United States Government Accountability Office

Washington, DC 20548 

April 24, 2008 

Congressional Requesters 

Subject: International Boundary and Water Commission: Two Alternatives for 

Improving Wastewater Treatment at the United States-Mexico Border 

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.1

 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.2

 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. (See encl. II for additional discussion of the context for

 1

Building of the SBIWTP was provided for in July 1990 by an international agreement known as a 

treaty minute between the U.S. and Mexican Sections of the International Boundary and Water 

Commission. They are responsible for resolving water and boundary issues along the U.S.-Mexican 

border, including constructing and operating wastewater treatment facilities. 2

Bajagua, LLC is a private company. 

GAO-08-595R Border Wastewater Treatment 
this issue, a timeline of significant events in the multiyear effort to address the 

environmental problems of Mexican wastewater affecting California, a map 

showing the location of wastewater treatment facilities in the region, and a diagram 

of the wastewater flows from the proposed facilities.) 

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, we briefed members of your staffs on our findings. This letter 

summarizes the main points from our presentation. See enclosure III for a copy of 

the briefing slides from that presentation. 

To conduct this work, we obtained project descriptions and estimated costs and 

timelines from the USIBWC for the proposed SBIWTP upgrade and Bajagua, LLC 

for the proposed plant in Mexico. We interviewed representatives of the USIBWC 

and Bajagua, LLC regarding their estimates, and other stakeholders such as the 

Commissioner of the Mexican Section of the International Boundary and Water 

Commission, EPA staff, and staff of the California State and San Diego Regional 

Water Quality Control Boards. We visited the SBIWTP in San Ysidro, California, 

existing and under-construction wastewater treatment plants in Tijuana, and the 

proposed site for the Bajagua plant. We analyzed the reliability of the cost and 

timeline estimates using GAO’s Cost Assessment Guide.3

 

Our work is subject to three key limitations. First, the USIBWC and Bajagua, LLC 

did not provide complete cost and timeline estimates until the latter half of March, 

limiting the time available for assessing their reliability. Second, due to time 

constraints, we did not independently verify the cost or timeline information that 

was provided to us. Third, we limited our review to the objectives discussed with 

the staffs of the House and Senate Appropriations Committees and as such did not 

address a variety of issues, such as (1) independently assessing Tijuana’s current or 

future wastewater treatment needs or the extent to which each proposal addresses 

those needs; (2) assessing whether Bajagua, LLC could develop the capacity to

reclaim and sell water from its proposed plant and whether such sales would 

reduce costs to the federal government; (3) assessing the extent to which untreated 

or undertreated sewage from Mexico affects southern California, how these 

impacts vary between wet and dry periods, and the extent to which each project 

would address these impacts; or (4) assessing the extent to which the USIBWC 

managed previous projects within its estimated costs and timeframes. 

We conducted this performance audit work from January 2008 through April 2008 

in accordance with generally accepted government auditing standards. Those 

 3

GAO, Cost Assessment Guide: Best Practices for Estimating and Managing Program Costs, GAO07-1134SP (Washington, DC: July 2, 2007). 

Page 2 GAO-08-595R Border Wastewater Treatment 
standards require that we plan and perform the audit to obtain sufficient, 

appropriate evidence to provide a reasonable basis for our findings and conclusions 

based on our audit objectives. We believe that the evidence obtained provides a 

reasonable basis for our findings and conclusions based on our audit objectives. 

For additional information on our scope and methodology, see enclosure I. 

Summary of Findings 

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. 

According to data from the USIBWC and Bajagua, LLC for their respective 

proposals, the estimated costs for the SBIWTP upgrade are lower than the costs for 

the Bajagua plant, but Bajagua, LLC projects that its plant will be completed about 

10 months sooner than the SBIWTP upgrade. However, neither proposal will 

enable the USIBWC to comply with the current court-ordered deadline; specifically: 

• The USIBWC estimates that expanding the SBIWTP will cost $101.5 million 

in construction costs, and that total O&M costs for both primary and 

secondary treatment facilities during the first year of operations will cost 

about $16.7 million. The cost to the U.S. federal government would be about 

$331 million for construction and operation over a 20-year term in 2008 

Page 3 GAO-08-595R Border Wastewater Treatment 
dollars when adjusted for present value. The USIBWC projects that the 

expanded SBIWTP would be operational by January 2011. 

• Bajagua, LLC estimates that building a new facility in Mexico will cost $195.6 

million, which it will finance. Wastewater treatment services, including 

recovery of construction costs, O&M costs (which include primary 

treatment at the SBIWTP), equity and debt service, management fees, and 

profit, will cost the U.S. federal government $33.8 million during the first 

year of operation. Over 20 years, the cost to the federal government would 

be about $539 million in 2008 dollars when adjusted for present value. 

Bajagua, LLC projects that the new plant would be operational by March 

2010. 

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. For example: 

• The SBIWTP upgrade cost estimate was based on a final design that is in the 

process of being updated and revised, with cost estimates for detailed 

project elements rolled up to a total cost of construction, with significant 

participation and review by USIBWC and SBIWTP technical staff. 

• The Bajagua plant cost estimate met some of the criteria for each best 

practice, but as a preliminary design, did not include the same level of 

detailed, comprehensive descriptions of project elements and costs, or as 

clearly explain the sources of data and methodologies used in developing the 

estimate. 

• Both cost estimates met little or none of GAO’s criteria for credibility, 

because neither had been independently reviewed and verified, varied the 

assumptions to assess sensitivity to changes, or conducted risk or 

uncertainty analysis to determine the extent to which actual costs may vary 

from the 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 

Page 4 GAO-08-595R Border Wastewater Treatment 
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. 

Agency and Other Interested Party Comments and Our Evaluation 

We provided a copy of our draft report to the USIBWC and Bajagua, LLC for their 

review and comment. The USIBWC’s and Bajagua, LLC’s comments and our 

detailed responses are presented in enclosures IV and V. 

In its written response, the USIBWC said that it generally agreed with our findings 

and conclusions given the limited scope and timeframe for the review of the two 

alternatives. The USIBWC also provided technical comments, which we 

incorporated into the report as appropriate. 

In its written response, Bajagua, LLC, commented on several aspects of our draft 

report, including four main areas of concern. 

• Bajagua, LLC said it believed that any comparison of its project with the 

upgrade of the SBIWTP should conclude that its project is the more timely 

and cost-effective alternative. We did not assess either project’s benefits or 

make conclusions about which project would be more timely or costeffective. We limited our work to the objectives discussed with the staff of

the House and Senate Appropriations Committees. Specifically, we assessed 

the reliability of the cost and timeline estimates provided by the USIBWC 

and Bajagua, LLC against the criteria contained in our Cost Assessment 

Guide. 

• Bajagua, LLC disagreed with our finding that its project has more unresolved 

issues than the SBIWTP upgrade and stated that our analysis was not 

supported by the facts. We believe our analysis was correct. Our draft 

report (now in enclosure III, pages 48-51) noted several areas where key 

issues remain unresolved, including obtaining necessary permits, negotiating 

a fee-for-services agreement, and resolving outstanding legal issues. 

Bajagua, LLC’s response provided no additional information to show 

resolution of these issues. As such, we believe it is appropriate to continue 

to characterize these issues as unresolved and therefore as uncertainties 

that could delay the Bajagua project’s timeline. 

• Bajagua, LLC also listed five issues regarding the SBIWTP upgrade that it 

believes we did not consider in our draft report, including how the two 

proposals could affect beach pollution in California, and the USIBWC’s track 

record managing past projects. We agree that we did not address these two 

issues since they were not part of our scope, as noted in our draft report 

(now on page 2). The third issue involves the potential for legal action 

against the SBIWTP, which we addressed in our draft report (now in 

enclosure III, page 47). Finally, Bajagua, LLC raised two legal and regulatory 

Page 5 GAO-08-595R Border Wastewater Treatment 
issues that do not appear to be factually accurate. Specifically, it said 

upgrading the SBIWTP could conflict with guidance from the U.S. 

Environmental Protection Agency (EPA) because Tijuana lacks a 

pretreatment program for its industrial wastewater. However, according to 

an EPA official, no such EPA guidance exists and an industrial pretreatment 

program has been in place in Tijuana since 2001. Bajagua, LLC also said the 

USIBWC’s estimated timeframes did not include the time needed to obtain 

approval from the California Coastal Commission. However, according to a 

Commission official, the Commission has already granted approval for the 

SBIWTP to provide secondary treatment. 

• Finally, Bajagua, LLC expressed the view that we should continue with a 

comprehensive review of the two alternatives, including the potential 

benefits of the Bajagua project. Bajagua, LLC stated that the explanatory 

statement calling for this report also requires us to conduct a separate, 

comprehensive assessment of the two alternatives. While the explanatory 

statement does make reference to a separate on-going comprehensive GAO 

review, we did not have such a review on-going. We would consider 

conducting further work related to wastewater treatment issues in the 

Tijuana River basin if we received a Congressional request or mandate to do 

so. 

Bajagua, LLC also provided GAO with technical comments, which we incorporated 

into our report as appropriate. 

- - - - - 

Page 6 GAO-08-595R Border Wastewater Treatment 
We are sending copies of this report to the Commissioner of the USIBWC; Bajagua, 

LLC; appropriate congressional committees; other interested Members of Congress; 

and other interested parties. We will also make copies available to others upon 

request. In addition, the report will be available at no charge on the GAO Web site 

at http://www.gao.gov. 

If you or your staffs have any questions about this report, please contact me at 202-

512-3841 or maurerd@gao.gov. Contact points for our Offices of Congressional 

Relations and Public Affairs may be found on the last page of this report. Major 

contributors to this report were Stephen D. Secrist, Assistant Director; Allen Chan; 

Brad Dobbins; Terrell Dorn; Richard Johnson; Alison O’Neill; Karen Richey; Anne 

Stevens; and Heather Whitehead. 

David C. Maurer 

Acting Director, Natural Resources and Environment 

Enclosures 

Page 7 GAO-08-595R Border Wastewater Treatment 
Congressional Addressees 

The Honorable Patrick J. Leahy 

Chairman 

The Honorable Judd Gregg 

Ranking Member 

Subcommittee on State, Foreign Operations, and Related Programs 

Committee on Appropriations 

United States Senate 

The Honorable Nita M. Lowey 

Chairwoman 

The Honorable Frank R. Wolf 

Ranking Member 

Subcommittee on State, Foreign Operations, and Related Programs 

Committee on Appropriations 

House of Representatives 

The Honorable Dianne Feinstein

United States Senate 

The Honorable Bob Filner 

House of Representatives 

The Honorable Duncan L. Hunter

House of Representatives 

Page 8 GAO-08-595R Border Wastewater Treatment 
Enclosure I 

Scope and Methodology 

To conduct this work, we obtained project descriptions, cost estimates, and 

completion timeline estimates from the U.S. Section of the International Boundary 

and Water Commission (USIBWC) for the proposed South Bay International 

Wastewater Treatment Plant (SBIWTP) upgrade and Bajagua, LLC for the proposed 

plant in Mexico. We interviewed representatives of the USIBWC and Bajagua, LLC 

regarding their estimates, and other stakeholders such as the Commissioner of the 

Mexican Section of the International Boundary and Water Commission, U.S. 

Environmental Protection Agency (EPA) staff and staff of the California State and 

San Diego Regional Water Quality Control Boards. We visited the SBIWTP in San 

Ysidro, California, existing and under-construction wastewater treatment plants in 

Tijuana, and the proposed site for the Bajagua plant. 

We conducted our analysis of the cost and timeline estimates using GAO’s Cost 

Assessment Guide.4

 The guide identifies best practices that should be followed to 

achieve the four characteristics of a high-quality, reliable cost estimate: 

1. Well Documented. An estimate is thoroughly documented, including 

source data and significance, clearly detailed calculations and results, and 

explanations of why particular methods and references were chosen. 

Data can be traced to their source documents. 

2. Comprehensive. An estimate has enough detail to ensure that cost 

elements are neither omitted nor double counted. All cost-influencing 

ground rules and assumptions are detailed in the estimate’s 

documentation. 

3. Accurate. An estimate is unbiased, not overly conservative or overly 

optimistic, and is based on an assessment of most likely costs. Few, if 

any, mathematical mistakes are present and those that are present are 

minor. 

4. Credible. Any limitations of the analysis because of uncertainty or bias 

surrounding data or assumptions are discussed. Major assumptions are 

varied and other outcomes are recomputed to determine how sensitive 

they are to changes in the assumptions. Risk and uncertainty analyses are 

performed to determine the level of risk associated with the estimate. 

The estimate’s results are cross-checked, and an independent cost 

estimate is developed to determine whether other estimating methods 

produce similar results. 

The Guide also identifies best practices for conducting reliable project timeline 

estimates. A project timeline estimate is considered reliable if (1) all activities are 

 4

GAO-07-1134SP. 

Page 9 GAO-08-595R Border Wastewater Treatment 
Enclosure I 

defined; (2) all activities are sequenced; (3) the duration for each activity is 

estimated; (4) resources such as labor, materials, and overhead are assigned to all 

activities; (5) a critical path is identified for all activities; (6) float time—the amount 

of time a task can slip before affecting the critical path—between activities is 

identified; (7) schedule risk analysis is conducted using statistical methods to

determine the amount of time to reserve for contingencies; and (8) the schedule is 

horizontally integrated (depicts relationships between different program tasks and 

resources needed for different tasks) and vertically integrated (traces the 

consistency of data between master-, intermediate-, and detailed-level tasks in the 

schedule). 

Our work is subject to three key limitations. First, we did not receive current and 

complete cost and timeline estimates until the latter half of March, limiting the time 

available for assessing their reliability. Second, we did not independently verify the 

cost or timeline information that was provided to us. Third, we limited our review 

to the objectives discussed with the staff of the House and Senate Appropriations 

Committees and as such did not address a variety of issues, such as (1) 

independently assessing Tijuana’s current or future wastewater treatment needs or 

the extent to which each proposal addresses those needs; (2) assessing whether 

Bajagua, LLC could develop the capacity to reclaim and sell water from its 

proposed plant and whether such sales would reduce costs to the federal 

government; (3) assessing the extent to which untreated or undertreated sewage 

from Mexico affects southern California, how these impacts vary between wet and 

dry periods, and the extent to which each project would address these impacts; or 

(4) assessing the extent to which the USIBWC managed previous projects within 

their estimated costs and timeframes. 

We conducted this performance audit work from January 2008 through April 2008 

in accordance with generally accepted government auditing standards. Those 

standards require that we plan and perform the audit to obtain sufficient, 

appropriate evidence to provide a reasonable basis for our findings and conclusions 

based on our audit objectives. We believe that the evidence obtained provides a 

reasonable basis for our findings and conclusions based on our audit objectives.

Page 10 GAO-08-595R Border Wastewater Treatment 
Enclosure II 

Background and Timeline of Major Events in the Effort to Address 

Wastewater Problems along the California-Mexico Border

Wastewater from Mexico has historically flowed into the United States from 

Tijuana, polluting the Tijuana River estuary and, subsequently, the beaches south of 

San Diego. The Clean Water Act (CWA) generally prohibits the discharge of 

pollutants into waters of the United States without a National Pollutant Discharge 

Elimination System (NPDES) permit.5

 California implements the CWA through its 

own water quality legislation known as the Porter-Cologne Act. Pursuant to these 

acts, the San Diego Regional Water Quality Control Board issues permits to 

discharging facilities in the San Diego area, including the SBIWTP. To meet CWA 

standards, wastewater discharged from the SBIWTP must undergo primary and 

secondary treatment. 

According to the USIBWC, from 1991 to 1994, Congress appropriated $239.4 million 

to the EPA for (1) a wastewater treatment facility that would provide both primary 

and secondary treatment capacity, (2) a facility called the South Bay Ocean Outfall 

(SBOO) to carry the treated effluent from the plant out into the Pacific Ocean for 

disposal, and (3) related facilities.6

 The EPA distributed these funds to the 

USIBWC to plan, design, and construct the SBIWTP; to the City of San Diego to 

construct the SBOO; and to the U.S. Army Corps of Engineers to provide planning 

and environmental review assistance. EPA’s appropriations act for fiscal year 1993 

capped funding for this project at $239.4 million.7

 

A primary treatment facility and related infrastructure was constructed for about 

$133 million, the SBOO was constructed for about $90 million, and the SBIWTP 

began operating in 1997. However, the part of the SBIWTP that would have 

provided secondary treatment was never constructed because nearly all of the 

appropriated funds had been spent on constructing the other facilities. As a result, 

effluent that does not comply with CWA standards continues to flow into the U.S. 

waters of the Pacific Ocean, and the SBIWTP has never been in compliance with 

the terms of its NPDES permit. Figure 1 shows the location of the SBIWTP and 

other existing and proposed wastewater treatment facilities in the Tijuana border 

region. 

 5

The permit includes limits on the amount of pollution that can be discharged as well as monitoring 

requirements to ensure, among other things, that water quality levels are maintained. 6

United States Section, International Boundary and Water Commission, Final Supplemental 

Environmental Impact Statement, Clean Water Act Compliance at the South Bay International 

Wastewater Treatment Plant (Pasadena, CA, 2005). 7

Pub. L. No. 102-389, 106 Stat. 1599 (1992). 

Page 11 GAO-08-595R Border Wastewater Treatment 
Enclosure II 

Figure 1: Location of Existing and Proposed Border Wastewater Treatment Facilities 

Monte de 

los Olivos 

Tijuana 

United States

Mexico

Imperial 

Beach 

California 

South Bay International Wastewater Treatment Plant (WTP) site and proposed Bajagua pump station 

San Antonio de los Buenos Wastewater Treatment Plant 

WTP under construction 

Proposed Bajagua WTP site 

South Bay 

Ocean Outfall 

N 

A.L Rodriguez 

Reservoir 

Proposed Bajagua 

WTP site 

Proposed Bajagua 

pump station 

La Morita 

Alamar River

South Bay 

International WTP 

and proposed 

Bajagua pump 

station 

San Antonio 

de los Buenos 

WTP 

San Diego 

15 miles north 

Source: GAO analysis of data provided by U.S. Section, IBWC, and Bajagua, LLC. 

Tijuana River

Proposed Bajagua pipelines (delivery and return) 

Existing pipeline 

San Diego

Bay

Pacific Ocean

Over the years, the USIBWC has considered several options for bringing the 

SBIWTP into compliance with the CWA. Under the National Environmental Policy 

Act of 1969 (NEPA), agencies evaluate the likely environmental effects of projects 

they are proposing using an environmental assessment (EA) or, if the projects 

likely would significantly affect the environment, a more detailed environmental 

impact statement (EIS). Over the past 14 years, the USIBWC prepared three 

separate EISs––in 1994, 1999, and 2005—considering different alternatives for 

achieving CWA compliance at the SBIWTP. 

In 1994, as part of the original SBIWTP design process, the USIBWC and EPA 

evaluated various options for secondary treatment and concluded that activated 

sludge treatment––using aerobic micro-organisms to produce disposable 

wastewater and residual solids––was its preferred option for meeting CWA effluent 

standards. However, the infrastructure needed to provide this treatment was never 

constructed in part because the adequacy of the NEPA analysis for the 1994 

decision was challenged in court. The USIBWC and EPA resolved the litigation by 

agreeing to re-examine the secondary treatment alternatives. In 1999, the USIBWC 

Page 12 GAO-08-595R Border Wastewater Treatment 
Enclosure II 

and EPA again reviewed its options and concluded that aerated pond treatment 

was its preferred alternative for secondary treatment because the USIBWC believed 

this was the most timely and cost-effective option.8

 However, Congress declined 

the USIBWC’s and EPA’s requests for funding and, in November 2000, passed the 

Tijuana River Valley Estuary and Beach Sewage Cleanup Act, authorizing the 

secondary treatment of wastewater from the SBIWTP at a new facility to be built in 

Mexico.9

 The Act authorized the USIBWC to enter into a multiyear fee-for-services 

contract with the owner of the Mexican facility and to negotiate a new treaty 

minute to implement the Act’s provisions. The Act’s provisions closely paralleled 

the proposal of a private company, Bajagua, LLC, to carry out secondary treatment 

in Mexico under a fee-for-services agreement. 

 

In 2001, the Regional Water Quality Control Board of San Diego sued the USIBWC 

seeking to compel it to begin complying with the CWA, the Porter-Cologne Act, and 

the terms of the NPDES permit. In December 2004, the U.S. District Court for the 

Southern District of California issued an order that established milestones to lead 

the USIBWC to comply with the CWA by September 30, 2008. 

In February 2004, the United States and Mexico Sections of the IBWC agreed to a 

new international agreement known as a treaty minute, Minute 311, to implement 

the Tijuana River Act. Under Minute 311, the commission could enter into an 

“operating lease contract” with Bajagua, LLC as the service provider of the Mexican 

facility. Minute 311 provided that the arrangement would be subject to the 

approval of the U.S. and Mexican governments in a subsequent treaty minute.10

In 2005, the USIBWC once more evaluated its options and concluded that funding 

was not available at that time to construct a secondary treatment option at the U.S. 

facility. Therefore its preferred option was to pump wastewater that had 

undergone primary treatment at the SBIWTP to a plant to be built in Mexico, where 

it would receive secondary treatment using an extended aeration process. The 

plant would be built and operated by Bajagua, LLC and paid for by a fee-forservices agreement. According to a 2005 document explaining the USIBWC’s 

decision, Bajagua, LLC was chosen in part because the USIBWC believed that 

Bajagua, LLC could meet the deadlines in the court order and because funding was 

not available at that time to upgrade the U.S. facility. However, the USIBWC 

suspended its development agreement with Bajagua, LLC on May 8, 2007, after 

Bajagua, LLC informed the USIBWC that it would not be able to meet the courtordered deadline.11 The 2008 Consolidated Appropriations Act, signed by the 

President on December 26, 2007, included language requiring the USIBWC to 

 8

Aerated ponds treat organic wastes using natural bacteria. 9

Pub. L. No. 106-457, Title VIII. 10Minute 311 further provides that if “agreement on an operating lease arrangement or design that is 

acceptable to both governments is not reached, the stipulations established in [the 1990 treaty 

minute] will apply.” The 1990 treaty minute included the original conceptual plan for building the

SBIWTP to secondary treatment capacity. 11The development agreement gives Bajagua, LLC exclusive rights to develop the Mexican facility. 

Page 13 GAO-08-595R Border Wastewater Treatment 
Enclosure II 

resume negotiations with Bajagua, LLC and to prepare plans to upgrade the 

SBIWTP. Consequently, 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 and pumping wastewater that received primary 

treatment at the SBIWTP to the new plant for secondary treatment, as proposed by 

Bajagua, LLC. Figure 2 shows the wastewater flows for the two proposals. 

Figure 2: Diagram of Wastewater Flows for the Alternative Proposals

Source: GAO analysis of data provided by U.S. Section, IBWC, and Bajagua, LLC.

(proposed) 

(proposed) 

SBIWTP Upgrade Proposal Bajagua Plant Proposal

25 mgd of 

untreated 

waste 

25 mgd 

advanced primary

treatment

(existing)

SBIWTP

25 mgd advanced 

primary treatment

(existing)

Bajagua WTP up 

to 59 mgd 

treated to 

secondary level 

(proposed)

25 mgd 

secondary

treatment

(proposed)

1 

3 2 

25 mgd of 

untreated 

waste 

Up to 

59 mgd 

discharged 

Up to 59 mgd 

secondary 

treated water 

flows downhill 

25 mgd primary 

treated water 

pumped uphill

Up to 34 mgd 

untreated 

Mexican waste 

(proposed) 

1 

3 

4 

2 

7 

5 6 

4 

SBIWTP 

Pacific Ocean 

Pacific Ocean

25 mgd discharged

outfall (existing)

United States

Mexico 

United States

Mexico 

Outfall (existing) 

San Diego BaySan Diego Bay

Page 14 GAO-08-595R Border Wastewater Treatment 
Enclosure III 

Slides from April 7, 2008, Briefing to Congressional Staff 

International Boundary and 

Water Commission

A Briefing for Congressional Requesters on 

Two Alternatives for Improving Wastewater

Treatment at the United States-Mexico Border

April 7, 2008

Page 15 GAO-08-595R Border Wastewater Treatment 
Enclosure III 

2

The Problem

• For many years untreated sewage flows entered the United 

States from Tijuana, Mexico, largely via the Tijuana River.

Tijuana’s sewage system does not have the capacity to treat 

all of the city’s wastewater, and its higher elevation resulted 

in sewage flowing downhill into California.

• The untreated wastewater polluted the Tijuana River estuary 

and discharged into the Pacific Ocean, causing beach 

closures on the California coast south of San Diego.

• In the 1990s, the U.S. and Mexican Sections of the

International Boundary and Water Commission and the U.S. 

Environmental Protection Agency (EPA) addressed the 

problem by building the South Bay International Wastewater 

Treatment Plant (SBIWTP) in San Ysidro, California.

Page 16 GAO-08-595R Border Wastewater Treatment 
Enclosure III 

3

The Problem (cont’d)

• To meet Clean Water Act (CWA) standards, wastewater from

the plant must receive primary and secondary treatment before

it can be discharged.

• The SBIWTP began operations in 1997, providing advanced 

primary treatment to 25 million gallons per day (mgd) of

wastewater from Tijuana. The part of the facility that was to

provide secondary treatment was never constructed because of

legal challenges and a lack of funding.

• As a result, water discharged from the SBIWTP via the South

Bay Ocean Outfall (SBOO) into U.S. waters of the Pacific 

Ocean is only partially treated and has never met CWA 

standards.

Page 17 GAO-08-595R Border Wastewater Treatment 
Enclosure III 

4

USIBWC Currently Is Considering Two 

Proposals

• The U.S. Section of the International Boundary and Water

Commission (USIBWC) has considered several options over the 

years to solve the problem, and is currently under a federal court

order to comply with the CWA by September 30, 2008. 

• The USIBWC is considering two alternatives:

1. Upgrading the SBIWTP to provide secondary treatment at the 

existing plant site, or

2. Building a new plant in Tijuana, Mexico, and pumping 

wastewater from the SBIWTP to the new facility for secondary 

treatment, as proposed by Bajagua, LLC. 

• Under both proposals, treated wastewater would be discharged 

into the ocean via the existing SBOO.

• Neither proposal addresses wastewater flows outside of the 

Tijuana sewage system.

Page 18 GAO-08-595R Border Wastewater Treatment 
Enclosure III 

5

USIBWC Currently Is Considering Two 

Proposals (cont’d)

Page 19 GAO-08-595R Border Wastewater Treatment 
Enclosure III 

6

Objectives

• In response to an explanatory statement 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 the cost and timeline 

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.

Page 20 GAO-08-595R Border Wastewater Treatment 
Enclosure III 

7

Scope and Methodology

• To describe the proposals, their costs, and timelines, we

• obtained project descriptions and cost and completion 

timeline estimates from the USIBWC for the SBIWTP 

upgrade and Bajagua, LLC for the plant in Mexico; and

• interviewed representatives of the USIBWC, Bajagua, 

LLC, EPA, regional water quality control boards, and 

other stakeholders.

• We also visited the SBIWTP, existing and under-construction 

treatment plants in Tijuana, and the proposed site for the 

Bajagua plant.

• We conducted this performance audit from January 2008 to

April 2008 in accordance with generally accepted 

government auditing standards.

Page 21 GAO-08-595R Border Wastewater Treatment 
Enclosure III 

8

Limitations of GAO’s Work

• The USIBWC and Bajagua, LLC did not provide current and

complete cost and timeline estimates until the latter half of

March, limiting the time available for assessing their

reliability.

• We did not independently verify these cost or timeline

estimates.

• We limited our review to the objectives discussed with the 

staffs of the House and Senate Appropriations Committees. 

As a result, we did not assess a number of related issues, 

such as the potential benefits of the proposals.

Page 22 GAO-08-595R Border Wastewater Treatment 
Enclosure III 

9

The Alternatives: In Summary

• Both plants would address the current need to provide 

secondary treatment to 25 mgd of Mexican wastewater, but 

would do so with different contracting and funding

approaches.

• The Bajagua, LLC proposal is more logistically complex due 

in part to the movement of wastewater back and forth across

the border for primary and secondary treatment.

• The larger treatment capacity of the Bajagua plant could help 

address Tijuana’s future needs, but estimates vary regarding 

when this additional capacity may be needed.

Page 23 GAO-08-595R Border Wastewater Treatment 
Enclosure III 

10

The Alternatives: Three Key Differences In

Approaches

Bajagua, LLC would finance cost of

construction. U.S. appropriations

would pay for wastewater treatment

services over 20 years enabling

Bajagua, LLC to recover the cost of

construction and pay for O&M costs, 

management fees, and profits. 

U.S. appropriations would fund 

construction and operations and 

maintenance (O&M) costs. 

Funding

Bajagua, LLC would enter into a

fixed price contract with a single 

contractor to design, build, and

operate (DBO contractor) the plant.

USIBWC would request separate

bids to (1) construct the upgrade

based on USIBWC’s final design 

and (2) operate the plant when 

completed.

Design,

construction,

and operation

Would provide secondary treatment 

for 25 mgd of wastewater and the

capacity to treat up to 34 mgd of

additional wastewater from Tijuana.

Would provide secondary

treatment for 25 mgd of

wastewater.

Amount

treated

SBIWTP Upgrade Bajagua Plant

Page 24 GAO-08-595R Border Wastewater Treatment 
Enclosure III 

11

The Alternatives: Differences in Wastewater

Flows for Each Alternative 

Page 25 GAO-08-595R Border Wastewater Treatment 
Enclosure III 

12

The Alternatives: Estimates Vary on When

Bajagua’s Extra Capacity May Be Needed

• A 2003 report by the State Commission of Public Services of 

Tijuana (CESPT) and EPA projected that Tijuana would need 

an additional 34 mgd of wastewater treatment capacity by 

2023. 

• A February 2008 updated analysis, also conducted by 

CESPT and EPA, found that Tijuana will need no additional 

treatment capacity until at least 2015, but could need about 

17 mgd of additional capacity by 2025.

• In a March 27, 2008 letter to the Commissioner of the 

Mexican Section of the IBWC, CESPT independently 

updated its estimate, identifying 12 mgd of additional 

treatment capacity needed in 2010, and 34 mgd needed by 

2019.

Page 26 GAO-08-595R Border Wastewater Treatment 
Enclosure III 

13

Costs and Timelines: In Summary

• According to USIBWC and Bajagua, LLC estimates for their

respective proposals,

• the SBIWTP upgrade would cost less to construct and 

less to operate on an annual basis as well as over a 20-

year operating period.

• the Bajagua plant would be operational about 10 months

before the SBIWTP upgrade would be operational.

• Neither proposal’s estimated completion date meets the court

order to meet CWA standards by September 30, 2008.

Page 27 GAO-08-595R Border Wastewater Treatment 
Enclosure III 

14

Costs and Timelines: SBIWTP Upgrade Costs

Less Than Bajagua Plant to Build and Operate

• USIBWC estimates the U.S. federal government’s cost to

upgrade the SBIWTP to 25 mgd of secondary treatment 

capacity is $101.5 million in 2008 dollars. 

• Total O&M costs for both the primary and secondary 

treatment facilities will initially (first year) cost $16.7 million in 

2008 dollars. 

• Total O&M costs include $8.4 million for primary and $8.3

million for secondary treatment.

Page 28 GAO-08-595R Border Wastewater Treatment 
Enclosure III 

15

Costs and Timelines: SBIWTP Upgrade Costs

Less Than Bajagua Plant (cont’d)

• Bajagua, LLC estimates that it will cost $195.6 million in 2008 

dollars to construct a plant with secondary treatment capacity

of 59 mgd.

• Wastewater treatment services, including O&M costs (which

include primary treatment at SBIWTP), equity and debt 

service, management fees, and profit, will initially cost the

U.S. federal government $33.8 million, in 2008 dollars. 

• Bajagua, LLC’s estimate is based on treatment of 34.6 mgd

in the first year of operation. This includes 25 mgd of 

wastewater it will receive from the SBIWTP and 9.6 mgd it 

expects to receive from the Tijuana sewer system.

• As treatment needs increase over time, as Bajagua, LLC 

expects them to, costs to the U.S. federal government will 

also increase.

Page 29 GAO-08-595R Border Wastewater Treatment 
Enclosure III 

16

Costs and Timelines: SBIWTP Upgrade’s Total

20-year Cost Is Less Than Bajagua Plant’s

• The estimated cost to the U.S. federal government for

construction and operation over a 20-year term is

• about $331 million for the SBIWTP upgrade, and

• about $539 million for the Bajagua plant.

• Both estimates are for the present value in 2008. 

• Both estimates include the costs of providing primary and

secondary treatment. This means that both estimates

include the O&M costs for primary treatment at the SBIWTP 

($121 million). 

Page 30 GAO-08-595R Border Wastewater Treatment 
Enclosure III 

17

Costs and Timelines: Other Cost

Considerations

• If Bajagua, LLC develops the capability to reclaim water from

its plant, it has proposed that future U.S. federal government 

costs could be reduced by sharing in revenues from the sale 

of such reclaimed water.

• After 20 years, Bajagua plant ownership would transfer to

Mexican authorities, and the U.S. federal government’s

service fee obligation to Bajagua, LLC would end. 

• SBIWTP O&M costs would continue as an obligation of the 

federal government indefinitely, as would O&M costs for 

pumping primary treated water to the Bajagua plant if it is

built.

• USIBWC is currently initiating negotiations with Mexico to

increase the share of SBIWTP O&M costs paid by Mexico.

Page 31 GAO-08-595R Border Wastewater Treatment 
Enclosure III 

18

Costs and Timelines: USIBWC Estimates the 

SBIWTP Upgrade Will Be Operating Jan. 2011

Activity

F

e

b

M

a

r

Design

Permits and 

Approvals

Procurement 

(Construction)

Construction

Procurement 

(Operations)

Testing 

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u

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v

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e

c

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a

n

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e

b

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a

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A

u

g

S

e

p

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c

t

N

o

v

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c

t

N

o

v

D

e

c

J

a

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2008

J

a

n

F

e

b

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p

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y

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2009 2010 2011

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Page 32 GAO-08-595R Border Wastewater Treatment 
Enclosure III 

19

Costs and Timelines: USIBWC’s Assumptions

for Beginning Operations in Jan. 2011

USIBWC’s estimate is based on its last solicitation for the 

SBIWTP O&M contract. O&M contract will be a negotiated 

procurement.

Procurement 9 months

(Operations)

Testing 1 month S&B Infrastructure estimates testing will take a month.

S&B Infrastructure estimates construction will take 18-24

months.

Construction 24 months

Time includes 1.5 months to prepare the solicitation, 3

months of bidding, and 2 months to award and issue notice to 

proceed. The construction contract will be awarded through

sealed bidding. Ability to award contract assumes that 

Congress provides sufficient funding at beginning of FY 2009.

Procurement 6.5 months

(Construction)

USIBWC estimates it will develop and issue a revised record

of decision explaining its rationale for selecting the SBIWTP

upgrade alternative in 3 months, and it will take an additional 

6 months to receive two permits.

Permits and 9 months

Approvals

Engineering firm S&B Infrastructure is updating the original 

design for USIBWC, to be completed by June 24, 2008. 

Design 5 months

Activity Estimated Duration Plans/Assumptions

Page 33 GAO-08-595R Border Wastewater Treatment 
Enclosure III 

20

Costs and Timelines: Bajagua, LLC Estimates 

Its Plant Will Be Operating in March 2010

Activity

Design

Permits and 

Approvals

Procurement

Construction

Testing

2008 2009 2010

J

a

n

F

e

b

M

a

r

A

p

r

M

a

y

J

u

n

J

u

l

A

u

g

S

e

p

O

c

t

N

o

v

D

e

c

J

a

n

F

e

b

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a

r

A

p

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M

a

y

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Page 34 GAO-08-595R Border Wastewater Treatment 
Enclosure III 

21

Costs and Timelines: Bajagua’s Assumptions 

for Beginning Operations in March 2010 

RW Beck made the estimate and the three firms that passed

the RFQ stage confirmed it.

Testing 1 month

Construction will begin after procurement. Engineering firm RW

Beck made the estimate and the three firms that passed the

request for qualifications (RFQ) stage confirmed it.

Construction 18 months

Procurement phase includes the time from USIBWC review of

the request for proposal to signing the DBO contract.

5 months, 

1 week

Procurement

Bajagua, LLC and its DBO contractor would be required to

obtain over 30 permits, environmental approvals, and

concessions from both U.S. and Mexican authorities during this

period.

Permits and 27 months

Approvals

Current design is conceptual. In line with typical DBO

contracts, contractor will complete design during procurement

and construction phase.

Design 17 months

Estimated Plans/Assumptions

Duration

Activity

Page 35 GAO-08-595R Border Wastewater Treatment 
Enclosure III 

22

Reliability Assessment: In Summary

• Neither project’s cost and timeline estimates fully meets

GAO’s criteria for reliability.

• The SBIWTP upgrade’s cost estimate meets GAO’s

criteria to a greater extent than the Bajagua plant’s cost 

estimate, which may make it somewhat more reliable 

than the Bajagua plant’s estimate.

• Neither timeline estimate meets GAO’s criteria, although 

the greater number of uncertainties related to Bajagua, 

LLC’s timeline reflects more potential risk in that 

schedule.

Page 36 GAO-08-595R Border Wastewater Treatment 
Enclosure III 

23

Reliability Assessment: Criteria for Assessing 

the Cost Estimates

• Certain best practices should be followed to develop accurate

and credible cost estimates.

• Best practices represent established, repeatable methods

that result in quality estimates that can be easily and 

clearly traced, replicated, and updated.

• We conducted our analysis of cost estimates using GAO’s

Cost Assessment Guide (GAO-07-1134SP), which considers

an estimate to be reliable if it is:

• well documented,

• comprehensive,

• accurate, and 

• credible.

Page 37 GAO-08-595R Border Wastewater Treatment 
Enclosure III 

24

Reliability Assessment: SBIWTP Estimate Is

Better Documented Than Bajagua’s

• While neither project’s cost estimate fully meets GAO’s criteria for

being well documented, the SBIWTP upgrade estimate meets more

of the best practices than the Bajagua estimate.

• The SBIWTP upgrade cost estimate largely meets GAO’s

documentation criteria. Specifically,

• its purpose is clear, assumptions are well-defined and have

been reviewed and approved by USIBWC technical staff, and it 

includes a technical baseline that comprehensively describes

the project in detail;

• the source data and methodologies for calculating the point 

cost estimate are clearly stated, which lends itself to replication;

• the estimate did not provide for full traceability to source data

(e.g., price quotes for materials) or always provide the rationale 

for using a particular methodology or source.

Page 38 GAO-08-595R Border Wastewater Treatment 
Enclosure III 

25

Reliability Assessment: SBIWTP Estimate Is

Better Documented Than Bajagua’s (cont’d)

• The Bajagua plant cost estimate partially meets GAO’s

documentation criteria. Specifically,

• its purpose is clear, the assumptions are generally defined, and

it has been reviewed and approved by Bajagua, LLC’s

management;

• the preliminary technical baseline describing the project is not

detailed or comprehensive, in keeping with the DBO approach;

• source data and methodologies for calculating the point cost 

estimate are only described in general terms, making 

replication potentially difficult; and

• the estimate did not provide for full traceability to source data, or always provide the rationale for using a particular 

methodology or source.

Page 39 GAO-08-595R Border Wastewater Treatment 
Enclosure III 

26

Reliability Assessment: SBIWTP’s Estimate Is

More Comprehensive Than Bajagua’s

• While neither project’s cost estimate fully meets GAO’s

comprehensiveness criteria, the SBIWTP upgrade estimate 

provides greater detail on more project elements than the Bajagua

estimate.

• The SBIWTP upgrade cost estimate partially meets GAO’s

comprehensiveness criteria. Specifically, it includes

• a work breakdown structure defining in detail the work needed 

to produce specific elements of the project down to four levels

of cost, and

• a detailed description of resources and processes needed to 

produce each component of the project, including the largest 

budget items that most impact total cost.

• We found estimates for high-level costs common to all project 

elements, but not for more detailed level costs, such as testing or 

procurement.

Page 40 GAO-08-595R Border Wastewater Treatment 
Enclosure III 

27

Reliability Assessment: SBIWTP’s Estimate Is

More Comprehensive Than Bajagua’s (cont’d)

• The Bajagua plant cost estimate partially meets GAO’s

comprehensiveness criteria. Specifically, it includes

• a work breakdown structure generally defining the work needed 

to produce specific elements of the project down to three levels

of cost, and

• a general description of the resources and processes needed to 

produce each component of the project, but did not specify the 

largest budget items that most impact total cost.

• We found estimates for many costs common to all project elements, such as procurement and construction management.

Page 41 GAO-08-595R Border Wastewater Treatment 
Enclosure III 

28

Reliability Assessment: Both Cost Estimates 

Partially Met GAO’s Accuracy Criteria

• Neither project’s cost estimate fully meets GAO’s accuracy criteria, but both have taken steps to validate the reasonableness of their 

updated estimates.

• For the SBIWTP upgrade cost estimate:

• a consulting engineering firm checked the original design 

estimate for errors, made corrections, cross-checked the 

biggest budget items, and used the build-up method which 

identifies detailed level costs and rolls the costs up to higher

levels to produce a new total cost point estimate.

• For the Bajagua plant cost estimate:

• the consulting engineering firm that developed the preliminary plant design revised the estimate to reflect the current design 

status, updated costs to reflect current prices and rates, and 

used the build-up method to produce a new total cost point 

estimate.

Page 42 GAO-08-595R Border Wastewater Treatment 
Enclosure III 

29

Reliability Assessment: Both Cost Estimates 

Met Little of GAO’s Credibility Criteria

• Neither project’s cost estimate meets GAO’s credibility criteria.

• The cost estimates for both projects have not

• been independently reviewed and verified to determine if other

estimating methods would produce similar results;

• varied major assumptions to determine how sensitive outcomes

are to changes in the assumptions; and

• conducted risk and uncertainty analyses to determine the level 

of risk and the extent to which the actual costs may vary from 

the point estimate.

• Both estimates included a contingency factor for uncertainty (10%

for Bajagua and 15% for SBIWTP upgrade) but neither described 

how or why this amount was selected.

Page 43 GAO-08-595R Border Wastewater Treatment 
Enclosure III 

30

Reliability Assessment: Best Practices for

Assessing the Timeline Estimates

• all activities are defined and sequenced, and the duration for each

activity is estimated;

• resources (e.g., labor, material, and overhead) are assigned to all 

activities;

• the critical path is identified for all activities;

• float time—the amount of time a task can slip before affecting the critical path—between activities is identified;

• schedule risk analysis is conducted using statistical methods to

determine the amount of time to reserve for contingencies; and

• the schedule is horizontally integrated (depicts relationships between 

different program tasks and resources needed for different tasks) and 

vertically integrated (traces the consistency of data between master-, intermediate-, and detailed-level tasks in the schedule).

GAO’s Cost Assessment Guide (GAO-07-1134SP) includes a set of best 

practices for scheduling that focus on constructing an integrated network 

schedule, necessary components of which include that:

Page 44 GAO-08-595R Border Wastewater Treatment 
Enclosure III 

31

Reliability Assessment: Neither Project’s 

Timeline Fully Meets GAO’s Criteria

• While both projects have timeline estimates based on the 

previous experience of their engineering contractors, neither

project’s timeline estimate fully meets any of the scheduling 

best practices. 

• Since a construction contractor has not yet been assigned to

either project, neither project has yet developed an integrated

network schedule, which would promote efficiency and 

accuracy in program scheduling.

• Although it is early in the project development stage for both 

projects, completing a schedule risk analysis to determine the

level of uncertainty related to different program elements would

be critical in assessing the reliability of the projects’ timeline 

estimates.

Page 45 GAO-08-595R Border Wastewater Treatment 
Enclosure III 

32

Reliability Assessment: Bajagua Plant 

Timeline Includes Greater Uncertainties

• Since neither project has conducted a schedule risk analysis, GAO identified some of the potential risks facing each project 

that would typically go into such an analysis. 

• GAO found that there are a greater number of uncertainties

associated with the Bajagua plant that could affect schedule 

and cost.

Page 46 GAO-08-595R Border Wastewater Treatment 
Enclosure III 

33

Reliability Assessment: Uncertainties That 

May Delay the SBIWTP Upgrade Timeline

USIBWC could not complete upgrade with 

current appropriations of $66 million.

USIBWC may not 

receive sufficient 

funding.

Delays upgrade if court issues injunction, which 

will depend in part on whether there is

significant new environmental information 

needing analysis.

Lawsuit may seek to 

force USIBWC to 

prepare new

Environmental Impact 

Statement

May delay contract award date and, 

subsequently, completion dates.

USIBWC may not 

receive funding at the 

beginning of the fiscal 

year.

Areas of Uncertainty Potential Impact

Page 47 GAO-08-595R Border Wastewater Treatment 
Enclosure III 

34

Reliability Assessment: Uncertainties That May 

Delay the Bajagua Plant’s Overall Timeline

Delay in any of these items would cause the 

timeline to be put on hold until the necessary

permit, approval, or concession could be obtained.

Over 30 permits, 

environmental approvals, 

and concessions from

both U.S. and Mexican 

authorities are needed 

both for construction and 

operations.

Areas of Uncertainty Potential Impact

Page 48 GAO-08-595R Border Wastewater Treatment 
Enclosure III 

35

Reliability Assessment: Uncertainties That May

Delay the Bajagua Plant’s Start of Procurement

Procurement could be delayed until

the issues are resolved. 

The Binational Technical Committee 

which advises the IBWC is concerned 

about the availability and location of 

the 34 mgd of additional sewage 

flows. 

Review would take a minimum of 1

month and could take more than a

year if the site is an endangered 

species habitat. 

According to EPA, the National 

Environmental Policy Act (NEPA) 

requires a review of the Bajagua

plant’s new site location before the 

start of procurement. 

Areas of Uncertainty Potential Impact

Page 49 GAO-08-595R Border Wastewater Treatment 
Enclosure III 

36

Reliability Assessment: Uncertainties That May

Delay the Bajagua Plant’s Start of Construction

The pipeline design details may delay 

approval of the right-of-way issuance by 

Mexico if Mexico thinks the pipeline 

installation may pose a problem for flood

control, vehicular access, or traffic. 

The location of proposed 

pipelines to and from the Bajagua

plant along the Tijuana River

flood control channel.

USIBWC hopes issues can be resolved before 

the DBO contract is ready, otherwise 

construction would be delayed for an unknown 

period until the issues are resolved.

USIBWC has concerns about the

draft of its fee-for-services

agreement with Bajagua, LLC,

which must be signed before 

Bajagua, LLC could sign a DBO 

contract. 

USIBWC officials estimate that negotiation will 

take approximately 13 months from the date of 

issuance of this GAO report, which could delay 

construction by about 9 months. 

U.S. and Mexican Sections of the

IBWC must negotiate a Minute

(implementation agreement)

before construction can begin.

Areas of Uncertainty Potential Impact

Page 50 GAO-08-595R Border Wastewater Treatment 
Enclosure III 

37

Reliability Assessment: Uncertainties That May

Delay the Bajagua Plant’s Start of Operations

Failure to resolve this issue could delay or

prevent Bajagua plant operation. 

Bajagua, LLC’s pending 

application for CWA permit 

and the need for USIBWC

to be named on the permit. 

Areas of Uncertainty Potential Impact

Page 51 GAO-08-595R Border Wastewater Treatment 
Enclosure IV 

Comments from the USIBWC 

Note: GAO 

comments

supplementing 

those in the report 

text appear at the 

end of this

enclosure.

See comment 1. 

See comment 1. 

 See comment 1. 

See comment 1. 

Page 52 GAO-08-595R Border Wastewater Treatment 
Enclosure IV 

See comment 2. 

See comment 1. 

See comment 1. 

See comment 1. 

See comment 1. 

Page 53 GAO-08-595R Border Wastewater Treatment 
Enclosure IV 

See comment 1. 

See comment 3. 

See comment 4. 

See comment 5. 

Page 54 GAO-08-595R Border Wastewater Treatment 
Enclosure IV 

GAO Evaluation 

1. Except where noted otherwise below, we made changes to the draft 

report in response to USIBWC’s technical comments as appropriate. 

2. The purpose of the maps in enclosure II, pages 12 and 14 of our report, is 

to identify the general locations of the existing and proposed border 

wastewater treatment facilities. They are not necessarily drawn to scale. 

3. As the report indicates in enclosure III, page 29, 9.6 mgd of additional 

wastewater is Bajagua, LLC’s estimate of the amount of wastewater it 

expects to receive from the Tijuana sewer system in its first year of

operation. We did not independently assess Tijuana’s current or future 

wastewater treatment needs. 

4. The USIBWC notes that it expects that there will be ongoing U.S. federal 

government cost participation in the proposed Bajagua plant after 20 

years. Our report does not say that all costs to the U.S. government 

would end after 20 years. Rather, in enclosure III, page 31, we said that 

the U.S. government’s service fee obligation to Bajagua, LLC would end 

at that time. In addition, we indicated that the O&M costs for the 

SBIWTP would continue indefinitely, including O&M costs for pumping 

primary treated water to the Bajagua plant, if it is built.

5. Enclosure III, page 34, of the report shows that, according to Bajagua, 

LLC, its estimated time for obtaining permits and approvals extends over 

the entire procurement process and that design activities will be 

conducted up to a point 5 months before construction is completed.

Page 55 GAO-08-595R Border Wastewater Treatment 
Enclosure V 

Comments from Bajagua, LLC 

Note: GAO 

comments

supplementing 

those in the report 

text appear at the 

end of this

enclosure. 

See comment 1. 

See comment 2. 

See comment 1. 

See comment 3. 

See comment 4. 

See comment 1. 

See comment 5. 

See comment 6. 

Page 56 GAO-08-595R Border Wastewater Treatment 
Enclosure V 

See comment 3. 

See comment 7. 

See comment 8. 

See comment 9. 

See comment 5. 

See comment 9. 

See comment 10. 

Page 57 GAO-08-595R Border Wastewater Treatment 
Enclosure V 

See comment 11. 

See comment 12. 

See comment 2. 

See comment 13. 

See comment 14. 

See comment 15. 

See comment 16. 

Page 58 GAO-08-595R Border Wastewater Treatment 
Enclosure V 

See comment 17. 

See comment 18. 

See comment 19. 

See comment 10. 

See comment 20. 

See comment 21. 

Page 59 GAO-08-595R Border Wastewater Treatment 
Enclosure V 

See comment 3. 

Page 60 GAO-08-595R Border Wastewater Treatment 
Enclosure V 

GAO Evaluation

1. r

s,

s

lusions

bout which project would be more timely or cost-effective.

2.

rtainties

that could delay the Bajagua plant’s planned start of operations. 

3.

e

r

River basin if we received a Congressional request or 

mandate to do so. 

4.

s to

the capacity to reclaim water from its project at some point in the 

future. 

5.

l

As stated on page 2 of the letter and enclosure III, page 22, we limited ou

work to the objectives discussed with the staff of the House and Senate 

Appropriations Committees and did not assess a number of related issue

including the potential benefits of the alternative wastewater treatment 

proposals. We assessed the reliability of the cost and timeline estimate

provided by the USIBWC and Bajagua, LLC, but made no conc

a

Our report does not conclude that the Bajagua project could be 

constructed 10 months sooner than the South Bay International 

Wastewater Treatment Plant (SBIWTP) upgrade. On page 3 of the letter

we present Bajagua, LLC’s estimate that its plant would be operational 

about 10 months before the SBIWTP upgrade, but as noted on page 2, we 

did not independently verify this information. We also identify, on pages 4 

and 5 of the letter and enclosure III, pages 48-51, a number of unce

Under our Congressional Protocols, when an explanatory statement 

directs us to report to specific committees, we work with the majority and

minority staff of the designated committees to clarify the scope of work,

reporting objectives, and time frames. In this case, we worked with th

relevant staff of the Senate and House Appropriations Committees to

arrive at the scope of work and reporting objectives described in the 

report on page 2. Although the explanatory statement which called fo

this report, accompanying the 2008 Consolidated Appropriations Act 

passed on December 26, 2007, makes reference to a separate on-going 

comprehensive GAO review, we did not have such a review on-going. We 

would consider conducting further work related to wastewater treatment 

issues in the Tijuana

Bajagua, LLC states that its project could provide recycled water to 

supplement diminishing supplies of water in the border region. However, 

the construction plans that Bajagua, LLC submitted to us for its proposed 

wastewater treatment plant did not include plans to construct facilitie

treat wastewater so that it can be recycled, sold, and reused. As our 

report states on page 2, we did not assess whether Bajagua, LLC could 

develop

Bajagua, LLC states that the cost per unit of treated wastewater for the 

SBIWTP would be higher than for the Bajagua plant. We did not conduct

such an analysis because it requires credible estimates of the amount of 

wastewater that will need to be treated by the Bajagua plant on an annua

basis over the next 20 years, above the 25 million gallons per day (mgd) 

Page 61 GAO-08-595R Border Wastewater Treatment 
Enclosure V 

that will be coming from the SBIWTP. As the report notes on page 3 of th

letter and in more detail in enclosure III, page 26, existing estimates vary

widely on when treatment capacity over 25 mgd will be needed, calling 

into question whether th

e

e per unit cost of wastewater treatment can be 

accurately estimated. 

6.

aid for by the Mexican

government in accordance with Treaty Minute 283. 

7.

received against the criteria contained in our Cost Assessment Guide. 

8. a 

n assist the

decision makers by providing relevant data and analysis. 

9.

in

ment’s

xican government would assume

ose costs, is not known at this time.

10.

ed

nters the Pacific Ocean and ultimately pollutes California’s 

beaches. 

11.

oo

rruns on the Bajagua

project will not be borne by the United States. 

12.

ns.

The report does not include the costs of sludge disposal because these 

costs are not borne by the USIBWC, but rather are p

As the report states on page 2, we did not independently verify the cost 

and timeline data submitted by either Bajagua, LLC or the USIBWC. We 

did, however, assess the reliability of the cost and timeline estimates we

The decision concerning which project is the best "on the merits" is

policy decision for Congress and the executive branch to make by 

weighing numerous and often conflicting policy goals. We ca

Our assessment of the reliability of the cost and timeline estimates

focused on a 20-year period because that is the term of the proposed

contract between the USIBWC and Bajagua, LLC. As the report notes

enclosure III, page 31, after 20 years, ownership of the Bajagua plant 

would transfer to Mexican authorities and the U.S. federal govern

service fee obligation to Bajagua, LLC would end. However, the 

operations and maintenance costs for pumping primary treated water from

the SBIWTP to the Bajagua plant would remain. Beyond that obligation, 

whether the United States would continue to incur additional costs related 

to the Bajagua facility, or whether the Me

th

See comment 6. As the report states on page 2, there were a number of 

issues related to wastewater treatment in the U.S.-Mexico border region 

that we did not assess, including how the Mexican government disposes of

the sludge it receives from the SBIWTP and whether improperly dispos

of sludge e

Because Bajagua, LLC does not yet have a final contract with a designbuild-operate (DBO) contractor and a fee-for-services agreement between

the USIBWC and Bajagua, LLC has not been finalized, we believe it is t

soon to safely conclude that the risk of cost ove

We did not assess the extent to which the cost of the Bajagua plant could 

be offset by revenues from the sale of reclaimed water for several reaso

Page 62 GAO-08-595R Border Wastewater Treatment 
Enclosure V 

First, Bajagua, LLC did not provide us information on how and when it 

plans to construct facilities that would allow it to reclaim water from its 

plant. Second, Bajagua, LLC did not provide us estimates of how much it 

would cost to construct these facilities. Third, as we note in enclosure

page 26 of the report, it is unclear how much wastewater the Bajagua 

facility would have available to treat and potentially reclaim. Fourth

price that might be obtained for this water is not known. Fifth, the 

USIBWC, Bajagua, LLC, and the Mexican government would need to agree 

on the amount of revenue from reclaimed water sales that would go to

United S

III,

, the

the

tates, and no negotiations to develop such an agreement have 

begun. 

13.

to more unresolved issues than the timeline for the 

SBIWTP upgrade. 

14.

e

pprovals will need to be

obtained from governments in two countries. 

15.

nt as

ermits, and approvals in a timely manner remains an area of 

uncertainty. 

16.

age

for

ns to be characterized by conflicting views that take time to 

resolve. 

17. the

e

State of California expressed reservations, and there was collective 

Our report shows in enclosure III, pages 46-51, that the Bajagua plant’s

timeline is subject

Bajagua, LLC characterizes its over 30 needed permits and approvals as 

“mainly minor”; nevertheless a delay in obtaining any one of them could

delay its schedule. Delays could occur because the Bajagua project is 

logistically complex and as such will likely require thorough review befor

permit approval. Furthermore, the timing of some permits is dependent 

on the approval of others, and the permits and a

According to the information that Bajagua, LLC provided to us, it has 

concessions from the Mexican government for the land for its plant site 

but not for rights-of-way needed to construct the pipelines to the pla

noted in enclosure III, page 50. We are aware that several Mexican 

government agencies support the project, but whether Bajagua, LLC can 

ultimately meet the requirements of these agencies to obtain the needed 

concessions, p

USIBWC and Bajagua, LLC have not reached agreement on the terms of 

the fee-for-services agreement. As the report states in enclosure III, p

50, this is an area of uncertainty and could delay construction of the 

Bajagua plant. Our report also notes in enclosure III, page 50, that the 

USIBWC hopes that issues related to the fee-for-services agreement can be

resolved before the DBO contract is ready. However, it is not unusual

negotiatio

In the hearing held on March 25, 2008, Judge Moskowitz discussed

possibility of ordering the USIBWC to sign the National Pollutant 

Discharge Elimination System (NPDES) permit. While he suggested he

might order such an outcome, attorneys for both the USIBWC and th

Page 63 GAO-08-595R Border Wastewater Treatment 
Enclosure V 

agreement to revisit the issue should the USIBWC decide to pursue the 

Bajagua project. Therefore, this remains an area of uncertainty. 

18. Our report acknowledges, in enclosure III, page 47, that one of the areas of 

uncertainty that could delay the SBIWTP upgrade timeline is if a lawsuit 

seeking to force the USIBWC to prepare a new environmental impact 

statement resulted in an injunction. 

19. According to an EPA Region IX official, there is no EPA guidance stating 

that activated sludge systems are not effective without pretreatment of 

industrial discharges. Moreover, the same official said that a pretreatment 

program has been in place in Tijuana since 2001. 

20. According to a California Coastal Commission official, a consistency 

determination and approval has already been granted for the SBIWTP to 

provide secondary treatment and no further review is anticipated. 

21. As our report states on page 2, we did not assess the extent to which the 

USIBWC managed prior projects, which includes the existing SBIWTP, 

within their estimated costs and timeframes.

(360925) 

Page 64 GAO-08-595R Border Wastewater Treatment 
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