By Cyrus Reed, Texas Center for Policy Studies

Yesterday, I attended the public meeting of the Good Neighbor Environmental Board in Laredo, Texas, which included a special public comment period organized by the Environmental Protection Agency with participation by the U.S Treasury Department and State Department. The purpose of the meeting was to receive comments from the public on the BECC and NADBANK, and specifically, on the background paper released by the three federal agencies recently.

This summary will briefly outline some of the comments received. My understanding is that the event was taped and a full transcript can be obtained from EPA at a later time. As always, I apologize for any misspellings, or inaccuracies.

Representing the EPA's Office of International Affairs was Jerry Clifford and Marico Sayoc, while Andrew Velthaus was there from the U.S. Treasury and Dennis Leskey from the U.S. State Department. The US federal government representatives explained that they were interested in hearing any comments regarding how to improve the BECC/NADBANK process and in particular any responses to issues raised in the background paper. Mr. Clifford said that they would be accepting written comments through the 31st of October, and possibly beyond, they would be most appreciative of comments received by October 15th.

Approximately 20 individuals provided oral comments on BECC/NADBANK reform, with about half from Mexico. I will not provide summaries of all of the comments, but only those that I actually wrote down in my notes. Again apologies for any misspellings.

Leo Olivares, city manager with Rio Grande City was the first to address the BECC/NADBANK question. He explained that they had two projects before the BECC and had received good response and support from both institutions. He stressed that technical assistance from BECC and the possibility of grant funding from NADBANK were critical for impoverished communities like RGC (population 16,000). In response to a question, he said he would like to see the process to be speeded up, but in doing so, did not feel there was any need to circumvent any of the BECC certification process, including the public comment process, which was very valuable.

Salvador Trevino from the City of Matamoros is concerned that the process takes too much time, and felt the problem is the rules and criteria of both institutions is not as clear as it needs to be, particularly with NADBANK. He said they had hired a US firm, Montgomery Watson, to do their studies, and were working on a master plan but hadn't even started a financial study. He said in the meantime the city was really collapsing in terms of the infrastructure and growth and he felt like there could be better coordination so as not to repeat studies.

A representative of City of Raymondville said they have had no problems with BECC or NADBANK and any delays have resulted more from their own consultants or their own inefficiencies rather than the two institutions. He praised the professionalism of the staffs and said the public comment and public participation was a needed step to really identify community support and concerns. He said they were seeking some loan funding from Texas Water Development Board and Dept of Ag Texas Finance Authority in addition to NADBANK grants.

Gale Armstrong with El Jardin Water Supply Corporation near Brownsville also spoke, but beyond talking about the difficulties in taking on loans for impoverished communities like the ones they serve (about 2700 connections with average of $14,000 in income) I got involved in a conversation…and didn't catch all he said.

Pablo Delgadillo from I believe Cuernevaca who has worked in both interior and the border as a hydraulic engineer spoke of the changes that are needed in Mexico at the local, state, federal and utility operating level. For example, he highlighted the difficulty in Mexico when the average utility operator only stays on the job for two years, and municipal leaders by law change every three years. This makes it very difficult to see a project from concept to construction in a short-time because of these turnovers. He said the State of Coahuila had recently changed municipal mayoral terms from 3 to 4 years, which he saw as a step in the right direction. He spoke about the need for professional planning departments within water utilities and better control and collection of basic water information. In terms of BECC and NADBANK, Delgadillo spoke about the need for clear timelines for projects and guidelines for grant funding, as well as the ability to do diagnostics with grants to let cities see where they really stood. He also spoke of better coordination with C.N.A and BANOBRAS.

Sergio de la Fuente from the State Govt of Nuevo Leon spoke about various projects occurring in his state. He said the training provided by BECC in terms of solid waste and wastewater management were of utmost importance. A first phase of a municipal solid waste project was certified by BECC in June of this year (I think for China/General Bravo), and said that a Mexican firm had done a wonderful job doing the studies. He said NADBANK had contracted a separate U.S. firm to review the studies. He spoke of need for greater agility in process, particularly clear rules from the NADBANK, as he felt their rules were somewhat obscure.

Juan Carlos Alampa from the water and wastewater division of the city of Nuevo Laredo spoke of an integral plan they were developing for improvements to water and wastewater in the city. A U.S firm had been hired to do some of the work. He said he was somewhat concerned that this firm was taking too long and if there was a way for Mexican authorities to help speed up the process, so that engineering firms in the US weren't holding up release of funds it would be wonderful. He said it was hard for them to pressure such a firm.

Javier Mendoza from Santa Rosa - a community of 2800 people - praised the BECC and NADBANK staff as very professional, and said delays have been mainly due to in-house problems with the consultant.

Victor Trevino with San Benito spoke in support of BECC/NADBANK process and said any project going through the process becomes a more efficient and better project. He said some delays had occurred more because of having to go through the Texas Water Development Board.

Julian Gonzalez from the La Joya Water Supply Company spoke, but again I got involved in a conversation. Sorry...

Alfonso Robledo from the State Water Utility in Reynosa, Tamaulipas spoke about their project which began the BECC process in 1998 to build three wastewater treatment plants and lift stations, etc. Cost estimated at $83 million. According to Robledo, after being certified in 1999, after about a year-and-half through the process, no construction has occurred. Robledo said much of the hold-up is due to NADBANK not releasing funds. Part of the problem appears to be a NADBANK condition that Reynosa show a commitment from the Mexican federal government for matching funds, but Robledo said money put in by the state and local authorities - such as $3.6 million for buying up land - has not been acknowledged by the NADBANK in releasing more funds. Robledo said he thinks part of the problem is a lack of clear rules on the part of the NADBANK. For example, he said both the BECC process and a final design performed by the city had identified possible sites for lift stations which he felt were technically viable for the project, but NADBANK forced them to redo a study and consider other sites. Robledo said what seems to be the case is whatever has been certified is the Bank reviews and forces changes if they don't like what they see. He again reiterated that what is most important is clear rules on the part of NADBANK, and that commitments made are carried out.

I, Cyrus Reed, then gave a brief synopsis of the written comments that TCPS has submitted. In particular, I said while project development efficiencies, better cooperation between the institutions, and more affordable loans are needed, there is no major overhaul that is needed. I said our recommendations can be divided into three areas: what we oppose; what changes are needed and what needs to continue. In the first category, we are opposed to merger of BECC/NADBANK, because it would require congressional approval and would cause delay; opposed to merger of the BECC/NADBANK boards for the same reasons; and opposed to transfer of project development functions and certification from BECC to NADBANK.

Changes that are needed could include: 1) creation of a joint executive committee of Board members from both institutions to resolve disputes which could be accomplished through an MOU; 2)improvements in Project Development Process, including the development of a project workplan or contract signed between BECC and applicant with clear timeline and a "team" approach which would include upfront NADBANK participation in financial analysis;

What really needs to continue are implementation of the Value Lending Program (low-interest loans), implementation of the mandate expansion and most especially, continued grant funding. I said this - as we had heard the participants say - was what really makes the process work and is the single most important thing the US federal government can do, especially as we face a budget crisis and new security and military needs.

(Andrew Velthaus from Treasury announced that the Value Lending guidelines had been approved and would soon be available which would allow loans on the order of 3.5 to 4.0 percent for one category of user….)

Finally, in terms of specific issues raised, we certainly support the idea that private industry can gain access to the process, but feel we should target those projects that supply the most public benefit, such as private-public partnerships and that we should review the three private projects certified to see what lessons we can learn from them. IN terms of the idea of using the BECC and NADBANK to push for regulatory reform, I said although as we heard some regulatory reform is needed, particularly in Mexico, the BECC and NADBANK could help by providing technical assistance for master planning, and helping new administrations learn about on-going projects, but they should not become vehicles for regulatory reform. Instead, Mexico needs to decide itself how to proceed with such efforts.

Santos Rivera from Cd. Ahahuac, Nuevo León also spoke, but again I didn't get all the points.

Andrea Abel then highlighted their nine recommendations contained in National Wildlife Federation's submitted comments. These included:

1. Allowing various program already approved to be implemented, which should increase private sector participation and allow for lower lending. Programs include Value Lending Program, Pilot projects identified through the mandate-expansion process and Private sector projects seeking BECC certification as a result of the BECC's modified Private Sector Projects certification criteria.

2. Commit to the continuation of grant funds for border environmental infrastructure projects, particularly through the Border Environment Infrastructure Fund (BEIF) and the Project Development Assistance Fund (PDAP). Seek grant funds for solid waste projects in addition to water and wastewater.

3. Conduct a thorough third-party analysis of alternative ways to use NADB paid-in capital to finance border environmental infrastructure projects as currently defined by the BECC and the NADB that would offer affordable funding opportunities while maintaining the paid-in capital.

4. Continue to provide technical assistance and capacity building to border communities through the NADB's Institutional Development Program (IDP) and the Utility Management Institute (UMI).

5: Before any wholesale changes are even considered to the BECC/NADB process, appoint an independent auditor or auditors to do a complete analysis of the BECC and the NADB, including but not limited to the following: