Itasca wastewater plant could lose $10 million

Itasca could lose $10 million for its new wastewater treatment plant after the U.S. Environmental Protection Agency issued a report saying the village failed to meet requirements to use American-made products in its construction.

As part of the funding for the $34 million project, Itasca received a $10 million loan from the American Recovery and Reinvestment Act, issued through the Illinois EPA. As part of the loan's terms, Itasca is required, with few exceptions, to use materials that are manufactured in the U.S.

But in April and May of last year, EPA inspectors responded to a hotline complaint and made surprise inspections at the plant on Prospect Avenue. According to the report, inspectors found steel pipes, fittings and other manufactured products made in foreign countries, which could make Itasca ineligible for the $10 million loan.

Village Administrator Evan Teich said the village is working with federal officials to get the nearly finished plant into compliance, so Itasca does not lose any major funding.

“The important part of their initial document was that we didn't do anything improper, in terms of maliciously disregarding the law,” Tiech said. “The problem originates in how you interpret complicated terms. These rules were not exactly clear when we started the project. Realistically, the Region 5 EPA office wants compliance and the village wants to comply with the law.”

In a response to the EPA's initial visits, Itasca issued a report of its work. In it, village officials said the total cost of the project is $34 million and about $16 million was spent on materials alone. Of that money, only roughly $221,000, or about 1 percent of material costs, are not American-made.

The EPA can issue a waiver for incidental components of a project, but its report said items such as foreign-made pipes, pumps and tubing don't qualify. Instead, the waiver is applied to smaller items such as screws, nuts and bolts.

Tiech said that's one example of how the confusion began, especially since the treatment plant was designed long before the American Recovery and Reinvestment Act existed, along with its Buy American rules.

Other murky areas, Tiech said, include exceptions that some foreign-made products can qualify if they are substantially altered by workers and plants within the United States. Itasca officials and the plants' designers, Baxter & Woodman Inc. Consulting Engineers, also believed some foreign-made products would be eligible as exceptions if they came from countries with which the U.S. had trade agreements. But the EPA report said Itasca was mistaken.

“It was kind of a new animal,” Tiech said. “We had the whole plant designed, sitting there waiting to be built one way, but then about six or eight months into the project they say, ‘I wouldn't rely on this definition of trade agreement.' So we dealt with it. And we're still dealing with it.”

The new treatment plant was created to replace the former plant on Schiller Street that was built in 1925, and to prepare for population growth in the village. The new plant will increase wastewater treatment capacity from 2.65 million to 4 million gallons a day, and replaces noisy pumps, loud gear drives and other issues that affected the surrounding neighborhoods

Currently, Itasca and EPA officials have scheduled meetings to help bring Itasca into compliance. The local EPA has until July 27 to issue an official response to the recent report, which was written by the Office of Inspector General, or OIG, an independent arm of the U.S. EPA. Government and Itasca officials both said several outcomes could occur.

Nancy Long, OIG spokeswoman, said the EPA is able to issue a waiver if Itasca makes compelling arguments for exceptions. Or, both Long and Tiech said the OIG and EPA may come to an agreement on how the village can comply.

Currently, Itasca asks that if a penalty occurs, the village lose only the $221,000 portion of the loan that funded foreign-made items. Tiech said it also would be possible to change the equipment to American-made brands, even though the plant is essentially complete.

If the two sides don't agree, Long said the issue could go to audit resolution.

But, she added, “nothing is final yet.”