City sues engineering firm CH2M Hill over sewage treatment

By Sean C. Morgan

The City of Lebanon is seeking a $12.3 million judgment in a lawsuit filed Sept. 3 against CH2M Hill and Operations Management International, Inc., in Linn County Circuit Court over the engineering firm’s recommendation to use a “cannibal process” to handle solid waste left over from the city’s wastewater treatment process.

The City Council voted Aug. 29 to pursue all legal remedies against CH2M Hill. Jacobs Engineering purchased CH2M Hill and OMI in 2017 and now operates the plant.

The system “simply has not worked as our engineers told us it would,” said attorney Kerry Shepherd, of the Portland law firm Markowitz Herbold PC, adding that the city has made “extraordinary efforts” to resolve things with CH2M Hill and OMI over the past 18 months. The city and the firm were set for mediation in March.

CH2M Hill canceled that meeting and rescheduled for Aug. 28, Shepherd said, and again CH2M Hill canceled the mediation.

At that point, the City Council didn’t have much of a choice but to move forward, Shepherd said.

The City of Albany filed a similar lawsuit in 2017. The next hearing in that case is scheduled for Oct. 28.

According to Lebanon’s complaint, engineering firm West Yost prepared a facilities plan for Lebanon’s Wastewater Treatment Plant and presented Lebanon with alternatives for wastewater solids processing. West Yost did not mention or recommend the cannibal technology marketed by Siemens Water Technologies.

CH2M later recommended the cannibal process, contrary to West Yost’s analysis and recommendations, according to the complaint. CH2M represented that it would serve Lebanon’s needs for 20 years or more. Over several years, beginning in 2005, CH2M expended many resources, with meetings scheduled between Lebanon and Siemens, to convince Lebanon to choose the cannibal system.

In presentations CH2M told Lebanon staff members that the cannibal process would reduce sludge yield by up to 85 to 90 percent and reduce disposal costs, according to the complaint. It would eliminate winter land application requirements, eliminate dewatering and storage capital investment and reduce operations and maintenance costs. It also claimed that it would allow flexible timing for land application.

CH2M represented that the cost savings for the cannibal process far outweighed the alternatives, according to the complaint, and the reduction in sludge production would be guaranteed, while other communities using the process were experiencing smaller yields than those in Lebanon at the time. CH2M represented that facilities around the country had reduced their solids wasting production to virtually zero.

CH2M obtained a written agreement with Lebanon in 2007 for its evaluation and recommendations of the cannibal process.

CH2M described the “interchange reactor” as “the key element in the cannibal system,” explaining that the reactor takes waste-activated sludge and “biologically degrades it in a closely controlled facultative environment,” according to the complaint. CH2M stated to Lebanon that the Cannibal Process would include aeration basin modifications, adding “two anoxic zones and piping changes to allow step feed.” The “advantage” of step feed, CH2M said, was “that more biomass can be carried in the reactor basin – which would reduce the total aeration volume – saving capital costs – and reduce the solids loading rate in the secondary clarifiers.”

“CH2M grossly overstated the present value cost of the alternative that West Yost had recommended, and grossly understated the costs of electing the Cannibal Process,” said the complaint, and “CH2M’s representations were false and negligently made.”

CH2M failed to disclose that the process had not been proven, that it did not understand the scientific mechanisms at work in the cannibal process, that it was a “black box” technology and that “Siemens would not disclose how the mechanism allegedly worked” said the complaint. CH2M did not disclose that the biological systems and mechanisms behind them were not understood and that no model accurately could predict performance of the process in Lebanon.

Lebanon relied on the skill and diligence of OMI, which operated the plant under contract, to identify and report any failures in the cannibal system, according to the complaint.

For 2009, OMI reported to Lebanon that the process had drastically reduced the volume of solids that had to be handled by the Wastewater Treatment Plant, but the complaint claims the representation was false. In 2011, Siemens reported that the process was working as represented. Neither CH2M or OMI questioned or disagreed with Siemens.

The claim was “illusory and false,” the complaint said, and for every year from 2010 until now, the process has failed to live up to CH2M’s representations and OMI’s reporting. Neither company made Lebanon aware of this.

Due to the trust and confidence Lebanon placed in CH2M and OMI, the city was not in a position to independently recognize the failure and underperformance of the cannibal process, the complaint said.

The result of CH2M’s and OMI’s acts and omissions, according to the complaint, is economic harm totaling $12.3 million.

The total includes $6.2 million to replace the cannibal process equipment with conventional equipment that will function as designed.

Additional costs include $1 million for new engineers to design and oversee the construction project to replace the cannibal system, $1 million to handle excess solids, $1.5 million in excess power usage and $2.6 million for the cost of the cannibal technology equipment.

Additional costs remain to be determined by forensic analysis caused by operating the plant to accommodate and hold excessive volumes of sludge, according to the complaint.

In the complaint, Lebanon alleges breach of contract by CH2M for failure to disclose information and failure to evaluate, test and verify representations about the system; professional negligence by CH2M for recommending the cannibal process and by both CH2M and OMI for its cannibal testing and reporting failures; breach of fiduciary duty by CH2M and OMI; reckless misrepresentation by CH2M and OMI; breach of contract for regulatory violations by OMI; and breach of contract by CH2M for refusing to indemnify Lebanon’s damages.

Jacobs had not returned requests for comment by press time.