Zedler, an ecology professor who has studied the estuary, says polluted sediments from Tijuana have eliminated clams, sand dollars and fish species from the estuary and adjacent waters. Endangered birds, such as the light-footed clapper rail, have been harmed, and plants native to the estuary killed off, including a rare species of pickleweed.

Once a sleepy border town, Tijuana is now Mexico's fourth-largest city, with a population of more than 1.3 million. About 2,000 people on average arrive daily to stay. Tijuana's growth stemmed from maquiladora plants -- foreign-owned plants allowed to import materials and export finished goods duty-free -- and more recently the North American Free Trade Agreement and growing cross-border trade.

With the city's flat land used up, hundreds of thousands of new dwellings eat up the surrounding steep hillsides so quickly that whole new neighborhoods appear in days. Even in many legal developments, the dwellings aren't connected to sewers or running water. Instead, plastic pipes run from indoor latrines, dumping raw waste into the dirt roads. The outflow etches gullies in the roads and flows into the Tijuana River or down the hillsides to the estuary on the U.S. side.

The municipal sewage system is leaky. A reporter driving one day in the city's center during the dry season saw a geyser of sewage shooting up from around a manhole cover and running down the street.

Tijuana has a sewage treatment plant of its own on the coast just south of Tijuana that receives 25 million gallons of raw sewage daily. It treats 17 million gallons to a "primary" standard before dumping it into the surf. Only solids are filtered out, not toxic chemicals, heavy metals and other dangerous stuff. The rest of the sewage is spewed untreated directly into the ocean.

The U.S. has long recognized that Mexico was unlikely to pay all the costs of treating sewage that washes north of the border. Under treaties, agencies in both countries work together on sewage and other issues. The U.S. agency is the International Boundary and Water Commission, an El Paso, Texas-based arm of the State Department.

In the 1990s the commission built the San Ysidro plant, on the U.S. side of the border. It takes in 25 million gallons per day of Tijuana sewage, treats it to a primary stage, then sends it through an 11-foot-wide pipe before discharging it in the ocean 3.5 miles offshore.

That partly treated discharge falls far short of U.S. Clean Water Act standards. In response, the IBWC intended to expand treatment at the plant. It acquired land and planned to increase capacity in steps.

Then Bajagua entered the picture. The small company was established solely to try to build a plant in Mexico under a U.S. government contract to address the Tijuana waste problem.

It grew out of a partnership in the 1990s between James D. Simmons, a former San Marcos, Calif., city councilman who runs a consulting business, and Enrique Landa, a Rancho Santa Fe, Calif., architect-turned-entrepreneur and son of a Mexico City architect. Messrs. Landa and Simmons had put together packages of permits which they sold to construction companies to build a waste-treatment plant in Sonora state in Mexico, and to upgrade treatment at a Mexico City plant.

Mr. Simmons says Mr. Landa's travels in northern Mexico, where he saw an acute shortage of usable water and waste treatment, led him to the idea of building a Tijuana treatment plant. (Through a Bajagua spokesman, Mr. Landa declined to be interviewed.) The two men concluded that they could make money by treating waste, eventually, to cleaner standards and selling the reclaimed water.

Under Bajagua's plan to build a plant in Tijuana, 25 million gallons a day of raw sewage would continue to flow to the San Ysidro plant on the U.S. side where, as now, it would be treated only to primary standards. Then new pumps and pipes would send it back uphill into Mexico to the new Bajagua plant.

After treating the sewage there, Bajagua would send it downhill again, through yet another set of new channels, where it would cross the border a third time, to San Ysidro. Then it would be shunted into the ocean through the existing pipe. Eventually, the Bajagua plant would also treat an additional 34 million gallons of sewage directly from Tijuana, to be sent across the border to the ocean pipe.

The idea of a U.S.-funded treatment plant in Mexico ran counter to an agreement the U.S. had with Mexico committing to build treatment facilities on its own side of the border.

A 1999 environmental-impact statement prepared by the Environmental Protection Agency and the IBWC called the Bajagua plan "not a feasible alternative." It said the plan wouldn't expeditiously meet the goal of additional treatment -- which it said could be accomplished at the San Ysidro plant.

A big criticism, then and now, was that no plan addressed a key source of pollution: the millions of gallons of Tijuana sewage that don't go into any sewer system at all.

Engineers who evaluated the Bajagua plan, including Michael L. Evans, a senior IBWC engineer at the time, concluded that it was unnecessarily costly, because the same sewage would ping-pong across the border three times before being discharged into the ocean.

Bajagua executives say their plan makes sense because the San Ysidro plant has limited room for expansion and faces local opposition. They also say Bajagua would be reimbursed in annual increments only after its plant is up and running. "The only way we get paid back is if we build it, it works and it operates to standards," says Mr. Simmons.

The commission and other federal agencies reviewed Bajagua's plan, and rejected it.

But that wasn't the end. Local members of Congress blocked the IBWC's plan to expand the San Ysidro plant and pushed the Bajagua alternative. Democratic Rep. Bob Filner, whose district includes the San Ysidro plant, and Republican Rep. Brian Bilbray, from a nearby district, in 2000 sponsored a bill promoting Bajagua's plan. A draft of the bill actually named Bajagua as the firm to do the work. When some lawmakers complained, the sponsors changed to wording that they hoped was so specific it would make Bajagua the only possible choice.

"We basically wanted one company," Mr. Filner says. "So we had to find a way to do it within the law."

From 1996 through 2005, Bajagua officials and their immediate relatives gave more than $56,000 in campaign contributions to Mr. Filner, federal campaign records show, more than to any other candidate in that period. Mr. Filner says he supported Bajagua because he considers it the best solution and his constituents wanted the plant in Mexico. "I'm doing this for my district, not for Enrique [Landa] who is my friend," he says.

The Clinton White House opposed the bill. The Office of Management and Budget stated, "Its approach raises serious foreign policy and legal concerns and will hinder our ongoing efforts to address the region's wastewater treatment needs." But after some amendments, and facing strong congressional support, Mr. Clinton signed it. The bill paved the way for a new treaty with Mexico that would allow the Bajagua project.

Even Congress's backing wasn't enough to overcome opposition by the IBWC and other federal agencies. Arturo Duran, IBWC commissioner in 2004 and 2005, says he had reservations because "it's not normal to sole-source to a company a contract for hundreds of millions of dollars. It's not how the federal government operates."

With progress at a standstill, the California Water Quality Control Board in 2001 sued the IBWC, as owner of the San Ysidro plant. The suit led to a federal court order to bring the plant's discharge up to less-toxic "secondary" standards by September 2008.

It took intervention from the White House and Republican Rep. Duncan Hunter of Southern California to turn events to Bajagua's favor.

On Oct. 14, 2002, Bajagua's Messrs. Simmons and Landa traveled to Roswell, N.M., where Vice President Cheney appeared at Republican fund-raisers. After a public rally, Mr. Cheney met privately with a small group of big contributors at the home of a local Republican backer, energy executive George Yates, Mr. Yates says.

Mr. Simmons says he and Mr. Landa went in response to an invitation received in the mail to the fund-raiser. "Dick Cheney attended that, I got to shake his hand, and had my picture taken, and that was the end of it," he says.

But the next day Mr. Simmons sent a letter on Bajagua stationery to the vice president, expressing gratitude "that you could spend some time with us in Roswell." It added, "I appreciate the opportunity I had to briefly introduce the Bajagua Project to you and your staff." Mr. Simmons also gave a five-page "Bajagua Project Briefing" to Catherine Martin, a top adviser to Mr. Cheney.

In early 2003 -- Bajagua officials say they can't recall the date -- Matthew Simmons, then a lobbyist for Bajagua, met with a Cheney aide about the project in the vice president's offices. (Mr. Simmons, a former legislative director for Rep. Hunter, isn't related to James Simmons.) Other lobbyists hired by Bajagua include James R. Jones, former U.S. ambassador to Mexico.

On Sept. 4, 2003, Bajagua representatives including James Simmons met with officials of the White House's Council on Environmental Quality, which oversees executive branch environmental policy, Bajagua says. The same day Rep. Hunter met with James Connaughton, chairman of the environment council, to press for support of Bajagua, according to emails by IBWC officials disclosed on the Web site of William Weaver, a University of Texas at El Paso professor.

Public records show that Bajagua spent $585,000 on lobbying from 2001 through the first half of 2006.

Beginning in 2003 the White House pressed the relevant federal agencies to embrace the Bajagua project, according to interviews, a report by the Project on Government Oversight, a Washington, D.C.-based nonprofit organization, and email messages and documents posted on Mr. Weaver's Web site. At the Justice Department, a staff attorney who had backed the IBWC's opposition to Bajagua on legal grounds was replaced by a political appointee who reported to then-Assistant Attorney General Thomas Sansonetti, a longtime friend of Mr. Cheney. Staff at the IBWC who had opposed the project were overruled or moved aside, say Mr. Evans and other former IBWC staff.

Lea Anne McBride, a spokeswoman for Mr. Cheney, declined to respond to questions about the vice president's role in the Bajagua case. "The bottom line is that the vice president does not issue government contracts," she said.

In 2004, Rep. Hunter pushed through amendments to the 2000 law that favored Bajagua, further exempting it from normal restrictions on federal contracts. In 2005, the IBWC chose Bajagua as the sole "preferred option" for additional treatment of Tijuana sewage.

The 2002 thank-you letter from Bajagua to Mr. Cheney praised Rep. Hunter, chairman of the House Armed Services Committee, as "our champion." Before the encounter at the fund-raiser with the vice president, Rep. Hunter had received a total of $4,000 in campaign contributions from Messrs. Simmons and Landa and a Bajagua lawyer. Two days after the meeting, he received another $1,000 each from Mr. Landa's brother and sister-in-law.

Bajagua spokesman Craig Benedetto says timing of the contributions was "coincidental." He says Rep. Hunter had no role in arranging access to Mr. Cheney.

Mr. Hunter's spokesman said the congressman "doesn't specifically recall coordinating a meeting" with Mr. Cheney, but "it would be entirely appropriate for the vice president to be involved in such a meeting" given the importance of the sewage issue.

Concerning the Bajagua campaign contributions, he said, "Congressman Hunter does what he thinks is right for the nation and in the best interest of the San Diego community. This project is no exception." Rep. Hunter has announced he is running for president in 2008.

Meanwhile, Rep. Bilbray, the other sponsor of the 2000 law, received $2,500 in contributions from Bajagua-related individuals. He lost his seat in the 2000 elections and soon went to work as a lobbyist. He represented Mr. Benedetto's public-relations firm to lobby on behalf of Bajagua, for which he received $35,000, records show.

In December 2001, less than a year after Mr. Bilbray's term ended, he testified before the House Water and Environment Subcommittee at a hearing on progress under the 2000 Bajagua-related law. He didn't disclose that he was a Bajagua lobbyist.

Mr. Bilbray says he didn't violate lobbying rules, which forbid a former lawmaker to appear before, or even communicate with, members of Congress to try to influence them on anyone else's behalf for a year after leaving office. He says he testified at the hearing "just representing myself as an author" of the 2000 law.

Last year, Mr. Bilbray was reelected to Congress, taking the seat vacated by Randy Cunningham, now in federal prison for soliciting bribes from federal contractors. Bajagua-related individuals gave Mr. Bilbray $6,850 in campaign contributions.

The cost to the government of the Bajagua project remains unknown. Bajagua and the commission missed a March 2006 deadline to negotiate an agreement which would have set the financial terms. The U.S. would reimburse the company's investment, with an added percentage of profit over 20 years once the plant opens.

Although Mr. Simmons says Bajagua's hopes for big profits lie in selling treated sewage someday as "reclaimed water," U.S. and Mexican officials say Bajagua hasn't submitted any plans for an additional plant to produce the water and has no land or approvals to build one. It isn't clear whether Bajagua legally could sell reclaimed water.

IBWC Commissioner Carlos Marin says Bajagua has missed deadlines for the Tijuana plant. Bajagua insists that, as required, it has arranged for financing. Mr. Simmons says flatly: "We have a commitment from Citibank to finance the project." But the IBWC says Bajagua hasn't given it any documents supporting the claim. Mr. Marin says, "We don't have any proof" of financing. Also, California denied Bajagua a permit it was required to obtain by September 2006 to discharge treated waste into the ocean. Bajagua is appealing.

Bajagua also was to have reached an agreement by September 2006 to purchase land. Mr. Simmons recently said Mexico would be announcing the specific site "in a few weeks." But José de Jesús Luévano, an official at the IBWC's Mexican counterpart, says the government has no intention of selling land to Bajagua. He says a lease is under discussion between Mexico and the company, but any announcement is months away.

Mr. Marin admits doubts about whether Bajagua will meet the 2008 deadline. "The more time that passes, that's getting a little bit leery," he says. Yet the IBWC has put all its eggs in Bajagua's basket. Failure would mean years before any alternative could be in place. Mr. Marin acknowledges that the IBWC has no backup plan.