Politics behind the scenes in Fulton sewer debate

County Commissioner Liz Hausmann: Hausmann raised questions about Fulton's plan to close Cauley Creek with the governor, EPD and the regional water district, even as other Fulton officials tried to convince some of the same agencies their plan made sense.

Gov. Nathan Deal: Deal's staff met with Cauley Creek's owners, who wanted him and EPD to prohibit Fulton from closing the plant until the water district reviewed the proposal. They didn't get what they wanted. But two weeks after the meeting, Turner announced the Fulton County audit.

Cauley Creek CEO Ron Green: Green and his customers pressed Fulton officials to keep his plant open and, later, to reconsider their decision to close it. Now he's using the EPD audit as leverage to convince them to reopen the plant.

Previously: Fulton County commissioners voted to end their contract with the Cauley Creek wastewater treatment plant in 2012, a decision that shuttered the plant. The state Environmental Protection Division launched an audit that found Fulton violated a regional water plan by charging the plant's former customers discounted rates for irrigation water.

The latest: Cauley Creek CEO Ron Green has offered to sell the plant to the county or reopen it himself and contract with the county to treat wastewater. He's billed the proposal as a way to address the EPD audit. Fulton officials have said they plan to address the audit by letting the contracts with Cauley Creek's former customers expire, then charge them full price.

What's next: County commissioners must decide whether to take Green up on his offer. EPD must decide whether Fulton is making a "good faith" effort to comply with the regional water plan.

When Fulton County officials decided they no longer needed a private sewage treatment plant in Johns Creek, the facility’s owners launched an intensive lobbying campaign to save it.

They lost the battle in 2012 when the County Commission voted to end its contract with the Cauley Creek treatment plant, a move the board said would save Fulton water and sewer customers an estimated $49 million.

But two years later, the owners may be close to winning the war, thanks in part to a state audit that critics say was politically motivated.

The state has denied those accusations. But what is clear, an Atlanta Journal-Constitution investigation has found, is plenty of politicking was going on behind the scenes as state regulators decided how to respond to Fulton County’s vote, which led to the plant’s closing. Cauley Creek’s owners lobbied Gov. Nathan Deal, the state Environmental Protection Division and a regional water board, asking them to force the county to reverse its decision.

Amid the lobbying, EPD launched an audit that found Fulton violated water conservation rules – an audit Cauley Creek CEO Ron Green is now using as leverage to convince the county to reopen his plant, though Fulton officials insist they don’t need it.

“I thought that whole (audit) process was orchestrated,” said former Commissioner Robb Pitts, who left office in December.

The debate pits Fulton’s desire to save tens of millions of dollars against state conservation efforts and a private company’s quest to keep a lucrative contract. Some Fulton officials think private profit and political connections are getting the upper hand.

“Ron Green, he stood to lose a lot,” Pitts said. “He’s going to do everything he can and use everything in his power, including his money.”

Green said company officials “were never privy to nor did we offer any input to the EPD relative to its decision to conduct an audit.”

State officials say Fulton’s hasty decision to close Cauley Creek has undermined regional conservation efforts. They say the county should have asked the water district’s permission before closing the plant.

“They made a decision it was worth saving short-term dollars,” said EPD Director Judson Turner, who ordered the audit. “We tried to make it clear there could be consequences.”

But hundreds of pages of state and county records reviewed by the AJC show current and former EPD officials told Fulton officials they didn’t need permission to close the plant.

No longer needed

Cauley Creek opened in 2002, when the county was desperate for more sewage capacity in booming north Fulton. For a decade, Fulton paid the plant’s owners to turn sewage into non-drinkable, “reused” water. Cauley Creek then sold the water for irrigation. It’s customers included several golf courses like the Atlanta Athletic Club and Country Club of the South.

When Fulton officials decided in 2012 they no longer needed the plant, the county was paying Cauley Creek more than $7 million a year. Meanwhile, much of the capacity at their own Johns Creek Environmental Campus – which opened in 2010 – went unused.

County officials concluded their new plant had enough capacity to accommodate growth in the Johns Creek area through 2035. They said Cauley Creek was always intended to be a temporary solution.

Cauley Creek, its customers and Johns Creek community leaders objected. The golf courses said closing the plant could threaten their access to irrigation water in a drought. City officials feared losing the plant’s capacity could eventually hinder development.

But in September 2012, the County Commission voted 5-2 to terminate the contract. It was a bipartisan vote, with Chairman John Eaves and Commissioner Liz Hausmann dissenting.

Fulton agreed to sell the plant’s former customers drinkable water for irrigation, charging them a discounted rate. Closing the plant allowed Fulton to cut water and sewer rates by 4 percent, commissioners said. The county expects to save $49 million through 2021, when the Cauley Creek contract was set to expire.

But terminating the contract did not end the controversy. Hundreds of pages of emails and other correspondence from several public agencies show Cauley Creek’s owners lobbied to overturn Fulton’s decision.

They took their case to the Metropolitan North Georgia Water Planning District, which oversees regional conservation efforts. Significant changes in local water systems require amendments to the district’s plans.

Fulton officials believe they didn’t need an amendment to close Cauley Creek. They cite more than a dozen similar actions taken by other local governments in recent years in which the water district required no amendment. The district wastewater plan says closing small facilities and shifting their flows to other plants does not require an amendment.

Others shared the county’s opinion, including consultant David Word, a former EPD assistant director who also spent a year working for the water district.

“Local governments in the MNGWPD routinely shift wastewater flows from one (treatment plant) to another based on economics and other reasons,” Word wrote in a memo.

EPD’s staff reached a similar conclusion. In a meeting with Fulton water officials, agency officials signaled there would be no regulatory hurdles, according to a county memo. EPD assistant branch chief Gail Cowie later confirmed in an e-mail that “our preliminary thinking is that an amendment would not be needed.”

In an interview with the AJC, Cowie said she erred in expressing that opinion without first checking with the water district. She said it was the water district’s decision to make, not the EPD’s.

In a letter to county commissioners two weeks before they terminated the Cauley Creek contract, EPD’s Turner expressed concern about closing the plant, citing the environmental benefits of its reused water. But he said nothing about the need for an amendment and threatened no EPD action if the county closed the plant.

Lobbying gains traction

But Cauley Creek’s lobbying campaign was gaining traction.

A few weeks before the County Commission vote, lobbyist Arthur Edge met with Boyd Austin, the mayor of Dallas, Ga., and the chairman of the regional water district. Edge represented golf courses that used Cauley Creek’s irrigation water.

In an email to his clients obtained by the AJC, Edge said he argued that the proposal to close Cauley Creek should be considered a “significant amendment” to the district’s regional water plan.

“I am very pleased to report that the chairman has agreed with our position and has sent a letter to each of the Fulton County commissioners advising them that they must meet with the board BEFORE voting to terminate the contract,” Edge wrote.

Edge told his clients the move “may well prevent Fulton County from acting on this matter in September.”

That would have been a significant victory for Cauley Creek because its county contract required 90 days’ notice to terminate. Delaying a vote beyond September would have meant an automatic extension of Cauley Creek’s contract for 2013, giving the plant’s owners millions in additional revenue and another year to negotiate. a better deal.

Austin said he does not recall meeting with Edge. But the week of the meeting, Austin wrote a letter to Fulton officials that said closing Cauley Creek would require an amendment to the district’s plan.

Facing a deadline to terminate the contract and assured by their staff they didn’t need an amendment, county commissioners voted to close Cauley Creek anyway.

Austin said Fulton decided to ask forgiveness instead of permission.

“They just kind of said, `This is what we’ve done. You can like it or not,’” he said.

After the County Commission vote, Austin wrote to EPD’s Turner, urging him to prohibit Fulton from closing Cauley Creek until the district reviewed the plan. He accused the county of ignoring state law and said the “credibility and reliability of the district’s governance of water policy is at stake.”

Cauley Creek’s owners – including GE Energy Financial Services, which invested $18 million in Cauley Creek in 2006 – took that same message to Gov. Deal a few weeks after the County Commission vote.

Discussion points prepared for the meeting show they argued the issue demanded the governor’s attention because Fulton was undermining the water district’s effectiveness and relevance. They urged the governor to intervene, according to documents prepared for the meeting, with “timely enforcement action that causes Fulton County to reverse its decision to terminate.”

They wanted EPD to prohibit Fulton from closing the plant until the water district had reviewed the proposal.

EPD took no such action. But two weeks after the meeting at the governor’s office, Turner notified the county that EPD would audit Fulton’s compliance with the water district plan. He said the audit was needed because of the discount rates Fulton planned to charge Cauley Creek’s former customers, as well as its failure to seek an amendment to the water district’s plan – an amendment his own staff had initially concluded the county didn’t need.

The governor’s office declined to comment, referring questions to Turner. Turner said the governor did not request the audit.

Turner acknowledged being lobbied by Cauley Creek, the golf courses and others on the issue. But he said Fulton’s decision to bypass the water district — not the lobbying — led to the audit. He said the county should have raised the issue with regulators much sooner.

“Your not doing something doesn’t make it my emergency,” Turner said. “There was a way to do this. It was probably going to take them another year. Still, I think it wasn’t too much to ask for them to follow the process.”

Fulton in a tough spot

Despite the audit threat, Fulton County Commissioners later reaffirmed their vote to cancel the Cauley Creek contract. The plant closed. But the EPD audit was under way.

In December 2013, EPD announced its audit findings: Fulton did not comply with the metro water district’s plan. It charged too little for irrigation water generally. And it charged Cauley Creek’s former customers too little for the drinkable water they now used for irrigation. The EPD said the low price discouraged conservation.

The audit carries a steep price for the county. Until it addresses the findings, Fulton can’t expand any treatment plant. EPD already has rejected the county’s requests to expand two north Fulton sewer plants, a move that could eventually hinder development in parts of Alpharetta, Roswell and Milton.

Fulton has raised irrigation rates to comply with the water district plan. But it’s still charging nine former Cauley Creek customers discount rates for irrigation water.

Meanwhile, Cauley Creek CEO Green has offered to sell the plant to Fulton County for $15 million or to reopen it himself and contract with the county to treat wastewater. A big selling point: Reopening the plant could resolve the audit by providing reused irrigation water to Cauley Creek’s former customers at rates acceptable to the water district.

Green said Fulton has two options to address the EPD audit: It can reopen the plant or breach its contracts with Cauley Creek’s former customers by raising their rates.

Fulton has asked EPD to approve a third option: Let the contracts with the Cauley Creek’s former customers expire, then Fulton will charge them full price. The contracts begin expiring in 2017, with the last expiring in 2023.

In a recent letter to EPD, Fulton officials noted that 24 other local governments – including the City of Atlanta and Cherokee and Fayette counties – charge less than they’re supposed to for irrigation water. According to EPD, none of those governments has been found in violation of the water district’s plan.

EPD is reviewing Fulton’s latest correspondence. The agency could reject the county’s argument, or it could determine it’s making a “good faith” effort to comply with the water district plan. That would allow it to expand treatment plants.

Meanwhile, county commissioners are considering Green’s offer. Some believe it could solve Fulton’s audit problems and boost the economy by aiding golf courses that attract major tournaments.

“(The plant) has a definite economic impact to the area that I think is important,” said Commissioner Hausmann, whose district includes Cauley Creek.

Others say it would be a mistake to reopen the plant. They believe the audit was politically motivated.

“Our people told us we were wasting money,” said former Commissioner Bill Edwards, who left office in December. “Everything else is politics. Everything.”

Turner disputes that. If Fulton officials are in a tough spot, he said it’s their own fault.

“There are some ways out of it,” he said. “It’s not going to be easy, I guess.”

Green insists he didn’t influence the actions of the EPD or the water district.

“That’s between them and the county,” he said. “I stay out of it altogether.”