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For many years, untreated wastewater originating in Tijuana, Mexico, has entered the United States, largely via the Tijuana River. Tijuana's sewage system does not have the capacity to treat all of the city's wastewater, and some areas of the city are not connected to the sewer system. Tijuana's higher elevation results in sewage flowing downhill into California and out to the Pacific Ocean, causing beach closures in southern California. In the 1990s, the U.S. and Mexican Sections of the International Boundary and Water Commission collaborated with the U.S. Environmental Protection Agency (EPA) to address the problem by constructing the South Bay International Wastewater Treatment Plant (SBIWTP) in San Ysidro, California. The SBIWTP began providing the first level of treatment, known as primary treatment, to 25 million gallons per day (mgd) of Mexican wastewater in 1997. However, the part of the facility that would have provided secondary treatment, allowing the wastewater to meet Clean Water Act (CWA) standards for discharge into the Pacific Ocean, was not constructed due to a lack of funding and legal challenges. As a result, water discharged from the SBIWTP is only partially treated and has never complied with the requirements of the CWA. Over more than a decade, the U.S. Section of the International Boundary and Water Commission (USIBWC) has considered a variety of alternatives to bring the wastewater into CWA compliance, and now faces a federal court order requiring it to achieve CWA compliance by September 30, 2008. The USIBWC is currently considering two proposals: (1) upgrading the SBIWTP to provide secondary treatment at the existing plant site, or (2) building a new plant in Mexico where wastewater that received primary treatment at the SBIWTP would be pumped for secondary treatment, as proposed by Bajagua, LLC. Under both proposals, the treated effluent would be pumped into U.S. waters of the Pacific Ocean through a pipeline known as the South Bay Ocean Outfall, a facility used by both the USIBWC and the City of San Diego. In response to an explanatory statement of the House Appropriations Committee that accompanied the 2008 Consolidated Appropriations Act, GAO (1) described the two proposed treatment alternatives, (2) described the estimated costs and timelines for each proposal, and (3) assessed the reliability of these estimates. The explanatory statement directed GAO to report to the Appropriations Committees within 120 days of enactment of the law, which occurred on December 26, 2007. On April 7, 2008, GAO briefed members of Congressional staffs on our findings. This letter summarizes the main points from our presentation.

Although both proposals are designed to enable the USIBWC to meet CWA requirements, they take different approaches in doing so. The USIBWC's proposal would expand the SBIWTP to allow it to provide secondary treatment to the 25 mgd of wastewater already receiving primary treatment at the plant, bringing it to CWA standards. According to the USIBWC, construction would follow a final design which will be provided by an engineering consulting firm in June 2008, based on its update of the original SBIWTP design. U.S. appropriations would pay for the expansion's construction and operations and maintenance (O&M) costs. Under the Bajagua, LLC proposal, Bajagua, LLC would contract with another company to design, build, and operate a new facility in Mexico that would provide secondary treatment to 25 mgd of wastewater that would be pumped to the plant after receiving primary treatment at the SBIWTP, bringing it to CWA standards. The Bajagua plant would also have the capacity to provide primary and secondary treatment of up to an additional 34 mgd of wastewater from Tijuana. However, because estimates of Tijuana's future wastewater treatment needs vary, it is unclear when this additional capacity will be needed. Bajagua, LLC does not currently have a detailed design for its plant because it plans to hire a contractor to develop one. Bajagua, LLC would fully finance the initial construction of the new plant, and U.S. appropriations for wastewater treatment services over 20 years would enable Bajagua, LLC to recover the costs of construction and O&M, as well as equity and debt service, management fees, and profits. After 20 years, the ownership of the plant would transfer to the responsible Mexican authorities. Neither projects' estimates of costs and timelines fully meets GAO's criteria for reliability, but the estimated costs and timelines for the SBIWTP upgrade may be somewhat more reliable than those for the Bajagua, LLC proposal. GAO considers a cost estimate reliable if it follows certain best practices--is well documented, comprehensive, accurate, and credible. The SBIWTP upgrade and the Bajagua plant cost estimates both met some of our criteria for being well documented, comprehensive, and accurate, but overall, the SBIWTP upgrade estimate met more of these criteria than the Bajagua plant estimate. Regarding project timelines, we found that neither project fully met GAO's best practices for scheduling. While it is early in the development stage for both projects, a schedule risk analysis--using statistical techniques to predict the level of confidence in meeting a program's completion date--would be useful in assessing the reliability of the timeline estimates. In the absence of such an analysis, we identified some of the potential risks facing each project that would typically be part of the analysis. We found that the Bajagua, LLC project includes more unresolved issues than the SBIWTP upgrade, such as the need to obtain over 30 permits, approvals, and concessions from both U.S. and Mexican authorities; the need to resolve significant issues in its draft fee-for-services agreement with the USIBWC; and other legal and technical issues which could delay its schedule.

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