Infrastructure Asset Management


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Infrastructure Asset Management

  1. 1. Infrastructure Asset Management A Practical Guide for Utility and Public Works Directors This guide was developed to help public officials how they would ensure the maximum return on understand the practical matters related to asset the public investment already made in the management so that more officials are infrastructure of the utilities they were to comfortable exploring how asset management acquire. In 1993, “asset management” made its can truly benefit their organizations. More way into the public works lexicon when the specifically, this paper: Australian Accounting Standards Board issued the Australian Accounting Standard 27 (AAS27). places asset management in a historical AAS27 required and technical context, municipalities to describes the difficulties that public capitalize and agencies face in implementing asset depreciate management programs, and infrastructure assets suggests an approach to asset rather than expense management that is incremental, them against earnings. systematic, and therefore, achievable. Thus, infrastructure – roads, sewers, fire Historical Background hydrants and the like – The word “asset” derives from the Latin ad satis, the domain of the meaning sufficiency. It was adopted long ago by engineer, was now a the accounting profession to denote real complex set of problems property of sufficient value to offset the debt, or for accountants to liability held by an individual or organization. manage. Many U.S. utilities have historically The term “asset management” first appeared in already adopted this type of accounting the banking industry to describe an investment convention, either to comply with revenue bond practice that built wealth through investments in funding covenants or because they were subject different types of financial vehicles. These to public utility commission regulations or vehicles – bonds, stocks, real estate, etc. – could guidance. However, the advance resulting from be valued and posted on the ledger as assets. the work of the New Zealand National Asset Moving money between these vehicles – or Management Steering Group and the Institute of managing money – became known as managing Public Works Engineering of Australia was to assets. advance this concept beyond solely a paper An early, comprehensive accounting transaction. Those groups developed adoption of the term “asset a framework that acknowledges that current management” in the actions can and do affect the useful life and cost engineering effectiveness of asset investments. This, at least profession was in the view of CDM, was the beginning of the during privatization heightened interest in asset management we of water utilities in have seen in the U.S. over the past 10 years. Great Britain in the 1980s. In order to Here in the U.S., the Federal Highway establish equitable pricing, Administration (FHA) has had a leadership role privatizers had to develop in advancing the principles and practices of asset detailed asset management plans identifying management to the built environment. A 1-1
  2. 2. Infrastructure Asset Management A Practical Guide for Utility and Public Works Directors Beginning in the early 1990s, the FHA began requires asset management as a condition of working with state Departments of eligibility. The provisions have not been enacted Transportation on various management practices into law as of yet, but demonstrate the that ultimately became so fundamental to FHA’s pervasiveness of the concept. mission that they created the Office of Asset Management to provide leadership and expertise Difficulties Experienced in the systematic In the eyes of the American Public Works Asset management management of Association, “the issue of managing a effectively represents highway jurisdiction’s [infrastructure] assets is no longer a shift from a infrastructure just an engineering problem; lawyers, planners, “management from assets. In 1999 – accountants, analysts, citizens all have a role to exception” the same year the play. Asset management effectively represents a philosophy now Office of Asset shift from a management by exception prevalent in public- Management was philosophy now prevalent in public works works operations and created, the operations and planning. A fully implemented planning. Governmental public works asset management system will Accounting allow decision makers to explore how each Standards Board issued Statement 34 (GASB34)1, action–e.g., operating and maintaining existing a U.S. accounting standard similar in many ways facilities as well as building new ones–is likely to to Australia’s AA27. GASB34 sought to provide influence both current budgets and long-term users of governmental financial statements a regional well being.”3 more complete picture of the assets and liabilities facing these entities. This interdisciplinary view of asset management is enforced by the General Accounting Office Other seminal events in the evolution of asset (GAO), which makes a strong case that an management in the U.S. include the publication effective asset management program requires of “Infrastructure 2000,” which identified a integration of data and decision making across systematic and growing gap in the need for the accounting, engineering, finance, infrastructure funding and the available amount maintenance, and operations functions of an of such funding. The report found that the need organization.4 for repair and replacement funding was especially critical. Then in January, 2001 the U.S. No wonder public works and utilities directors Environmental Protection Agency issued a draft have had difficulty implementing asset rule known as CMOM (capacity, management, management programs! It is enough of a operations, and maintenance). CMOM, while challenge to manage one’s own departments specific to wastewater collection systems, is effectively. To achieve seamless, inter- significant because it is the first pending departmental decision making involving regulation that may require that asset attorneys, accountants, financial managers, plant management programs be implemented within affected departments of public works and municipal utilities.2 Subsequently, Congressional 3 Asset Management for the Public Works Manager: legislation extending the authorization for the Challenges and Strategies. Findings of the American state revolving fund programs for water and Public Works Association Asset Management Task Force, wastewater has incorporated language that August, 1998. 4 Comprehensive Asset Management Has Potential to Help Utilities Better Identify Needs and Plan Future 1 Information about GASB34 is provided in Attachment 1 Investments. General Accounting Office, March, 2004 2 Information about CMOM is provided in Attachment 2 (GAO-04-461). A 1-2
  3. 3. Infrastructure Asset Management A Practical Guide for Utility and Public Works Directors operators, engineers, planners, and maintenance making you do every day: the priority-setting, personnel…that is quite a challenge. what-if analysis and “buck-stops-here” responsibility you exercise. An asset Studies in Canada and the U.S. have revealed management program is a set of procedures that some of the common difficulties public works, institutionalize and preserve that decision utilities, and municipal officials have faced in making. And what makes having a program so implementing asset management programs5. important is that it: Their observations are consistent with our own and are summarized below: Makes the decision making understandable to others Challenges: Provides a consistent framework for making those decisions and balancing Too much maintenance and condition competing needs and interests data is required Creates data that can make next year’s Inadequate standards of analysis exist decision making even better for valuing assets and establishing Establishes roles, goals, and metrics condition assessments that can focus and motivate your entire There is a lack of cost-effective, non- organization toward more cost- invasive, and non-destructive effective operation inspection and condition assessment tools; More than anything else, an effective asset Software tools are too complicated; management program will help you get the The value of asset management cannot funding required to run a first-class operation. be realized during a typical election Whether your operation is funded through rates, cycle taxes, debt service, grants, or any combination, An asset management plan could an asset management program will provide your increase the short-term revenue funders sound, understandable data illustrating requirements of an organization when the revenue you need and the consequences of its intent is to decrease the cost of not getting it on a timely basis. operation. However, costs savings are long term There are many definitions of asset management. “This is a pain…we already do this CDM is fond of this one, provided by the FHA: stuff!” “Asset management is a systematic process of maintaining, upgrading, How to Design and Implement an and operating physical assets Asset Management Program cost effectively. It combines If you are responsible for the planning, design, engineering principles with sound construction, operation, or financing of public business practices and economic infrastructure, you already do asset theory, and it provides tools to management. It’s that simple. facilitate a more organized, logical approach to decision making. Thus, But doing asset management is not the same as asset management provides a having an asset management program. The doing framework for handling both short- of asset management is the complex decision and long-range planning.6” 5 Municipal Infrastructure Asset Management: A Best Practice. National Guide to Sustainable Municipal Infrastructure. Canada, 2003. A 1-3
  4. 4. Infrastructure Asset Management A Practical Guide for Utility and Public Works Directors [Your customers may not always recognize the In keeping with this definition, there are six value of the service you provide them, which questions that your asset management program sometimes complicates this chain of events.] This must enable you to answer:7 money is seen as revenue that is either collected by your organization or distributed to your 1. What assets do you have and where are organization in the form of a budget. they? 2. What is the remaining service life of your That revenue is accounted for and used to offset assets? the cost of engineering, operations, maintenance, 3. What are they worth in real dollars? and the other activities you oversee. Those 4. What needs to be done to preserve your activities provide value to your customers in the assets (repair, renewal, or replacement)? form of specific services, such as the provision of 5. When do you need to do it and how much drinking water, disposal of waste, pedestrian will it cost? and vehicular transport, and so on. All those 6. How will you equitably distribute the cost services depend upon physical infrastructure, burden among users? which has inherent dollar value commensurate with its condition and/or remaining useful life. The Asset Management Conceptual Your ability to preserve those infrastructure Model assets so that they provide the maximum value To answer these questions, CDM has developed to your customers – or return on investment – is a conceptual model and a six-step process to the heart of your asset management program. configure this model to fit your organization. In this model, the key variables – those that must Here is how the model works: be configured to meet your specific goals, structure, culture and resources – are: The methods you employ to make asset preservation decisions, and The movement of revenue through your organization. They are represented by the small black arrows to support your preservation decision making. Customers – rate payers, the public, “users” of That revenue, mapped in the form of your services – have needs and pay money to annual capital and operating budgets, is a major determinant in how well an organization your organization to have those needs met. performs and achieves the asset management goals. More informed maintenance, repair, 6 Asset Management: Advancing the State of the Art Into the 21st Century Through renewal, and replacement decisions allow Public-Private Dialogue. Federal Highway Administration and directors to adjust the timing of preservation the American Association of State Highway and Transportation Officials, 1996. activities, providing more flexibility in leveling 7 capital expenditure requirements between These questions are derived from information contained in Municipal Infrastructure Asset Management: A Best Practice. National Guide to budget years. Leveling, in turn, delivers Sustainable Municipal Infrastructure. Canada, 2003. optimum financial returns. Asset managers of the future will be judged by their ability to A 1-4
  5. 5. Infrastructure Asset Management A Practical Guide for Utility and Public Works Directors Step 1 – The Asset Management Strategy During development of the asset management strategy, a set of guidelines must be established for making decisions about, and establishing funding mechanisms for R&R. In CDM’s approach, the strategy must explicitly address three timeframes: 1. Immediate, or the corrective action phase 2. Near-term, or the tactical planning phase, and 3. Long-term, or the strategic planning phase These phases, and the elements of each, are optimize the cost of maintaining existing assets illustrated in the below figure. against replacements, while meeting a defined level of service to the public. The Six Steps For years, with some “back-of-the- envelope” estimates of infrastructure age and original installed cost, engineers have made estimates of long-term repair and replacement (R&R) expenditures. These estimates have been rudimentary and self- fulfilling as opposed to informed and strategic. And as a result, communities and utilities frequently discount these needs and do not adequately plan, and thus understate their revenue needs. However, the lack of a systematic program In addition to establishing the R&R criteria for increases system failure, increasing costs in the each of these planning phases, the strategy must short and long term. As a result, municipalities address the three core planning elements of: have not been generating enough revenue from user rates and taxes to cover their full cost of Organizational alignment and service. Lots of revenue is consumed in the near readiness; term since there is often no choice but to react to Business process definition and a problem and repair an asset as a corrective or documentation; and emergency measure. The time frame in which we Technology have faced the greatest problems is the 2-5 year window. This is the timeframe in which we must Organizational and business process matters are select specific assets to be repaired or replaced in self explanatory. It should be clear from the time to get projects funded in the capital earlier discussion on difficulties others have improvement program. encountered with asset management that your entire organization must be aligned to a set of A 1-5
  6. 6. Infrastructure Asset Management A Practical Guide for Utility and Public Works Directors clear goals and the ownership of business The fewer levels in the hierarchy, the less data processes and outcomes must be documented. will need to be managed. The tradeoff, of course, is that there will be less data to analyze. The trick Regarding technology, it is impractical to is to identify the fewest number of “parts” of implement an asset management program assets while retaining the ability to track each without some sophisticated computer tools. The asset’s performance as it relates to the designed basic tools required include a database of all life expectancy and service level. The hierarchy your assets – in which the initial capital should allow for reconciliation of an asset in the investment, maintenance, renewal, and hierarchy with an asset in your community’s replacements costs are tracked – and a flexible financial accounting system. If you are already report generator that allows multiple views of using a maintenance or work management these data based on various assumptions and system, you may already have adopted a funding scenarios. The availability, use, hierarchy that is embedded in that software. This maintenance, and integration of these tools should be reviewed for compatibility with your within your enterprise-computing environment asset management goals. An optional element of is something that must be scoped, scheduled, this step is to classify assets into importance or and budgeted in the plan. It should be noted that criticality. In some programs, this classification is you have discretion in how comprehensively used as a prioritization tool for determining you tackle this problem. For example, you may which assets to preserve before others. only start this with a single treatment plant, the downtown infrastructure, or just pumping The process of inventorying your assets is likely stations. The pace and focus of the program is to be the single most time consuming and something you can and should control. expensive part of your asset management program. Step 2 – Asset Inventory The asset inventory is a database of your assets. Step 3 – Assess the Condition of It is necessary to distinguish between an asset and a part. There are just too many individual Assets pieces of equipment, or parts of assets to be able Typically, during the initial inventory step, a to create and maintain a record of each. This condition assessment is made concurrently. It is distinction is often referred to as a “hierarchy.” important to remember that condition A sample generic hierarchy is illustrated below. assessments must be made at regular intervals. Step 3, therefore, is the beginning of the iterative, or continuous phase, of the asset management program. As discussed earlier, one of the difficulties encountered with asset management programs is the lack of availability of models, methods, and appropriate guidance for how to conduct condition assessments. This is a step that requires both creativity and common sense. For some assets, there are good models and best practices available for condition assessment – the NASSCO Asset Hierarchy sewer pipe condition rating system is one A 1-6
  7. 7. Infrastructure Asset Management A Practical Guide for Utility and Public Works Directors such example.8 Paving condition assessment Step 5 – Establish Capital and methodologies are quite mature. Operating Budgets The valuation step can readily be projected to a During step 3, it is important to determine how total-dollars-per-year requirement to either “condition” is defined for each type of asset and, replace or perform major rehabilitation for all the indeed, whether to define condition. In many assets that have been inventoried. cases, the condition of an asset is less relevant than, or is simply a surrogate for its useful life. In This projection is typically very uneven, with these cases – for a mechanical blower for some years showing a large requirement and example, it may be more expedient to directly many years showing lesser requirements. These estimate the useful remaining life of the asset numbers will be very dependent upon when than it is to say it is in “fair” or “poor” condition. large assets require R&R. In It is rarely possible to Step 4 – Financial Valuation of Assets order to accumulate the full This is the step that gives asset management its minimize amount necessary to name. Without this step, we would be talking financial burden, replace multiple major about “infrastructure maintenance” or “facilities it is necessary to management.” But we are talking, indeed, about assets and the reserve “smooth out” asset management. The valuation step is a bit may need to be these projections tricky. As the public works or utility director, supplemented by long- by determining you are only marginally concerned with the total term borrowing. an amount to be valuation of your installed assets. The value of reserved for R&R that portfolio, if you will, is a bit academic. What each year that will result in a near-flat funding is germane is the amount of revenue you will curve throughout the study period. A planning need to keep those assets functioning at the level horizon of at least 20 years is preferred in order of service your customers demand. That revenue to plan adequately for the large asset requirement is a function of the value of the replacements. Funding the R&R reserve in an installed assets. More specifically, it is a function adequate amount each year will allow the of the remaining useful life of your assets, the organization to accumulate excess funds in some cost of replacement, and your ability to preserve years in order to expend additional funds in the assets through optimal R&R planning. other years. The purpose of this step is to establish an It is rarely possible to accumulate the full assessment of the system’s replacement value to amount necessary to replace multiple major inform future budgeting. By understanding and assets and the reserve may need to be establishing the replacement value, it is possible supplemented by long-term borrowing. This will to assess and evaluate the cost effectiveness of be individual to each organization and cannot be R&R strategies. There are a variety of formulized. The R&R reserve transfer should approaches to obtaining these estimates, and can become part of the revenue requirement for be done relatively cost effectively. rates. The fairness doctrine here is that the current customers who are “using up” the assets, so to speak, are contributing to their replacement. The key concern raised by many customers is that they do not want to be paying for 8 Manual of Sewer Condition Classification. National Association of Sewer Contractors (NASSCO). A 1-7
  8. 8. Infrastructure Asset Management A Practical Guide for Utility and Public Works Directors improvements now so that future customers can objectives. For example, a typical infrastructure benefit from and not have paid anything to maintenance, repair, and replacement program support the facilities. This funding approach would include three primary functional more accurately matches the cost of an asset with objectives: the benefits/service provided by that asset. 1. Capacity restoration – this objective is Step 6 – Maintain, Repair, Renew, and aimed at keeping assets functioning at Replace Assets to Achieve their full, original capacity. Examples are Sustainability removing sediment or debris from a Implementing an asset management program pipeline system; reducing infiltration and supports the long-term maintenance, repair, and inflow in a wastewater collection system; replacement of the assets needed to achieve and/or repairing system defects that sustainability. Two steps to achieving would limit system flow capacity. sustainability are dedicating sufficient funding to support system needs and making smart 2. Damage repair – this objective is aimed at decisions about where to allocate this funding repairing structural damage and failures first. An asset management program coupled in the system that are the result of wear, with a sound decision support approach will corrosion, age, and/or construction- allow utilities to meet each of these objectives. related damage. This function reduces the risk of system failure that could cause In many cases, funding levels and priorities for interruptions in service, negative impacts the maintenance, repair, and replacement of to the community, and increase costs as assets have been based on rules of thumb, compared to scheduled maintenance and operator knowledge, and seat-of-the-pants repairs. understanding of system needs. While these are often reasonable approaches to making these decisions in the short term, these approaches 3. Maintenance reduction – this objective is typically fail in the long term for a number of aimed at repairing portions of the system potential reasons: that are subject to known, repeated maintenance problems that increase maintenance costs and keep crews from • Proposed budgets based on rules of conducting more productive preventive thumb can not withstand high-level maintenance. Examples in a wastewater scrutiny during budget-cutting times; collection system are the repair of • Staff turnover results in a lost knowledge conditions such as root intrusion, offset base to support these decisions; and joints, pipe sags, improper service • Undocumented assumptions cannot be connections, and other system tested and confirmed to improve the deficiencies that typically lead to decision-making process in the future recurring problems for system operators. To reverse this trend, it is important to define the functional objectives that must be achieved by a maintenance, repair, and replacement program. Once these functional objectives are defined, they may be used with assembled asset information to set priorities, allocate funding, and document the success in meeting identified A 1-8
  9. 9. Infrastructure Asset Management A Practical Guide for Utility and Public Works Directors By defining these functional objectives, utility The financial management benefits from an asset managers can develop specific criteria to set management system are many. It gives managers a priorities for where in the system each function system to accurately project maintenance and is needed. In addition, financial analyses may be capital replacement trends into the future. The conducted for each of these criteria to system will assist in developing annual funding demonstrate the returns that will be achieved on profiles for the maintenance, repair, rehabilitation, infrastructure investments. This provides a and replacement of assets. Progressive maintenance mechanism to defend proposed funding levels planning funded through an asset management and present the business case for increasing system will limit the frequency of expensive and maintenance, repair, and replacement disruptive corrective maintenance, reducing costs investments. over time. Historic levels of maintenance can be projected for assets nearing This analysis approach, coupled with condition the end of their useful lives. The identification of assessment information needed to support these assets projected for disposal will trigger requests objectives, improves and documents the basis for for planning support, design, and funding for setting budgets and priorities so they are more replacement. By tying costs to asset condition, and clearly understood by decision makers. Lastly by long-term planning for each asset, it provides and possibly most importantly, the resulting reliable information for policy makers so they can benefits from the investment in the maintenance, understand long-range funding needs. repair, and replacement program must be quantified and documented. This last element, documenting benefits and results, is essential to defending the need for funding on an annual, recurring basis so that the long-term success of the program is not undermined. Conclusion Asset management really represents a way of conducting and operating a business, not a one- time project. The creation of an asset management program requires the involvement of engineers, financial planners, maintenance professionals, operators, accountants, and, in some cases, attorneys. Integration of data from key business units is critical to creating an asset management strategy and program. An asset management strategy cannot be developed without first defining objectives and constraints. Infrastructure asset knowledge (condition information, etc.) is a critical part of building predictive and decision-making models. However, we cannot optimize repair and replacement dollars by simply collecting data; we must know what optimization problem we are trying to solve and organize and report that information to help inform strategic and tactical decision making. A 1-9
  10. 10. Infrastructure Asset Management A Practical Guide for Utility and Public Works Directors The “modified” approach also requires an Attachment 1 inventory of assets, but also requires a quantitative measure of the level of service to GASB34 be provided by each asset, a plan to maintain that level of service, and a minimum 3-year GASB sets reporting and accounting rules for evaluation cycle to ensure that the required municipal and state governments and agencies. level of service is being provided by each While GASB’s statements do not have the force asset. This is essentially an asset of law, they define “Generally Accepted management program. Accounting Principles,” or GAAP for Under the “modified approach,” each asset is governmental entities. Financial statements identified and a service level established for that must comply with GAAP to receive an asset. A condition assessment9 is made of each unqualified opinion from a public entity’s asset and a determination is made of what is outside auditor. The failure to obtain an necessary to maintain the asset’s current unqualified opinion may adversely affect a condition, or to bring the asset up to the municipality’s ability to borrow money and established service level. This condition level receive grants. must be established through a formal policy GASB Statement 34 is a recent requirement for adopted by the public entity. It is necessary to state and local governmental units intended to determine the funding level required for meeting provide users of financial statements a more the required service levels, so budgets must be complete picture of the financial health of the set, including providing an appropriate governmental unit(s). Among the many maintenance as well as a capital program to requirements of GASB34, is that the unit provide renew the asset if necessary. Finally, an annual information on its long-term infrastructure asset report of actual money spent versus funds base. Until GASB34, there was no requirement budgeted for repairs and maintenance will be that governmental units include any such prepared and attached to the annual audit. On a information in their financial statements. periodic basis, at least once every 3 years, the entity must review its compliance with its More specifically, GASB34 requires reporting the overall service plan. value and/or condition of publicly owned capital and infrastructure assets for all Although the modified approach is likely to be governmental properties and assets based on one more time consuming and require more work to of two accepted methodologies. The critical implement than the depreciation approach, bond issue is that a governmental entity maintain a rating agencies and insurers will likely prefer record of asset value based upon either the time this approach since it provides a much more value of the asset (depreciation approach) or its complete picture of the organization’s assets and actual physical condition (modified approach) liabilities, and thus long-term financial risk. The relative to an asset service level designation. value of the modified approach to the utility and public works director is that it produces a The “depreciation” approach requires an method for prioritizing maintenance, renewing inventory of assets, determination of their and replacing aging infrastructure, linking to a original cost, assessment of their useful life, budget program that puts more emphasis on and the depreciation of those original costs in preventive rather than corrective maintenance the financial statements. A 1-10
  11. 11. Infrastructure Asset Management A Practical Guide for Utility and Public Works Directors activities, and, thus ensuring more consistent, reliable, and equitable funding. Nonetheless, because the modified approach involves increased effort, many utilities have determined that a practical approach to GASB34 compliance is to use the depreciation method for formally meeting GASB34 requirements, while concurrently implementing an incremental modified approach by piloting a limited number of assets based upon which to develop the procedures and methodologies appropriate to the organization GASB34 Compliance Deadlines Revenue Phase Implement Category in FY after $100 Million + 1 June 15, 2001 > $10 Million 2 June 15, 2002 and < $100 Million < $10 Million 3 June 15, 2003 For historical assets acquired after June 15, 1980 $100 Million + 1 June 15, 2005 > $10 Million 2 June 15, 2006 and < $100 Million < $10 Million 3 Exempt A 1-11
  12. 12. Infrastructure Asset Management A Practical Guide for Utility and Public Works Directors that receives wastewater from the Attachment 2 satellite collection system. (For many municipalities, this will be a Capacity, Management, Operations, new permit with all the and Maintenance (CMOM) enforcement powers of the National Pollution Discharge Elimination System regulations.) The CMOM regulations are EPA’s policy initiative to move communities to reduce and 2. Municipal Sanitary Sewer System CMOM ultimately eliminate sanitary sewer overflows Program. (SSOs), which are a violation of the Clean Water This is the heart of the draft regulation. All Act. On January 5, 2001, EPA Commissioner NPDES permittees (including satellite collection Browner signed and issued the draft rule on systems with SSOs) will be required to develop SSOs. Since that time, EPA has broadened the and implement a comprehensive CMOM definition of SSO’s to include discharges that program following the standards prescribed in reach waters of the U.S., as well as overflows the regulation. that do not reach waters of the U.S., which includes wastewater backups into buildings The key elements of a sound CMOM program caused by utility operations. include: The 120-day comment period for the draft rule Planning to ensure adequate capacity during will not begin until the proposed rule is both dry and wet weather, published in the Federal Register, and the EPA administrator has delayed this pending inter- Effective overall system management, agency review and approval. This delay does including mapping, maintenance tracking, not remove the potential for enforcement actions training, and supervision, by EPA regional enforcement staff, since SSOs are Clean Water Act violations. Enforcement Efficient operations, as measured in spending, actions, which are discretionary, can lead to equipment performance, and efficiency, and consent decrees or permit requirements that require a utility to implement a CMOM-type Regular system maintenance. program. The following is an overview of the four-part draft regulation: 3. Municipal Sanitary Sewer Systems-General Prohibitions 1. Municipal Satellite Collection System This portion of the proposed regulation defines This section of the draft regulation will require the general prohibition of SSO discharges and owners of municipal satellite collection systems the use of enforcement discretion for SSOs to: caused by “severe natural conditions,” and affirmative defenses for discharges caused by Obtain a “no discharge” NPDES other factors beyond the “reasonable control” of permit, or the utility. The affirmative defense clause is very important to POTWs to provide appropriate Issue a permit amendment to the liability protection for SSOs that are beyond the owner of the permitted publicly “reasonable” control of the utility. owned treatment works facility A 1-12
  13. 13. Infrastructure Asset Management A Practical Guide for Utility and Public Works Directors 4. Municipal Sanitary Sewer Systems- Reporting, Public Notification, and Recording This portion of the rule defines what is considered an SSO, and defines procedures for agency notification, public reporting, and record keeping. These procedures include immediate notifications and follow-up reports, discharge monitoring reports, and annual reports. The current definition of an SSO as outlined in the regulations is as follows: “A sanitary sewer overflow (SSO) is an overflow, spill, release, or diversion of wastewater from a sanitary sewer system. SSOs do not include combined sewer overflow or other discharges from the combined portions of a combined sewer system. SSOs include: Overflows or releases of wastewater that reach waters of the United States; Overflows or releases of wastewater that do not reach waters of the United States; and Wastewater backups into buildings that are caused by blockages or flow conditions in a sanitary sewer other than a building lateral. Wastewater backups into buildings caused by a blockage or other malfunction of a building lateral that is privately owned is not an SSO.” The SSO draft regulations were developed on the premise that utilities that routinely evaluate and improve their sanitary sewer systems will reduce the likelihood of Clean Water Act violations, extend the life of their infrastructure, and provide better customer service. The regulations specifically discuss the development of an asset management approach to maintenance as the procedure for deflecting regulatory action and fees if a SSO event occurs. Therefore, the steps involved with creation of asset management procedures and funding strategies discussed under GASB34 are components of the CMOM requirements as well. A 1-13