INDEPENDENTREVIEWͲ
WHANGANUIWASTEWATER
TREATMENTPLANT
PREPAREDFORWHANGANUIDISTRICTCOUNCIL
AnindependentreviewofthefactspertainingtoWhanganuiDistrictCouncil’sdecisionͲ
makingprocessesfrom2003to2012leadingtothefailureofitswastewatertreatmentplant.
RobertDommMBA,MLLR,LLB,BA,GDLP
9September,2016
NOTE:ThecontentofthisreportreflectstheoutcomeoftheIndependentReviewanddoesnotnecessarily
reflecttheviewsofWhanganuiDistrictCouncil.
INDEPENDENTREVIEW
WHANGANUIWASTEWATERTREATMENTPLANT
INDEX
TITLE
PAGE
EXECUTIVESUMMARY........................................................................................................... 3
1.
2.
3.
4.
5.
INTRODUCTION
1.1
Background.......................................................................................................
1.2
TheIndependentReview.................................................................................
1.3
Council’sTermsofReference...........................................................................
1.4
PublicCommentaryontheTermsofReference..............................................
TECHNICALASPECTSOFTHETREATMENTPLANT
2.1
CardnoBTOAdvicetoCouncil–November2011...........................................
2.2
CardnoBTOAdvicetoCouncil–MarchandApril2013...................................
2.3
CH2MBecaAdvicetoCouncil–October2015................................................
FACTUALREVIEWOFCOUNCILPROCESSES–2003TO2012
3.1
DesigningtheTreatmentPlant–2003to2005...............................................
3.2
ConstructingtheTreatmentPlant–2005to2007..........................................
3.3
OperatingtheTreatmentPlant–2007to2012...............................................
THEFIVESPECIFICQUESTIONSASKEDBYCOUNCIL....................................................
KEYPARTICIPANTSINCOUNCILPROCESSES
5.1
ColinHovey.......................................................................................................
5.2
DeanTaylor......................................................................................................
5.3
ColinWhitlock..................................................................................................
5.4
CouncillorRayStevens.....................................................................................
5.5
CouncillorSueWestwood................................................................................
5.6
AllanWrigglesworth.........................................................................................
5.7
JohnCrawford..................................................................................................
5.8
MichaelLaws....................................................................................................
5.9
DavidWarburton..............................................................................................
5.10
JulianReweti....................................................................................................
5
6
8
9
11
12
14
15
27
29
34
61
69
69
70
71
72
73
74
87
88
1|P a g e 5.11
5.12
5.13
5.14
5.15
5.16
5.17
6.
7.
8.
9.
KevinRoss.........................................................................................................
RickGrobecker.................................................................................................
PhilGilmore......................................................................................................
MayorAnnetteMain........................................................................................
ArnoBenadie....................................................................................................
MarkHughes....................................................................................................
HorizonsRegionalCouncil................................................................................
FINANCIALIMPLICATIONSOFFAILEDPLANT..............................................................
CONCLUSIONS
7.1
MajorDesignPhaseShortcomings...................................................................
7.2
MajorConstructionPhaseShortcomings.........................................................
7.3
MajorOperationsPhaseShortcomings...........................................................
RECOMMENDATIONS...................................................................................................
90
91
92
92
93
94
96
102
104
105
105
107
ATTACHMENTS
A.
WWTPProcessCapacityReviewandOptimisation–ExecutiveSummary.Cardno
BTO–28November2011.
B.
WanganuiWWTPOdourIssues–OdourMitigationMemoforInfrastructure
Meeting–CardnoBTO–27March2013.
C.
WanganuiWastewaterTreatmentPlant–EvaluationofLongͲTerm
ImprovementsforConsentCompliance–ExecutiveSummary.
CardnoBTO–24April2013(fullreportonCouncilwebsite)
D.
WanganuiWWTP–PresentationtoWanganuiDistrictCouncilbyHumphrey
Archer,CH2MBECA–28October2015(alsoonCouncilwebsite)
E.
MinutesofMeetingofWhanganuiDistrictCouncil–17January2013.
2|P a g e EXECUTIVESUMMARY
TheprevailingmanagementandgovernanceculturewithinWhanganuiDistrictCouncilwasentrenched
andoverlytrustingintheperiodupto2005whenthewastewatertreatmentplantwasdesigned.
Close and longstanding relationships existed between Councillors, Council staff and engineering
consultants.
Markettestingwasnotpracticedfortheprovisionofengineeringservicesonthewastewatertreatment
plantprojectfrom2000to2012.ThemakingoftheoriginalconceptdesigncontractbetweenCounciland
MontgomeryWatson(laterMWH)inOctober2000didnotaccordwithnormalpractice.
Councilandseniormanagementeffectivelydelegatedthedevelopmentofthetreatmentplantdesignto
asmallgroupofCouncilstaffandMWHconsultants.
FromJuly2000toOctober2003,thedesignoptionidentificationandevaluationmethodologythatwas
pursuedbyCouncilstaffandMWHthroughtheTechnicalWorkingGroupprocesshadbeensoundandin
accordance with the traditional riskͲminimisation approach of the wastewater industry. Thirty four
treatmentoptionsintotalwereevaluatedandallwerebasedontechnologiesproveninfullscaleusein
NewZealandand/oroverseas.
In a seminal decision, the Technical Working Group on 20 October 2003 deviated from this riskͲ
minimisation approach and developed a radical, untried and untested design option that was argued
wouldbemuchlowercostand‘optimised’forWhanganui’sspecificneeds.Thenewoptionwasa‘hybrid’
ofelementsfromeachofthefourshortlistedandprovenoptionsbeingconsideredbytheWorkingGroup.
Noprecedentforthedesignwasknowntoexistintheworld.
Council confirmed the ‘hybrid’ option called the Optimised Lagoon Treatment Process design on 16
February2004,subjecttoapeerreview,afterbeingincorrectlyinformedthatitwasrelativelylowrisk
andbasedonproventechnologies.
The significantly lower cost of the design compared to proven options was a major consideration in
Council’s decision and the key driver for Council staff in advocating the Optimised Lagoon Treatment
process.
The crude, lowͲcost and low technology design proved to be a false economy which ultimately cost
Whanganuiratepayers$27million.
InaccordancewithCouncil’sFebruary2004decision,anindependentPeerReviewPanelwasbriefedin
March2004andraisedsignificantissuesandriskswithMWHandCouncil’sconceptdesignthatitargued
neededtobeaddressed,includingthroughthedetaileddesignphase.
CouncilstaffprematurelyshutdownthePeerReviewinOctober2004withouttheindependentpanel’s
issueshavingbeenresolvedandwithoutthePanelhavingseenanydetaileddesigns.TheCouncilwas
thenincorrectlyadvisedthefollowingmonthinNovember2004thatthePeerReviewhadcompletedits
briefandhadaffirmedtheOptimisedLagoondesign.
3|P a g e Councilstafffailedtodisplayanadequateunderstandingoftheconceptsofriskandriskmanagement
regardingthetreatmentplantdesign.
Significantly therefore,conceptdesigndecisions madeat thethreecritical meetingscomprisedofthe
Working Group in October 2003, the Council in February 2004 and then a newlyͲelected Council in
November2004,plantedtheseedsofthetreatmentplant’sultimatefailure.
It is difficult to comprehend that a responsible Council in November 2004 would have approved the
conceptdesigngoingforwardifithadbeenproperlyadvisedabouttheoutcomesoftheindependentpeer
review.
By the time the new Chief Executive, Dr. David Warburton, took over in 2005 from his longͲserving
predecessor,thetreatmentplantprojecthaddevelopedanalmostunstoppablemomentumtowardsthe
1July2007dateundertheresourceconsentwhentheplanthadtobeconstructedandoperational.In
thecircumstances,thereexistedneitherdesirenorwilltoreviewtheapproveddesign.
Theindependentpeerreviewgatekeepershadbeensummarilydismissedtheyearbeforeleavingtheir
essentialtaskincomplete.
ThetreatmentplantcommencedoperationsinSeptember2007andalmostimmediatelyexhibitedsome
ofthedifficultiessuchasodourproblemsthathadbeenenvisagedbythePeerReviewPanel.Initially,the
causewasbelievedtobedeficientaeratorsandittooknearlytwoyearsforreplacementandadditional
aeratorstobeinstalled.Thesefailedtoresolvetheoperationaldifficultieshowever.
Throughout its troubled five years of operation, the plant was never able to achieve the terms of its
resourceconsentevenwiththeimplementationofdrasticoperationalmeasures.
Councilstaffadopted‘mitigationmeasures’inbreachoftheresourceconsentsuchasdivertinguntreated
effluentdirectlytotheseaorfillingandflushingthelagoonstotheseainanefforttocontroltheodour
problemsandtoreducethepressureoftradewasteloadsontheplant.Thishadtheeffectofdisguising
theplant’soperationaldifficultiesandtheirunderlyingrootcause.
Despitethisandtheapplicationofarangeofothershorttermupgrademeasurescosting$2.3million,the
plantcontinuedtofailuntilitwasfinallyshutdowninthefaceofpotentiallycostlyenforcementaction
byHorizonsRegionalCouncil.
Manyreasonssuchaslackofaeration,excessivewetindustryloadsandpoormanagementhavebeen
publiclyadvancedtoexplainwhythetreatmentplantfailed.Somevestedinterestsevenarguethatitdid
notfail.
CertainlyCouncilvigorouslyassertedtheywereletdownbytheengineeringdesignconsultants.Their
legalactionagainstthedesignconsultantsclaimingnegligencehasnowbeensatisfactorilysettled.
From all the evidence examined by the Independent Review, the root cause of the failure of the
Whanganui Wastewater Treatment Plant traces back to 2003 and 2004 with critical shortcomings in
Council’s prevailing culture and decisionͲmaking processes which allowed endorsement of the plant’s
radicalandflaweddesign.Theseissuesareexploredindetailthroughoutthereport.
4|P a g e 1
INTRODUCTION
1.1 BACKGROUND
ThefailedstateoftheWhanganuiwastewatertreatmentplantbylate2012wastheendresultofalengthy
and convoluted series of events that has caused much angst, anger and anxiety throughout the local
community,whichunfortunatelybearstheenvironmentalandfinancialburdenforwhathasoccurredin
thepast.
Theconflictingargumentsaboutthecausesoftheplant’sfailurehavequiteunderstandablymadethe
issueacontinuingboneofcontentionformanywithinthecommunity.Fairlyornot,reputationaldamage
hasbeenaconsequence.
Inthiscontext,itissomewhatparadoxicalthatthedevelopmentofthetreatmentplantbyCouncilhadits
origins in sound public policy developed to end the environmentally unsustainable practice whereby
untreateddomesticwasteandtradewastehadbeendischargedintotheTasmanSeaviaamarineoutfall
located1800metresoffSouthBeach.Indeed,priortotheconstructionoftheBeachRoadPumpStation
(BRPS) and the marine outfall, the practice had been to discharge unseparated domestic waste and
stormwaterandtradewasteintotheWhanganuiRiver,whichledtoserioushealthriskssuchastyphoid.
In 1992, Council established the Whanganui River Wastewater Working Party and it recommended a
schemetoenduntreatedwastedischarge,whichwassubsequentlyapproved.Resourceconsentswere
obtainedfortheschemetobeimplementedthroughsignificantinvestmentintonecessaryinfrastructure
andservicesoverafifteenyearperiod,culminatingwiththecommencementofanewtreatmentplanton
1July2007.ThefifteenyearperiodwasconsideredthelengthoftimenecessaryforCounciltofinance
thenewinfrastructurethroughitsexistingratingbaseandwithouttakingonadditionaldebt.
In 2002, it was decided that full separation of sewer and stormwater drains was to be the ultimate
objective.Atthattime,stormwaterwastobedischargedintotheWhanganuiRiverandsewageandtrade
wasteweretobepumpedtogethertotheBRPStobeinitiallyscreenedpriortotheuntreatedeffluent
thenbeingdischargedthroughthemarineoutfall.
Inthefinalandmostsubstantialstageoftheprocess,from1July2007,thescreeneddomesticandtrade
wastewastobepumpedfromtheBRPStothenewlyͲbuilttreatmentplantwheretheresultanttreated
effluentwastobedischargedtotheseathroughthemarineoutfall.
Historyshowsthatthetreatmentplant,designedbyMontgomeryWatsonHarza(“MWH”),commenced
operationalittlelaterthanscheduledinSeptember2007,butexperiencedoperationaldifficultiesalmost
fromthebeginning.
Amyriadofoperationaldifficultiessuchassignificantodourevents,aeratorfailuresandexcessivesludge
generation occurred and theplantnever met thefull terms ofits resourceconsent over five years of
operation.Indeed,thefactsdemonstratethattheplantwasneverevenfullycommissionedduringits
periodofoperationduetotechnicalshortcomings.
5|P a g e Horizons Regional Council finally issued an Abatement Notice on 9 January 2013 which required
rectificationactionfromCouncilby7February2013.InthefaceofanyinactionbyCouncil,thenextstep
wasthegrantingofanEnforcementOrderwhichinturncouldresultinsubstantialpenaltiesbeingapplied
toCouncil.
Councilobtainedfurtherexperttechnicaladviceandtheplantwasjudgedtobeinatotallyfailedstate.
Theplant’soperationwascloseddownandthesitewaseventuallyremediatedandmothballed.
Following the closure of the treatment plant operations, screened but untreated domestic and trade
wasterecommencedbeingdischargedintotheTasmanSeathroughthemarineoutfallunderemergency
resourceconsentconditions,pendingthedevelopmentofanewplant.
Therefore,afteronlyfiveyearsoftroubledoperation,Councilin2013haddeterminedonthebasisof
peerͲreviewedexpertadvicethattheplantwasnotviableandwasobligedtocommencealegalclaimfor
damagesagainsttheplant’sdesignerMWH.TheconsultantsCardnoBTO,whohadbeenadvisingCouncil
onwastewatertreatmentmatterssince2011andstrugglingtomaketheplantoperatetorequirements,
wereengagedtodesignanewplant.
On26February2016,itwaspubliclyannouncedthatfollowingthecompletionofamediationprocess
begunin2015,MWHandtheCouncilhadagreedtosettlethelegalclaimlodgedbyCouncilonstrictly
confidentialterms.Council’smediareleasestatedthatbothpartieswere‘pleasedthatthematterhas
beenresolved.’
Councilon9August2016reaffirmeditsearlierdecisionofMarch2016toproceedwiththeconstruction
of a new CardnoͲdesigned wastewater treatment plant with operations scheduled to commence in
December2018.
1.2 THEINDEPENDENTREVIEW
On 4 July 2016, Whanganui District Council (“Council”) following a public workshop determined to
commission an inquiry into the facts surrounding the failure of its waste water treatment plant (“the
plant”).ThefullwrittenreportresultingfromtheinquiryhadtobepresentedtoCouncilby4October
2016inaccordancewiththeTermsofReferencesetoutbelow.
Council’s expressed rationale for the inquiry was: ‘The Council and Whanganui community need to
understand the circumstances and Council processes which led to the failure of the old plant – from
conceptevaluationtothefinalfailure.’
The inquiry has been conducted by way of an independent review of the facts pertaining to Council
processesthroughouttherelevanthistoricalperiodof2003to2012,whichultimatelyledtothecomplex
and costly infrastructure failure. Council processes included political, administrative and technical
decisionͲmakingmechanisms.
6|P a g e TheIndependentReviewcommencedon13July2016andthetermsofengagementguaranteed‘access
to all Council records, documents, Council officers, elected members and where appropriate other
individualsasrequiredtoundertaketheinquiry.’
Important primary source documents held by Council such as Council and Committee minutes,
correspondence,technicalreports,contractsandmanagementmeetingrecordshavebeenreliedupon,
supplementedbyattemptstoquestionanumberofkeyparticipantsfromtherelevanthistoricalperiod,
mostofwhomhaveleftCouncilandcouldnotbecompelledtocooperate.Unfortunately,anumberdid
not.
The principles of natural justice have been respected by the invitation to key participants to provide
voluntaryinputintotheIndependentReview.Moreover,inascertainingthefactstheReviewhasnot
basically sought to apportion blame to particular individuals and has focused instead on systemic
shortcomings throughout the whole process. Systemic shortcomings within a local government
bureaucracyfacilitateanenvironmentinwhichmistakesarecapableofbeingmade.
ItisatruismthatWhanganuiDistrictCouncilasaperpetuallegalentity,albeitinaformthatmaychange
from time to time, is ultimately accountable to the public for the mistakes of any of its past officials,
employees,consultantsandcontractors.
IthasbecomeapparentduringthecourseoftheIndependentReviewthattheorganizationofCouncil’s
historicalrecordsarelessthanideal.Thisinpartreflectstherapidandongoingtechnologicalchangethat
hassignificantlytransformedrecordͲkeepingoverthepastyears,includingwiththetransitionfrompaper
todigitalandsoftwaredevelopments.Moreover,somedecisionͲmakingprocessesmayhaveelements
whichwerenotformallyrecordedordonotformpartofCouncil’srecords.Thepracticeofverbalbriefing
ofCouncillorsandprivatecaucusingaretwoexamples.
ThelargenumberofCouncildocumentsthathavebeenaccessedhavepaintedareasonablyclearpicture
ofthesystemicshortcomingsthatoccurredinthepast.Thesearesetoutinthisreportaspartofdetailing
theessentialfactsandprocessesfollowedbyCouncilinchronologicalorder,uptotheultimatefailureof
thewastewatertreatmentplant.
The purpose of the Independent Review is to present the Whanganui community with the facts
surroundingtheCouncilprocessesthatwerefollowedinthecriticalperiodbetween2003and2012,even
ifthesefactsmayrepresentanuncomfortableorinconvenienttruth.Nevertheless,anumberofthefacts
arealreadyamatterofpublicrecord
ThisreporthasthereforebeencommissionedbyCouncilonbehalfofthecommunityofWhanganuito
ensure there is proper transparency and accountability for what has occurred and that appropriate
lessonsmaybelearned.
7|P a g e 1.3 COUNCIL’STERMSOFREFERENCE
ThefollowingTermsofReferenceoutlinetheparametersofthisreportandweredeterminedbyCouncil
followingapublicworkshopon4July,2016:
Part1:Technical
The technical aspects of the plant have been highly investigated, reported on and made public. The
technicalaspectsoftheplantalsoformedpartofthemediationbetweenCouncilandMWH.Nofurther
investigationisrequiredinrespectofthe‘technical’aspectsoftheplant.Theindependentreportshall
confirmandreferencetheexpertopinionsstatingthattheMWHͲdesignedplantwasnotsalvageable.
Part2:Process
ToreviewtheprocessesfollowedbyCouncilfrom2003to2012.Thiscouldincludethemanagementof
theprocess,reportingtoCouncilandthedecisionsmadebyCouncil:
1.3.1
Whatfault,ifany,wasthereinCouncil’sinputintothedesignparametersandtheirdecisionmaking
processesthatledtotheacceptanceofthedesignandbuildofthe2007plant?
1.3.2
Whowasinvolvedandwhatwasthedecisionmakingprocess,startingfromtheinitialdesignofthe
plantin2003totheopeningoftheplantin2007?
1.3.3
Whatfault,ifany,wasintheCounciloperationofthe2007plantwhichcouldhaveledtoitsfailure?
1.3.4
Isthereanyevidencethatwetindustriesunderestimatedtheirinputsduringthedesignphaseor
added nonͲconsented, excessive or nonͲpermitted inputs into the plant that contributed to its
inabilitytofunction?
1.3.5
WasthereanyfailureoftimelyreportingbyplantoperationsstafftoHorizonsRegionalCouncil
(“Horizons”),Councilstaff,theMayororCouncillorsofthefailureoftheplant?
8|P a g e 1.4 PUBLICCOMMENTARYONTHETERMSOFREFERENCE
ThetĂŶŐĂŶƵŝŚƌŽŶŝĐůĞeditorializedon5August2016whiletheIndependentReviewwasunderwaythat
Council’sTermsofReferenceweretoorestrictiveandlimitedthewastewaterreviewtomerely‘checking
councilprocessesandwillnotconsidertechnicalaspectssuchastheintegrityorcapabilityofanytreatment
plants,past,presentorfuture.’
Nevertheless,theŚƌŽŶŝĐůĞstillsawmeritwiththeTermsofReferenceinseekingtoestablishkeyfacts
surroundingCouncilprocesses.Assuch,thenewspaperfellwellshortoflabellingtheIndependentReview
a‘sham’ora‘wasteofmoney’assomecommentarypublishedinthemediahasdone.
Predictably, with voting in council elections due to commence in September 2016, the wastewater
treatmentplantissomethingofapoliticalfootballandassociatedwiththishasbeenafairdegreeofpublic
criticismoftheIndependentReview.Indeed,thetĂŶŐĂŶƵŝŚƌŽŶŝĐůĞreportedon20August2016that
threeWhanganuiDistrictCouncillorswhoareseekingreͲelection,calledfortheIndependentReviewtobe
called off or have its Terms of Reference widened, with one going so far to describe the inquiry as a
‘whitewash’andwasteofmoney.
The public interest dictates that a public inquiry of this nature be defined by terms of reference. By
definition,theyareaformoflimitationorrestrictiontoensurethattheinquiryhasscopeanddirection.
Thetwelveweekmaximumtimeframeand$100,000budgetcaparetwootherlimitationsorrestrictions
applyingtotheinquirythatarealsoconsistentwiththepublicinterestinfacilitatinganefficientandcostͲ
effectiveoutcomeonbehalfofratepayers.
AnotherlimitingfactorinthisinquiryisthatalargeamountofMWHcommercialinformationregardingthe
designofthefailedtreatmentplantwasobtainedbyCouncil’slawyersconfidentiallyunderdiscoveryfor
thepurposesofCouncil’slegalactionagainstMWH.Asaresultofthemediationprocessandsubsequent
confidential settlement reached between Council and MWH, these documents remain privileged and
cannotbedisclosed.Thisisamatteroflegalfact.
MostofthekeyCouncilstaffwhoparticipatedinthetreatmentplantprojectfrom2003to2012havenow
left Council’s employment. Some have declined to cooperate with this inquiry by not responding to
questionsputtothemorbynotacceptingtheinvitationtomakesubmissionsoftheirchoice.Legally,these
keyparticipantscannotbecompelledtocooperatewiththeIndependentReview.
Inaccordancewiththeprinciplesofrepresentativedemocracy,thecurrentCouncilisaccountablethrough
electoralmechanismstothecommunityforitscurrentlawfuldecisionsanditisneithercommonpractice
norappropriatethatsuchdecisionsbesubjecttoaninquiryofthisnature.Councilhaspublishedonits
websitetheexperttechnicaladviceuponwhichitreliedinmakingitscurrentdecisionssothecommunity
canmaketheirowninformedjudgements.
It is important to note that the Council’s expert and peer reviewed advice is built upon the practical
experienceandknowledgegainedduringfiveyearsoffailedoperationoftheoriginalplant.Assuch,this
hasnotbeenanacademicengineeringexercise.
AspartofreviewingCouncil’shistoricaldecisionͲmakingprocesses,itisappropriateandindeedbeneficial
tomakerecommendationsforthefutureconductofCouncil.
9|P a g e TheTermsofReferencehavebeeninterpretedbroadlyforthisIndependentReviewtoascertainrelevant
factsregardingtheCouncilprocesses,whichnecessarilyincludedthetechnicalprocessesthatevaluated
thirtyfourknownandproventreatmentplantoptionsandendingupadoptingamuchlowerͲcost‘hybrid’
solutionofWhanganui’sowncreationthatlackedanyprecedent.
Ultimately, it will be a matter for the community of Whanganui to judge whether the objectives of
transparencyandaccountabilityhavebeenachievedwithinthecontextoftheissuesoutlinedabove.
10|P a g e 2 TECHNICALASPECTSOFTHETREATMENTPLANT
ThisreportispremisedontheobjectivefactthattheWhanganuiWastewaterTreatmentPlantfailedto
operate properly almost from its commencement in late 2007. The failures included never meeting
resourceconsentrequirementspertainingtoeffluentdischargeandcontinuedseasonalodourevents.
TheWhanganuicommunityarewellawareofthelatterfailureinparticular,havingsufferedthedirect
effectsoftheodourproblememanatingfromtheplant.
Councilandstaffwereengagedincontinualandcostlyefforts,fromtheplant’sopeninginSeptember
2007throughtoitsultimateclosure,tryingtomakethefacilityworkefficientlyandeffectively.
These plant failings resulted in complex legal action instituted by Council against the plant’s designer
MWHwhichhasnowbeensettled.Thisprocessresultedinthediscoveryofmuchtechnicalandother
documentationthatremainslegallyconfidential.Agooddealofinformationpertainingtothetechnical
aspectsoftheplant’sfailureneverthelessalreadyexistsinCouncil’sownrecordsandthepublicdomain.
Councilhasmovedforwardsanddeterminedtobuildanewtreatmentplantbasedonexpertandpeer
reviewed advice and has thus deemed it unnecessary to further investigate certain technical aspects.
Rather,theIndependentReviewisrequestedtoconfirmandreferencethekeyexpertadviceuponwhich
Council has relied to determine that the MWHͲdesigned plant was not salvageable and needed to be
replaced.
ThefollowingsummaryaccordinglyoutlinesthekeyexperttechnicaladvicethatCouncilhasreliedupon
toclosethefailedtreatmentplantandproceedtoconstructanewplant.
2.1 CARDNOBTOADVICETOCOUNCIL–NOVEMBER2011
InJuly2011,whilstattemptingtodealwiththeongoingdilemmaofitsfailingplant,Councilcommissioned
newtechnicalconsultantsCardnoBTO(Cardno)whoweretaskedwithcomparingtheactualperformance
andcapacityoftheplanttoitsresourceconsentconditionsanddesign.TheservicesofMWHbythisstage
hadlargelybeendispensedwithontheproject.
TheresultantCardnoreportentitled‘WWTPProcessCapacityReviewandOptimisation’wasproducedin
November2011.Atthispointintime,Cardnowereessentiallycommissionedtorecommendwaystotry
andmakethefailingplantworkbetter.However,thewritingappearedtobeonthewallbythenthatthe
plant’sfuturewasproblematic.
The2011Cardnoreportadvisedthattheplantneededupgradingtoaddresstheproblemsofresource
consentnonͲcompliance(faecalcontaminantsandsuspendedsolidsconcentration)andhighoperating
costs(aerationpower usage and UV operating/maintenance). However,thereport cautionedthatits
identifiedsolutionswere‘designedwithintheconstraintsoftheexistingtreatmentprocesswhichmay
limittheirefficacy.’(ExecutiveSummaryp.6)
Atotalofeightupgraderecommendationsweremade(inastagedprocesswitheachconditionalonthe
previous stage), in addition to other specified work pertaining to contaminants within trade waste
dischargesandsludgequantitiesinthetreatmentlagoonswhichneededtobecarriedout(ESpp7Ͳ8).
11|P a g e Thesignificantcapitalcostsoftheproposedupgradeweretobeoffsetinpartbypotentialreductionsin
operatingcosts(ESp.9).
The2011report’supgraderecommendationswereincludedinCouncil’s10yearplan.
AcopyoftheExecutiveSummaryofthe2011Cardnoreportentitled‘WWTPProcessCapacityReviewand
Optimisation’issetoutatAttachmentA.
2.2 CARDNOBTOADVICETOCOUNCIL–MARCHANDAPRIL2013
Duringthesummerof2012Ͳ2013,theplantwasstillexperiencingoperatingproblems,particularlywitha
prolongedandsignificantodourevent.On9January2013,theenvironmentalregulatorHorizonsRegional
Council(HRC)hadissuedanAbatementNoticewhichrequiredCounciltoreduceodoursemanatingfrom
the plant to an acceptable level by 7 February 2013 (this was followed up by HRC being granted an
EnforcementOrderbytheEnvironmentCourtwithCouncil’sconsent).
DespitealltheactionstakenbyCouncilinaccordancewithCardno’s2011recommendationsfortheshort
and medium term, the odours had been reduced but still remained at an unacceptable level. The
underlying issue of the plant’s design still remained, which was regarded as the root cause of the
unacceptableodourlevels.
Atitsmeetingof17January2013,CouncilresolvedtocommissionCardnotoprovideafutureoptions
reportthatincludedadviceon:
x
x
x
x
Anyadditionalimmediatemeasuresthatcouldbetakentoaddressodourandtreatment
Whetheritwasviabletocontinuewiththeplant
Ifviable,whichoptionstoachievesatisfactoryperformancewereavailableforcompletionover
thefollowingtwoyears
Ifnotviable,thenwhattypeof plantwouldbesuitablefor Whanganui’swaste andwhatsize
wouldthatneedtobe
CouncilalsorequiredthatCardno’sreportbeundertakenoverathreemonthperiodandthatitbepeer
reviewed concurrently by an expert independent of the project. The peer review was subsequently
conductedbyAECOMworkingalongsideCardno.
On27March2013,CardnoproducedanOdourMitigationmemorandumforCouncil’sInfrastructureand
PropertyCommitteeMeetingof9April2013,outliningshorttermandmediumtermmitigationstrategies
andstatingthatalongertermsolutioninvolvedadetailedevaluationofpotentialsolutions.
A copy of Cardno’s March 2013 memorandum to Council, to which is attached commentary from the
AECOMpeerreviewer,issetoutatAttachmentB.
Cardno’s‘EvaluationofLongͲTermImprovementsforConsentCompliance’,issuedon24April2013and
peerͲreviewedbyAECOM,determinedthatcontinuingwiththeplantinitsthencurrentconfigurationwas
notviable,statingthat:
12|P a g e ‘Theoriginaldesignconceptisflawedandcapitalimprovementsarerequiredinordertoreliablymeetthe
effluent consent and minimize the risk of odours’. Whilst some use could be made of the existing
infrastructure,Cardnoconcludedthatanewtypeofplantwasnecessary.
Significantly,Cardnowentontostatethat,giventheplant’shistorytherewas‘noopportunitytotrial
experimental,highrisksolutions’,whichwasseeminglyareferencetotheunprecedentednatureofthe
originaldesignofthefailedplant.(ExecutiveSummaryp.iii).
Infact,CardnodescribedtheMWHplantprocessdesignas‘unconventionalinthatitcombinesanaerated
lagoonͲtypeprocessontopofa4metredeepanaeorobicsludgelayer.’(p.16offullreport).
AcopyoftheExecutiveSummaryoftheApril2013CardnoreportissetoutatAttachmentC.Afullcopy
ofthereportanditsattachmentsisavailableonCouncil’swebsiteatwww.whanganui.govt.nz.
ThepeerreviewofCardno’sreportwasconductedconcurrentlybyMatthewMatesfromAECOM,who,
alongwithCardno,reportedtoCouncilatitsmeetingof29April2013.Theminutesofthemeetingrecord
thefollowing:
MayorMainaskedMrMatesifhehadseenanywastewaterplantthesameasWanganui’sandwhatwas
hisinitialassessmentoftheplant.MrMatessaidheworkedforacompanywith50,000employees.This
planthadaverydeeppondandheconsideredittobealowcostsolutionforatreatmentplantandone
thathehadneverseenanywherebefore.HesaidtheCouncilwasnowdealingwiththecumulativeeffect
oftheplanthavingbeenoverloadedforaperiodoftimeandbeingsuppliedwithinsufficientoxygenand
wasnowinafailurestate.MrMatesconsidereditaverycrudesystemandhewouldnothaveselected
thisprocessashedealtinamuchmorehightechworld.
Following consideration of the Cardno report and the corroboration from the AECOM peer reviewer,
Councilon10June2013:
x
x
x
acknowledged that continuing with the wastewater treatment plant in its then current
configurationwasnotviablegivenitsinabilitytomeetexistingresourceconsentsandtocomply
withairqualitystandards
acknowledged that the cost of a completely new wastewater treatment plant (greenfield
approach) estimated at $60MͲ$80M was an unrealistic and unaffordable option for the
Whanganuicommunity
resolvedthatmodifyingthethenexistingwastewatertreatmentplantwastheonlyviableoption
toconsider.
13|P a g e 2.3 CH2MBECAADVICETOCOUNCIL–OCTOBER2015
TheadvicetoCouncilfromthehighlyͲrespectedHumphreyArcherofCH2MBeca(Beca)of28October
2015clearlypostͲdatedCouncil’sJune2013decisionthattheconfigurationoftheMWHdesignedplant
wasnotviable.
WhiletheBecaadvicewasthusnotconsideredbyCouncilindeterminingthefutureoftheMWHdesigned
plant, it is useful to restate Beca’s conclusions here as they represent further expert confirmation of
Council’sdecision.
TheBecareportconcluded:
x
x
x
x
x
The“OptimisedLagoonProcess”[i.e.theMWHͲdesign]didnothaveprecedentsandattempted
tocombinealltreatmentfunctionsintoonelagoon
Significanterrorsweremadeintheestimatedsludgestoragevolumewhichresultedinthestorage
capacity being exceeded from about 2009/10 [i.e. just over 2 years after the plant’s
commencement]
Requiredaerationenergywassignificantlyunderestimatedandnomarginswereapplied(which
isstandardpracticeforaerationdemand)
Installedaerationenergydisturbedthesludgelayerandpreventedfullanaerobicdigestionofthe
sludge.Furtheraerationwouldhavecausedmoredisturbanceofthesludgelayer
Theconcernsexpressedbythe2004PeerReviewerswerenotappropriatelyaddressedbyMWH
A full copy of the Beca Presentation to Whanganui District Council by Humphrey Archer is set out at
AttachmentDandisalsoavailableonCouncil’swebsiteatwww.whanganui.govt.nz.
14|P a g e 3 FACTUALREVIEWOFCOUNCILPROCESSES–2003TO2012
CouncildecisionͲmakingprocessesfrom2001to2005thatdeterminedthepreferreddesignoftheplant
essentially followed two main concurrent streams: Reports to and discussions at formal Council and
CommitteemeetingswhereCouncillorsandstaffwerepresentanddeliberationsofaTechnicalWorking
GroupconvenedinMarch2001andofficiallymadeupoftwoCouncilstaff,MWHconsultantsandIwiand
communityrepresentatives.
CouncillorswerenotparticipantsintheWorkingGroupprocess,whichwasmeanttofeedintotheCouncil
decisionͲmaking process. In practical terms, the substantive deliberations of the Working Group were
undertakenbyMWHconsultantsandtwoCounciltechnicalstaff.
The Council processes would have also included numerous internal meetings and discussions and
meetingswithexternalconsultants,aswellasbriefingswithCouncillorsandotherformsofinteraction
andcommunication.
Inordertopaintanoverarchingandchronologicalpicture,theCouncilprocessesfrom2003to2012have
beendividedintothethreecriticalandconsequentialstagesofplantdesign,plantconstructionandplant
operation. The following summary thus sets out the key decisionͲmaking trail followed by elected
CouncillorsandCounciltechnicalstaffandassociatedprocessesoverthethreestagesofthetreatment
plantproject.
ItshouldbenotedthatthenormalprocessatCouncilwasforwastewatermatterstobefirstconsidered
by the relevant committee and the records of these committee deliberations were subsequently
incorporatedintomeetingsoffullCouncilwhereformaldecisionswerethenconfirmed.Insettingoutthe
decisionͲmakingtrailtherefore,reliancehasbeenplacedprimarilyontherecordsoftheformaldecisionͲ
makinggoverningbody.Whereconsiderednecessaryatcriticalmeetings,crossͲreferencingofcommittee
recordswasalsoundertakenforadditionalaccuracypurposes.
3.1 DESIGNINGTHETREATMENTPLANTͲ2003TO2005
ThecriticalmeetingofCouncilwherethedecisionwasmadetoconfirmtheconceptoftheMWHͲdesigned
OptimizedLagoonTreatmentProcess,subjecttoapeerreview,washeldon16February2004.
Bywayofnecessarybackgroundandcompleteness,theearlierCouncilmeetingof20May2002seems
thefirstformalmeetingwhereCouncillorswereadvisedindetailoftheprocessstaffhadbeeneffectively
followingsinceJuly2000withtheWastewaterTreatmentWorkingGroup(Technical).
Theminutesofthe20May2002CouncilmeetingshowthatCouncillorswereinformedthat:
x
x
x
x
havingrecentlyobtainedrevisedconsentsfortheproject,thewastewaterplanningphasehad
shiftedtoanalyzingthebesttreatmentprocess
thiswasatechnicallycomplexissueandanumberofoptionswouldneedtobeevaluated
theWorkingGrouphadbeenformed,assistedbyMWH,inordertodeveloptheseoptionsfor
Council’sconsideration
Councillorswouldbesubsequentlyaskedtoconsiderthereferencecaseandarangeofalternative
treatmentoptions
15|P a g e 3.1.1TheElectedCouncil–KeyDecisionͲMakingProcesses
CouncilMeetingͲ4November2002
AttheCouncilmeetingof4November2002,itwasreportedthattheconsultantengineersMWHmadea
presentationonprogressoftheWorkingGrouptothatpointintime,specificallythattheevaluationhad
beennarroweddownfromthirtyfourtothefollowingfouroptions:
x
x
x
x
Referencecase(facultativelagoonandtricklingfilters)
Advancedpondsystem(AIWPS)
Aeratedfacultativepond(aeroFAC)
Aeratedlagoon
MWHadvisedthattheaeratedlagoonoptionhadthelowestcapitalconstructioncostat$16.4Mandthe
advancedpondsystemwastwicethiscost.Eachoftheoptionshadsignificantongoingoperationalcosts.
AfteraskinganumberofquestionsofMWH,Councilresolvedtoexpress‘confidenceintheprocess.’
CouncilMeetingͲ24February2003
Atthemeeting,ageneraldiscussionensuedabouttheprocessforobtainingpeerreviewsforengineering
reportsonCouncilprojects.Duringthisdiscussion,itwasacknowledgedthattheengineeringreportsfor
theselectionofthewastewatertreatmentprocessweretobepeerreviewed.
CouncilMeetingͲ3November2003
AreportandrecommendationsfromthemeetingoftheWorksandTransportcommitteeof21October
2003waspresented.Inthereport,CouncilstaffadvisedthattheinitialthirtyͲthreedesignoptionshad
beennarroweddowntoashortlistoffour,comprisingtwolargepondprocessesandtwocompact‘tank’
processes.Alloptionshadbeenratedagainst‘OutcomeSuccessCriteria’andthefourremainingoptions
hadbeenmodifiedandcostedovera30yearlifecycle.Anewpotentialplantsiteneartheairporthad
beenidentifiedwhichmaybeagoodfitforanadditional‘hybridoption’beingconsideredbytheWorking
Group,whichsoughttocombinethebestfeaturesofallshortlistedoptionsbeingevaluated.
CouncilMeetingͲ16February2004
ThesoͲcalled‘hybridoption’,whichtheWorkingGroupcharacterizedastheOptimisedLagoonProcess,
wasputtoCouncilon16February2004foradoptionasarecommendationfromtheWorksandTransport
Committeemeetingon10February2004.
StaffadvisedCouncillorsthatdevelopmenthadbeenundertakenbytheWorkingGroupto‘essentially
selectthebestcomponentsofthe[fourshortlisted]optionsandproduceahybrid,whichisconsideredto
betheoptimumplantforWanganui’sneeds.’
MWHhadalsomadeapresentationtoCouncillors.
CouncillorswereadvisedthatthekeyfeaturesoftheOptimizedLagoonProcesswere:
x
theplanthadarelativelysmallfootprintmeaningitcouldbelocatedclosertothecitynearthe
airport
16|P a g e x
x
x
x
x
it was innovative and there was ‘no such plant in existence, certainly in New Zealand, which
combineswellͲestablishedprocesstechniqueswithauniquesludgemanagementprocess’
thegroundconditionsonsitemeantthatmajorcostandoperationalsavingscouldbeachieved
bystoringandtreatingsludgefor20yearsatleast–pondswouldbeexcavated‘upto10metres
deepwhereinnormalsituationstheywouldbemuchshallower’
therewasflexibilitytocopewithvariationsormodificationstodealwithinfluentfluctuationsand
futuregrowth
four lined ponds or lagoons, with control and distribution systems, surface aerators on the
lagoonsandanultravioletdisinfectionsystem
asignificantlylowercostthantheotherfourshortlistedoptions–a‘wholeoflife’costof$16.93M
comparedtothefourshortlistedoptionswhichrangedfrom$26.80Mto$47.15M.
Councillors were further advised by staff that the Optimised Lagoon Process was relatively low risk
‘primarilybecauseitisbasedonproventechnologies.’Nevertheless,itwastobepeerreviewedand‘any
issuesraisedinthereviewwillbeabletobedealtwithinthedetaileddesignphase.’
TheOptimisedLagoonProcesswaspresentedasa‘majorpositiveforCouncilbothintermsofoverallcost
andmeetingthesuccesscriteriaidentified.’Indeed,staffalsoadvisedthatanet$4Mplusreductionin
thetreatmentplantbudget[i.e.costsaving]wastobeallocatedforpublicseparationto‘maximisethe
benefitoftheprogrammeinaddressingtheneedsofurbanflooding.’
OnlyoneCouncillorqueriedthefactthatthestaffreportdidnotcontainafinancialreportandwastold
thiswouldbeprovidedatalaterdate.
TheCouncilconfirmedtheOptimisedLagoonwastewatertreatmentprocess,subjecttoapeerreview.
CouncilMeetingͲ29November2004
The29Nov2004CouncilmeetingwasthefirstnormalbusinessmeetingofthenewlyͲelectedgoverning
body.ItconsideredareportfromtheWorksandTransportCommitteeof17Novemberinrespecttokey
mattersrelevanttotheplant:
x
x
theauthorizationofdiscussionswithMWH,OPUSandWorksInfrastructureLimitedtoformulate
analliancepartnershiptodeliverwaterandwastewaterengineeringservices
theoutcomeofthepeerreviewoftheOptimisedLagoontreatmentprocessandprocurement
optionsforconstruction
[NBInrespecttothealliancepartnership,thereappearsnoconsiderationwasgivenbystafforCouncillors
to undertaking a competitive procurement process for the provision of the engineering and related
services. Rather preͲexisting consultancy relationships were seemingly rolled over into the new
contractualarrangements.]
RegardingMWH.Councilwasadvisedthatthetreatmentplantwas‘amajorprojectthatrequiredthebest
skillsandresourcesavailable.’TheOptimisedLagoonprocess‘hasbeendevelopedwiththeassistanceof
MWHconsultingengineers[and]itispreferablethattheyberetainedtoprovidespecialistexpertisefor
thenextthreeyearsinthedesignandprojectmanagementphase.’
17|P a g e ThepeerreviewoftheMWHdesignwasconductedbyJohnCrawfordfromOpusConsultantsandCliff
TiplerfromURSNewZealand,assistedbyaCouncilstaffmemberJulianRewetifromWanganuiWater
Services.
The Peer Review Panel was required by Council to answer whether the treatment plant option
identificationprocesshadbeenrobustandwhethertheselectedoptionswouldmeetWhanganui’sneeds.
Councillors were advised by staff that the Peer Review Panel had answered both questions in the
affirmative.
TheminutesrecordthatCouncillorswereprovidedwiththefollowingsinglesentenceextractfromthe
Peer Review Panel: ‘Generally, we are in agreement that the concept of a panel based system is a
pragmaticapproachtotheselectionandperformancecriteriathathavebeendevelopedfortheproject.’
Stafffurtheradvisedthatthe‘reviewalsoraised,notunexpectedly,anumberoflargelytechnicalissues
whichwillrequireresolution.Theseissuesessentiallyrelatetoriskmanagement.’Nospecificdetails
wereprovidedtoCouncillorsandtherewasnorecordeddiscussionpertainingtotheseissues.
Council’sresolutiondidnotrefertothepeerreviewwhenadoptingthedesign,tenderandcontractmodel
fortheprocurement.
CouncilMeetingͲ17December2004
CouncilresolvedtoenterintoanagreementwithMWH,OPUSandWorksInfrastructureforthedelivery
of water and wastewater engineering services, based on the Alliance Partnership memorandum of
understandingsignedon17December2004.Oncefinalized,thethreeseparatecontractshadtogoto
theTendersBoardforapproval.
CouncilMeetingͲ4April2005
StaffreportedtotheCouncilmeetingof4April2005thatMWHhadbeenengagedtoprojectmanagethe
procurementofthenewplantinadditiontodesigningit‘becauseoftheirparticularexpertiseinsuch
projects’ and because of their ‘close involvement [with Council] over recent years including the
developmentoftheparticulartreatmenttechnologywehaveselected.’
Councillorswereadvisedthata‘PainGain’clausewasbeingnegotiatedforprocurementandconstruction
wherebyMWHwouldacceptsomeoftherisksinvolvedbecausethe‘projectitselfishighvalueandcarries
anumberofsignificantrisksfortheCouncilthatneedtobecarefullymanaged.’
CouncilMeetingͲ19September2005
Councillorsatthemeetingwereprovidedwithanupdateonprogresswiththetreatmentplant,which
wasrequiredtobecompletedby1July2007.Councillorswereadvisedinpartthat:
x
x
x
thesystemapprovedbyCouncilwasanoptimizedaeratedlagoonsystem
thisconsistedofanaeratedlagoon,asettlementlagoonandanultravioletdisinfectionsystem
pluscontrolandmonitoringsystems
thestructurewouldallowstorageofsludgewithoutinterventionfor20years
[NB.Theaeratedlagoonandsettlementlagoonbeingproposedatthistimewasdifferenttothefourlined
lagoons concept that Council had approved in February 2004. However, former Mayor Michael Laws
18|P a g e submitted to the Independent Review that he was briefed on this at the time by then CEO David
Warburtonwhoassuredhimthatthis wasnot ‘afundamentalchangetotheoriginaldesignconcept.’
ReportNo.11producedbyMWHfortheTechnicalWorkingGroupinOctober2005statedthatthe‘shape
of the lagoons has been modified to ‘natural’ shapes that can fit largely within the contours of the
proposedsiteandthataremoreaestheticthantheoriginalrectangularlagoons.’Themodifieddesign
representedasignificantcostsaving]
3.1.2CouncilStaff–TheTechnicalWorkingGroupProcess
EstablishmentoftheWorkingGroup
DespiteMWHandCounciltechnicalstaffcommencingworkinJuly2000,theWorkingGroupwasonly
formallyconvenedinMarch2001andwascomprisedofCouncil’sSeniorEngineerColinHovey,Public
UtilitiesManagerDeanTaylor,TupohoRepresentativeMerianaKarauria,NgatiApaRepresentativeChris
ShentonandAlanWrigglesworthfromFriendsoftheShoreline.
MWHprovidedtheWorkingPartywithprofessionaltechnicalassistanceandtheirteamengagedonthe
wastewaterprojectwasmanagedbyIanRobertsonandincludedotherconsultants,primarilyDr.Dave
Stewart.
ThedeliberationsoftheWorkingGroupeffectivelyfollowedtwoparallelstreams,amoreconsultativeͲ
type,informationͲsharingprocesswhichincludedthecommunityandIwirepresentativesasstatedabove
andanotherinvolvingjustMWHconsultantsandthetwoCouncilstaffwhichdidthemoresubstantive
technicalevaluationandanalysisandreportedbacktothebroadergroupandCouncil.
The broader Working Group process including the Iwi and community representatives held nineteen
meetings between 19 July 2001 and 4 December 2003, when it officially concluded for the external
representatives.MWH’sIanRobertsonpresentedtomostbutnotallofthebroadergroup’smeetings.It
wasanimportantmechanismforengagingwithIwiandFriendsoftheShoreline,therebyachievingtheir
inputandbuyͲintothewastewatertreatmentproject.
Council’sformerSeniorEngineerandleadingmemberoftheWorkingGroup,ColinHovey,submittedto
theIndependentReviewthat:
‘During the working group process visits with the group were made to plants at Porirua, Otaki and
PalmerstonNorth.TheywereaccompaniedbyMWHstaff.IalsovisitedNZplantsatFeilding,Alliance
Pukeuri,FonterraEdendale,Winton,GoreandBluff,inthecompanyofDr.DaveStewart,theprincipal
processdesignerforMWH. Thesevisitswouldhavetakenplacein2001andearly2002.InOctoberͲ
NovemberIvisitedplantsinUSA,three,Scotland,one,andSouthAfrica,three.IwasmetbyMWHlocal
engineersonmostoccasions.AlltheseplantshadaspectsofpossibleoptionsforWhanganui.’
ReflectingtheparallelstreamsoftheWorkingGroup,thecriticaltechnicalmeetingatMWH’sofficesin
Wellingtonon20October2003detailedbelow,whichdevelopedtheconceptofa‘hybridoption’called
theOptimisedLagoonProcess,wasonlyattendedbyfourMWHconsultantsandthetwoCouncilstaff.
Whilstthepotentialityofthisnewtreatmentprocessdesignhadbeenflaggedatameetingofthebroader
WorkingGroupon25September2003,itwasnotoutlinedindetailtothegroupuntilitsfinalmeetingon
19|P a g e 4December2003,whereIanRobertsonfromMWHtabledandspoketotheWorkingGroupReportsNos.
9and10.
Infact, itwas ReportNo.10producedin December 2003andoutlinedbelowwhich first detailedthe
conceptoftheOptimisedLagoonTreatmentProcess.
MWHworkingwithCouncilstaffcontinuedwiththefinalizationofthedetailedplantdesignoverthenext
couple of years following the official end of the Working Group in December 2003, the Council’s
confirmationoftheOptimisedLagoonconceptinFebruary2004andthesubsequentPeerReviewofthe
designconceptconductedthroughoutthatyear.
TheWorkingGroupwasthekeytechnicaldriverinCouncil’sdecisionͲmakingprocessonthetreatment
plantandMWHproducedatotaloftwelvereportsfromJuly2001uptoitsStageOnedesignreportin
November2005.WhilstCouncillorswerenotdirectlyinvolvedinthisprocess,somereportingtoCouncil
didoccurfromMay2002onwards.
ThefirstsevenreportsoftheWorkingGrouppredatetheperiodbetween2003and2012beingreviewed
inaccordancewiththeTermsofReference,buttheyarereferredtobrieflybelowforthepurposesof
context,completenessandaccuracy.
TheOriginalMontgomeryWatsonContractͲ2000
In October 2000, Ian Robertson from Montgomery Watson (as MWH was then known) presented a
proposaltoCouncilstafftosupportaworkinggroupfortheevaluationofwastewatertreatmentoptions.
Theproposaloutlinedmatterssuchasproposedmethodology,consultants’feestructureandprofessional
qualifications.ItstatedthatIanRobertsonhadbeen‘closelyinvolvedwithWanganuisince1989’andwas
theconsortiumprojectmanagerfortheWanganuiWastewaterProjectPhase3from1992to2000.
TheMontgomeryWatson(MW)proposaltosupporttheworkinggroupwasacceptedbyCouncilstaff
withoutanyapparentevidenceoftestingthemarketfortheprovisionofconsultancysupport.Moreover,
asearchofCouncil’srecordshasnot uncoveredastandardprofessional services contract whichwent
throughtheTenderBoardprocessexistingatthetime.
Infact,CouncilsentalettertoMWdated2October2000invitingthemtosubmitaproposaltoprovide
consultancyadvicetotheproposedWorkingGroup.ThiswasfollowedbyanotherletterfromCouncilto
MWdated17October2000acceptinganMWproposalofOctober2000tosupporttheworkinggroup.
Thisconstitutedthecontractualrelationship.
Documents uncovered from earlier in the year 2000 show correspondence between MW and Council
relatingtothewastewaterprojectwhichrefertoanewwastewaterprofessionalservicescontractbeing
adoptedbyCouncil.
On 11 May 2000, Montgomery Watson sent a facsimile transmission to the Council CEO objecting to
Council’sselectionofapreferredprofessionalservicescontractorfortheWastewaterProject,including
separationworksandthetreatmentplant.
MWcomplainedthatCouncilwas‘changingtheleadprojectstaffingfromMontgomeryWatsonwhichis
acknowledgedasbeingtheworld’stopproviderofengineeringservicesinwastewaterandseweragetoa
20|P a g e firmwhosecapabilitycomprises5or6people,mainlyinHamilton…[Council]arealsotakingoutthemost
capableandknowledgeablelocalperson.’
The MW facsimile concluded: ‘We believe it will be in the interests of the Wanganui community if
capabilityandexperienceisacknowledgedasbeingofvalueandisretained.Wethereforesuggestyou
separate the wastewater project from the remainder of the contract services and retain your current
expertadvisers.’
Thefollowingdayon12May2000andafteradiscussionwithCouncilstaff,MWexpresseditsconcernin
anotherfacsimiletransmissiontoCouncil’sCEOthat‘thecontentoftheprofessionalservicescontractis
not clear as it relates to the Wastewater project.’ Arguing that theprofessional services contract was
virtuallyallaboutsupportingwastewaterseparation,MWreiterateditsproposalofthedaybeforethat
theWastewater[i.e.treatment]Projectbeshiftedoutofit.
MWwentontostate:“Iwouldaddmyconcernthatsomepeopleassumethisislowtechworkandcan
bedonebyanybody.Thisisnotthecaseifyouwantthedegreeofcostcontrol[Councilhas]indicatedto
date. The investigation methodologies, design capability and approach to the construction phase
activitiesallhaveasignificantimpactonthefinalcost.’
TheMWproposalofOctober2000acceptedbyCouncilon17October2000alsoprovidedthattheinitial
engagementbasedonspecifiedratesforhoursworkedcouldbeconvertedtolumpsumsforidentifiable
itemsofworkwhen‘mutuallyagreeable.’
DespitethelettersͲbasedcontractcomingintoexistenceinOctober2000,Council’sfinancialrecordsfor
thetreatmentplantprojectindicatethatMWhadsubmitteditsfirstinvoiceforanamountof$11,093in
July 2000 with subsequent invoices in August and September for $7,367 and $12,942 respectively.
Therefore assuming the invoices are correctly accounted for, MW claimed a total of $31,402 before
CouncilinvitedthemtosubmitaproposalinOctober2000.
Allup,CouncilrecordsshowthatMWandMWHasitbecame,werepaidatotalof$413,000overthefive
yearsfromJuly2000untilContract1181cameintoexistence.
ProfessionalServicesContract1181betweenCouncilandMWH,primarilyfordetaileddesignandproject
managementofconstructionofthewastewatertreatmentplant,wassignedinJune2005afterhaving
beenvettedthroughtheTenderBoardprocess.
Overall,MWHwaspaidatotalofalmost$2.9millionfromJuly2000untilFebruary2013.
3.1.3 TheWorkingGroupReportingTimeline
ThefollowingoutlinesthetwelvereportsproducedbyMWHinconjunctionwiththeWorkingGroupand
associatedCouncilprocess:
WorkingGroupReportNo.1ͲJuly2001ͲTreatmentTerminologyandTechnology
ThisreportwasanintroductionforCouncilstaffonthebasicsofwastewatertreatment.
21|P a g e Significantlyinthelightoffutureevents,thereportstatedinpartthat:‘Technologicaldevelopmentsin
sewage treatment have tended to be incremental improvements of wellͲestablished processes rather
thanradicalnewapproaches.’
WorkingGroupReportNo.2ͲSeptember2001ͲProjectDevelopmentandDeliveryProcess(PDDP)
Basically,thisreportwasanintroductionforCouncilstaffonthemethodologyofprojectmanagement.
The report stated in part that the final preferred option report ‘will provide WDC with a guide to an
appropriatewastewatertreatmentplantstrategy,togetherwithbackgroundmaterialstoemphasisethat
itistheresultofarobustprocess.’
WorkingGroupReportNo.3ͲOctober2001ͲPDDP:InformationforDevelopment
ThereportsetouttheProjectDevelopmentandDeliveryProcessplanelementsandresourcing,including
theGoalStatement,theOutcomeSuccessCriteriaandStakeholders.
WorkingGroupReportNo.4ͲJanuary2002ͲReferenceCaseConcept
The report detailed the Reference Case treatment process, location, costs, evaluation criteria and
performance,statingthatthereferencecasemustmeetthegoalsandsuccesscriteriasufficientlyforitto
beconsideredarealisticpotentialsolution,‘butnotnecessarilythebestsolution.’TheReferenceCase
wastobeusedtoassistevaluationofalternativetreatmentprocesses.
WorkingGroupReportNo.5ͲMay2002ͲReferenceCaseDetail
Specific details of theReference Casewere outlined. The report stated inpart: ‘The Reference Case
treatment plant comprises anaerobic treatment in aerated facultative lagoons, aerobic treatment in
tricklingfiltersfollowedbyUVtreatmentofeffluent.Sludgeisthickenedanddewateredfordisposalor
potentialreuse.’
WorkingGroupFullDayWorkshopWellingtonͲ16May2002
The workshop was a brainͲstorming session in Wellington attended by six MWH consultants, one
representative from NIWA and three Council staff. The workshop identified wastewater treatment
alternativestobeevaluatedagainsttheReferenceCase.Atotalofthirtyfouralternativeswerereduced
toa‘longlist.’ImprovementstotheReferenceCasewerealsodeveloped.
WorkingGroupReportNo.6ͲAugust2002ͲDefinitionofAlternatives
The ‘longlist’of alternativesconsideredwerePondBasedprocesses,Attached GrowthProcesses,the
SuspendedGrowthProcessandPhysicalProcesses(chemicallyassistedsedimentation).
Significantlyinlightoffutureevents,thereportstatedthattheyrepresented‘therangeoftreatment
processesincurrentuseandcovertherangeofbasicalternativesavailable.Whilstmanyareinnovative,
theyarepredominantlyincrementalimprovementsofbasicprocessesratherthannew‘breakthroughs’in
treatmenttechnology.Theyareallproveninfullscaleuse,althoughsomenotinNewZealand.’
WorkingGroupReportNo.7ͲOctober2002ͲResultsofMultiCriteriaAnalysis
ForeachOutcomeSuccessCriteria:
Ͳ theperformanceoftheReferenceCasewasassessedonascaleof0to10
22|P a g e Ͳ
theperformanceoftheAlternativeswereassessedonascaleof0to10relativetotheReference
Case
Thenumericalperformanceassessmentswereused,togetherwithweightingsoftheOutcomeSuccess
Criteria,tocalculatetherelativepreferenceforeachAlternative.
TheendresultwasthatacloselybunchedgroupoftheReferenceCaseandthreeAlternatives(the‘short
list’)wereclearlyseparatedfromtheremainderwhichwerealsocloselybunched.
WorkingGroupReportNo.8ͲOctober2003ͲAlternativesͲRefinedCostEstimates
Costestimateswererefinedfortheshortlistcomprisedof:
Ͳ ReferenceCase
Ͳ PartiallyMixedAeratedLagoon
Ͳ AdvancedIntegratedPondSystem(AIPS)
Ͳ AdvancedIntegratedWastewaterPondSystem(AIWPS)
WorkingGroupTechnicalMeetingͲWellingtonͲ20October2003
PresentatthismeetingatMWH’sofficesinWellingtonwereCouncilstaffColinHoveyandDeanTaylor
andfourMWHconsultantsincludingDr.DaveStewart.
Rather than the original intention of developing the shortlisted options further, the objective of the
workshopwasnowexpressedtobeusingtheseoptions‘toevaluatetheperformanceandbenefitsofthe
variouselementswhichmakeuptheoptionsanddevelopasingleoptimumarrangementwhichisspecific
toWanganui’sneeds.’
Thekeyfactorstakenintoaccountwhenconsideringwhatconstituted‘optimum’were:
Ͳ Cost(capitalandoperating)
Ͳ Reliabilityinachievingresourceconsentrequirements
Ͳ Lowproductionofsludgewithoutarequirementforexpensive,constantprocessing
WorkingGroupReportNo.9ͲNovember2003ͲAlternativesͲAssessmentoftheAeroͲFacSystem
The AeroͲFac System had not been considered in Report No. 8 because its power requirements were
considered too high. This report assessed three proprietary systems of aerated facultative lagoons
marketedbyLASInternationaloftheUSA.
WorkingGroupReportNo.10ͲDecember2003ͲDevelopmentofanOptimisedWastewaterTreatment
Process
ThereportfollowedonfromthetechnicalmeetinginWellingtonon20October2003whereMWHand
CouncilstaffhadbrainstormedtheconceptofanewOptimisedLagoonTreatmentProcess.
Thisinvolvedidentifyingthe‘mostdesirablefeatures’ofalltheshortlistedoptionsandcombiningthem
‘inaformthatcouldprovideWanganuiwithaprocessthatbestmeetsalltheselectioncriteria.’
ThemainfeaturesoftheOptimisedLagoonProcesswereexpressedtobe:
x Twoaeratedlagoonsoperatedinparallel(similartothePartiallyMixedAeratedLagoonoption)
23|P a g e x
Each aerated lagoon followed by a settling lagoon which acted as a clarifier (instead of the
concreteandsteelclarifiersinthePartiallyMixedAeratedLagoonoption)
x Thelagoonswouldbeconstructedwithanadditionaldepthof4metresdesignedtoallowsludge
toaccumulateoveraperiodof20yearsormorewithouttheneedforanysludgemanagementor
disposal,therebyeliminatingthishighcostforasignificanttime
x The treatment of all wastewater inflows including high flows in wet weather by including
freeboard in the aerated lagoons to provide storage and control the flow to the settlement
lagoonsandUVsystem
TheOptimisedLagoonProcesswascalculatedtooffer‘significantcostadvantages’withaNetPresent
Valueof‘wholeoflife‘costcalculatedtobe$16.93M,comparedtothefourshortlistedoptionswhich
rangedfrom$26.80Mupto$47.15M.
WorkingGroupReportNo.11ͲOctober2005ͲConfirmedProcessDesign
ThereportoutlinedamodificationoftheOptimisedLagoonProcessdesignandconfirmedthelocationof
thenewtreatmentplant.
Themodifieddesignresultedin‘asingleaeratedlagoonandsinglesettlementlagoonconnectedinseries
insteadoftwoparallelaeratedlagoonsandtwoparallelsettlementlagoons.
Theshapesofthelagoons[were]modifiedtonaturalshapesthatcouldfitlargelywithinthecontoursof
theproposedsiteandweremoreaestheticthantheoriginalrectangularlagoons.
Keyfeaturesofthemodifieddesignwere:
x Treatmentprovidedinafourhectareaeratedlagoonwithfloating,electricallyͲpoweredsurface
aerators
x Effluentfromtheaeratedlagoonflowedintoasecondlagoontosettleoutsuspendedsolids
x AeratedlagoonhadanactivedepthoffourmetreswithanadditionalfourmetresbelowforlongͲ
termsludgestorage
x Settlinglagoonhadanactivedepthoffivemetreswithanadditional3metresdepthbelowfor
longͲtermsludgestorage
x Aerated lagoon had two metres freeboard to provide flowͲbalancing of high wet weather
wastewaterinflows
x EffluentfromthesettlingponddisinfectedbyultraͲvioletlightbeforedischargetotheocean
ReportNo.11alsoincludedasectionontheoutcomesofthepeerreviewoftheOptimisedLagoonProcess
andthisiscommentedonfurtherbelowin3.1.4.
WorkingGroupReportNo.12Ͳ24November2005ͲStage1DesignReport
Thisreportfocusedontechnicalmattersassociatedwiththedesignandoperationofthetreatmentplant,
includingcalculationsoftradewasteflowsandloads.
3.1.42004PeerReviewofthePreferredOptimisedLagoonProcessDesign
CouncilhadconfirmedthedesignfortheOptimisedLagoonTreatmentProcessatits16February2004
meeting,butonlyontheconditionthatitbepeerreviewed.
24|P a g e TheOptimisedLagoonTreatmentProcessis‘basedonadeepaeratedlagooninwhichsettlement,sludge
storageandaerobicbiologicaltreatmentareperformedwithinasinglelagoon.’(CardnoBTO)
APeerReviewPanelwasbriefedbyCouncilstaffinMarch2004andwascoordinatedbyJohnCrawford
fromOPUSInternationalConsultants.ThePanelalsoincludedCliffTiplerfromURSNewZealandandwas
assistedbyCouncilstaffmemberJulianRewetifromWanganuiWaterServices.
TheReviewPanelinitiallyraisedanumberofissuesandconcernswithMWHandCouncilstaffregarding
thepreferredtreatmentplantdesign,towhichresponseswereprovided.
On 16 September 2004, the Review Panel Coordinator, John Crawford, wrote back to Council staff
confirmingthatanumberoftheissuesraisedbythePanelhadbeen‘satisfactorilyresolved.’However,
thePanelalsoconsideredthatanumberoftheissuesraisedhad‘notbeensatisfactorilyaddressed.’
The Review Panel detailed the following five key points for further action or attention by MWH and
Council:
x
x
x
x
x
The need for a rigorous risk assessment process covering the preferred option, the sewer
separationprocessandtradewastedischargers
Provisionofcalculationsusedfordeterminingtheproposedaerationrequirements
Provisionofrawdatatosupporttheclaimsmade
Confirmationofthelongevityoftheplant,particularlyintermsofsludgeinventory
The need to formalize the trade waste bylaw and trade waste agreements with significant
dischargerstoensureadequatecontrolofdischargesisenforceable
ThePeerReviewPanelCoordinatornotedthattheriskassessmentwouldnotbeabletobeaddressedby
ameetingofthepartiesandneededtobe‘arigorousandstructuredpartoftheprocurementprocess
fromhereon.’HeattachedtohiscorrespondenceadetailedlistoftheissuesraisedbythePaneland
responsesreceivedasatthatdatefromMWHandCouncilstaff.Thedetailedlistverifiedthesignificant
issues that remained unresolved or where Council/MWH had not supplied the data upon which the
conceptdesigncouldbeproperlyreviewed.
CouncilstaffwrotebacktotheReviewPanelamonthlateron28October2004statinginpartthat:
x
x
x
TherequirementsoftheMarch2004peerreviewbriefhadbeen‘broadlysatisfied’
AnumberoftheissuesraisedbythePanelrequiredfurtheranalysisandthiswouldassistCouncil
inthebriefingofthedesignandprocurementphase
The peer review was considered complete and the Panel was requested to provide their final
invoice
TheTechnicalWorkingGroup’sReportNo.11,producedbyMWHjustoverayearlaterinNovember2005,
commentedonthePeerReviewstatingthatit‘raisedanumberofquestionsandpotentialrisksthathave
largelybeen addressed.However,someoftheissuestheyraisedcannotbeansweredwithcomplete
certainty and it is recognized that the detailed design of the treatment system will need to provide
contingenciestoreacttothepossiblerisks.’
3.1.5TheWanganuiWaterandWastewaterPartnership
25|P a g e TheAlliancePartnership
Council records state that the Alliance Partnership ‘was designed to deliver the new Wastewater
Treatment Plant, the completion of the Wastewater Separation Project, miscellaneous water and
wastewaterrelatedprojectsandalsoprovideoperationalandassetsupport.’
AnAlliancePartnershipMemorandumofUnderstanding(MOU)betweenCouncilandMWH,OPUSand
WorksInfrastructureLtdwassignedon17December2004.
TheAlliancePartnershipMOUdidnotcreateacorporateͲtypepartnership,butratherwasasingleand
overarching framework agreement with three separate service providers for the delivery of Council’s
interrelatedwaterseparationandwastewaterprojectsandassociatedworks.
Essentially, the alliance partnership sought to draw on MWH’s professional engineering skills in
wastewatertreatmentplantdesign,onOPUS’sprofessionalengineeringskillsinwastewaterseparation
design and on Works Infrastructure’s relevant professional, operational and maintenance engineering
skillsinwaterandwastewateractivities.
Based on the MOU, separate contracts between Council and MWH, OPUS and Works Infrastructure
respectively, with Tender Board approval, were developed in 2005 for the delivery of water and
wastewaterengineeringservices.
TheWaterPartnershipSteeringGroup
The MOU specified that each contract would contain a requirement for MWH, Opus and Works
InfrastructuretocontributeonepersoneachtoaWaterPartnershipSteeringGroupwhichwouldalso
includetwoCouncilmanagers.SomeofthekeyobjectivesoftheWPSGweretoprovideoveralleffective
managementoftheWaterandWastewaterprogrammes,tofosteracooperativepartneringapproachto
projectdeliveryandtoputinplacepeerreviewprocesseswhereapplicable.
The2005MWHContract
In accordance with the MOU, Professional Services Contract 1181 between Council and MWH New
ZealandLtdwasmadeon27June2005withanegotiatedtenderpriceof$1,096,000excludingGSTfor
thefirstyearofthecontract.
Thecontractwasexpressedtooperateuntil1July2006withapotentialforaoneyearplusanotherone
yearrolloveronascheduleofratesbasis.
Council’sfinancialrecordsindicatethatMWHwaspaidatotalofabout$2.4millionfortheperiodJune
2005toFebruary2013underContract1181.Overall,MWHwaspaidnearly$2.9millionintotalfromJuly
2000toFebruary2013.
TheMWHcontractprovidedthatitsprimaryobjectiveswere:
26|P a g e 1. ToprojectmanagetheWastewaterTreatmentPlantandAssociatedWorkswhichincludesdesign,
contractmanagement,commissioningandachievingofperformancecriteria.
2. ToprovideemergencyresponsesupportforWanganuiWaterServices.
3. To project manage a range of projects, investigations, supervision, inspections and asset
managementfunctionsasassignedbytheWaterPartnershipSteeringGrouponinstructionbythe
client.
4. To ensure that PR, customer interfaces and service are undertaken to at least or better than
Council’sservicestandardsandpolicies
5. Toensurethatprojectsundertakenaredesignedtobestcurrentpracticeanddeliveredinabest
forprojectmannerthatconsidersbestpriceandadviceforwholeoflifeassetmanagementofthe
facilities.
TheCouncilTenderBoardProcess
The Tender Board consisted of three elected Councillors appointed by the Mayor (but excluding the
Mayor)andatleastfour Council staffappointedby theCEO(butexcluding theCEO). TheBoard was
normallychairedbytheDeputyCEOandhadtoapplyanumberofteststoanyproposedprocurement
coming before it and then, if satisfied, make recommendations to the CEO on particulars such as
procurementmethodologyandwhetherthemattershouldbereferredtoCouncil.Documentsassociated
withtheJune2005contractbetweenCouncilandMWHsuggestthatCouncilstaffinvitedMWHtosubmit
theonlytenderproposalfortheprojectandtheTenderBoardprocesswasmainlyconcernedthatthe
contractualpaperworkwasinorder.
3.2 CONSTRUCTINGTHETREATMENTPLANT–2005TO2007
TheTreatmentPlantwasrequiredtobeconstructedandoperationalby1July2007inaccordancewith
thetermsofCouncil’sresourceconsent.Asmatterstranspired,theprojectendedupbeingcompleted
overtimeandoverbudget.
The construction process had its technical and logistical challenges and the site itself produced some
complications.Elevenphysicalworkscontractswereawardedoverall.
Plantoperationsdidnotcommenceuntillate2007.
TheCouncilmeetingrecordssetoutbelowshowcontinuingprogressreportsagainstthebackgroundofa
tightdesign,tender,contractandconstructiontimeframe.
CouncilMeetingͲ21February2005
CouncilstaffreportedthatthefinancialprovisionforconstructionofthetreatmentplantintheLongͲterm
CouncilCommunityPlan(LTCCP)was$22.5M.
However,throughtheoptionsevaluationprocess,staffhadbeenableto‘developanoptionthattakes
advantageoftheuniqueWanganuisituationandupͲtoͲdatetechnologythatisestimatedtosignificantly
reducetheoriginalprojection.’Therevisedcapitalestimatewas$15Mandtheoptimizedlagoonprocess
wassaidtoalsoincurloweroperatingcosts.
Staff cautioned that these 2004 figures were subject to currency movements and escalation in
constructioncosts.ItwasreiteratedthatCouncilhadresolvedin2004‘totake$4Mofthisprojected
savingandapplyittofloodmitigationprojects.’
27|P a g e CouncilMeetingͲ4April2005
Councilresolvedtopurchaseatmarketvalueabout21hectaresoflandadjacenttothecityairportthat
waspartoftheHarbourEndowmentportfolioforthepurposesofconstructingtheplant.Councillors
were also advised about the ‘Pain Gain’ clause being negotiated with MWH to accept some of the
‘significantrisk’associatedwiththedesignandprojectmanagementoftheplant’sconstruction.
CouncilMeetingͲ30June2005
ItwasnotedthatTeRunangaOTupohohadgivenapprovaltotransferownershipofthelandnearthe
airportfromtheHarbourEndowmenttotheCityEndowmentforthepurposesofconstructingtheplant.
AnIwirepresentativepresentatthemeetingsaidapproval‘wasgiventhroughthegoodwillofIwiasIwi
consideredthesewerageschemeimportant.’
CouncilMeetingͲ19September2005
ItwasreportedthatMWHandCouncil’sengineeringprojectmanagerwerefinalizingultimateflows,loads
and peak volumes that the plant would have to cope with and be sized for. Following sizing, a Total
EstimatedCostwouldbedevelopedafterdetailedcostingsanddesigns.Thetwostagedesignprocess
wouldoccurfromSeptembertoDecember2005followedbyaconfirmationofcontractingstrategyand
tenderingprocessfromDecember2005toFebruary2006.ConstructionwouldthencommenceinApril
2006andrunthroughtoApril2007,therebyallowingcommissioningoftheplantinJulythatyear.
CouncilMeetingͲ12December2005
TheStageIdesignwasreportedascompletedandCouncilresolvedtomovetoStage2.Theestimated
capitalcostoftheplantwasnow$14.3M.Theprojecthadbeenoptimizedtoallow,forexample,for
highervolumesofstormwaterflow.
ItwasstatedthatmakingtheplantbiggercreatedanumberofriskmanagementopportunitiesforCouncil,
for example to deal with growth or decline in wet industry and to allow for greater sludge storage.
Discussionshadalsobeenheldwiththewetindustryregardingsizingoftheplantandimprovementsthat
couldbemadeintheirowntradewastetreatmentsystems.TheCouncilCEOadvisedthatitwouldlikely
becheaperforwetindustrytouseCouncil’splantthaninstalltheirown.
CouncilMeetingͲ3April2006
Detaileddesignwasreportedasprogressingandfinaltradewastemonitoringandevaluationwasnearing
completion.TheMinisterforConservationhadconsentedtothesaleoftheHarbourEndowmentLand.
CouncilMeetingͲ22May2006
Designwasreportedasstillunderwayandothernegotiations,worksandtenderswereprogressing,such
asforaerators.
CouncilMeetingͲ3July2006
An update was provided on tender progress. The implementation and construction timeframe was
proving challenging. Tender pricing was high risk because of the prevailing economic climate for
constructionworks,particularlywhereproductsweresourcedfromoverseas.
CouncilMeetingͲ25September2006
28|P a g e Afurtherupdatewasprovidedontheprogress oftendersandworks. Of theprojected $14Mcapital
expenditure,contractsfor$7Mhadbeenawardedtodate.
CouncilMeetingͲ27November2006
TheStage2detaileddesignwasnearingcompletionandotherworkswerecontinuing.Ofthe$13.8M
budget, contracts for $13.1M had by then been awarded. Works to the value of $2.67M had been
completed.
CouncilMeetingͲ29January2007
Allmajorconstructioncontractshadbythenbeenawardedwiththeprojectedcapitalcostthenbeing
$14.6M.
CouncilMeetingͲ26March2007
Earthworks were substantially completed, pipeͲlaying and major power supplies to the site were
completed. Eighteen major aerators had arrived in New Zealand and were awaiting delivery. The
projectedcosthadincreasedto$14.9M.
CouncilMeetingͲ28May2007
Overall,theprojectwassixtoeightweeksbehindtheplant’stargetedcommissioningdate.
CouncilMeetingͲ30July2007
Constructionwasnearingcompletionbuttheprojectstillsixtoeightweeksbehindschedule.
CouncilMeetingͲ27August2007
Mostworkswerecompletedandtestingwascontinuing.
3.3 OPERATINGTHETREATMENTPLANT–2007TO2012
Operationaldifficultiesstartedtooccurshortlyaftertheplant’scommencementinlate2007andregular
reports were made to Council on the causes and effects. A manifestation of the difficulties was the
significantodourproblemthatfirstbeganemanatingfromtheplantoverthesummerof2007/2008.
It should be noted that the formal reports to Council/Committee meetings on operational difficulties
appeartobecomelessfrequent,atleastasfarastheCouncilminutesrecord,followingthemeetingon
19May2008whereitwasreportedthatcertainmitigationmeasureshadbeenimplemented,including
diversionofuntreatedeffluenttotheseainbreachofCouncil’sresourceconsent.Reportinghowever
wasoccurringinotherways.
TheformerMayorofCouncil,Mr.MichaelLaws,statesthathesought‘regularverbalandwrittenupdates
toCouncil’afterhefirstbecameawareoftheseriousodourprobleminJanuary2008.
29|P a g e FurthertotheCouncilmeetingof19Maythepreviousyear,on8June2009itwasreportedtoCouncil
thatthe‘operationalprocedures’which‘minimisethebiologicalloadingssenttotheplant’hadeffectively
reducedtheodourproblemsinceMarch2008[NB.theimplicationbeingthatthese‘mitigationmeasures’
wereongoing].
ThefollowingsummaryoutlinesthekeyreportingtoCouncilofoperationalmattersfrom2007onwards:
CouncilMeetingͲ17December2007
ItwasreportedtoCouncilthatbiologicalcommissioningofthenewplantwascompleted[NB.laterproven
tobeincorrect]buttheUltraViolet(UV)facilitywasnotfullycommissioned.Othermajorworkshadbeen
completed. However, the new aerators were not performing sufficiently and this was reported as a
contractorissuetoresolve.
Council was advised that as a consequence of the aerator problem, odour was being produced by
insufficientoxygenationofpeaktradewasteandsewageloads.
CouncilMeetingͲ28January2008
ConcernwasexpressedbytheMayoraboutthecontinuingodourproblemwiththetreatmentplantand
staffadvisedthatamultiͲprongedapproachwasbeingtakentosolveitandtooptimizethetechnical
aerationlevel.TheMayorapologizedtoresidentsfortheodourandemphasizedthattheCouncilmust
knowfirstiftherewasaproblemwithanyCouncilserviceandtoldstaffthathehopedthematterwould
beaddressedwithalacrity.
CouncilMeetingͲ25February2008
Councillorswereadvisedthat:
x Theplantwasreceivingindustryandresidentialloadsandthequantityandqualityoftheindustry
loadswerebeingassessed–thesecouldhaveanimpactontheplant’sperformance.
x Theturbineandaerationcapacityhadbeendoubledbutoxygenlevelswereonlyslowlyincreasing
x Staffwereattemptingtoincreaseaerationbyincreasingpropellerperformanceandpitchangles.
Additionally,anotheraeratorwasbeingpreparedforuse
x Thesettlingpondhaddevelopedascumlayerwhichwasbeingsuckedoutandbrokenup–a
continuingprocess.
x Previous nonͲoxygenated nutrient meant that oxygen levels would take time to rise as the
nutrientwastreated.
x The manufacturerhad toprovide under the contract eighteen replacement aerators and they
wouldbe17%moreefficientthaniftheoriginalfaultyaeratorshadbeenoperatingproperly
CouncilMeetingͲ7April2008
AreportwasprovidedbystaffthatcommissioningoftheUVfacilityhadbeenprogrammedforMarch,
thatimprovedaerationofthemainlagoonwasbeingundertakenandfurthermeasureswerebeingtaken
tocontroltheodourproblemwiththesettlinglagoonbyaddingminiaeratorsandtheinstallationofa
sludgeremovalpump.
CouncilMeetingͲ19May2008
StaffreportedtoCouncillorsthat:
x UnpleasantodourissueshadbeenexperiencedsinceNovember2007.
30|P a g e x
Theaeratorproblemsmeantthattheefficiencyofconvertingelectricalpowertodissolvedoxygen
wasbeingcompromised
x Onlypartiallytreatedeffluentwasbeingtransferredtothesettlementpond
x DuringDecember2007,loadsinexcessoftheplant’sdesignwereexperienced.FromJanuaryto
May2008,combinedloadswereconsistentlyattheupperendoftheplant’sdesigncapacity
x The plant’s designer MWH was consistently stating that the basic issue was lack of efficient
aerationwithintheaeratedlagoon
x Arangeofmitigationmeasureswerebeingundertakenuntiltheaerationandcapacityissueswere
resolved.Theseincludedminimizingloadingtotheplant(divertingtotheseainbreachofthe
resourceconsent)andtrialmodificationstotheaerators.
Significantly, staff were required to provide updates on the operational problems every six weeks to
Council’sFinanceandInfrastructureCommittee,theminutesofwhichinturnwouldbereportedtothe
Council.
CouncilMeetingͲ30June2008
Withtheaeratorandotherproblemscontinuing,itwasreportedthattheUnitedStatesmanufacturerof
theaeratorsandtheiragentwereworkingwithMWHandweretosubmitaremedialproposalonthe
basisofnoadditionalcosttoCouncil.
CouncilMeetingͲ11August2008
ThesecondremedialproposalfromtheaeratorsupplierhadbeenapprovedinprinciplebyCouncilstaff,
whowereworkingthroughthedetailwithMWHandthecontractor.Moreaeratorswerebeingplaced
onthesettlementpond.StaffreportedtherehadbeennoodourissuesthroughoutApriltoJune2008.
ActualexpenditureontheprojecttoendJunewas$15.9M.
CouncilMeetingͲ8June2009
Staffreportedthat‘operationalprocedures’hadbeenadopted‘whichminimizethebiologicalloadings
senttotheplant’andhad‘effectivelycontrolledthereleaseofunpleasantodoursinceMarch2008.’
ReplacementaeratorswereintransitfromtheUSAandweretobedeployedontheaeratedlagoonatno
additionalcosttoCouncil.
CouncilMeetingͲ20July2009
Twentythreenewaeratorshadbeeninstalledcomprisingnineteenreplacementunitsandanadditional
fournewaerators.Itwasreportedthatdissolvedoxygenlevelshadrespondedwelltothenewunitsand
commissioning works were continuing. The costs of approximately $2.5M were fully met by the
contractorwhosentateamfromAustraliaandSweden.
CouncilMeetingͲ31August2009
Theplantwasreportedtobecontinuingtooperateeffectivelybuttreatmentqualityhadtakensometime
toadjusttoincreasingloadsfromAffco’sImlayplantastheymovedtodoubleshifts.Problemshadbeen
experiencedatBeachRoadPumpStationwithlargevolumesofanimalbyproductsblockingthescreens.
Discussionswerebeingheldwithmajorindustriestoidentifythesourceoftheproblemandtoputinplace
practicalremedies.
31|P a g e CouncilMeetingͲ19October2009
Council’skeyobjectiveswithtradewastewereoutlined:
x The plant was designed to meet existing industry and domestic requirements with a modest
allowanceforgrowthbasedonadditionalaerationcapacity
x A new trade waste byͲlaw would allow Council to control and manage discharges to the
wastewatersystem
x Industrytradewastedischargerswouldbegranteddischargeconsentswithmonitoringtoensure
compliancewithinagreedlimitsandquality
x Thetradewastemodelwouldapportioncapitalandoperationalcoststoindustryanddomestic
consumersusingmonitoredflowsandloadspluslongͲtermaveragedata
x Fine tuning over future years would occur using better information on flow, load and plant
performance
Councilwasseekingtochangethewastewatermodusoperandifroman‘anythinggoes’mindͲsettoa
‘responsibledischarge’mindͲset.TheplanthadcapacitylimitssoindustryneededtopreͲtreatitswaste
tovariouslevels.CouncilwasfullyresponsibleforitsdischargeconsenttoHorizonsRegionalCounciland
Council’s Trade Waste consents for industry were a vital control mechanism to ensure good
environmentaloutcomes.
CouncilMeetingͲ19July2010
Councillors were advised that a consent variation to the wastewater resource consent had been
advertisedon3July2010followingliaisonwithHorizonsRegionalCouncil:
x Torenewtheexistingbypassdischargetotheoceanforsignificantweatherevents
x To vary some existing clauses of existing consents to avoid what was termed ‘technical nonͲ
compliance’inthefuture
Councilwasseekingtodischargedilutedwastewaterandstormwaterfromtheoceanoutfallwhenflows
atBeachRoadPumpStationexceeded1120litrespersecondatamaximumflowof1600litrespersecond.
Theannualfrequencyofthedischargewascalculatedat0.37%.
CouncilMeetingͲ14November2011
StaffreportedthatCouncil’sapplicationtovarytheresourceconsenthadbeensuccessfulwithafifteen
yearcoastalpermitgrantedtodischargedilutedwastewaterandstormwaterthroughtheoceanoutfall
duringhighflowstormeventsandthedischargeoftreatedwastewaterthroughtheoutfallatothertimes.
Thefactthatafullhearingontheapplicationwasnotrequiredwasreportedbystaffasrecognitionof
‘thesuccessoftheentirewastewaterscheme,includingthepublicandprivateseparationworks,andthe
commitmenttoimprovingenvironmentalperformance.’
CouncilMeetingͲ19December2011
The use of suitable electronic trade waste measuring equipment was reported to be considered cost
prohibitivetoinstallatthesevenlargestwetindustrysites.Theannualtradewasteforthecompanies
wascalculatedbysamplingandanalyzingtheireffluentfourtimesperyearfortenconsecutiveworkdays
eachtimeateachsite.
32|P a g e CouncilMeetingͲ30January2012
It was reported that AFFCO and Tasman Tanning were disputing their trade waste charges and had
withheldpartofwhattheyowedtoCouncil.
CouncilMeetingͲ23October2012
CouncilconsideredareportfromtheInfrastructureandPropertyCommitteemeetingofthe2October
2012.
Atthe2Octobermeeting,MarkHughes,Council’snewInfrastructureManagerappointedon23July2012,
requestedthatalateagendaitemregardingmattersatthetreatmentplantthatrequiredCouncil’searly
consideration.Mr.Hughesgaveanoutlineoffailuresattheplantsinceitscommencementin2007and
advisedCouncillorsthatanindependentreportonthe‘health’oftheplanthadbeencommissionedby
staffaboutayearbeforeandreceivedinlateNovember2011.
The2011CardnoBTOreportadvisedthatthegapbetweentheconditionoftheplantanditsconsent
compliancewaswidening.Sludgeaccumulationwasexcessive,onlysevenoutoftwentythreeaerators
wereoperating,UVtreatmentwasineffectiveandtheplantwasdischargingrawcoliforms.WhilstabioͲ
augmentationprocessandothermeasureshadbeenimplemented,theplantwasclosetobeing‘dead.’
Councillors were warned that the plant was not compliant with its consent conditions from Horizons
RegionalCouncilandwasina‘criticalsituation.’
CouncilExtraordinaryMeetingͲ17January2013
InfrastructureManager,MarkHughes,madeadetailedreporttoCouncillorsgoingoverthehistoryofthe
treatmentplantprojectanditsoperationalfailuressince2007andinformingthemofactivitiesthenbeing
undertakenandplanned.
Council’s resolution at this meeting has been referred to in Item 2.2 of this Report. It led to the
commissioningoftheCardnoBTOreportofApril2013whichfoundthatthetreatmentplantbasedonthe
optimized lagoon process was not salvageable and a new type of plant needed to be built. Council
subsequentlyadoptedthisposition.
Forcompleteness,afullcopyoftheminutesoftheExtraordinaryMeetingofCouncilon17January2013
aresetoutatAttachmentE.
33|P a g e 4 THEFIVESPECIFICQUESTIONSASKEDBYCOUNCIL
Whatfault,ifany,wasthereinCouncil’sinputintothedesignparametersand
theirdecisionmakingprocessesthatledtotheacceptanceofthedesignandbuild
ofthe2007plant?
WhanganuiDistrictCouncil’sLegalActionagainstMWHNewZealandLtd
In June 2013, Council formed the view that the design of the treatment plant was not viable and
subsequentlylodgedastatementofclaimagainsttheplant’sdesignerMWHintheHighCourtofNew
Zealand.Theclaimsoughtjudgementagainsttheplant’sdesignerforremediationcostsandrepaircosts
alongwithinterestandlegalcosts.
Council’sfirstcauseofactionwasthatMWHwasnegligentintheperformanceofwhatwastermedthe
‘Concept Design Contract’ entered into by Council’s letter and acceptance of MW’s proposal on 17
October2000.
Council’ssecondand/oralternativecauseofactionwasthatMWHwasnegligentintheperformanceof
what was termed the ‘Detailed Design Contract’ entered into by Council and MWH on 27 June 2005
(ProfessionalServicesContract1181).
AprocessofmediationoccurredbetweenthepartiesinNovember2015.
On26February2016,CouncilissuedamediastatementthatthepartieshadagreedtosettleCouncil’s
claimrelatingtoMWH’sworkonthewastewatertreatmentplant,thattheywere‘pleasedthatthematter
hasbeenresolved’andthat‘theprecisetermsofthesettlementarestrictlyconfidential.’
The Independent Review has not been provided with a copy of the confidential terms of settlement.
Nevertheless,itisareasonableassumptionthatCouncil’sclaimwassettledonthebasisofnoadmissions
ofliabilitybyeitherpartyasthisisacommonpracticewithagreementsofthisnature.
ItisamatterofpublicrecordhoweverthatCouncilwhencommencingitslegalactionconsideredMWH
negligentandthereforeliablefortheplant’sfaileddesign.
WasthereanyfaultinCouncil’sinputintothedesignparameters?
ThequestionbeingaskedaboutanyCouncilfaultarguablyraisestheissueofcontributorynegligencein
thedesignofthetreatmentplant.ShouldtheassumptionbecorrectthatCouncil’slegalactionagainst
MWHwassettledonthebasisofnoadmissionsofliabilitybyeitherparty,thenexploringtheissueofany
contributorynegligencemayruncontrarytotheconfidentialagreement.
Nevertheless,Councilstaffwerecertainlyintegrallyinvolvedandprovidinginputintothetreatmentplant
conceptdesign,primarilythroughtheirinvolvementintheTechnicalWorkingGroupprocess.Inonesense
34|P a g e this was necessary because MWH could not design a treatment plant specific to Whanganui’s needs
withoutaccessingthecorporateknowledgewithinCouncil’sinfrastructureteam.
Council’sSeniorEngineer,ColinHovey,hadacloseworkingrelationshipwithMWHstretchingbacktothe
1990sandwasthekeyCouncilstafferengagedondevelopmentofthetreatmentplantdesign.
MrHoveyforinstanceattendedthecriticaltechnicalmeetingatMWH’sWellingtonofficeon20October
2003whichfirstformallydevelopedtheOptimisedLagoondesignconcept.
MWH’sReportNo.11ofOctober2005,whichfinallyconfirmedtheOptimisedLagoonTreatmentProcess
Design,acknowledgeditwaspreparedbyDr.DaveStewartfromMWHwithinputfromColinHoveywho
wasalsospecifiedasoneofitsreviewers.
Mr.HoveysubmittedtotheIndependentReviewthathe‘sizedthetreatmentlagoon,assetoutindesign
report11andtheworkthatwentintothatwascomplexbutveryrobust…MWHwerethemajordesigners
alongwithmyself.Variousotherexpertsassistedwiththedetaileddesign–geotechnical,electrical…’
MWHhoweverwascontractuallyboundtoprovideahighstandardofprofessionalengineeringadvice
andsupporttoCouncilandtheirengagementbydefinitionevidencedthefactthatCouncil’stechnical
stafflackedsufficientexpertiseandcapabilitytodesignthetreatmentplantthemselves.
Inseekingtobeawardedtheoriginalcontract,MWH’sIanRobertsonhadwrittentotheCouncilCEOon
11May2000assertingthatMontgomeryWatsonwasacknowledgedasbeing‘theworld’stopprovider
ofengineeringservicesinwastewaterandsewerage.’(emphasisadded)
TheoriginalcontractbetweenCouncilandMWHof17October2000inpartcontainedthefollowinglegal
undertakingthatMWwouldprovidetechnicalsupporttoCouncilthroughtheir:
x
x
x
x
x
x
peopleandconsentexperienceinNewZealand
wastewaterspecialistsinNewZealand
international technology specialists and their reputation as a leading international provider of
wastewaterservices
databasesandknowledgemanagementcentresrelatingtowastewater
accesstoknowledgeoutsideMontgomeryWatsonthroughestablishedindustrylinks
understandingofWanganui
MWHthereforewasboundbyitsobligationtoprovideahighstandardofprofessionalengineeringadvice
andsupportandassuchwasprimarilyresponsiblefortheplant’sdesign.
ThequestionessentiallybeingaskedbyCouncilintheTermsofReferencegoestotheissueofanyfaultin
theprocessesfollowedbyCouncilthatledtotheacceptanceoftheplant’sdesignandthisissueisexplored
below.
WasthereanyfaultinCouncil’sdecisionmakingprocesses?
TheevidencesetoutintheIndependentReviewshowsthattheprocessesfollowedbyCouncilthatledto
theacceptanceofthedesignandbuildofthetreatmentplantwereflawedatcriticalstages.Theseflaws
greatlyincreasedtheprospectsthattheprojectwouldultimatelyfail,whichofcourseitdid.
35|P a g e Theflawsorfaultscanbebroadlycharacterizedasdeficientmanagementandgovernance.
Inparticulartheycanbedescribedasalackofproperprocurementprocess,anentrenchedandoverlyͲ
trustingseniormanagementculture,inadequateproceduralrigouratmanagementandgovernancelevel,
insufficient inͲhouse expertise and consequential overͲreliance on purported experts, inadequate risk
managementandtheprovisionofincorrectadvicetoCouncil.
ObjectivelyanddespitethewellͲmeaningeffortsofmany,theprocessthatledtotheadoptionofthe
OptimisedLagoonconceptdesignbyCouncilinFebruaryandNovember2004wasarguablyfatallyflawed
throughthesesystemicshortcomings.TheflawsinfectedthedecisionͲmakingprocessinthecriticalearly
yearsfrom2000to2004andimpacteduponeverythingthatoccurredfrom2005onwards.
Thefollowingnarrativesetsoutthesystemicshortcomingsupto2007.
TheCircumstancesPertainingtotheOriginalMWHContractͲOctober2000
In2000,MWHanditsearlierincarnationofMWalreadyhadalongͲstandingwastewaterrelationshipwith
Councilcontractuallystretchingbackto1992andinanindividualsenseevenearlier.Theseniorstaff
MWHregularlydealtwithatCouncilhadbeenthereformuchlongerperiodsstretchingbackto1986and
1981and1976inonecase.TheMayorandCEOhadbeeninplacesince1986and1984respectively.
WiththerecordsindicatingthatMWHcommencedprovidingconsultancyservicesfortheconceptdesign
inJuly2000,CouncilstaffsubsequentlywentthroughaselectionprocessinlateOctober2000andafter
MWHhadalreadyapparentlylodgedthreemonthsofinvoicesforitsconsultancyservices.
ItappearsMWHwastheonlyconsultancyfirminvitedtosubmitaproposal.Atleasttherewassome
documentationevidencingaformofcontracteventuallyplacedonfile,butCouncil’sestablishedprocess
appearednottohavebeenadequatelyadheredto.TheoriginalMWHcontractwasnotCouncil’sstandard
professionalservicescontract.
ThelackofanymarkettestingfortheconceptdesignworklimitedCouncilstafftoonlyconsideringthe
onesourceofconsultancyadviceforwhatwastobeoneofitsmostimportantinfrastructureprojects.
Thiswasaseriousshortcomingforitsignalledalackofproceduralandintellectualrigourattheveryearly
stageoftheproject.
TheWorkingGroup’sMethodologyͲFromRiskͲMinimisationtoRiskͲTaking
The Working Group including MWH was the key technical driver for the treatment plant design and
operated in two parallel streams, one mainly consultative with external participants and the other
involvingtwoCounciltechnicalstaffandMWH.Thelatterstreamdidtheheavyliftingontheconcept
designworkandliaisedwiththeconsultativestream.
ItwasclearfromtheearlyWorkingGroupreportsproducedbyMWHthattheconsultantswereleading
Council staff through the basic principles and processes of wastewater treatment and project
management.Thiswasentirelyappropriateforconsultantswhendealingwithaclientwhichmaynot
havetherequisiteinͲhouseknowledgeandexperiencetoembracethecomplexitiesofaparticularproject.
36|P a g e ItwasnodoubtalsousefulinformationfortheIwiandcommunityrepresentativeswhowereparticipating
ontheconsultativestream.
ThemethodologyfollowedbyMWHinprovidingtheWorkingGroupwiththirtyfourwastetreatment
options to evaluate against the Reference Case and defined success criteria was prima facie a robust
methodology.
Indeed,thefirstninereportsproducedbyMWHfortheWorkingGroupbetweenJuly2001andNovember
2003andtherefinementofthelonglistoftreatmentoptionstoashortlistoffourreflectedthisrobust
methodology.
An illustration of the early soundness of the MWH Working Group approach was evidenced by the
followingsomewhatpropheticstatementcontainedinReportNo.6fromAugust2002whichreferredto
the‘longlist’oftreatmentoptionsbeingevaluatedatthatpointintime.
The‘longlist’accordingtoMWHrepresentedthe‘rangeoftreatmentprocessesincurrentuseandcover
the range of basic alternatives available. Whilst many are innovative, they are predominantly
incrementalimprovementsofbasicprocessesratherthannew‘breakthroughs’intreatmenttechnology.
Theyareallproveninfullscaleuse,althoughsomenotinNewZealand.’(emphasisadded)
If only MWH had adhered to this sensible riskͲminimisation approach adopted by the wastewater
treatmentindustry.
TheWorkingGroup’sSeminalFault–20October2003
InWellingtonon20October2003,twoCounciltechnicalstaffandfourMWHconsultantsheldaworkshop
todevelopanew‘breakthrough’intreatmenttechnologythatwasnotproveninfullscaleuseanywhere
intheworld.
RatherthanbeinganincrementalimprovementofbasicprocessestheninuseasMWHhadpreviously
advised,whatbecameknownastheOptimisedLagoonTreatmentProcessrepresentedaquantumleap
intotheuntriedanduntested.
MWHandCouncilstaffweresupposedtobeattheWellingtonworkshopevaluatingthefourshortͲlisted
treatmentoptionsdevelopedbytheWorkingGroupovermorethantwoyearsandaspreviouslyadvised
toCouncil.Instead,theyadoptedthemoreradicalapproachofcherrypickingwhatwereconsideredthe
bestfeaturesofeachofthefourshortͲlistedoptionsandcombinedthemtoproduceanewandmuch
lowerͲcostoptionthatwasarguedwouldbeuniqueandcustomizedtoWhanganui’sneeds.
Council’sformerSeniorEngineer,ColinHovey,submittedtotheIndependentReviewthatduring2001Ͳ
2002heandmembersoftheWorkingGroupconductedsiteinspectionsatatotalofninetreatmentplants
inNewZealandaccompaniedbyDr.DaveStewartofMWH.Mr.Hoveyalsovisitedthreeplantsinthe
USA,oneinScotlandandthreeinSouthAfricaandonmostoccasionswasjoinedbyMWHlocalengineers.
Despitethis,Mr.Hoveystatedthathewas‘notaware’oftheexistenceanywhereofatreatmentplant
comparabletothatdesignedforWhanganui.
37|P a g e HumphreyArcherfromCH2MBecawastocommentinOctober2015that‘theOptimisedLagoonProcess
didnothaveprecedentsandattemptedtocombinealltreatmentfunctionsintoonelagoon.’
Council staff in 2004 however were referring to their recommended design as ‘state of the art’ and
‘innovative.’
ManagementandGovernance–AnOverlyͲTrusting,‘CosyandInsular’Culture
TheTechnicalworkingGroupwithtwoCounciltechnicalstaffandMWHprovidingsupportwasofficially
convenedinMarch2001andmetforthefirsttimewithIwiandcommunityrepresentativesinJuly2001.
Effectivelyhowever,ithadbeenoperatingwithMWHandCouncilstaffsinceJuly2000
WhenCouncilreceivedaformalreportonthedeliberationsoftheWorkingGroupthefollowingyearon
20May2002,theGrouphadalreadymetatotalofninetimesandMWHhadbythenproducedatotalof
five written reports. When the matter next came before Council on 4 November 2002 with MWH
presentingfourshortlistedtreatmentoptions,Councillorsexpressedtheir‘confidenceintheprocess.’
FormerCEOColinWhitlockconfirmedtotheIndependentReviewthataverytrustingenvironmentexisted
betweenCouncillorsandmanagementupuntilhedepartedin2005.
FormerMayorMichaelLawssubmittedthatundertheadministrationofthelongͲservingduoofMayor
ChasPoynterandCEOColinWhitlock,‘thecouncilhadbecometoocosyandinsular.’
Effectively,CouncilandtheCEOhaddelegatedthetaskofdesigningthetreatmentplanttoMWHand
Counciltechnicalstaffandthegoverningbody’soversightofmanagementoftheprojectcouldbestbe
describedasoverlytrusting.Thiswasconsistentwiththeprevailingcultureduringthisperiod.
Providingsomecontext,formerMayor,MichaelLaws,submittedthat:
‘The design and construction of the council’s wastewater treatment plant – when I was mayor – was
withoutinternalorpoliticalcontroversy.Therewereanynumberofmoreexacting,controversialand
immediateissuesthatconfrontedthecouncilatthetime.Bycontrast,thedesignandconstructionofthe
wastewatertreatmentplantwasconsideredtobearelativelyprosaicprocess.Itwasalwaysperceived
bythegovernanceteamasbeingproperlymanagedbyitsengineeringandenvironmentalprofessionals.
Atnostagewasmygovernanceteamawareoforalertedtoanydesignrisks…thesubsequentoperation
and failure of the wastewater treatment plant was neither foreseen nor imagined by the governance
teamsofthetime.’
CouncilexpressedconfidencewiththeWorkingGroupprocessatanearlystageandwassubsequently
veryacceptingofstaffadvice.ThisisreflectedintwokeymeetingsinFebruaryandNovemberof2004
whichhelpedsetthescenefortheplant’sultimatefailure.
However, any arguable lack of rigour on the part of the governing body at these two meetings was
mitigatedsomewhatbytworelevantfacts:
x
x
Councilwasmisinformedatbothofthesemeetings;and
AnewCouncilhadbeenelectedjustbeforetheNovember2004meeting.
38|P a g e MisinformingtheCouncilMeetingof16February2004
CouncillorswereadvisedatthismeetingthattheOptimisedLagoonTreatmentProcessdevelopedbythe
WorkingGroupwasrelativelylowͲrisk,primarilybecauseitwasbasedonproventechnologies.
Thisadvicewasessentiallyincorrect.
MWH had made a presentation to Councillors, so there existed the opportunity to question Council’s
professionalengineeringadvisers.TheminutesoftheCommitteeandCouncilmeetingsrevealthatthe
twoissuesraisedby Councillors relatedtothe effectonthe airport ofseagullsbeingattractedtothe
treatmentlagoonsandtheliningmaterialforthelagoons.OnlyoneCouncillorqueriedthefactthatthe
Councilpaperdidnotcontainafinancialreport,whichreflectedinpartitsdeficiencyasabusinesscase.
Councillorswerealsoadvisedthattherecommendedtreatmentprocesswas‘innovativeandtherewas
no such plant was in existence, certainly in New Zealand, which combines wellͲestablished process
techniqueswithauniquesludgemanagementprocess.’
Itssludgemanagementprocesswasdescribedas‘unique’becauseitstreatmentpondswere‘excavated
uptotenmetresdeepwhereinnormalsituationstheywouldbemuchshallower.’
ThewarningsignsshouldhavebeenflashingforCouncillorsthattherewasaninherentcontradictionin
whattheywerebeingtold.HowcouldatreatmentprocessdevelopedforthefirsttimebyMWHand
Councilstaff,withauniquesludgemanagementprocessinvolvingtreatmentpondsmuchdeeperthan
wasnormal,besimultaneouslyaprocessthatwasrelativelylowͲriskandproven?
Infact, a clever use oflanguage was used to smoothovertheseemingly contradictorynotionsofthe
recommendedtreatmentprocessbeing‘unique’butatthesametime‘proven.’
MWHexpresseditwellinasubsequent2008paper:‘ThenewWanganuiwastewatertreatmentfacility
extendstheconventionalandwellͲproventechnologyofaeratedlagoonsbyincorporatingprovisionfor
sludgestorageintendedtoputofffor20yearsthevexingproblemsofsludgeprocessinganddisposalthat
facemostwastewatertreatmentfacilitiesinNewZealandandoverseas.’
Sothe‘conventional’technologywaswellͲproven,itwasjustthe‘extension’ofthetechnologythatwas
unique.
Council’s Senior Engineer at the time, Colin Hovey, submitted to the Independent Review that no
comparable plant to that developed by his Working Group existed to his knowledge but it was
‘understandablethatthesituationwouldnotbeexplainedtocouncilbecauseofitscomplexity.’
Nevertheless,Councillorsappearedtobeassuagedbythefactthatthetreatmentplandesignwastobe
peerreviewed.
Council’sformerCEO,ColinWhitlock,whoattendedthemeetinginFebruary2004toldtheIndependent
Review in August 2016 that he recalled MWH being upfront with management back then about the
unprecedentednatureoftherecommendeddesignandtheconsequentrisksinvolved.
Importantly,CouncillorswereadvisedattheFebruary2004meetingthattherecommendedtreatment
processcameatasignificantlylower‘wholeoflifecost’at$16.93millionthantheshortͲlistedoptions
39|P a g e whichrangedfrom$26.8millionto$47.15million.Indeed,a$4millionsavingfromthetreatmentplant
constructionbudgetwasalreadytobereͲallocated.
The search for a lower cost treatment option appeared to be a key driver in the development of the
OptimisedLagoonprocess.
MisinformingtheNewlyͲElectedCouncil–29November2004
ThemisinformingofCouncilattheNovember2004meetingwasarguablymoreseriousthanattheearlier
Februarymeeting,whereCouncilhadconfirmedtheOptimisedLagoondesignconceptonthecondition
itbepeerreviewed.
ThiswasthefirstbusinessmeetingofthenewlyͲelectedCouncilaftertheinitialceremonialmeetingof
September 2004. A new Mayor and Deputy Mayor had been elected, but some Councillors had also
servedonthepreviousadministration.ItwasatthismeetingandtheprecedingCommitteemeetingthat
staffreportedontheoutcomeoftheindependentpeerreviewoftheOptimisedLagoondesignrequired
bytheformerCouncil.
Council was advised that the Peer Review Panel had affirmed that the treatment plant identification
processhadbeenrobustandthattheOptimisedLagoondesignwouldmeetWhanganui’sneeds.
ThisadvicewasessentiallyincorrectandCouncilwasthussignificantlymisinformedonacriticalpoint.
ThesinglesentenceextractfromthePeerReviewPanel’sletterof16September2004toCouncil’sColin
HoveythatwasprovidedtoCouncillorsasevidenceofthisaffirmationdidnosuchthing.Itmerelystated
that ‘the concept of a panel based system is a pragmatic approach to the selection and performance
criteria’thathadbeendevelopedfortheproject.
StaffdownplayedtheseriousnessoftheissuesraisedbythePeerReviewPanelbydescribingthemas
‘largelytechnicalissues’whichessentiallyrelatedtoriskmanagement.Theminutesofthemeetingdo
notrecordanyinformationbeinggiventoCouncillorsaboutwhatthese‘technicalissues’were.
ThestaffadviceonthepeerreviewwasnotchallengedbyCouncillors,someofwhomwerenewlyͲelected
andwithnopriorcorporateknowledgeoftheplantdesignprocess.
Inactualfact,thePeerReviewPanelhadraisedanumberofsignificantissueswithMWHandCouncilthat
neededtobeaddressedwhichincludedtheneedforarigorousriskassessment.ThePanelhadalsosought
furtherinformationthathadnotpreviouslybeensupplied.Importantly,thePanelhadonlyconsidered
theplantdesignatconceptstageandfullyexpectedtobeinvolvedinpeerreviewingthedetaileddesign
stage.
Inacriticallyflaweddecision,thePanelwasshutdownbyCouncilstaffinlateOctober2004onlyamonth
beforetheNovemberCouncilmeeting.ThiswasinbreachofCouncil’sintentionofFebruary2004that
confirmed the MWHͲdesigned Optimised Lagoon process on the condition that it be peer reviewed.
CouncillorsinNovember2004weregiventheimpressionthatthepeerreviewwascompleteandhad
affirmedtheplant’sdesign.
40|P a g e UnlikeMWHwhichpresentedtoCouncilonanumberofoccasionsandweresubjecttoquestioning,the
independentPeerReviewPanelmemberswerenotinvitedtodoso.
FormerMayorMichaelLawssubmittedtotheIndependentReviewthat:
‘Atnostagewereanypeergroupmisgivingsoroutstandingquestionsrelatedtodesign/operationofthe
projectedWWTPreportedtomeortothefullcouncil.Thiswasadesignandconstructionthathadthe
strong and sustained support of senior council management, who confirmed such when questioned
throughthegovernanceprocess.’
Council’s Julian Reweti was appointed to the Peer Review Panel to assist the two independent panel
membersonoperationalissues.Hestatedin2013that:‘OneofthemainissuesIrecallJohn[Crawford]
raisingwasinrelationtoodour.Anotherwasthatsludgeaccumulationwasgoingtobecomeamajor
problem,despiteMWH’sclaimthatsludgewouldnotneedtoberemovedforaperiodof20years.’
Mr.Rewetiadded:‘ItgottoapointwheretherewasconflictbetweenMWH’sdesignandJohn’stechnical
concernswiththeplantandJohn’spositionwasthatMWHhadnotansweredthoseconcerns…Inmy
viewitbecameastalematebetweenOpusandMWH.’
PrematureClosingdownoftheIndependentPeerReviewProcess
JohnCrawford,theCoordinatorofthePeerReviewPanel,submittedtotheIndependentReviewthat:
‘Thepaneldidnotconsiderthatthepeerreviewprocesswascompleted.Itwasourunderstandingthat
thepanelwouldbereconvenedagain,atthedetaileddesignphase,tocheckthatissuesraisedinthe
initialpeerreview(andothersarising)werebeingappropriatelyaddressed.Thecontextoftheinitial2004
Peer Review was that it was of a concept only, that concept being the one that the Council and its
consultantshadchosenaspreferredfromanumberofoptions.’
Mr.Crawfordfurthersubmittedthathehadnoknowledgeastowhetheranyofthekeypointsraisedby
thePanelweresubsequentlyactionedbyMWHandCouncil.‘Ihavehadnosubsequentinvolvementwith
theprojectsincemy16September2004letterandtheCouncilresponse,closingthecurrentphaseofthe
peerreviewprocess’hestated.
Extraordinarily,Mr.Crawfordstatesthathe‘wasneversubsequentlyrequestedbyCounciltoundertake
anyfurthercritiquesorreviewsofanycomponentsofthedetaileddesign[and]…Iamreasonablycertain
that [fellow independent Panel member] Mr. Tipler had no further involvement either, after 16
September2004.’
ThetechnicalissuesraisedbythePeerReviewPanelincludingrisksassociatedwiththeconceptdesign
mayprovidesomeinsightsastowhythereviewwasabruptlyterminatedbyCouncilbeforeithadeven
consideredthedetaileddesign.
Forinstance,whenqueriedbythePeerReviewPanelaboutwhatlevelofriskassessmenthadbeenused
inderivationoftheestimates,theresponsefromCouncilandMWHstatedinpart:
41|P a g e ‘Aeratedlagoonsandsettlementlagoonsaresimple,lowrisktechnologywithalongoperatinghistory
throughouttheworld.TheonlyriskelementisintheinnovativeandunͲtesteduseofextradeeplagoons
toholdsludgeforalongperiod.’(emphasisadded)
ThePeerReviewPanelreplied:‘TheuseofunͲtestedtechnologyonaplantofthissizewouldseemtobe
asignificantrisk…’
CouncilandMWHrespondedsomewhatdismissively:‘Therearealwaysrisksassociatedwithanyproject.
Itisacceptedthatariskassessmentshouldbecarriedout,butthathasnotbeenwithinthescopeofthe
projecttodate.’
ThePeerReviewPanelalsowarnedthat‘odourwillbeoneofthemajorconcernsforapondsystemsuch
asproposed.Statements[fromCouncil]suchas‘ItisunlikelythatodourwouldbecarriedoverWanganui’
offerlittlecomfort.’
ThePanelaccordinglyrequestedMWHandCounciltojustifytheirassertionthat‘odourhasnotbeenan
issuewithanyoftheaeratedlagoonsystemsdesignedbyMWHforsimilarsituations‘byconfirmingthe
existenceofanyothertreatmentplantsthathadsimilarsludgeinventoriestothatproposedforWanganui.
TheMWH/Councilresponsewasilluminating:
‘It has been clearly explained that the proposed scheme will differ from any other existing aerated
lagoonsysteminthatthelagoonswillbeverydeep,designedtoaccumulatesludgeoveralongperiod.
Thesludgeinventorywillthereforebemuchhigherthaninthereferenceplants.However,thisisnota
concerninrelationtoodour.Providedthatadequateaerationisprovidedintheupperzoneofthelagoons,
odorouscompoundsoriginatingfromthesludgewillbeoxidizedbeforetheycanbereleasedtotheair
abovethelagoons.’(emphasisadded)
Earlyin2004,thebriefingnoteforthePeerReviewuncoveredinCouncil’srecordsandapparentlydrafted
by MWH, had stated that a presentation would be made to the Independent Panel by MWH’s Ian
Robertsonon10February2004andthatthepeerreview‘shouldbecompletedinaperiodofonemonth
fromthepresentation.’Furtherthebriefrequiredthatthe‘reviewprocessandtheresultingreportshould
be the minimum necessary to satisfy Council that Council’s best option is to proceed with the
recommendedtreatmentprocess.’
ItseemedMWHandCouncilstaffregardedthepeerreviewasafairlyroutine‘tickofthebox’requiredby
Councilbeforetheyproceededtodetaileddesign.
CouncilstaffwhenwritingtothePeerReviewPanelon28October2004terminatingtheirbrief,madethe
revealing comment which indicated some frustration that ‘the review process has taken many more
monthsthanexpected.’
ItseemsthattheindependentPeerReviewPanelmayhavebeendoingitsjobalittletoowellandasking
too many difficult technical questions of MWH and Council about their untried and untested concept
design.However,thePeerReviewwassimplyactinginaccordancewiththeirbriefwhichexpressedtheir
essentialquestionasbeing:‘Willtheoptimizedlagoonprocesswork?’
ThePeerReviewbriefrequiredtheindependentpaneltoevaluatethefollowingsevenaspectsrelatingto
whatMWH/Councilthemselvesdescribedas‘theuniquenessoftheproposal’:
42|P a g e x
x
x
x
x
x
x
Arethebasicassumptionsandinputdatavalid?
Does theselected option fit withthe parameters of the Wanganuienvironment, the resource
consenttreatmentstandards,theinfluentcharacteristics,theexistinginfrastructureetc?
Doestheoptimizedlagoonprocessmeetacceptedprinciplesofwastewatertreatment?
Does the key feature of sludge accumulation within the lagoons provide a satisfactory sludge
managementoption?
Aretheresignificantriskswiththerecommendationthathavenotbeenidentified?
Istheprocesspracticaltooperate?
Dothecapitalandoperatingbudgetsidentifiedrepresentatruepictureofcost?
ItisworthreiteratingthatstaffhadadvisedCouncilinFebruary2004thattheOptimisedLagoondesign
wasrelativelylowriskandbasedonproventechnologiesandinNovember2004hadadvisedCouncilthat
thePeerReviewhadaffirmedthedesign.
ItisdifficulttocomprehendthatanyresponsibleCouncilexercisingitsgovernanceroleproperlywould
haveendorsedtheMWHconceptdesigninNovember2004haditbeenmadefullyawareoftheviewsof
theindependentPeerReviewPanel.Apartfromtheengineeringrisks,thepoliticalriskwouldhavebeen
significantforanyelectedbodytoproceedwithanuntriedconceptoverwhichsuchseriousquestions
hadbeenformallyraised.ThisisparticularlysogiventhatCouncil’sconfirmationofthedesigninFebruary
2004wasmadeconditionalontheoutcomeofasatisfactorypeerreview.
ThemisinformingofCouncilinNovember2004wassoseriousthatitinfectedthetreatmentplantproject
from that point onwards. The seeds for the project’s ultimate failure were arguably planted at this
meetingandtherewerenomoreindependentsafeguardstostoptheforwardmomentumtowards1July
2007whenconstructionhadtobecompletedandcommissioninghadtooccur.
ThenewlyͲelectedMayorattheNovember2004meeting,MichaelLaws,submittedtotheIndependent
Reviewthat:
‘Three separate senior management teams – those led by chief executives Colin Whitlock, David
WarburtonandKevinRossandcomprisingexpertengineeringpersonnel–endorsedandpromotedthe
MWH design and blamed any later deficiencies upon external companies and contractors … If the
optimized lagoon design was so fundamentally flawed then how could those governance teams have
discovered that error, given the overwhelming support that senior management and engineering
professionalsindicatedfortheoriginalandamendeddesigns?’
Fromhisperspective,MichaelLawsmakesafairpoint.
Withhindsight,thegreatlearninghoweverfromthisexperienceisthatgoodgovernancedictatesthat
CouncilshouldhavedemandedfromstafftheprovisionofanyPeerReviewPanelreports,particularly
giventhatstaffhadpurportedtoquotefromone.CouncilshouldhavealsorequiredthePeerReview
PaneltomakeadirectpresentationtoCouncillorssothattheycouldbequestionedfaceͲtoͲface.Instead,
a newlyͲelected Council opted to trust staff advice on the peer review outcome even though it was
transparentlydeficientfromaperusaloftherecordsmanyyearslater.
ItisagoodthingforCounciltotrustitsstaff,butinagovernancesensetrustaloneisnotenough.Fora
major capital works project such as the wastewater treatment plant, good governance also required
verification.
43|P a g e Councillor Sue Westwood, who was present at both the February 2004 and November 2004 Council
meetings,submittedtotheIndependentReviewontheissueofanyshortcomingsingovernance:
‘Ibelieveinretrospectthatwe[Councillors]fellwellshortgiventheinformationthathascomeoutsince.
Toomuchtrustwasplacedinthecapabilityofourstafftoeffectivelydeliveronwhatwas anewand
uniquedesign.HadIpersonallybeenmoreawareoftheproblemsclearlywewouldhaverequiredmore
indepthreports,proposedmitigationandhadmanydiscussionsonthisissuewithMWH.’
MWHEffectivelyReviewsItsownDesign
The Peer Review Panel may have been abruptly terminated in October 2004, but the independent
memberswerenevermadeclearofthisfact.Council’slettertoJohnCrawforddated28October2004
advisingthat‘thepeerreviewprocessiscomplete’alsostatedthat‘itwouldbeusefulifpanelmembers
wereavailabletocritique/peerreviewcomponentsofthedesignprocessgoingforward.’
TheindependentpanelmembersneverheardfromCouncilagain.MWHeffectivelybecamereviewerof
itsowndetaileddesignin2005andaccordingtoHumphreyArcherfromCH2MBecaandothersfailedto
appropriatelyaddresstheissuesraisedbytheindependentpanelin2004.
ReportNo.11ofOctober2005preparedbyMWHfortheWorkingGroupdevotedlessthanonepageof
itsfiftypagesofdetailedcontenttoaddressingtheissuesraisedbythePeerReview,concedingthatsome
ofthem‘cannotbeansweredwithcompletecertaintyand…thedetaileddesignofthetreatmentsystem
willneedtoprovidecontingenciestoreacttothepossiblerisks.’
Council’sformerSeniorEngineer,ColinHovey,wassoconfidentoftheOptimisedLagoondesignthathe
submittedtotheIndependentReviewthatthe‘SWATanalysisonpage3of[MWH]report10didnot
suggestanyriskssignificantenoughtonotproceedinthefaceofsuchcostsavingsoverthenextbest
options.Imyselfdidnotconsidertherewasanyparticularrisk,havingseenexamplesoftheprocessesto
beusedinthefinalMWHdesign.’(emphasisadded)
Mr.HoveyaddedthathistechnicalstaffcolleagueswhoreportedtoCouncilonthetreatmentplantdesign
likelysharedhisviews‘aboutminimalspecificrisks.’
MWH’sReportNo.11containedasectionon‘RiskAssessment’andstatedthefollowingatpage48:
‘Everyefforthasbeenmadetominimizetherisksbycarryingoutadditionalmonitoringandtestingof
industrialwastewater,researchingexperienceelsewhereofsludgegenerationandmodifyingtheplant
designtomanagepotentialriskssuchashighwetweatherflows.Nevertheless,anumberofrisksstill
remainthatwillnotberesolveduntiltheplanthasbeeninoperationforanumberofyears.’
CostCuttingastheKeyDriver
TherecordoftheseminaltechnicalworkshopoftheWorkingGroupinWellingtonon20October2003
thatformallydevelopedtheOptimisedLagoonprocess,setoutthekeyfactorsthatMWHandCouncil’s
technicalstaffconsideredrelevanttowhatconstituted‘optimum.’Thesewere:
x
Cost(capitalandoperating)
44|P a g e x
x
Flexibilityinachievingresourceconsentrequirements
Lowproductionofsludgewithoutarequirementforexpensiveconstantprocessing
JulianReweti,Council’sformerInfrastructureManager,submittedtotheIndependentReviewthat‘the
wastewaterworkingpartyalwayswantedthemostlowestcostͲeffectivedesign…Thetreatmentoptions
recommendedandpreferredbythewastewaterworkingpartywerealwaysadvisedbytheconsultantsas
aviablesolutions.’
ColinHovey,Council’sformerSeniorEngineerandkeymemberoftheWorkingGroup,submittedthatthe
‘optimisedscheme’representedsignificant‘costeffectiveness’asits‘capitalcostwas$9.53mcompared
tothestandardpartialmixaeratedlagoonof$14.645m(withoutfeesetc.)’
FindingthelowestcostoptionwasclearlythekeydriverforCouncilstaffwhenallotherfactorsaretaken
into consideration. MWH accordingly developed a new design concept that it believed achieved the
client’s costͲcutting objective. At the same time, MWH advised Council as client that the drastically
cheaper‘optimum’designwouldalsobeviable.
Ofcourse,anyindependentadvicethatmayhavebeentothecontraryhadbeenprematurelydispensed
with.
LaterinApril2008whenthenewlyͲoperationalplantwasexperiencingsignificantdifficulties,ColinHovey
sentanemailtoCouncil’sInfrastructureManagerandDaveStewartofMWHwhichstatedinpart:‘MWH
havebeenconcernedaboutthesituationandhavehadamajorconferencecallaboutthevariousissues
…weshouldnotlosesightofthefactthatthedesignbyDave[Stewart]isabituntriedandaimedat
keepingcostsdown.’(emphasisadded)
MichaelLawshadonlybecomeMayorofWhanganuiinlate2004andafterthecriticalmeetingofFebruary
thatyearthathadconfirmedtheplantdesign.HesubmittedtotheIndependentReviewthatthenew
governanceteamwasbriefedbyCouncilstaffinNovember2004that‘theprojectedcostsoftheWWTP
had dropped dramatically from around $23 million to $14 million … [which was] by far the cheapest
option.’Mr.Lawsstressedhoweverthat‘atnostagewasthelikelycostoftheWWTPeveranissuearound
mycounciltable.’
BylateNovember2004,thetreatmentplantprojecthaddevelopedanalmostunstoppablemomentum
ofitsown.Mr.LawssubmittedthatherequestedareportinMarch2005toreviewthetreatmentplant
projectandCouncilstaffwere‘stronglygearedagainstanydelayorinterruptionofexistingpolicyrelated
tothewastewaterproject…[and]theredidnotexistthepoliticalappetitetochallengethisadvice.’
Significantly,theformerMayorstatesthathehadbecome‘waryoftheimpartialityofseniormanagement
advicetocouncil’atthistime.Hequestioned‘whetherseniormanagementwasbeinggenuinelyopen
andcoͲoperative.’
Whowasinvolvedandwhatwasthedecisionmakingprocess,startingfromthe
initialdesignoftheplantin2003totheopeningoftheplantin2007?
TheCouncildecisionͲmakingprocessesfromtheinitialdesignoftheplantin2003totheopeningofthe
plantin2007arecomprehensivelydetailedinpages13to29ofthisreport.
45|P a g e ArepresentativecrossͲsectionofthekeyparticipantswhowereinvolvedinCouncil’selectedofficialand
technicalworkinggroupdecisionͲmakingprocessesandtheirsubmissionswhereprovidedissetoutin
pages61to102ofthisreport.
TherewereanumberofothercouncillorsandstaffinvolvedinthedecisionͲmakingprocesses,butthekey
participants who were approached were considered the most relevant for the purposes of the
IndependentReview.
ThekeydecisionͲmakersfrom2003to2007,asdistinctfromthoseinvolvedintheprocess,were:
Councillors–2003ͲSeptember2004
Mayor Chas Poynter, Councillors Sue Westwood, Ray Stevens, IG Brown, BL Bullock, PA Bullock, MH
Campion,RDahya,JLLithgow,JRMcGregor,RMitchellͲAnyon,SWPalmer,ACStewart
Councillors–November2004Ͳ2007
MayorMichaelLaws,CouncillorsSueWestwood,RayStevens,BLBullock,RDahya,NHiggie,MHughes,
MLindsay,JRMcGregor,DMcKinnon,SPepperell,GTaylor,RMWills
ChiefExecutiveOfficers
ColinWhitlock–until2005
DavidWarburton–2005to2008
KeySeniorCouncilTechnicalStaff
Colin Hovey as Senior Engineer was the key Council staff member on the Working Group and on the
projectoverall.
DeanTaylorasAssetsManagerwasinvolvedwiththeWorkingGroupuntilheleftCouncilin2005.
JulianRewetiwasCouncil’sUtilitiesManagerandthenbecameInfrastructureManager
RickGrobeckerasDeputyInfrastructureManagerplayedakeyroleintheconstructionandcommissioning
oftheplant.
MWH
Dr.DaveStewartprimarilyforthedesignoftheOptimisedLagoonTreatmentProcessandIanRobertson
primarilyfortechnicalsupporttotheWorkingGroup.OtherMWHconsultantswerealsoinvolvedinthe
process.
OtherInvolvedCouncilStaff
IanMcGowan
IndependentPeerReviewPanel
JohnCrawford(CoͲordinator)ͲOPUSConsultants,CliffTiplerͲURSConsultants
46|P a g e Whatfault,ifany,wasintheCounciloperationofthe2007plantwhichcould
haveledtoitsfailure?
TheOperationalProblemsfromPlantCommencement
Whenthesignificantodourproblemoccurredatthetreatmentplantduringthesummerof2007/2008
andshortlyafteritcommencedoperations,staffreportedtoCouncilthattheywerebeingconsistently
advisedbytheplant’sdesignerMWHthatthebasicissuewasthelackofefficientaerationwithinthe
aeratedlagoon.
TheMayoratthetime,MichaelLaws,recallsthatCouncillorsinearly2008‘wereinformedthatallthe
problemswereteethingandmechanicalandthattheaeratorswerenotdoingthejobtheywererequired
todo.’
Certainlystaffinvolvedintheoperationofthetreatmentplanthadbeenplacedinaninvidiousposition
withtheplantperformingpoorlyfromthebeginning.Theywerestillrelyingheavilyontheprofessional
adviceoftheplant’sdesignerMWHatthistime.Thatadvicelaytheblameonaerationdifficultiesbut,as
ittranspired,theTornadoaeratorsmanufacturedintheUnitedStatesthathadbeensuppliedwerenot
fitforpurposebyNewZealandspecifications.
Rick Grobecker, Council’s then Deputy Infrastructure Manager, stated: ‘When we first switched the
aerators on, they did notwork as anticipated. They overloaded because they had been set to run in
America,theyhadbeensettotheAmericanelectricalsystemof60hertzand220or210volts…theNew
Zealandelectricalsystemoperatesonaloweramountofhertz…thesizeofthepropellerwastoobigto
runthemotorsattheamperagethatweneededtorunat.’
Council’sInfrastructureManager,JulianReweti,providedabriefingnotetotheMayorinOctober2008
whichstatedinpart:
x
x
x
Staffhadidentifiedthescaleoftheaerationissueandseparateditfromtheoverallloadingissue
(NBTheMayorhadbeenadvisedthat‘theloadsfromindustrythisyearandpriortoChristmas
havebeenthelargestonrecordandwellbeyondthedesignparametersfortheaerationsystem’)
Mostoftheaeratorshavesufferedfrommechanicalfailureandarerequiredundercontracttobe
repairedbythesupplier.Partsoftheaeratorsregularlyfail.Althoughthesupplierremediesthis
under the contract, this leaves Council at risk of not sufficiently treating the wastewater and
havingpotentialodourandconsentrisks
Theaeratorsperformverypoorlyandinefficientlyandwelloutsidetheperformanceclaimedby
thesupplierduringtender.Thekeyproblemisthatthestyleandtypeofaeratorsdonotproduce
therequireddissolvedoxygenneededandwehavenowformallyrejectedtheseundercontract.
IttooktwoyearsbeforenineteenTwisteraeratorsthathadbeenreplacedatthecontractor’scostwere
installed with Council paying for an additional four to increase aeration capacity. These Twisters
eventuallyfailedaswell,butfordifferentreasonsthantheearlierTornadoes.TheTwisterswereplagued
bygearboxproblems.
Whilstthereisclearevidencethatsomemodificationswereundertakenbystaffandtheircontractorsto
tryandimprovetheaerators’performanceoveraperiodoftime,itisarguedthatthiswasonlydoneasa
consequenceoftheirregularfailureandwasnotthecauseofthefailure.Moreover,asCouncil’sthen
47|P a g e DeputyInfrastructureManagerrecalled‘allthechangeswereeitherproposedbyorcheckedwithMWH
…itwasstillunderMWH’scontrolastohowtheaeratorswereoperatedthroughthecommissioning
stage.’
Council’sformerSeniorEngineer,ColinHovey,disputesthistellingtheIndependentReviewthatitwas
‘wellknownthatcouncildidnotmaintaintheaeratorsattheplant…[furthermore]itisobviousthatvery
littlewasdonetoensuretheplantwasfunctioningortooperateasitwasdesigned.’
Thefactsdemonstratehoweverthatplantoperationsstaffwerestrugglingwiththesituationtheyhad
inherited with obnoxious odours, mechanical problems, excessive loads from wet industry and a
treatmentplantapparentlynotoperatinginthemannerwarrantedtoCouncilbytheplant’sdesigner.
Limitedstaffresourcesbecameanissue.
Council’sSeniorWastewaterEngineer,ArnoBenadie,submittedtotheIndependentReviewthat:
‘The MWH designed treatment plant was designed and sold to Council as a standͲalone process with
minimaloperatorandhumaninputnecessary.InrealitythiswasnotthecasewhenIstartedworkingat
CouncilinFebruary2010.Thestaffmembersemployedtooperatethecitynetworks,smallpumpstations
andBeachRoadpumpstationwerealsotaskedwithoperatingthenewtreatmentplant.Thelargenumber
ofmanͲhoursrequiredtomaintainandoperatetheMWHplantcausedproblemswiththelimitedstaff
availabletocoverallwastewaterrelatedduties.Sincetheopeningofthetreatmentplantin2007,the
operatorshadtospendunrealisticandunreasonablehourstryingtomaketheplantperformbetterand
tryingtofinallycomplywithourresourceconsents.’
Mr.BenadiestatedthatCouncil’swastewateroperatingstaffnumberswereonlyincreasedbyoneFull
TimeEquivalentwiththecommencementofthetreatmentplant.
TheAnnualConsentReportstoHorizonsRegionalCouncil
CouncilisrequiredtocompileanannualconsentreportforforwardingtoHorizonsRegionalCouncilwhich
areintendedtoshowcomplianceorotherwisewiththeresourceconsents.Whilstannualreportswere
prepared,ittranspirestheywerenotalwayssenttoHorizons.
The2010annualconsentreport,forexample,statedthatoperationalproblemsattheplantcontinuedto
beexperienced.Theseincludedinadequateaerationandfailingaerators,odourconcernsandtransfer
controlproblems.
The2011annualconsentreport,forexample,statedinpartthatCouncilwasonlymanagingtoachieve
39% [resource consent] compliance at the UV plant and other options for treatment were being
investigated.
Council’s then Deputy Infrastructure Manager, David Boothway, advised the CEO by email on 28
September2012thatthereweremanysimilarcommentsintheannualconsentreports,whichincluded
tablesofdataandgraphsshowingnonͲcompliancewiththeresourceconsents.
MrBoothwaystatedthatCouncilhadbeen‘openandclear’initscommunicationswithHorizonsasserting
that:
48|P a g e x
x
Councilhadanewtreatmentplantwithaperformanceproblemandwasnotmeetingitsconsent
limits
Staffhadbeen‘activelyinvestigatingandimplementingchangestotryandreachcompliance’
Mr.Boothway’semailwentontostate:‘WehavenotactivelyaskedHorizonswhytheyarenotfiningus…
andmaybeitisduetothegoodrelationshipandthattheyknowwearenotsittingonourhandsbut
activelyreporting,spendingmillionsofdollarsanddoingthings.’
Interestingly,Mr.BoothwaythenurgedtheCEOthatstaffbeallowedtogetonwiththeirjobandthat
seniormanagement‘andthepoliticiansbecircumspectandnotkickany“hornets’nest”whenthereis
“nonetokick”otherwisewewillallgetstungunnecessarily,withunnecessarytimewastageofstafftime
andCouncilmoneyatmeetings,reports,payingfines,legalfees,unnecessarynewspaperattentionetc.
Staffnumbersareverylimitedandwewouldprefertouseitwiselyandgetthejobdone.’
Council’sSeniorWastewaterEngineerArnoBenadiesubmittedtotheIndependentReviewthat:
‘Theannualconsentreportisasummaryreportonthecompliancewithalltheconditionsoftheconsent
… including a summary report of the effluent quality monitoring. A detailed investigation of both
Whanganui District Council and Horizons Regional Council processes showed that the annual consent
reportswerenotsenttoHorizonsduetoadministrativeerrorsmadebybothorganisations.’
ThesubmissionfurtherstatedthatonlyoneannualconsentreportwassenttoHorizonsbetween2007
and2012.‘HRChowevercompletedalltheirannualsitevisitsandonͲsitediscussionswithoperational
staffduringthistimeperiodandwasawareoftheoperationaldifficultiesandpoorperformanceofthe
plant.’
The‘MitigationMeasures’inBreachofResourceConsent:December2007Onwards
Council’sSeniorWasteWaterOperator,PhilGilmore,statedin2015thataroundChristmas2007plant
operationsstaffstartedtoreceivecomplaintsaboutastrongodouratthenearbyairport.Hemanaged‘a
temporaryfixbyfillingandflushingthepondstoremovewhateverwascreatingtheproblem.’Healso
addedsodiumnitratetothepondsbuttheodourproblemremained.
AsreportedtoCouncilinMay2008andJune2009,stafffeltobligedtoimplement‘mitigationmeasures’
tominimisetheodourproblemthatoccurredinthesummerof2007/2008.
ThesemitigationmeasurescommencedinMarch2008andincludeddivertinguntreatedeffluenttothe
seainclearbreachoftheresourceconsent.Itappearsthatthispracticecontinuedonforthelifeofthe
plantbothduringpeaktimeswhichexperiencedhighloadsandevenoffpeaktimeswithmuchlower
loads.
Council’sGeneralManagerforInfrastructure,MarkHughes,submittedtotheIndependentReviewthat
‘thebiologicalperformanceoftheplantwassubstandard[and]ithadfailedtomeetitsresourceconsent
conditionsinanyandeveryyearsinceitstartedoperating.’
HereferredtothelatestperformanceindicatorsforthequarterendingJune2012whichshowedthat
despitethatbeinganoffpeakperiodandthereforeexperiencinglowloads:
49|P a g e x
x
Theplantwasbypassedarecorded13%ofthetime(i.e.untreatedeffluentdivertedtosea)
Despitethelowloadsandthebypassing,theplantstillfailedtocomplywithitsresourceconsent
conditions61%ofthetime.
TheShortͲTermMitigationMeasurestoImprovePlantPerformance:2012to2014
Faced with the realization that the treatment plant was consistently failing to meet the terms of its
resourceconsent,Councilstaffundertookextensiveandexpensivemeasurestokeeptheplantoperating
asbestitcouldbe.
CardnoBTOwascontractedin2011torecommendinthefirstinstancearangeofshortͲtermmitigation
measuresthatcouldcorrecttheplant’sperformance.ItproducedareportinNovember2011andCardno
BTO’srecommendationsresultedinatotalofnearly$2.3millionbeingexpendedbetween2012and2014
inanultimatelyfutileattempttosavetheplantfromfailure.
Thefollowingbreakdownofthenearly$2.3millionofshortͲtermmitigationmeasuresimplementedby
staffandtheirparticularcostsgivesanimpressionofthescaleoftheeffortstakentryingtosalvagethe
plant:
AeratorsͲ$150.2k
BeachRoadCleanUpͲ$25.8k
BioͲaugmentationͲ$172k
CraneHireͲ$6.4k
ElectricalWorksͲ$117.1k
HydrogenPeroxideͲ$163.6k
LimeͲ$258.5k
Lime–HelicopterApplicationͲ$121.5k
MinorMechanicalWorksͲ$18.8k
OdourControlFenceͲ$781.6k
PolymerͲ$104.4k
ProfessionalAdvice(varioussources)Ͳ$271k
PumpsͲ$17.7k
SensorEquipment–22.1k
SodiumNitrateͲ$11.7k
VacuumTruckServicesͲ$38.7k
50|P a g e MWH’sRoleduringtheOperationalPhase
Council’sfinancialrecordsshowthatMWHsubmittedtwentythreeinvoicesforworkperformedbetween
October2007(whenaclaimfor$225kforworktoJulythatyearhadbeenapproved)andFebruary2013.
These twenty three invoices totalled $136k for this period during which the plant was operational.
However, the MWH invoices submitted after January 2010 were for relatively small amounts which
demonstratesthattheirworkforCounciltaperedoffduringthisperiod.
ThefinancialrecordsthereforeevidencethatMWHremainedactiveonthetreatmentplantprojectduring
its operational phase and well after construction was completed. This was particularly the case from
October2007uptoJanuary2010.
PhilGilmoreisCouncil’sSeniorWasteWaterOperatorandhemadeastatementin2015aboutMWH’s
roleintheearlyoperationofthetreatmentplant.AccordingtoMr.Gilmore,‘duringtheinitialstagesof
the commissioning process, MWH sent its engineers to conduct tests and make sure the WWTP was
performing to industry expectations.’ Mr. Gilmore’s role was to maintain the treatment plant in
accordancewithMWHandCouncildirections.
The plant’s operating and maintenance manuals were prepared by Dr. Dave Stewart of MWH. Mr.
Gilmorestatedthatthemanual‘containedinformationaboutmostoftheequipmentwhichwasonsite,
thedesignofthepond,theaeration,thecontrolsystemandtheplant’sloadingcapability…[it]alsogave
usanindicationofwhatwehadtoachievewithregardstooxygenlevels.’
Council’s Infrastructure Manager at this time, Julian Reweti, recalled MWH and Council staff being
involvedinthenegotiationswiththeaeratorsuppliercontractor(ITT)in2008toreplaceatcontractor’s
costtheoriginalnineteenunderͲperformingTornadoaeratorswithhigherͲperformingTwisteraerators,
withCouncilpurchasinganotherfouraeratorsadditionaltotheoriginaldesign.
Mr.Rewetistated:‘MWHwasinvolvedthroughouttheissueswiththeaeratorsandRick[Grobecker]and
Colin[Hovey]communicatedregularlywithDaveStewartofMWH.Oneofthekeythingswefollowedup
onwasconfirmationbyMWHthattheyapprovedthenewaeratorsandthenewconfiguration…Before
we proceeded with reaching agreement with ITT we were absolutely certain that MWH had given its
approval…’
MWHalsoprovidedCouncilwithadraftCommissioningReporton19February2010,eventhoughthe
reportfailedtocommissionthebiologicalprocess.
DidCouncil’sOperationofthePlantLeadtoitsFailure?
Itis reasonabletoassumethatoperational mistakesweremade byCouncilstaffduring thecourse of
attemptingtomanageatreatmentplantthatwasnotperforminginthemannerwarrantedbyitsdesigner.
Anecdotalevidenceexiststothiseffect.
Council’s Phil Gilmore, for instance, alleged in 2015 that budgetary constraints prevented proper
maintenancebeingundertakenattheplant.However,Mr.GilmorefailedtorespondtotheIndependent
Review’srequesttomakeasubmissionortheattempttoquestionhim.Noconclusiveevidencehasbeen
elicitedthatthisfactormayhavecausedtheplant’sfailure.
51|P a g e Council’s former Senior Engineer Colin Hovey has asserted that Council’s operation of the plant was
responsibleforitsfailure.However,hisassertionsinthisregardmustbeconsideredinthecontextofhis
admittedcloserelationshipandinvolvementwithMWHinthetreatmentplant’sdesign.
Theobjectiveevidencetendstowardsthepropositionthatanyoperationalmistakesthatmayhavebeen
madeweredonesointhecontextofreactingtoatreatmentplantthatconsistentlyfailedtoperformto
Council’sexpectationsandrequirements.Agoodexampleofthiswastheproblemsexperiencedwiththe
initialTornadoaeratorsbecausetheyhadnotbeensettorununderNewZealand’selectricalsystem.
Council’s then Deputy Infrastructure Manager Rick Grobecker stated that the supplier and/or
manufacturermodifiedthepropellerattheendoftheaeratorstotakeoffsomeoftheloadsothatthey
would operate better. This was done by ‘removing or trimming the end of the propeller, only by
millimetres,tochangetheaerator’sloading.Thesemodificationsdidnotwork.’
TheevidencedemonstratesthatCouncilstaffworkedveryhardandtriednumerousandcostlystrategies
tomaketheplantoperateeffectivelyandtomeetitsresourceconsents.
Ironically,todealeffectivelywithemergentproblemssuchasodourtheyevenresortedtobreachingthe
resourceconsentsby‘flushing’and/ordivertinguntreatedeffluenttotheseathroughthemarineoutfall.
Evenbydoingthis,theplantnevermettheconditionsofitsresourceconsentbetween2007and2012.
FarfrombeingalargelyselfͲoperatingplantaspromisedbythedesigners,theeffortsofstafftomakethe
plantworkcorrectlyprovedtobelabourintensiveandcostlyoverthefiveyearsofoperation.
52|P a g e Isthereanyevidencethatwetindustriesunderestimatedtheirinputsduringthe
designphaseoraddednonͲconsented,excessiveornonͲpermittedinputsintothe
plantthatcontributedtoitsinabilitytofunction?
DidWetIndustriesUnderestimatetheirInputsduringtheDesignPhase?
The nature of Whanganui’s five wet industries and their industrial location within the district of only
43,000residentsplaceduncommondemandsonthecity’swastewatertreatmentplant.Whilstthewet
industriesonlygenerateabout20%ofthevolumeofthewaste(orflow)goingintotheplant,theirtrade
wastecontainsabout80%oftheload(themattercontainedwithintheflow)goingthroughtheplant.Put
conversely,residentialandcommercialwastegeneratesabout80%ofthevolumeofthewastegoinginto
theplantbutonlyabout20%oftheload.
Tradewastethereforeplacesthegreatestpressureontheplant’scapacitytotreatinfluent,socalculating
thewetindustryinputsisintegraltotheinitialdesignoftheplantandcontrollingtheseinputsisalso
importanttotheplant’ssubsequentoperation.Theloadsfromwetindustryarealsoseasonal,withpeak
loadsexperiencedbetweenDecemberandJune.
Report No. 11 produced by MWH in October 2005 for the Technical Working Group stated that ‘a
wastewaterplantmustbedesignedtohavesufficientcapacitytotreatthehighestwastewaterflowsand
loadslikelytooccur.’Atreatmentplantcannotjustbedesignedtotreataverageflowsandloads.
MWH’sReportNo.12of24November2005detailedhowCouncilcarriedoutintensivetestingtohelp
calculatetheflowsandloadsfrommajorwetindustriesinWhanganui.Duringtheperiod5Aprilto20
May2005,‘thewastewatervolumesdischargedtothesewerweremeasuredforallfiveindustriesand
samplesofeffluentcollecteddailytodeterminethecomposition.’Thiswasjudgedtorepresentpeak
seasondemand.
PostscreeningsampleswerealsotakenattheBeachRoadpumpStationandalldatafrom23June2002
to24June2005wasanalysed.
Somewhatpresciently,theMWHreportalsoidentifiedthefollowingmajorpotentialproblemwiththe
operation of the city’s largest trade waste discharger, Imlay (Affco): ‘This site is the biggest risk for
dischargingahighbiologicalloadtothetreatmentplant.Therenderingplantinparticularcoulddischarge
aloadthatwouldturnthetreatmentplantanaerobicandleadtoodourcomplaintsandpooreffluent
quality.Theimportanceofcontrollingpeakdischargeshastobemadecleartothissite.’
Council’sformerSeniorEngineer,ColinHovey,submittedtotheIndependentReviewthat:
‘Atthedesignstageforthetreatmentplantintensivemonitoringwascarriedout.Checksweremade
periodicallyontheaccuracyoftheflumesandsampleswerecollectedbycouncilstaffandsentofftoan
accreditedlaboratoryforanalysis.Thesumoftheloadsfromallthemonitoredsiteswerecheckedagainst
therecordedloadattheBeachRoadpumpstation.Henceanaccuratepicturewasbuiltupoftheloads
fromeachofthefivemainwetindustries.Loadsvariedonaseasonalandweeklybasisandthedesign
loadwastakenasthe90%ͲilevalueofthetotalloadsatBeachRoad,whichweresampledonthreeorfour
daysperweek.Idonotconsiderthatindustryinputswereunderestimatedduringthedesignphaseand
infactcouncilnotindustrymeasuredtheseloads.’
53|P a g e The Council meeting of 12 December 2005 was advised that the plant design had been modified to
increasecapacitytodealwithgrowthordeclineinwetindustriesandtoallowforgreatersludgestorage.
Discussionshadalsobeenheldwithwetindustriesregardingsizingoftheplantandimprovementsthat
couldbemadetotheirtradewastesystems.
Dr.DaveStewart,thekeyMWHplantdesigner,wroteapaperin2008wherehestatedthatin2006when
theplantwasdesigneditcouldnotbeknownforcertainwhattheactualwastewaterflowsandloads
would be after separation of the combined sewer was completed in 2010. ‘Therefore an extensive
programmeoftradewastetestingwascarriedouttodefinethelikelyindustrialloads.’
Dr.Stewartadded:‘NoprovisionwasmadeforincreasedpopulationgrowthinWanganuior a major
increaseinindustrialactivity.However,akeyadvantageoftheaeratedlagoonprocessistheeaseof
extendingitsloadtreatmentcapacitybysimplyincreasingthenumberofaerators.’
The evidence therefore suggests that, while discussions necessarily occurred with wet industries over
plantsizing,ascientificexercisewasundertakenbyMWHandCouncilstafftocalculatepeaktradewaste
discharges.Thereforereliancewouldnothavebeenprimarilyplacedondischargeestimatesfromthewet
industries.
Nevertheless,MichaelLawssubmittedtotheIndependentReviewthatinearly2007,closetotheendof
theplant’sconstruction,CEODavidWarburtonbriefedhimthatanewtradewastebylawwasnecessary
because‘council’sinͲhouseengineeringteamhadbeen“crunchingthenumbers”andbecomeconcerned
abouttheplant’scapacitytoprocessallthecity’sindustrialwaste.’
ItispertinenttonoteinrespecttothisissuethefollowingobservationsofHumphreyArcherfromCH2M
BecawhoreportedtoCouncilon28October2015:
x
x
Byusingthebypasstotheoceanoutfall,CouncilprotectedtheplantfromhigherBODloadings
duringpeakprocessingseasons
Oneoftheprimarydesignfaultsby MWHwas an ‘optimisticinterpretation ofthemassloads
duringthedesignandconstructionphasesandaninsufficient‘safetyfactor’wasused.’
DidWetIndustriesAddNonͲConsented,ExcessiveorNonͲPermittedInputsintothePlant?
AnewTradewastebyͲlawwasdevelopedin2008tofacilitateoperationofthetreatmentplant.Wet
industries were issued with discharge consents which specified agreed limits and quality of loads.
Compliancewas complemented byamonitoring system involving sampling andanalyzingtrade waste
effluentfourtimesperyearfortenconsecutiveworkdayseachtimeeachwetindustrysitewastested.
Despitethis,anumberofkeypastandpresentCouncilstaffhaveprovidedevidencetocorroboratethe
assertionthatcertainofthewetindustriesaddedexcessiveand/ornonͲpermittedloadingstotheplant.
RickGrobeckerwasCouncil’sDeputyInfrastructureManagerfrom2006to2009andmadeastatement
forCouncilin2013outliningthedifficultieswiththeplant’soperationalmostfromthecommencement
ofoperationsinlate2007.Hestatedthat‘thecapabilitiesoftheplantwerereallytestedinDecember
54|P a g e 2007’andtheodourproblemsfirstarose.Heassertedthattheplant‘basicallyfellovervirtuallystraight
awaybecauseitcouldnotcopewiththeloadthatwasputintoit.’
Mr. Grobecker firstly attributed the plant’s early failure to the fact that Whanganui was experiencing
droughtconditionsatthetimewhichresultedinfarmersdestockingtherebygeneratingacorresponding
increaseinwetindustryoperations.Secondly,hestatedtheproblemwiththeoperationoftheaerators
wasexacerbatedbytheloadsgoingintotheplantbeingmorethanitwasdesignedfor.
CouncilinFebruary2008wasadvisedthatanassessmentwasbeingundertakenbystafftodeterminethe
quantityandqualityofloadscomingfromindustryandthatthe‘qualityfromindustryandindustrialpreͲ
treatmentperformancehasanimpactontheperformanceofthewastewaterplant.’
On19May2008,CouncilwasfurtheradvisedthatfromJanuary2008toMay2008,‘combinedloadswere
consistentlyattheupperendoftheplant’sdesigncapacity.’
StaffreportedtoCouncillorson31August2009thattreatmentqualityattheplanthadtakensometime
toadjust to increasingloads as oneparticularwetindustryhadmoved to working double shifts. The
screensattheBeachRoadPumpStationhadalsobecomeblockedbylargevolumesofanimalbyͲproducts
anddiscussionswereoccurringwiththewetindustriestofindthesourceandtorectifytheproblems.
JulianReweti,Council’sInfrastructureManagerfrom2007until2012,recallsinstancesofnonͲpermitted
wet industry inputs to the plant in his submission to the Independent Review. These ‘added to the
difficultyoftheplant’soperationsanddeterminingplantperformance.’Theplant’soperatorsvisitedwet
industriestotryandassesstheiroperationsandtalkwiththeirstafftominimiseimpactsontheCouncil
plant.
Significantly,Mr.Rewetiobservedthatoperationsatthetreatmentplantwerebecomingmoredifficult
afteraerationhadbeenrepaired(i.e.twoyearsafterconstruction)inoffpeaktimeswhenloadswerenot
consideredexcessive.Indeed,hestatestheplantwasprogressivelyworseningpriortohisdeparturefrom
CouncilinMay2012.
IncommentsrecordedforCouncilin2013,Mr.Rewetialludedtotheabovepointwhenconfirmingthat
thewetindustriesattimesexceededtheirconsentlevels,‘butevenwhenloadswerelow,the[plant]was
stillnotmeetingresourceconsentrequirements.’
The consistent pattern of problems associated with the wet industry inputs to the treatment plant
motivatedCounciltoencouragethemtoprogressfromacultureof‘anythinggoes’toamore‘responsible
discharge’mindͲset.
StaffadvisedCouncilon19October2009thatduetotheplant’scapacitylimits,wetindustriesneededto
preͲtreattheirwastetovariouslevels.Theissuanceoftradewasteconsentsandmonitoringweretwoof
Council’scontrolmechanismstoachievethis.
In early December 2012 the plant reportedly received ‘very high and unexpected trade waste loads.’
Councilon17January2013wasadvisedthat‘thiswasfollowedbytwofurtherdischargesofunconsented
wasteovertheChristmasandNewYearperiods.’
InhissubmissiontotheIndependentReview,Council’scurrentGeneralManagerofInfrastructure,Mark
Hughes,statedthatthewetindustriesperiodicallysentexcessandnonͲpermittedloadstotheplantand
55|P a g e ‘thesewereusuallyofshortdurationandwereattributedtoeithermanagementormechanicalfailures
atthesourceindustry.’
However,giventhepoorperformanceofthetreatmentplant,itwasnotabletoadequatelyrecoverfrom
these inputs in the way a wellͲperforming plant would have. According to Mr. Hughes, these
excessive/nonͲpermittedloads‘exacerbatedthenonͲcomplianceandodourissues[and]didnotontheir
owncausethem.’
ItshouldbenotedthatfollowingMr.Hughes’commencementatCouncilinJuly2012andtheproblems
encounteredatthetreatmentplant,staffhavetightenedmonitoringofthewetindustryloadsgoinginto
theCouncilsystemandtheindustry’scompliancewithconsentsissuedunderthe2008TradeWasteByͲ
Law.Thishasincludedtheinstallationofnewtradewastemeasuringequipmentatwetindustrydischarge
points, random sampling of discharges and seeking to hold industry to account where instances of
breachesaredetected.
Council’sthenDeputyChiefExecutive,forinstance,wrotetoamajorwetindustryon10September2014
settingoutaseriesofallegedtradewastebreacheswherepreviouscorrespondencehadbeenentered
intoonthefollowingdates:
x
x
x
x
x
8March2013–nonͲcompliantpeakdischarge
17April2013–onsitetallowspill
29January2014–nonfaecalgrosssolidseglungsandheartsindischarge,significantfatlayer,
intactanimalfaeces,pluspowerlosttoCouncil’ssampler
24February2014–significantfatsandsolidslayer
21March2014–HorizonsRegionalCouncilAbatementandInfringementNoticesandSignificant
NonͲComplianceReport
It therefore seems clear on the evidence that there was a consistent pattern over the years of wet
industriesaddingexcessiveandnonͲpermittedinputsintothetreatmentplantfromtimetotime.
DidthisContributetothePlant’sInabilitytoFunction?
Council’sCEOwrotetoamajorwetindustryon8March2013statingthat‘theheavytradewasteloads
beingreceivedbyourWasteWaterTreatmentPlantarecausingrealconcernstotheoperationofthe
plant…thecomplianceofourindustrieswithdischargepermitsiscriticaltothesolutionweallneed.’
AlloftheaboveevidenceleadstothelogicalconclusionthattheexcessiveandnonͲpermittedtradewaste
discharges to the treatment plant did occur and they significantly contributed to the operational
difficultiessuchasodourthatwereexperienced.
Theevidencehoweveralsosuggeststhattheplantwashavingmajoroperationaldifficultiesevenwhen
wetindustryloadswerenotexcessive.
Whilethebehaviourofwetindustrieswasacontributingfactorintheplant’sfunctionaldifficulties,itwas
notthereforetheunderlyingcausalfactorthatledtotheplant’sultimateinabilitytofunction.
56|P a g e WasthereanyfailureoftimelyreportingbyplantoperationsstafftoHorizons
Regional Council (“Horizons”), Council staff, the Mayor or Councillors of the
failureoftheplant?
ReportingtoHorizonsRegionalCouncil
HorizonsRegionalCouncilsubmittedtotheIndependentReviewthat:
‘FromreviewingthefileitiscleartherehavebeenfailingsbyWDCtocomplywiththeprovisionsofits
resourceconsent,particularlyinrelationtonotificationofnonͲcompliances.WDCexplanationfornot
complying with the notification conditions of the consent is that Horizons were aware of attempts to
addressthem.Thiswasparticularlythecasebetween2007and2010whentheAnnualReportswere
provided toHorizons. Failure to provide the required Annual Reports occurred due to administrative
errorsonbehalfofWDC.’
‘The WWTP has been subject to a number of visual and nonͲvisual assessments since 2007. These
assessmentshaveidentifiedonͲgoingissueswithcompliance,whichtypicallyrelatetofailuretocomply
withTSSandEnterococciconcentrations.OnceitbecameapparenttheWWTPhadfundamentallyfailed
andtheenvironmentaleffectswereseriousandongoingHorizonstookformalenforcementaction.’
‘Since2013thefocusforHorizonshasbeentoensureWDCisprogressingtowardsalongtermsolution
fortheWWTP.TheissuingoftheEnforcementOrderinApril2013wasthefirstsubstantivesteponthis
pathway. Thegrantingoftheshortterm consentinJune2016waseffectivelytheculminationofthe
consentingprocess,whichnowsetsacleartimeframebywhichalongtermsolutionistobeachieved.
Horizonsarenowfocusedonassessingcompliancewiththisresourceconsent.’
Council’sSeniorWastewaterEngineersince2010,ArnoBenadie,submittedthatinfactonlyoneannual
consent report was sent to Horizons between 2007 when the plant commenced operations and 2012
when the plant failed and Horizons submitted that no reports were provided for the 2011 and 2012
reportingyears.
ThetworelevantprovisionsofCouncil’sresourceconsentsrequirenotificationofnonͲcompliancetobe
madetoHorizonswithintenworkingdaysofthenonͲcompliance.ThesubmissionfromHorizonsstates
thatthesereportswerenotbeingmade.
The submission from Horizons refers to the explanation given by Council’s then CEO Kevin Ross in
correspondencedated30November2012foritsfailuretoreportnonͲcompliances,being‘theplanthas
alwaysbeennonͲcompliantandthishasbeendiscussedwithHRCsince2007.’
Clearlytherefore,apragmaticapproachwasadoptedtodealwiththeunexpectedandongoingdifficulties
that occurred from the plant’s commencement. There was certainly a failure of timely reporting to
HorizonsbecauseinfacttherewasnoreportingatallofnonͲcompliancesinthemannerprescribedby
theresourceconsents.Horizonswashoweverawareoftheoperationaldifficulties.
57|P a g e ReportingtoCouncilStaff
TheroleofplantmanagementstaffwastoreporttotheirlinemanagementnottheMayor,Councillorsor
Horizons,althoughtheywouldcollectdataforthepurposesofmanagementreportsandwouldliaisewith
Horizonsstaffwherenecessary
Council’s Senior Wastewater Engineer submitted that the reporting to management occurred in the
followingways:
x
x
x
x
x
x
x
DailyverbalreportsfromSeniorWastewaterEngineertotheDeputyInfrastructureManager
WeeklyreportsattheInfrastructureManagementmeetings.
MonthlyreportstotheInfrastructureManager.
QuarterlyKPIsperformancerecordedonCouncil’sKPIsystem.Theseresultswerereportedtothe
SeniorManagementTeamonaQuarterlybasis.
ReportingofimportantissuesintheannualplanandtheLongTermPlan(10yearplan).Allthese
planswerereadandapprovedbyCouncil.
AssetManagementPlans
AnnualchecksbytheAuditorGeneralfortheannualaudit.Theperformanceoftheplantwasa
challengefortheauditorsandeveryyeartheyhadmanyquestionsaboutitsperformance,the
consent breaches and the plans to fix the problems. All of this was reported to Senior
Management.
ReportingtotheMayorandCouncillors
ResponsibilityforreportingtotheMayorandCouncillorslaywiththeInfrastructureManagerandnotthe
plantoperationsstaff.
JulianRewetiwasCouncil’sInfrastructureManagerfrom2007to2012andsubmittedtotheIndependent
Reviewthat:
‘Council reports had regular sections on wastewater treatment issues. Councillors were aware as
operational were aware of the issues. The issues however were intermittent after the aeration was
repaired(afteracoupleofyears)andwerenotatthesamescalethatwasobviouslyexperiencedafter
2012.Thefundamentalissuessurroundingaerationandindustryloadswereacommontheme,however,
during2011Ͳ2012theinabilityofoperationstoremedytheseatanoperationallevelmeantwelookedto
alternateconsultantadvicetotryandremedymatters[CardnoBTOadvice].Thatadvicehoweverstarted
tohighlightamuchgreaterconcernthatquestionedthefundamentaldesign.’
Mr.Rewetialsostated that theMayorrequired daily reports aboutthe plant’soperationaldifficulties
whichwerewidelycirculatedandmediareleaseswereissuedwhenodoureventsoccurredforexample.
FormerMayorMichaelLawsconfirmedthatherequireddailyreportsfrommanagementafterhefirst
becameawareoftheodourprobleminthesummerof2007/08.Hestatedthathe‘ensuredthatthe
healthoftheWWTPbecameafocusoftheseniormanagement’sreportingcycletothegovernanceteam.’
AnnetteMain,whobecameMayorinNovember2010,submittedtotheIndependentReviewthat:
‘Withoutgoingthroughtherecordsofthattime,Idonotrecallbeingadvisedofoperationaldifficulties
withtheoperationoftheplantfromwhenIbeganinOctober2010butintheyearpriortothefinalfailure
58|P a g e Council received regular updates on the problems and the methods being used to ensure the plant
functioned.Wewerekeptwellinformedonprogress,includingtheimplementationofactionssuggested
inareferencedreportreceivedbyCouncil.Ireadthereferencedreportatthetime.Irecallbeingvery
surprisedtohearthatthereportsasrequiredbytheRegionalCouncilhadnotbeenprovidedandasked
whythishadnotbeenraisedwithCouncilbytheRegionalCouncil.Whentheplantfailedovertheholiday
periodIwasnotsurprisedasitwasclearfromtheupdateswewerebeingprovidedwiththattheproblems
wereinsurmountable.’
However,MayorAnnetteMainadded:
‘WereceivedthereportsregularlybutIdoknownowthattherewasinformationwecouldhavebeen
provided with which raised doubt about the ability of the plant to perform before it was built. This
backgroundwouldhaveassistedinknowingwhattoaskasanewcouncillor.IbelievetheCouncilhas
struggled to understand the advice on why the plant failed when it did while being bombarded with
conflictingviewsfromthosewithvestedinterests.Theviewthatsomecouncillorsheldthattheyknew
betterthanstaffbecameincreasinglyobvious,makingitdifficultforotherstolistenimpartiallytothe
adviceofstaff.’
Councillor Sue Westwood also recalled to the Independent Review that staff information regarding
operationaldifficulties‘fellveryshort’ofwhatwasrequired.
TheevidenceexaminedthroughoutthecourseofthisIndependentReviewsuggeststhatthefollowing
seemstohaveoccurredaftertheinitialpublicoutcryandsharppoliticalresponsefromtheMayorand
Counciltothesignificantodourproblemsofthe2007/08summerperiod:
x
x
x
x
Staff implemented ‘mitigation measures’ from March 2008 onwards that in part included
divertinguntreatedeffluenttoseathroughthemarineoutfallinwilfulbreachoftheresource
consent.TheminutesrecordCouncillorsbeingformallyadvisedofthesemeasuresonatleast
twooccasions.
TraditionalreportingtoCouncilmeetingsaboutoperationaldifficultiesgraduallydiminishedas
timewentonafter2008andtheodourproblembecamelessovertforaperiod,althoughother
reportingwasoccurringinanumberofwaysincludingverbalbriefings.However,theplantnever
achievedcompliancewithitsresourceconsentsthroughoutitswholefiveyearsofoperationand
the diversion of untreated effluent to the sea was effectively disguising the difficulties by
mitigatingtheirmostpublicmanifestation(i.e.odour)
FormerMayorMichaelLawssubmittedtotheIndependentReviewthathewasreceivingdaily
reportsfromearly2008onwardsregardingoperationaldifficultiesattheplant.Whatisimprecise
istheextenttowhichheandCouncillorswerenotfullyadvisedofdifficultiesastheyoccurred.
Fromlate2007MWHwasadvisingthattheoperationaldifficultiesrelatedtolackofadequate
aeration andit took nearlytwo yearsresolve contractorliabilityissuesand to install newand
additionalaeratorsimportedfromoverseas.Thishadtheeffectofdelayingstaffconsiderationof
whethertherewasadeeperunderlyingcauseoftheoperationaldifficulties.
59|P a g e x
x
Councillorsforasignificantperiodalsobelievedthattheproblemsrelatedtofaultyaeratorsand
excessivewetindustryloadswerethecauseoftheoperationaldifficulties
StaffprovidedoptimisticreportstoCouncilfromtimetotimethattheplantwasoperatingwell
whenthiswasnotalwaysthecase.AgoodexampleofthiswaswhenstaffadvisedCouncilon14
November 2011 of ‘the success of the entire wastewater scheme … and the commitment to
improving environmental performance.’ This was the same month staff had received the first
report from Cardno BTO advising on a range of measures to try and improve the plant’s
deterioratingperformance.
ThelastpointaboveillustratestheapparentdisconnectexistingbetweenoptimisticreportingtoCouncil
on the one hand and the practical reality on the ground at the treatment plant on the other hand.
Council’sformerInfrastructureManager, JulianReweti,recalledthat Cardno BTO wasengaged inJuly
2011to‘adviseaboutshorttermfixestoenabletheplanttoatleastcomplywiththeconsentconditions.
Thiswasourmostpressingandurgentpriority.’Cardnowasalsorequestedtoadviseonmediumterm
andlongtermfixes‘tomaketheexistingplantoperatesatisfactorilymovingforwardintothefuture.’
Despitethesometimesoptimisticreporting,ayearlaterbyend2012thechickenshadcomehometo
roost.
60|P a g e 5 KEYPARTICIPANTSINCOUNCILPROCESSES
Therewereasignificant numberofparticipantsinvolvedwithCouncil’sprocessesassociatedwiththe
treatmentplantovertheyears2003to2012.MosthadadirectrelationshipwithCouncilthroughbeing
anelectedcouncillor,astaffmemberoracontractororconsultant.OtherssuchasHorizonsRegional
CouncilhadregulatoryresponsibilitiesoverWhanganuiDistrictCouncil.
ItmustbenotedthatthenowdeceasedMr.ChasPoynterwastheMayoroftheCityofWanganuifrom
October 1986 to October 1989 and the Mayor of Whanganui District Council for eighteen years from
November1989untilNovember2004.Mr.PoynterwasMayorduringtheconceptdesignphaseofthe
wastewater treatment plant from 2001 to 2004 and when Council confirmed the Optimised Lagoon
TreatmentProcessinFebruary2004.
The following list of individuals who were invited to make written submissions of their choice and to
voluntarily respond to questions put to them by the Independent Review, were key participants and
deemedtoberepresentativeofalargergroupwhohadinvolvementwithCouncilprocessesbetween
2003and2012.Certainconsultantsandindividualswhowereinvolvedduringthatperiodwerenotinvited
to make submissions due to sensitivities associated with confidentiality aspects of Council’s mediated
settlementwithMWH.
Withacoupleofexceptionsduetotheirpersonalcircumstances,thekeyparticipantslistedbelowwere
invitedtomakewrittensubmissionsbyCOBFriday26August2016.Ascanbeseen,anumberofthekey
participants either declined the opportunity to provide input to the Independent Review or failed to
respondtorequeststodoso.Othersmadelengthysubmissions.
The Whanganui community may draw their own conclusions about individual responses to the
Independent Review. However, Irrespective of whether key participants took advantage of the
opportunitytomakesubmissionsornot,thepertinentquestionsputtothemaresetoutbelowalongwith
anyresponsesreceived.
5.1 ColinHovey
ColinHovey,alongwithDeanTaylor,werethekeyCouncilmembersoftheWDCWastewaterTreatment
WorkingGroup(Technical)includingMWHthatdevelopedtheconceptoftheOptimisedLagoonTreatment
ProcessforultimaterecommendationtoCouncilinFebruary2004.Moreover,hecontinuedtobeakey
participantintheproject’sprocessesafterCouncilconfirmedtheWorkingGroup’srecommendation.His
permanent employment with Council as Senior Engineer commenced in November 1986 and ended in
December2009,althoughhecontinuedforsometimeafterthatonacasualbasisasaContractProject
Engineer.ThesixquestionsbelowwereputtoMr.Hoveyon4August2016.
Mr.Hoveyrespondedon12August2016tothetwoemailssenttohimbytheIndependentReviewand
indicatedthatheintendedtomakeasubmissiondespitehisconcernswiththeTermsofReference.Onthe
same day, the Wanganui Chronicle published a letter from Mr. Hovey where he stated that the
IndependentReviewwasawasteoftimeandmoney,basedonhisobjectiontotheTermsofReference.
61|P a g e Mr. Hovey however met with the Independent Review on 15 August and made the following written
submissionon26August2016.Thesubmissionsetoutbelow,whichalsoincludesMr.Hovey’scomments
on the Terms of Reference, has been edited primarily due to its length, inclusion of media articles,
referencestolitigationandinclusionofsupplementarythirdpartydocumentation.
1. CAN YOU PLEASE DETAIL YOUR PROFESSIONAL QUALIFICATIONS AND PRIOR EXPERIENCE WITH WASTEWATER
TREATMENTPROCESSES?
UpuntilIretiredfromWDCinDecember2009,Ihadworkedintheengineeringfieldfor45years.My
qualificationswereB.ECivil,CPeng,IntPE.
I joined WDC in 1986 and immediately began working on the wastewater scheme. I had taken
wastewaterengineeringasanoptionwithinmyBE,buthadnotworkedinthisfieldpriortojoiningWDC.
IwastaskedwithpreparinganewconsenttocontinuetodischargerawsewagetotheWhanganuiRiver.
WDCpleadedfinancialhardshipinthattheywerestillpayingoffthefirststageofasewagescheme.I
wasalsotointroduceandimplementatradewastebylawandchargingregimeforwetindustries.This
wastorecovercostofthepartoftheschemewhichhadnotreceivedagovernmentsubsidy.
Theconsentapplicationhadelementsoftheimpactofpathogensfromhumanandanimalwasteon
theriverandmarineenvironment.Thiscalledforaknowledgeofsuchmatterssimilartoaspectsof
wastewatertreatment.
The trade waste bylaw also had to take account of the impacts of industrial discharges on the
environment,andtheimpactthatwastetreatmentonͲͲsitewouldhave.Imademyselffamiliarwithsuch
treatmentandactedastradewasteofficerforWDC.
IwasalsoawareatthattimethatultimatelyWDChadtobuildatreatmentplanttotreatthedomestic
andindustrialwastefromthecity.Iattendedanumberofconferencesonwastewaterandvisiteda
numberoftreatmentplantsaroundthecountry.Iwasalsoattendingannualtradewasteconferences
andvisitingplantsassociatedwiththoseconferences.
IattendedspecificwastewaterworkshopsrunbywellͲknownexpertssuchasWesEckenfelderand
theAustralianWastewaterInstitute.
By the time WDC was required to design a treatment plant I was very conversant with wastewater
practice.IworkedwithMWHconsultantsin2000todevelopaschemewithseparatedomesticand
industrialtreatment.
IwentonaNZ landdisposaltourtoMelbourneand visitedsome large treatmentsitesin
Australia.
Whenthisseparateschemewasfoundtobenotsuitableandaworkinggroupwassetupunderanew
consentframeworkIwasthetechnicalrepresentativeonthatgroupforWDC.IconsiderIhadmore
than adequate knowledge to evaluate consultant processes and treatment proposals and to help
advisethelaymembersofthegroup.ThisprocessbeganinJuly2001.
62|P a g e WhentheMWHtreatmentplantwasshutdownbyWDCinDecember2012,Iattemptedtoadvise
council.ThispointedoutthattheschemeproposedbyCardnowouldnotwork.Thisdemonstrateda
highlevelofunderstandingofwastewaterprocesses,knowledgeIpossessedbeforetheMWHplant
wasbuilt.
2. DIDYOUUNDERTAKEANYSITEVISITSIN NEW ZEALANDOROVERSEASTOASSISTYOUINDETERMININGTHE
WASTEWATERTREATMENTPROCESSTORECOMMENDTOCOUNCIL?IFSO,WHENANDWHEREDIDYOUTRAVEL
TOANDWHO,IFANYONE,ACCOMPANIEDYOUONTHESITEVISITS?
During the working group process visits with the group were made to plants at Porirua, Otaki and
PalmerstonNorth.TheywereaccompaniedbyMWHstaff.
IalsovisitedNZplantsatFeilding,AlliancePukeuri,FonterraEdendale,Winton,GoreandBluff,inthe
companyofDrDaveStewart,theprincipalprocessdesignerforMWH.Thesevisitswouldhavetaken
placein2001andearly2002.InOctoberͲͲNovemberIvisitedplantsinUSA,three,Scotland,one,and
SouthAfrica,three.IwasmetbyMWHlocalengineersonmostoccasions.Alltheseplantshadaspects
ofpossibleoptionsforWhanganui.
3. WEREYOUAWAREOFANYCOMPARABLEEXAMPLESOFTHEOPTIMISEDLAGOONTREATMENTPLANTPROCESS
OPERATINGSUCCESSFULLYINNEWZEALANDOROVERSEASANDWHATADVICEWASPROVIDEDTOCOUNCILIN
THISREGARD?
Thetermunitprocessesisoftenusedinconnectionwithtreatmentplants.Forexampletrickling
filtersareaseparatecomponentofsomeplantswherethebacteriaexistonthesurfaceofstones
or manmade elements. The waste is sprayedover the surface andtrickles through, undergoing
breakdownbythebacteria.Anotherunitprocessisactivatedsludgewherewasteandbacteriaare
fullymixedinthepresenceofoxygen.Anotherprocessisananaerobiclagoonwherebacteriathat
donotrequireoxygenareusedtobreakdowntheincomingwaste.Thistakestimeandrequiresa
largelagoon,butproduceslesssludgethanaerobictreatment.
Allfouroptionsdevelopedandcostedinreport8hadunitprocesses.Sothetermoptimisedinthe
Whanganui case was used to convey the fact that selected processes were being combined to
achievetreatment.
Ratherthanaseparateprocesstoachieveanaerobicbreakdownthiswastooccurnaturallyover
timeinthedeeperthanusualtreatmentlagoon,thusleadingtolesssludgeultimately.
As some waste potion could be discharged under the consent to discharge to sea, full activated
sludgetreatmentwithitsassociatedhigherenergycostswasnotnecessary.Asthecitywasnotyet
fullyseparatedthetreatmentlagoonwasmadelargertoallowwetweatherflowtogothroughthe
plantandbedisinfected,hencemeetingconsentsatalltimes.Thiswasinsteadofbuildingseparate
holding tanks to store excess flows or providing a bypass system and chlorination then deͲͲ
chlorinationtomeetconsents.Thiswasalsoseenasoptimisingrequirements.
Itisthusunlikelythatacomparableplantexists,andIamnotawareofone.
63|P a g e HoweverAIWPSplantsͲͲthatisadvancedintegratedwastewaterpondsystemͲͲdoexistandIvisited
oneinCalifornia.Theyhaveadeepsay4mpitinthemiddleofalarger4mdeepaerobiclagoon.
Thepurposeofthepitistoallowanaerobicbreakdown,muchaswasthecasewiththeMWHplant.
TherearemanyaeratedlagoonsaroundNZandoverseas.TheclosestoneisPalmerstonNorth,where
anaeratedsectionisfollowedbyalessaeratedsectionwheresludgecansettleout,againlikethe
secondandthirdzonesintheMWHplant.
It is understandable that the situation would not be explained to council because of its
complexity.
Table1onpage7oftreatmentworkinggroupreport10showsthecosteffectivenessofthe
optimisedscheme.Itscapitalcostwas$9.53mcomparedtothestandardpartialmixaerated
lagoonof$14.645m(withoutfees,etc.)
4.
PLEASEDESCRIBEHOW COUNCILLORSWEREPROVIDEDWITHARISKASSESSMENTFORTHERECOMMENDED
OPTIMISEDLAGOONTREATMENTPLANTPROCESS?WERETHEYADEQUATELYADVISEDOFANYRISKSINYOUR
OPINION?
TheSWATanalysisonpage3ofreport10didnotsuggestanyriskssignificantenoughtonotproceed
inthefaceofsuchcostsavingsoverthenextbestoptions.
Imyselfdidnotconsidertherewasanyparticularrisk,havingseenexamplesoftheprocessestobe
usedinthefinalMWHdesign.
Pages49ͲͲ50ofreport11identifyrisks,butnoneofthemarespecifictothefinalselection.
Julian Reweti presented reports to council, generally written by Dean Taylor, as I recall. I did not
necessarilyseethesereportsandcannotreallyofferanopinionastowhethercouncilwereadvised
of‘risks’.ItisquitelikelythatDeanandJulianbothsharedmyviewsaboutminimalspecificrisks.
5.
6.
GIVEN THAT COUNCIL IN FEBRUARY 2004 CONFIRMED THE RECOMMENDED MWHͲͲ DESIGNED
OPTIMISED LAGOONTREATMENTPLANTPROCESSONTHECONDITIONITWASPEERREVIEWED,PLEASE
DESCRIBEHOWCOUNCILLORSWERESUBSEQUENTLYINFORMEDOFANYISSUESANDCONCERNSRAISED
BYTHEPEERREVIEWPANEL? WERETHEYADEQUATELYINFORMEDOFTHESEISSUESANDCONCERNSIN
YOUROPINION?
HowwereanyissuesandconcernsraisedbythePeerReviewPanelin2004addressed
byMWHinthesubsequentdetaileddesignoftheOptimisedLagoonTreatmentplant?
Were they adequately addressed in your opinion and what advice was provided to
Councilinthisregard?
Itseemstomethatthesequestionsaresorelatedthattheyarebetteransweredasone
question.
Idonothaveanelectroniccopyofthepeerreviewquestionsandresponsesbutassumetheyhave
beenprovided.
64|P a g e Queries1ͲͲ3relatetoindustryloadsandagreements.Theywouldhavebeenmadeforanyoption
notspecificallyfortheoptimisedoption.
Query4isaboutodourandisansweredadequatelybyDaveStewartinsayingthatprovidedenough
aerationwassuppliedanyodorouscompoundswouldbeoxidisedbeforereachingthesurface.
Query5about‘risingsludge’wasansweredbythenormalactionofmixingremovingbubble
flotationeffectandbyreferringtothetemperatureinthedeeperlagoon,andtheabsenceof
suchaproblemelsewhere.Mitigationmeasureswereavailableifaproblemdidoccur.
Query5.3wasansweredbyquotingvaluesoftransmissivityfromseveralotherplantswithsimilar
operationalcharacteristics.
Query6isabouttheestimatesandriskassessmentsandwouldhaveappliedtoanyoftheoptions.
Query8isaboutsludgevolumesandaccumulation.Itisclearlyacknowledgedthatthisisadifficult
area. Technical analysis has been done using bestͲͲguess estimates for the various treatment
efficiencies and ‘usual’ textbook parameters for kinetic coefficients. A literature search was also
carriedoutandvariousratesextractedfromstudiesaroundtheworld.ValuesfromNZthatMWH
were familiar with were also quoted. At the end of the day it was accepted that if sludge did
accumulate more rapidly than estimated it would simply have to be removed from the lagoons
soonerthanexpected.
Otherqueriesareconstructionandsitingrelatedandwereadequatelyaddressed.
Query13istheonlyquerythatspecificallytalksabouttheoptimisedprocessdesignandsettlement.
DaveStewarttalksaboutthedifferencebetweenpartialͲͲmixandthedesignreferringtoadifferent
degreeoftreatmentandthedepthofthesettlementpondaswellasitsarea.Healsohadspecific
TSSmeasurementsdoneattheP.N.planttoprovideevidencethatsettlementasproposedcould
producetherequireddesignvalues.
Itwasexplainedtotheworkinggroupthatiftheeffluentfromthesettlementpondwasnot‘clean’
enoughandchemicaldosingorbafflesadditiondidnotwork,thenclarifierswouldbeneeded.These
arecostlysowhynottrywithouttheminitially.
IsawsimilarsettlementpondsinS.A.whichappearedtoworkwellenough.
Idon’tknowwhetherthiswascommunicatedwellenoughtocouncil,butIamsuretheapproach
wouldhavebeenacceptedanyway.
Inmyopiniontherewerenorealrisksidentifiedthatwouldhavealteredthedecisionbycouncilto
approvethescheme.Thefactthattheplantperformedasdesignedwhenproperlyoperated,and
thatactualsludgeaccumulationrateswerelowerthanDaveStewart’sestimatessupportsmyviews.
65|P a g e ADDITIONALCOMMENTSBELOWBYCOLINHOVEYREGARDINGTHETERMSOFREFERENCE
TERMS OF REFERENCE AS DETERMINED BY WHANGANUI DISTRICT COUNCIL FOLLOWING A
PUBLICMEETINGON4JULY2016
PART1.TECHNICAL
The technical aspects of the waste water treatment plant (“the plant”) has been highly
investigated,reportedonandmadepublic.Thetechnicalaspectsoftheplantalsoformedpartof
the mediation. No further investigation is required in respect of the ‘technical’ aspects of the
plant.
ThereportshallconfirmandreferencetheexpertopinionsstatingthattheMWHdesignedplant
wasnotsalvageable.
Comment
Istronglyobjecttothispartofthe‘independent’enquiry.
FirstlythereferencetoapublicmeetingsuggeststhepublichadinputtotheTOR.Theydidnotand
hadnospeakingrightsatthemeeting.Somecouncillorssubmittedquestionstheywantedanswered
bytheenquirybuttheywerenotincluded.
The technical aspects of the plant were certainly part of the mediation but the responses to those
expertopinionsastowhytheplantfailedandwhyWDCchosetosueMWHhavedefinitelynotbeen
madepublic.Neitherhasthesettlementafterthemediationprocessfailedbeenmadepublic.
Toconfirmandreferencetheexpertopinionswithoutanyreferencetotheresponsestothose
opinions,willsuggestthattheexpertopinionswerecorrect.
Inmyopiniontheenquirywillnotbeacceptedasbeingindependentwiththetechnicalpartofthe
TORbeingsostructured.
Andfurtherwithrespectto2.3underprocess:
Whatfault,ifany,wasintheCounciloperationofthe2007plantwhichwouldhaveledtoitsfailure?
Itiswellknownthatcouncildidnotmaintaintheaeratorsattheplant.Withoutaddressingtheexpert
opinionsabouttheplantandtherebuttaloftheseclaims,andwithoutlookingatthetechnicaldata
fromtheplant,itwillleaveroomtosaythattheaeratorissueonlyexacerbatedtheproblem,asBTO
havesaid.
Thisistotallyunsatisfactory. 66|P a g e PART2.PROCESS
TO REVIEW THE PROCESSES FOLLOWED BY COUNCIL FROM 2003 TO 2012. THIS COULD INCLUDE THE
MANAGEMENTOFTHEPROCESS,REPORTINGTOCOUNCILANDTHEDECISIONSMADEBYCOUNCIL.
2.1
What fault, if any, was there in the Council’s input into the design parameters and their
decisionmakingprocessesthatledtotheacceptanceofthedesignandbuildofthe2007plant?
TheuseofthetermCouncilwouldseemtoincludecouncillorsasinmeetingdiscussions,resolutions,
etc.Idon’tconsidercouncillorshadanyrealinputintodesignparameters.Ibelievereportsthatwere
puttoCouncilwereapprovedafteranyrelevantdiscussion.Thisappliestobudgetdecisionsaswell
astechnicaldetails.Ifthetermcouncilistoincludeofficer’sinputanddecisionmakingprocessesthis
isfartoolargeaquestiontocommenton.
Isizedthetreatmentlagoon,assetoutindesignreport11andtheworkandeffortthatwentintothat
wascomplexbutveryrobust.Theplanthascopedverywellwiththecombinedflowsfromthecityin
theperioditwasoperating.
Otherdecisionsweretakenthroughouttheworkinggroupprocessandreporting.
2.2
WHOWASINVOLVED,ANDWHATWASTHEDECISIONMAKINGPROCESS,STARTINGFROMTHEINITIALDESIGN
OFTHEPLANTIN2003TOTHEOPENINGOFTHEPLANTIN2007?
MWHwerethemajordesignersalongwithmyself.Variousotherexpertsassistedwiththedetailed
designͲͲgeotechnical,electricalͲͲe.g.GregMallett.
2.3
WHATFAULT,IFANY,WASINTHECOUNCILOPERATIONOFTHE2007PLANTWHICHWOULDHAVELEDTOITS
FAILURE?
Itiswellknownthataeratorsfailedattheplantincludingthesecondset.
Thiswasunprecedentedbutdidnotmeanthatsurfaceaerationshouldnothavebeenpersevered
with.
It was, like most treatment plants, a biological plant, and the bacteria needed oxygen to
function.Plainandsimple.
Noneofthealternativereasonsforfailurehaveheldup.Itisnotpossibletonotpresentsometechnical
datatosupporttheseclaims.
Thisdataclearlyshowstheplantworkingwhensuppliedwithadequatedissolvedoxygen(DO).There
wouldbenoperiodsofsuchperformanceifalltheclaimsweretrue.
Requirements for monitoring were well set out in the operation and maintenance manual. The
requirements and purpose of the monitoring were again spelt out in the biological commissioning
reportdated11October2010.Themonitoringwasintendedtomeasurethe‘health’ofthebiomass
andtoallowforadjustmentinthecriticalF/Mratiobyalteringaerationinthethreezones.
ThismonitoringwasneverdoneandnoattemptsweremadetocheckF/Mratios.Myrequest
toprovidemonitoringdatawereneverrespondedtobutdiscussionsrevealedthatsamplingwas
nevercarriedout!
67|P a g e Itisobviousthatverylittlewasdonetoensuretheplantwasfunctioning,ortooperateitasitwas
designed.
2.4
ISTHEREANYEVIDENCETHATWETINDUSTRIESUNDERESTIMATEDTHEIRINPUTSDURINGTHEDESIGNPHASE,
ORADDEDNONͲͲCONSENTED,EXCESSIVEORNONͲͲPERMITTEDINPUTSINTOTHEPLANTTHATCONTRIBUTEDTOITS
INABILITYTOFUNCTION
IdealtwithwetindustriesfromthetimeIintroducedthetradewastebylawin1988untiljustpriorto
theplantopeningin2007.Industrybeganpayingtradewastechargesbasedontheirloadsfrom1989.
Thisrequiredthemtobemonitoredfortheparametersthatmadeupthecharge.Eachsitehada
monitoring flume which was continually monitored, and inspected to ensure it was properly
maintained.Atthedesignstageforthetreatmentplantintensivemonitoringwascarriedout.Checks
weremadeperiodicallyontheaccuracyoftheflumes,andsampleswerecollectedbycouncilstaff
andsentofftoanaccreditedlaboratoryforanalysis.Thesumoftheloadsfromallthemonitoredsites
werecheckedagainsttherecordedloadattheBeachRoadpumpstation.Henceanaccuratepicture
wasbuiltupoftheloadsfromeachofthefivemainwetindustries.Loadsvariedonaseasonaland
weeklybasisandthedesignloadwastakenasthe90%ͲͲilevalueofthetotalloadsatBeachRoad,
whichweresampledonthreeorfourdaysperweek.
Idonotconsiderthatindustryinputswereunderestimatedduringthedesignphaseandinfact
councilnotindustrymeasuredtheseloads.
Theplantwasdesignedtobeaeratedandinthecaseofexcessloadsfullaerationshouldhavebeen
supplied.Weekendperiodsallowedtheplantto‘recover’fromexcessloadsduringtheweek.During
theperiodwhentheplantwasoperatingwiththedesignnumberofaeratorssomeloadswellover
double the design load entered the plant and were treated satisfactorily, with TSS effluent levels
meetingconsent.SuchloadsaretobeexpectedfromwetindustriessuchasWhanganui’sandshould
becateredfor.
Aftertheplantaeratorswereturnedoffandattemptsweremadetorunitwithintroducedbacteria
suppliedwithoxygenfromchemicals(oxygain),highloadsfromindustrymadethisimpossibleand
drewattentiontoindustrywhowerejustgoingabouttheirbusinessasusual.
2.5
WASTHEREANYFAILUREOFTIMELYREPORTINGBYPLANTOPERATIONSSTAFFTOHORIZONS,COUNCILSTAFF,
THEMAYORORCOUNCILLORSOFTHEFAILUREOFTHEPLANT?
AnnualreportswerealwaysrequiredbyHorizonssothatcompliancewithvariousconsentscould
bemonitored.Iwroteandprovidedthesereportsformanyyears.Thecouncil’sownannualreports
alsoreportedonthemonitoringresults.
AsIunderstanditthesereportsceasedtobeprovidedtoHorizonsshortlyaftertheplantopened.
Horizonsapparentlydidnotpickthisup,andneitherdidWDCannualreports.Itisconceivablethat
hadHorizonsbecomeawareaboutthecontinualnonͲͲcomplianceoftheplanttheymighthavetaken
actiontohavethatremedied.
Ihavealsoseencouncillorsreportedassayingtheywerenotmadeawareofanyissuesattheplant.
Itseemsthehorrendoussmellscausedbyshuttingdowntheaeratorsbroughtalltheissuestolight.
68|P a g e 5.2
DeanTaylor
DeanTaylorcommencedemploymentwithCouncilinJanuary1976,progressingthroughvariousrolesand
becomingin2001akeymemberoftheWDCWastewaterTreatmentWorkingGroup(Technical)including
MWH that developed the concept of the Optimised Lagoon Treatment Process for ultimate
recommendation to Council in February 2004. Moreover, he continued to be a key participant in the
project’sprocessesafterCouncilconfirmedtheWorkingGroup’srecommendationupuntilhisdeparture
fromCouncilinJune2005.ThefollowingquestionswereputtoMr.Tayloron8August2016:
1. AreyouawareofanysitevisitsbeingundertakeninNewZealandoroverseastoassistCouncil
staffindeterminingthewastewatertreatmentprocesstorecommendtoCouncil?Ifso,please
providedetails.
2. WereyouawareofanycomparableexamplesoftheOptimisedLagoontreatmentplantprocess
operatingsuccessfullyinNewZealandoroverseasandwhatadvicewasprovidedtoCouncilin
thisregard?
3. Please describe how Councillors were provided with a risk assessment for the recommended
OptimisedLagoontreatmentplantprocess?Weretheyadequatelyadvisedofanyrisksinyour
opinion?
4. Given that Council in February 2004 confirmed the recommended MWHͲdesigned Optimised
Lagoon treatment plant process on the condition it was peer reviewed, please describe how
CouncillorsweresubsequentlyinformedofanyissuesandconcernsraisedbythePeerReview
Panel?Weretheyadequatelyinformedoftheseissuesandconcernsinyouropinion?
5. Totheextentofyourknowledge,howwereanyissuesandconcernsraisedbythePeerReview
Panelin2004addressedbyMWHinthesubsequentdetaileddesignoftheOptimisedLagoon
Treatmentplant?Weretheyadequatelyaddressedinyouropinionandwhatadvicewasprovided
toCouncilinthisregard?
Response:Mr.Taylordidnotrespondtothequestionsputtohim.
5.3
ColinWhitlock
ColinWhitlockwasTheTownClerkoftheCityofWanganuifrom1984to1989andthenChiefExecutive
OfficerofWhanganuiDistrictCouncilfrom1989until2005,includingtheevaluationanddesignphaseof
thewastewatertreatmentplantleadinguptoCouncil’sdecisioninFebruary2004toconfirmthestaffͲ
recommendedOptimisedLagoontreatmentprocessandthereporttoCouncilinNovember2004onthe
outcomeofthepeerreview.ThefollowingquestionswereputtoMr.Whitlockon5August2016:
1. DidyouapproveCouncilstaffundertakinganysitevisitsinNewZealandoroverseastoassistin
determiningthewastewatertreatmentprocesstorecommendtoCouncil?Ifso,whenandwhere
didstafftraveltoandwho,ifanyone,accompaniedstaffonthesitevisits?
2. WereyouawareofanycomparableexamplesoftheOptimisedLagoontreatmentplantprocess
operatingsuccessfullyinNewZealandoroverseasandwhatadvicewasprovidedtoCouncilin
thisregard?
69|P a g e 3. Please describe how Councillors were provided with a risk assessment for the recommended
OptimisedLagoontreatmentplantprocess?Weretheyadequatelyadvisedofanyrisksinyour
opinion?
4. Given that Council in February 2004 confirmed the recommended MWHͲdesigned Optimised
Lagoon treatment plant process on the condition it was peer reviewed, please describe how
CouncillorsweresubsequentlyinformedofanyissuesandconcernsraisedbythePeerReview
Panel?Weretheyadequatelyinformedoftheseissuesandconcernsinyouropinion?
5. HowwereanyissuesandconcernsraisedbythePeerReviewPanelin2004addressedbyMWH
in the subsequent detailed design of the Optimised Lagoon Treatment plant? Were they
adequatelyaddressedinyouropinionandwhatadvicewasprovidedtoCouncilinthisregard?
6. Didyouhaveanyissuesorconcernswiththeevaluationanddesignprocessforthetreatment
plant?Ifso,didyouraisetheseissuesorconcernswithstaffunderyourmanagementorwiththe
Mayororanyothercouncillors?
Response: Mr.Whitlockrespondedbytelephonemessageon15August2016anddeclinedtomakea
submission.HedidhowevermeetwiththeIndependentReviewon24August2016andprovidedsome
usefulinsightsintothetrustingseniormanagementcultureprevailingin2004andhisconcernsheldover
theprematureterminationofthePeerReviewPanelinlate2004.Mr.WhitlockalsorecalledthatMWH
wasquiteupfrontwithCouncilmanagementthatthetreatmentplantconceptdesignhadnoprecedents
andthereforeentailedsignificantrisks.
5.4
CouncillorRayStevens
CouncillorRayStevenshasbeenonWhanganuiDistrictCouncilfornineteenyears,coveringtheevaluation
anddesignphaseofthewastewatertreatmentplantleadinguptoCouncil’sdecisioninFebruary2004to
confirm the staffͲrecommended design for the Optimised Lagoon treatment process, the construction
phaseofthetreatmentplantandtheoperationalphaseofthetreatmentplantfrom2007to2012.The
followingquestionswereputtotheCouncilloron5August2016:
1. Were Councillors advised by staff of any comparable examples of the Optimised Lagoon
treatmentplantprocessoperatingsuccessfullyinNewZealandoroverseas?
2. Please describe how Councillors were provided by staff with a risk assessment for the
recommendedOptimisedLagoontreatmentplantprocess?Weretheyadequatelyadvisedofany
risks in your opinion? Did Councillors raise this issue with staff at the relevant time in your
recollection?
3. Given that Council in February 2004 confirmed the recommended MWHͲdesigned Optimised
Lagoon treatment plant process on the condition it was peer reviewed, please describe how
CouncillorsweresubsequentlyinformedbystaffofanyissuesandconcernsraisedbythePeer
Review Panel? Were Councillors adequately informed of any issues and concerns in your
opinion?DidCouncillorsraisethisissuewithstaffattherelevanttimeinyourrecollection?
4. Toyourknowledge,howwereanyissuesandconcernsraisedbythePeerReviewPanelin2004
addressed by MWH in the subsequent detailed design of the Optimised Lagoon Treatment
plant?WeretheyadequatelyaddressedinyouropinionandwhatadvicewasprovidedtoCouncil
bystaffinthisregard?
70|P a g e 5. Please describe how Councillors were informed by staff of the operational difficulties at the
treatmentplantaftertheplantcommencedin2007upuntiltheendof2012.WereCouncillors
adequatelyinformedbystaffofthenature,extentandcauseofthesedifficultiesinyouropinion?
6. With hindsight, do you believe that Councillors were sufficiently robust in exercising their
governancefunctioninrespecttostaffmanagementofthetreatmentplantprojectduringthe
period2003to2012?
Response:TheCouncillorwasunabletorespondwithinthedeadlineforsubmissions.
5.5
CouncillorSueWestwood
CouncillorSue Westwood has beenonWhanganui District Counciland itspredecessorfor thirty years,
covering the evaluation and design phase of the wastewater treatment plant leading up to Council’s
decisioninFebruary2004toconfirmthestaffͲrecommendedOptimisedLagoontreatmentprocess,the
constructionphaseofthetreatmentplantandtheoperationalphaseofthetreatmentplantfrom2007to
2012.ThefollowingquestionswereputtotheCouncilloron5August2016andherresponsesaresetout
below:
1. Were Councillors advised by staff of any comparable examples of the Optimised Lagoon
treatmentplantprocessoperatingsuccessfullyinNewZealandoroverseas?
Response:NotthatIcanrecall.
2. Please describe how Councillors were provided by staff with a risk assessment for the
recommendedOptimisedLagoontreatmentplantprocess?Weretheyadequatelyadvisedofany
risks in your opinion? Did Councillors raise this issue with staff at the relevant time in your
recollection?
Response:Wewereassuredthatapeerreviewofthewholeoperationhadbeendone(Iassumedby
professionalsanddidnotquestionthisprocess).Nospecificriskassessmentwastabled.Wewerenot
adequatelyadvisedofrisks.HadwebeenIwouldhavequestionedmitigationstobeundertaken.Aswe
didnotknowanypotentialrisksclearlyquestionswerenotraised.
3. Given that Council in February 2004 confirmed the recommended MWHͲdesigned Optimised
Lagoon treatment plant process on the condition it was peer reviewed, please describe how
CouncillorsweresubsequentlyinformedbystaffofanyissuesandconcernsraisedbythePeer
Review Panel? Were Councillors adequately informed of any issues and concerns in your
opinion?DidCouncillorsraisethisissuewithstaffattherelevanttimeinyourrecollection?
Response:InhindsightCouncillorsputtoomuchtrustintheprofessionalismofourengineers.Theonly
reporttoCouncilinmyrecollectionwasthattheaeratorshadfailedandwouldneedtobereplacedas
theyweretoosmalltobeeffectivewiththeaerobiclevel.Wefalselyassumedthatthereplacements
fixedtheproblemandIwasnotawarethatthesereplacementsweredifferentfromtheoriginals,were
raisingtheanaerobiclevelintotheaerobicandthustheaerobiclevelwasnoteffectiveinitsoxygenlevels.
71|P a g e Idonotbelievethatwewereadequatelyinformedofanysubsequentissues.Myassumptionwasthat
theplantwasworkingsatisfactorily.
4. Toyourknowledge,howwereanyissuesandconcernsraisedbythePeerReviewPanelin2004
addressed by MWH in the subsequent detailed design of the Optimised Lagoon Treatment
plant?WeretheyadequatelyaddressedinyouropinionandwhatadvicewasprovidedtoCouncil
bystaffinthisregard?
Response:Tothebestofmymemorythetechnicalrequirementswerelefttostaffandtheirreporting
regimeleftalottobedesired.AgainIassumedthattherewerenoproblemsasnoneofsignificancewere
reportedtoCouncilthatIcanrecall.
5. Please describe how Councillors were informed by staff of the operational difficulties at the
treatmentplantaftertheplantcommencedin2007upuntiltheendof2012.WereCouncillors
adequatelyinformedbystaffofthenature,extentandcauseofthesedifficultiesinyouropinion?
Response:AsyouareprobablyawareIwasnotpartofMichael’sVISIONteam.OnmanyissuesIfelthis
‘InTeam’whocaucusedmanypositionspossiblyweremoreaware.Thisispurelymyownopinion.Apart
from the aerator problem I can’t honestly recall being told of other problems. In retrospect staff
informationfellveryshort.
6. With hindsight, do you believe that Councillors were sufficiently robust in exercising their
governancefunctioninrespecttostaffmanagementofthetreatmentplantprojectduringthe
period2003to2012?
Response:Ibelieveinretrospectthatwefellwellshortgiventheinformationthathascomeoutsince.
Toomuchtrustwasplacedinthecapabilityofourstafftoeffectivelydeliveronwhatwas anewand
uniquedesign.HadIpersonallybeenmoreawareoftheproblemsclearlywewouldhaverequiredmore
indepthreports,proposedmitigationandhadmanydiscussionsontheissuewithMWH.
5.6
AllanWrigglesworth
Allan Wrigglesworth was an original member of the WDC Wastewater Treatment Working Group
(Technical)includingtwoCouncilstaff,theconsultantsMWHandIwirepresentativesthatwasestablished
in2001.CouncilstaffontheWorkingGroupsubsequentlyengagedwithMWHinanevaluationprocess
to recommend a preferred treatment plant design to Council. The following request was put to Mr.
Wrigglesworthon5August2016:
PleaseincludeadescriptionofthenatureandextentofyourroleontheWorkingGroupinanysubmission
thatyoumaymake.
Response:Mr.Wrigglesworthdidnotrespondtothetwoemailssenttohim.However,on8August2016,
theWanganuiChroniclepublishedaletterfromhimwhichstatedhewasboycottingtheIndependent
ReviewinobjectiontotheTermsofReferenceandencouragedotherstodothesame.
72|P a g e 5.7
JohnCrawford
John Crawford is a consultant with OPUS and was the Coordinator of the Peer Review Panel that was
commissioned by Council in 2004 to review the MWHͲdesigned Optimised Lagoon Treatment Process.
CouncilhadconfirmedtheprocessinFebruary2004,subjecttopeerreview.TheothermemberofthePeer
Review Panel was Cliff Tipler from URS New Zealand and the Panel was assisted by Julian Reweti
representingCouncilasclient.ThefollowingquestionswereputtoMr.Crawfordon11August2016and
hisresponsesreceivedon25August2016aresetoutbelow:
1. On16September2004youwrotetoCouncilonbehalfofthePeerReviewPanelandappended
toyourletteratablewhichdetailedtheissuesthepeerreviewhadidentifiedandCouncil’sinitial
responsetothoseissuesandstatingthatanumberofissuesidentifiedhadnotbeenadequately
addressed.Yourlettersetoutfivekeypointsforfurtheractionorattention,includingtheneed
forarigorousriskassessmentprocesscoveringthepreferredoption.DidthePanelconsiderthat
the peer review process was completed by the sending of this letter to Council or after any
subsequentdiscussionswithCouncilstaff?
Response: The panel did not consider that the peer review process was completed. It was our
understandingthatthepanelwouldbereconvenedagain,atthedetaileddesignphase,tocheckthat
issues raised in the initial peer review (and others arising) were being appropriately addressed. The
contextoftheinitial2004PeerReviewwasthatitwasofaconceptonly,thatconceptbeingtheonethat
theCouncilanditsconsultantshadchosenaspreferredfromanumberofoptions.
2. Are you aware whether the rigorous risk assessment process that the Panel required to be
undertaken in fact occurred or whether any of the other four key points (eg. provision of
calculationsdeterminingaerationrequirements,provisionofrawdatatosupportclaimsmade,
confirmationofthelongevityoftheplantparticularlyintermsofsludgeinventory)wereever
actioned?
Response:NoIhavenoknowledgeastowhetheranyofthosekeypointsweresubsequentlyactioned.I
havehadnosubsequentinvolvementwiththeprojectsincemy16September2004letterandtheCouncil
response,closingthecurrentphaseofthepeerreviewprocess.
3. IsitcorrectthatthePanelhadonlyrevieweddesignconceptsandthatadetaileddesigndidnot
existatthatpointintimein2004?
Response: Thatiscorrect.Itispossiblethatsomedetaileddesignalreadyexisted. Butthepanelwas
certainlynotawareofit.
4. Councilrepliedtoyourletteron28October2004statinginpartthatthepeerreviewprocesswas
complete,butthatitwouldbeusefulifthePanelwasavailabletocritique/reviewcomponentsof
thedesignprocessgoingforward.WereyouorthePaneleverrequestedbyCounciltoundertake
anyfurthercritiquesorreviewsofanycomponentsofthedetaileddesign?
Response:IwasneversubsequentlyrequestedbyCounciltoundertakeanyfurthercritiquesorreviews
ofanycomponentsofthedetaileddesign.IcannotspeakconclusivelyforMrTipler.However,onthe
basis of conversations that the two of us had shortly after the issues became public knowledge, I am
73|P a g e reasonably certain that Mr Tipler had had no further involvement either, after 16 September 2004. I
cannotspeakforMrReweti,theCouncilrepresentativeonthepanel.
5.8
MichaelLaws
MichaelLawswastheMayorofWhanganuiDistrictCouncilfromNovember2004to2010andaCouncillor
from 2010 to 2014. His period on Council covered the final stage of the detailed design phase of the
wastewatertreatmentplant,itsconstructionanditsoperationalphasefrom2007to2012.Thefollowing
ninequestionswereputtoMr.Lawson5August2016andherepliedwithalengthysubmissionon26
August2016.Mr.Laws’submissionissetoutinfullbelow:
1. AreyouawareofCouncillorsbeingadvisedbystaffofanycomparableexamplesoftheOptimised
LagoontreatmentplantprocessoperatingsuccessfullyinNewZealandoroverseas?
2. WereCouncillorsduringyourperiodasMayorprovidedbystaffwithariskassessmentforthe
recommendedOptimisedLagoontreatmentplantprocess?Weretheyadequatelyadvisedofany
risks in your opinion? Did Councillors raise this issue with staff at the relevant time to your
knowledge?
3. GiventhatCouncilinFebruary2004andpriortoyourcommencementasMayor,hadconfirmed
therecommendedMWHͲdesignedOptimisedLagoontreatmentplantprocessontheconditionit
was peer reviewed, please describe to the best of your knowledge how Councillors were
subsequentlyinformedbystaffofanyissuesandconcernsraisedbythePeerReviewPanel?Were
Councillorsadequatelyinformedofanyissuesandconcernsinyourrecollection?DidCouncillors
raisethisissuewithstaffatanyrelevanttime?
4. Toyourknowledge,howwereanyissuesandconcernsraisedbythePeerReviewPanelinlate
2004addressedbyMWHinthesubsequentdetaileddesignoftheOptimisedLagoonTreatment
plant?WeretheyadequatelyaddressedinyouropinionandwhatadvicewasprovidedtoCouncil
bystaffinthisregard?
5. Wasthewastewaterprojectbudgetsizedcorrectlytodeliveraviabletreatmentoutcomeinyour
opinion?Doyoubelievestaffheldanyperceptionthattheyhadtodeliveralowercostoption?
6. Fromyourexperience,doyoubelievethatCouncil’sinternaltechnicalandengineeringstaffhad
therequisiteknowledgeandexpertisetoadequatelycontractmanageCouncil’sexternaltechnical
andengineeringconsultantsonthetreatmentplantproject?
7. Please describe how Councillors were informed by staff of the operational difficulties at the
treatmentplantaftertheplantcommencedin2007upuntiltheendof2012.WereCouncillors
adequatelyinformedbystaffofthenature,extentandcauseofthesedifficultiesinyouropinion?
8. DidyouinyourcapacityasMayorreceiveregularstaffbriefingsfrom2007to2010ontheplant’s
operationaldifficultiesand,ifso,whatwasthenatureandextentofthosebriefings?
9. With hindsight, do you believe that Councillors were sufficiently robust in exercising their
governancefunctioninrespecttostaffmanagementofthetreatmentplantprojectduringthe
period2003to2012?
74|P a g e SubmissionofMichaelLawstotheWWTPInquiryͲAugust2016
MynameisMichaelLaws.IwaselectedasMayoroftheWanganuiDistrictCouncilinOctober2004
andreͲelectedtothatrolein2007.Ihadnotservedonthedistrictcouncilpriortomyelection.
IretiredfromthemayoralroleonOctober2010butwaselectedasaWanganuidistrictcouncillor
in2010andreͲelectedin2013.Iresignedfromthecouncilin2014becauseIhadreͲlocatedwith
myfamilyoutsideofthedistrict.
Previously,IhadservedastheMemberofParliamentforHawke'sBayfrom1990to1996.
Thisisrelevant onlyinasmuchthat Iwas familiar with parliamentary policy making and inquiry
functions,andservedonParliament'seducationandscience,MaoriAffairs,andelectorallawselect
committeesfortwoparliamentaryterms.
SubmissiontotheWanganuiDistrictCouncilInquiry
AlthoughIhavepubliclystatedmysupportforaninquiryintothefailureoftheWanganuiwastewater
treatmentplant,Imustrecordmysubstantialmisgivingsaroundthetermsofreferencethatframethis
inquiry.
ThedetailsofthoseconcernsIhavecommunicatedtotheindependentreviewerMrRobertDommand
thechiefexecutiveoftheWanganuiDistrictCouncil,MrKymFell.
IhavebeenaskedaseriesofquestionsbyMrDomm,whichIattachasanappendixtothissubmission.
Ibelievethatthecontentofthissubmissionanswersthosequeries.
However,IbelievethatinsimplyansweringMrDomm'squestions,thatIwouldnotbepresentinga
sufficientlyfull,transparentandaccurateportrayaloftheinformationthatIhold,andthatisrelevant
tothisinquiry.Hencethismoreformalanddetailed submission.
Therewillbegapsinmyevidenceandperhapstheoccasionalerror.Theywillnotbedeliberate:rather,
theresultofmymemoryofsometentotwelveyearsagorearrangingfactsandimpressionsoutoforder.
Onefinalpoint.
Thedesignandconstructionofthecouncil’swastewatertreatmentplantwhenIwasmayorwas
withoutinternalorpolitical controversy.
Therewereanynumberofmoreexacting,controversialandimmediateissuesthatconfrontedthecouncil
ofthetime.Bycontrast,thedesignandconstructionofthewastewatertreatmentplantwasconsidered
tobearelativelyprosaicprocess.Itwasalwaysperceivedbythegovernanceteamasbeingproperly
managedbyitsengineeringandenvironmentalprofessionals.
Atnostagewasmygovernanceteamawareoforalertedtoanydesignrisksassociatedwiththe
wastewatertreatmentplant.
The subsequent operation and failure of the wastewater treatment plantwas neither foreseen nor
imaginedbythegovernanceteamsofthetime.
75|P a g e ElectionasMayor2004
IwaselectedtotheWanganuimayoraltyinOctober2004astheleaderofa'team'collectivelycalling
ourselves'VisionWanganui'.
Followingparliamentaryprecedents,wepublishedadetailedmanifestoofpolicyobjectivesandagreed
ongovernanceprinciplesandpolicyprioritiesshouldwebeelected.
At the 2004 local body elections,' Vision Wanganui' candidates were elected to the mayoralty, six
districtcouncilseats,twodistricthealthboardseatsandoneHorizonsregionalcouncil seat.
Iappointedthenlocalhotelierandbusinesswoman,CrDotMcKinnon,asdeputymayor.
Ialso appointed nonͲVision and experienced senior councillor Don McGregor as chairman of the
infrastructurecommitteethatoversawthewastewaterseparationandtreatment plant.
ItooktheadviceofthencouncilchiefexecutiveColinWhitlockonthisappointmentasMr
WhitlockconsideredthatDonMcGregorhadagoodgraspoftherelatedissues,eventhoughCr
McGregorwasnotpartofthe‘VisionWanganui’team.Hehadgoodexperienceofthe
wastewaterseparationprojectincludingthedesignofthewastewatertreatment plant.
For the second term of my administration, Cr Ray Stevens chaired the infrastructure committee
responsibleforthecouncil'swaterandwastewaterservices.
TheWanganuiDistrictCouncilSeniorManagement
Asanewmayor,withareformagenda,therewasapalpablewarinessinmyearlyrelationshipwiththe
council'sseniormanagement.
TheseniormanagementthatIhadthemosttodowithcomprisedofchiefexecutiveColinWhitlock,
deputy chief executive Ian McGowan, finance manager Dave Foster, and infrastructure manager
DeanTaylor.
Withintwelvemonths,allwouldbegonefromthedistrictcouncilͲeitherretired
(Whitlock/McGowan)orresigned(Foster/Taylor).
Thedistrictcouncilappointedanewchiefexecutiveinlate2005toreplaceColinWhitlockͲDrDavid
Warburton.ItalsoappointedDrWarburton'sdeputy,thecouncil'sthencorporateservicesmanager,
MrKevinRoss.
DrWarburtoncamehighlyrecommendedbyrecruitmentspecialists.Hewasseenbythegovernance
teamashavingtherightmixofleadershipand privatesectorexperiencetocompletethereformof
thecouncil'sadministrationand operations.
InmydealingswithallthreechiefexecutivesthatservedwhilstIwasmayorͲColinWhitlock,David
WarburtonandKevinRossIneveroncehadcausetodoubttheirprofessionalismnorhonesty.
TherelationshipbetweenOpus,MWHandthedistrictcouncil
Prior to my election as mayor, I had expressed concerns at the close relationship between private
engineeringcompany,Opus,andtheseniormanagementofthedistrictcouncil.Thisrelationshiphad
76|P a g e beenpubliclycementedwiththemutualsecondmentofinfrastructuremanagerDeanTaylortoOpus,
andhisOpusequivalenttotheroleofcouncilinfrastructuremanagerin2003/4.
Myconcernwasthatthecouncilwasoverlyreliantupononesingleagencyformostofitsinfrastructure
policy advice and its operational capacity. I doubted the ability of senior council management to
properlymonitorthequalityofadviceandworkcontractedtothecouncil,especiallygiventheclose
personalrelationships.
IexpressedthisviewstronglytobothColinWhitlock,andhissuccessorDavidWarburton.Isawaneed
tohavesoundengineeringexpertiseandoverviewlocatedwithincouncil,andonthecouncilpayroll.I
wasassured,especiallybyDrWarburton,thatsuchcapacitywouldbeaddedtothecouncilteam.
BriefingPapersofissuesintransition
Uponmyelectionasmayor,andwithsevennewcouncillorssimilarlyelected,thenewgovernanceteam
looked to senior management to update them as completely as possible after their election and
swearingͲin.
Ifoundthecouncil’ssbriefingpaperstobebothbriefandinadequateandcommunicatedthisviewto
thechiefexecutive.
Thebriefingpapersonthewastewatertreatmentplantcontainednodifferentinformationtothat
publishedinthe2003Ͳ13LongTermCouncil CommunityPlan(LTCCP). Theysimplyrecordedthata
policyanddesigndecisionhadbeenreachedandconsultingengineersMWHengagedtofurther
thedesignandprojectmanagetheconstruction.
WastewaterSeparationProject&Treatment Plant
OneofthefirstquestionsIposedtothecouncil'sseniormanagement,uponbeingelectedasMayor,
washowImighthalttheaboveprojectsuntilafundamentalandexternalreviewhadbeencompleted.
Itwasmyview,atthattime,thatthequantumcostoftheprojectbeingthepublicandprivateseparation
andtheprojectedWWTPͲwasfiscallyunsustainable.
Inaddition,Icametorealisethatthedistrictcouncil'spublishedplansandfinancialstatementscould
notbereliedupon.
Inpart,thatwasbecauselocalgovernmentwasmovingtowardsanewaccountingregimeandnewaudit
requirements,andinpartbecausethepreviouscouncilhadnotmadepublicaseveredowngradingof
thecouncil'sprojectedincomeoverthenextdecade,especiallyfromforestry dividends.
ItalsoseemedbizarreͲatleasttothislayoutsiderͲthatwewereabouttoconstructawastewater
treatmentplantthatwouldhavethecapacityoftentimesthepopulationofourdistrict/city.Although
thelatterwasnotmyimmediatefocus:intermsoftheoverallcostofthewastewaterseparationproject
itmadeuparelativelyminorproportionofthetotalcost.
IhadextensiveprivatemeetingswithColinWhitlock,DaveFosterandDeanTayloraroundtheseissues.
77|P a g e Alladvisedthat"theshiphadsailed"withregardtohaltingthewastewaterseparationprojectand
revisitingpreviouscouncildecisions.Capitalworkswereunderway,legalcontractshadbeenlet
andcommunityconsultationhadconcluded.
Onthewastewatertreatmentplant,DeanTaylorprovidedbriefingstobothmyselfandtothefull
councilonhowtheplantwastobeconstructed,thetechnologybehinditsconstruction,howthe
plantwouldfunction,anditslikelycost andtiming.ͼ
AtnostagedidheinformthenewgovernanceteamthatthedesignfortheWWTPwasuntriedand
untestedanywhereinNewZealand.Nordidthechiefexecutive.However,MrTaylorhadprovidedsuch
informationtothepreviousgovernanceteamledbyMayorChasPoynter.
On10February2004,MrTaylorinformedthethencouncil'sworksandtransportcommitteethatͲ
"Thereisnosuch[wastewatertreatment]plantin existence,certainlyinNewZealand,which
combineswellͲestablishedprocesstechniqueswithauniquesludgemanagementprocess."
Healsoinformedcouncilthat"theprocessisconsideredtoberelativelylowriskprimarilybecauseit
isbasedonproventechnologies.Inordertoassistwiththemanagementofrisks.…apeerreview
groupwillexaminetheproposalinthecontextofallotherpossibleoptions...Anyissuesraisedwillbe
abletobedealtwithinthedetaileddesignphase."
IwouldnotreadthesefullCouncilminutesuntilyearslaterͲIseemtorecallafterthefirstproblems
becameapparentatthecommissionedplant.
Mr Taylor also addressed the issue of council's relationship with Opus, MWH and Works
infrastructure[seeWorks&PropertyCommitteeminutes17Nov2004]andsuggestedapathahead
toexpandcouncilresourcesaheadoftheconstructionoftheWWTPforJune2007.
Inhisadvicetomygovernanceteam,DeanTaylornotedthatthedesignoftheWWTPhadalreadybeen
subjecttopeerreview(Opus,URSandWanganuiWaterServices)andallhadsaidthattheoptimised
lagoondesignwouldwork.
FinancialcostoftheWWTP
DeanTayloralsonoted,inhisNovember2004briefingtothenewgovernanceteamthattheprojected
costoftheWWTPhaddroppeddramaticallyfromaround$23millionto$14million.Ilaterunderstood
thatthisinformationcamefromtheoriginaldecisiontorecommendthe"optimisedlagoon"choiceto
MayorChasPoynter'scouncilinFebruary2004.Itwas,byfar,thecheapestoption.
AtnostagewasthelikelycostoftheWWTPeveranissuearoundmycounciltable.
Myview, andthat of allcouncillors, was that whatever itwould cost, itwould cost.We neededan
estimateforbudgetpurposesbutitwasthelesseroftheoverallexpenditureofaround$120millionon
theentirewastewaterseparationproject.
78|P a g e SeniormanagementexplainstheWWTPproject
Iwasdissatisfiedwiththeinitialmanagementbriefings.Iasked DeanTaylortoprepareareportfor
Council(inconfidence)inMarch2005toreviewtheWWTP,itsconstruction,timingandoperation.
Bynow,I'dbecomewaryoftheimpartialityofseniormanagementadvicetocouncil.
TherehadbeenunsatisfactoryexplanationsaroundinformationontheSarjeantArtGalleryextension
andtheforestryreceipts,unbudgetedcontractsbeingͼ1etforanupgradeofupperVictoriaAvenue,a
CodeofConductcomplaintbyaseniormanageragainstacouncillor,andmanagementresistancetoa
nilratesincreaseͲallofwhichmademequestionwhetherseniormanagementwasbeinggenuinely
openandcooperative.
DeanTaylordulypresentedhisreportontheWWTPinMarch2005.
Itwasstronglygearedagainstanydelayorinterruptionofexistingpolicyrelatedtothewastewater
project.Itsuggestedmajorgovernment,regionalcouncilandlocaloppositiontoanydelayandfinancial
costsinthehundredsofthousandsofdollars.Theseriskswerealsoemphasisedintheverbalreportsof
thechiefexecutiveColinWhitlockandthefinancemanagerDaveFostertothesame meeting.
Theredidnotexistthepoliticalappetitetochallengethisadvice.Returnedcouncillorsstronglyendorsed
theproject(CrsDonMcGregor,RayStevens,
Randhir Dahya,SueWestwood and Barbara Bullock) whilst newcouncillors lackedtheexpertiseor
experienceͲoftenbothͲtoproperlyquestionexpertandseniormanagementadviceandargument.
NoneofthegovernanceteamͲmyselfincludedͲcamefromatechnicalnorengineering background.
We were given no reason to doubt the conclusions reached and promoted by senior council
management.Namely,thattheoptimisedlagoondesignofMWH,consideredbypeerreviewers,and
endorsedbythecouncil'sengineeringleadership,wasthemosteffectiveandefficientchoicetomeet
thewastewatertreatmentneedsoftheWanganuicommunity.
AppointmentofDrDavidWarburton
ColinWhitlockhadservedovertwentyyearsinhisroleasthechiefexecutiveoftheWanganuiDistrict
CouncilandhadenjoyedastrongandcloseworkingrelationshipwithmypredecessorMayorChas
Poynter.
Itwasmyviewthatthecouncilhadbecometoocosyandinsular,hadrunoutofcreativeenergy,
andhadadoptedacostͲplusmentalityinitsdealingswithWanganui ratepayers.
Dr David Warburton was appointed to the role of chief executive and I supported that choice
becausehepossessedprivatesectorexperiencealongsidesolidengineeringcredentialsandrecent
experienceofchangemanagement.
Inaddition,DrWarburtonhadadoctorateinenvironmentalengineeringfromMasseyUniversitywhere
hehadalsoheldseniorlecturerpositions.Isawsuchacademicqualificationsasinvaluableinassisting
thecouncilthroughthenextphaseofthewastewaterproject.Thegovernanceteamagreed.
79|P a g e Newfacesintheseniormanagementteam
Dr Warburton set about reforming the organisation as was his brief. He flattened the management
structure of council, put a focus on improving customer and client service, started building inͲhouse
engineeringcapacity,andtookanactiveroleincreatingamoreresponsivebuildingconsentteam.
Wehaddailybriefings,usuallyaroundmidday.
AmongDrWarburton'sappointmentswereJulianRewetiasinfrastructuremanager,seniorengineer
RickGrobeckerandaheightenedroleforthencouncilengineerColinHovey.SometimesMrReweti
wouldaccompanyDrWarburtonforthedailymayoralbriefingsespeciallyifitrelatedtorelevantissues.
TheappointmentofDrWarburtonwouldalsoofferthepotentialofrevisitingtheWWTPconstruction,
astowhethertherightdecisionhadbeenreached.
AdvicethusfartoMayorandCouncilfromSeniorStaff
ItisimportanttonotethatALLseniormanagementadviceandpapersmadeavailabletomyselfand
districtcouncillors,forthefirsttwelvemonthsofmymayoralty,wereinsupportoftheexistingcouncil
policywithregardstobothstormwaterseparationandthedesignandconstructionofthewastewater
treatmentplant.
Inaddition,thebenefitsofhavingMWHasdesignengineersandprojectmanagers,wereextolled
byMrTaylor,MrMcGowanandMrWhitlock,inconversationswithbothmyselfandmycouncil
colleagues.
Itwasstatedprivately,andimpliedpubliclyatfullcouncilmeetings,thatanymisgivingswereunjustified.
Therightdesignandtherightdecisionshadbeenmade.
Anexampleofthisadviceistakenfromtheminutesof23March2005
"DeanTaylor,AssetsManager,reportedasfollows:
TheCouncilhasresolvedtonegotiatewithMWHLimited(MWH)todesignandprojectmanagethe
procurementofthenewWastewaterTreatmentPlant,whichistobeconstructedoverthenexttwo
yearsandlocatedneartheWanganuiairport.
MWHhavebeenselectedbecauseoftheirparticularexpertiseinsuchprojectsandalsobecausethey
have had a close involvement with us over recent years including the development of the
particulartreatmenttechnologywehaveselected."
In other words, Council governance was being told that MWH had the design expertise and the
experience to both design of the W WTP and project manage its construction. Thisadvice
waspersonallyreinforcedtomebyDeanTaylorandColin Whitlock.
Atnostagewereanypeergroupmisgivingsoroutstandingquestionsrelatedtodesign/operationofthe
projectedWWTPreportedtomeortothefullcouncil.Thiswasadesignandconstructionthathadthe
strongandsustained support of senior council management, who confirmed such when questioned
throughthegovernanceprocess.
80|P a g e TheOptimisedLagoonDesignͲanamendment
AftertheretirementsofColinWhitlockandIanMcGowan,andtheappointmentsofDavidWarburton
andKevinRossaschiefexecutiveanddeputychiefexecutiverespectively,Councilbegantosettle.A
newfinancemanagerJulianHarknesswasappointedandanewseniorengineerinRickGrobecker.
Theinfrastructurecommitteewasreceivingregularupdatesatitsscheduledmeetingsonthedesign
detailandconstructionprogressofthenew WWTP.
Theonlyissuebeingflaggedtothatcommitteewasa6Ͳ8weekdelayinconstructionandthepotential
fortheWanganuidistrictcounciltobeinbreachoftheHorizonsregionalcouncilresourceconsent.My
understandingwasthattheconsenttodischargewouldexpireon1July2007andtheplantwouldnot
beoperationalbythisdate.Ididn'tseethisasamajorissue:IdidnotbelievethatHorizonswould
prosecuteoveraconstructiondelayandneitherdidDavidWarburton.
Atsometimein2006,DavidWarburtonbriefedmeinmymayoralofficethattheWWTPdesigners
and project managers, MWH, had revised their earlier design and reduced the number of settling
pondsfortheWWTP.Thattheyconsideredthatthequalityoftheirdesignworkedjustaseffectively
withtwopondsinsteadof four.
DrWarburtonsaidthathedidnotconsiderthistobeafundamentalchangetotheoriginaldesign
concept, rather a matter of detail. His view was endorsed by Julian Reweti and Colin Hovey, in
subsequentorconcurrentbriefingsinmymayoraloffice.
Frommemory,IaskedthemtoprovidethesameinformationtoinfrastructurecommitteechairmanCr
DonMcGregor.CrMcGregorwasresponsiblefororganisingthemeetingagendafortheinfrastructure
committeeinconcertwithJulianReweti.
Ididnotpursueapeerreviewoftheamendeddesignforthreereasons.
First,thechangeswerenotconsideredbyseniormanagementorthecouncil’sseniorengineering
stafftobefundamentaltothedesignofthewastewatertreatmentplant.
Second,aswillbeillustratedlater,thecapacityforoverviewandreviewwasavailabletothecouncil
throughitsexistingrelationshipswithOpusandWorksInfrastructure.
Third,theamendmenthadtheimprimaturofthechiefexecutiveDrWarburton.Ihadnoreasontodoubt
hisjudgementonengineeringmattersespeciallyintheareaofenvironmentalengineering,forwhichhe
hadbeenawardedadoctorate.
The optimised lagoon amendments were relayed to the infrastructure committee in the formal sixͲ
weeklyupdatesbyJulianReweti.ItwasalsolikelytohavebeenconveyedtothefullCouncil(whowere
allmembersoftheinfrastructurecommittee)duringthedraftinganddeliberationsontheLongTerm
Council2006Ͳ2016CommunityPlan(LTCCP).
AroundthissametimeͲJune2006ͲDavidWarburtonappointedRickGrobeckerasaseniorengineer
anddeputyinfrastructuremanagerandhesubsequentlyattendedmostWWTPͲrelatedmeetings.
AtthefullCouncilmeetingof6June2006,DrWarburtonisrecordedasinforminghis
governanceteamoftheappointmentandͲ
81|P a g e "HeexplainedthattheCouncilshouldbeabletochallengeengineeringdesignsbyaninternalreview,
but that he was loathe to undertake external peer reviews of the Project due to the present
engineeringconsultancyarrangements."
I took that statement and similar briefings to mean that 'the Alliance' of Opus, MWH and Works
ConsultancywerestillprovidingengineeringoverviewasaresultoftheirexistingcontractswithCouncil.
Council'sviewofseniormanagement
ItwouldbefairtosaythatdespitethedifferingpersonalitiesandpolicyprioritiesaroundtheWanganui
districtcounciltable,allthirteenoftheelectedgovernanceteamhadcometotrustandrelyuponthe
adviceandinformationprovidedtous.
Simply,wehadnoreasontodoubteithertheinformationbeingprovidednortheprofessionalismofthe
seniormanagersprovidingit.
We had also come to trust our colleagues. Cr Don McGregor, as chairman of the infrastructure
committee, was anexperiencedcouncillorofsignificantmilitary backgroundandofunimpeachable
integrity.Hewasregardedbyallcouncil,includingmyself,asasafepairofhandswiththatmilitaryeye
for detail.
Dr Warburton'sengineeringbackground,especiallyashehadgainedhisdoctorateinenvironmental
engineering,alsoeasedmyinitialconcernsaroundthequalityofmanagementadvice.JulianRewetiwas
apersonableandapproachableinfrastructuremanagerandhispresentationstocouncilwerealways
concise,clearandconsistent.
Thestrengtheningofthecouncil'sinͲhouseengineeringcapacityalsoeasedany concerns.
Thedesignofthewastewatertreatmentplant
AsatthemiddleofJune2006,thegovernanceteamhadtheassuranceofnotonebuttwosetsofsenior
councilmanagementthatthedesignofthewastewatertreatmentplantwasrobustandthatitwould
provideWanganuiwiththecapacityforcurrenttreatmentandfuture growth.
That'sanimportantpointtomake:twosetsofseniordistrictcouncilmanagementͲquitedifferentin
skills,experienceandpersonalityͲendorsedandpromotedtheWWTPdesignasafittingendsolution
toour$120millionwastewaterproject.
AnyamendmenttothedesignoftheWWTPwasperceivedandmarketedasminor.Thedesignconcept
oftheWWTPplantwastheissuewithitsmixofaerobicandanaerobictreatments,theextensiveuseof
aeratormachinesandaseparateUVtreatmentfacility.
TheWWTPdesignhadbeenendorsednotjustbycouncilengineeringstaffbutexternalreviewerstoo.
Sostatedtwodifferentseniormanagementteamsintheirreportstothesamegovernanceteam.
82|P a g e Thewastewatertrade byͲlaw
Atthestartof2007,DrWarburtonandJulianRewetibriefedmethatthecouncilwouldrequireanew
byͲlawtodealwiththeexpectedtradewastesfromWanganui's'wet'industries.
Asexplained,therewasaconcernaroundbothvolume andcostings.The concerns were that the
untreatedtradewastemightcompromisethe
WWTP’sbiologicalcapacity.Inaddition,therewereconcernsaroundtherightpricetochargethewet
industriesforthetreatmentoftheirwaste.
IcanrememberbeingsurprisedthatthebyͲlawwasnecessaryandthatthisissuehadcomesonearthe
endconstructionoftheWWTP.IexpressedsuchtoDrWarburton.Hisreplywasthatthecouncil'sinͲ
house engineering team had been "crunching the numbers" and become concerned about the
plant'scapacitytoprocessallthecity'sindustrialwaste.
From memory, Cr McGregor and his infrastructure committee took policy responsibility for
overseeingtheformationofabyͲlawandanypublicconsultation.Therewasanelementofhaste
as to its formation and I noted the concern of senior management that this byͲlaw be
completedbeforetheplantbecameoperational.
Atthattime,theplantwasstill6Ͳ8weeksbehindinitsconstructionsoitappearedthatthestatutory
windowwasslightlyajartomeetallthenecessarydeadlineseveniftheHorizonsresourceconsent
mightneedtobeextended.
TheWWTPisopened
The localgovernment election cycle beganinJuly2007with nominations being opened for the
districtcouncil.
Therewerealsoanumberofcouncilcapitalworkseitherunderconstructionorbeingcompletedatthe
time Ͳ the wastewater treatment plant, the Splash aquatic centre, the ' soft water ' and aquifer
explorations,theWanganuiairportrefurbishment,theconstructionoftheriverfrontjettyandwalkway,
andthecompletionoftheUpokongarolandingjetty.
Seniormanagementreportedthattheirengineeringstaffwereworkingatcapacity.
InSeptember2007,Iofficiallyopenedthewastewatertreatmentplant.Itwasableakandgreydayand
anyguestswerepleasedtodoaquicktourofthefacilityandgetoutofthecold.Therewasageneral
senseofreliefthatWanganui'sriverwasnolongergoingtobecontaminatedwithsewageandindustrial
wasteandcouldberestoredasamajorrecreationalfocusforthecity.
Problemsstartalmostimmediately
ThefirstthatIbecameawarethattherewereproblemsatthenewwastewatertreatmentplantwas
after the October 2007 local government elections had been completed and I' d concluded my
morning talkback show from the Radio Live studio on Ridgway Street. I came down the stairs,
openedtheentrancewaytothestreet,andwasassaultedbytheodourofsewage.
83|P a g e Ididnotautomaticallyassumethatthenewtreatmentplantwasthecause.ImetwithDrWarburton,
mentionedthesmell(itwasnotdiscernibleinthecounciloffices)andhereturnedlaterthatafternoon
withJulianReweti.
Fromthatdayon,DrWarburtonreportedtomeonthedailyhealthoftheplant.Atthetime,wewerealso
experiencingasimilarlymalodorousproblem with Virginia Lake after it had been invaded by an algal
bloom.Ofthetwo,thelatterseemedthemorepressingandpersistentissue.
AsexplainedtomebyDrWarburtonandJulianReweti,theWWTPwasnotperformingproperlybecause
ofbothmechanicalandwetindustrydumpingissues.TheformerͲafailureoftheinstalledaeratorsͲwas
consideredtobetheprimarycause.
Aswasmygovernancestyle,Iensuredthatallcouncillorswerebriefedimmediately.
Iusedtodothisbyemail,directfrommymayoraloffice.Ithadthevirtueofalwaysbeingimmediate
and allowed councillors to answer any constituent queries without waiting for formal briefings at
formalmeetings.Believeitornot,itwasnotcouncilpolicytoemailcouncillorsbeforeIwaselected.
IalsoensuredthatthehealthoftheWWTPbecameafocusoftheseniormanagement'sreportingcycle
to the governance team. The smell from the plant could often be discerned at the entranceway to
Wanganuiairportandthatrathermilitatedagainstthenewvisitorandawarenessstrategythatwehad
developed.
What'stheproblemwiththenew WWTP?
ImustconfesstobecomingquiteagitatedattheunderͲperformanceofthewastewatertreatmentplant,
andexpressingsomefairlydirectviewstoseniorcouncilmanagement.
MyexpressedupsetfocussedonboththemultiͲmillioncostofaplantthatwasn’tworkingandthatͲin
termsofaestheticsandWanganui'sreputationͲithadactuallymadethingsworsethanbeforetheplant
wasopened.Idemandedremedialactionandmanagementpriorityinfixingtheproblem.
I'msureallofthegovernanceteamsharedmysentimentsandconcerns.
Aroundthecounciltable,therehadbeensomechangesinpersonnelsincethelastelection.CrGraeme
Taylor had resigned to become chief executive of theSports Foundation,CrSuePepperell hadleft
Wanganuiforcareerandpersonalreasons,CrMurrayHugheshadnotbeenreturnedbytheelectors,and
CrDonMcGregorwasreͲelectedbutunabletoservebecauseofterminal cancer.
NewcouncillorselectedtoreplacetheabovewerePhilippaBakerͲHogan,AllanAnderson,RanaWaitai
andRobVinsen.
Atthebeginningof2008,DrWarburtonalsoflaggedthathewouldbereturningtotheprivatesector
andwastobeappointedaschiefexecutiveofengineeringconsultantsDownerEDI.Heresignedin
June2008andthecouncilappointedhisdeputyKevinRosstothechiefexecutiverole.
Thecouncilreportsof2008detailtheongoingattemptsofseniormanagementtorectifytheillsof
theWWTP.
84|P a g e TheyreportexactlythesameinformationasIwasprivatelypresentedinmymayoralbriefings.Again,it
wasmyviewthatweshouldbeasopenandtransparentaspossibleandthereweremediareleases
andcouncilpublicationsthatsharedtheavailableinformationwiththewiderWanganuipublic.
SeniormanagementrepeatedlyreportedthesamecausesforanyfailingsoftheWWTP;namelythat
the aerators were either underͲpowered or poorly designed or unfit for purpose thereby
compromisingthebiologicalprocesseswithintheplant'sponds.
In turn, the governance team made the same demands of senior management: fix the problem as
quicklyaspossible.Wegavetheseniormanagementteamapprovaltoemployshortterm,mediumterm
andlongtermstrategiesandweeffectivelytoldthemtoforgetthelikelycosts.
Myinstruction(endorsedunanimouslybycouncil)was:Justgettheplantfunctioningproperlyand
wecanworryaboutwhoistoblame,andwhoisgoingtopay,afterwards.Onthatlatterpoint,the
likely expenses to repair and refurbish were anticipated to fall upon themanufacturersand
installersofthe aerators.
Julian Reweti would spend a good portion of time, every council and committee meeting, on
explaining progress to the governance team. His reports were often augmented by the verbal
contributionsofRickGrobeckerandsometimesColinHovey.
AsImentioned,DrWarburtonresignedaschiefexecutiveinMay/June2008andwasreplacedbyKevin
Ross.Ifanything,MrRosshadevenmorecredibilitywiththegovernanceteam,especiallythemore
experiencedcouncillors,becauseofhislongassociationwiththedistrictcouncilandstaff.
Eventuallythemoreimmediateproblemsofsmellandmalfunctioningequipmentbegantoabate.There
were occasional issues: again, senior management considered that both industrial dumping and
summerdroughtconditionswerechieflytoblame.
FortherestofmymayoraltermͲuntilOctober2010Ͳtheplantseemedtobeslowlyworkingitselfintothe
operationalcapacityforwhichitwasdesigned.
Butthemanagementandengineeringadvicetothegovernanceteamwasconstant:thatanyfailures
wereofequipmentandmachinery.
Therewasneverasuggestionthatthedesignoftheplantwasatfault.
Therewasneverasuggestionthatcouncilstaffhadimproperlymanagedthefacility.
AndtherewasnosuggestionthattheplantlackedthecapacitytocopewithWanganui'swastewater
needs.
WWTP 2010onwardsͼ
IsteppeddownfromtheWanganuimayoraltyinOctober2010andformerHorizonsregionalcouncillor
AnnetteMainwaselectedasmysuccessor.
Ms Main and myself are different personalities with different philosophies, principles, policies and
governancestyles.
85|P a g e Iservednoroleinthesubsequentcouncilbarbeinganordinarycouncillor.Thepaperspresented
tomeweremostlyinthepublicdomainandIhavelittleadditionalinsightfrom2010onwardsto
contributetotheinquiry.
However, it is important to note that, as a member of the wider governance team, I received no
indicationthattherewereongoingissuesattheWWTP.
Infact,thefirstIbecameawarewaswhenthestenchoftheplantwaftedthroughallofWanganuione
Sundayafternoon,and caused myselfandmychildren Ͳ playingonthe back lawnofour distant St
John'sHilladdressͲtoholdournosesandexclaimatthestenchthathadinvadedourhome.
Irememberthinking:dearLord,ifit'sthisbadthisfaraway,what'sitlikeclosertotown?
ThousandsofWanganuiresidentswouldsubsequentlysufferadiminishedqualityoflife,formonths
andmonthsafterwards,asaconsequence.Thateffectwillbelonglasting.
The anticipated cost of replacing the failed wastewater treatment plant is going to cripple the
council'sfinancesforyearstocome.Itwillreducecouncilinvestmentinnecessaryinfrastructure,
communityfacilitiesandcommunityservices.
Conclusion
ItstillstaggersmethattheWanganuiwastewatertreatmentplantfailed.
BecauseofthelegalpapersthatremainhiddenfromtheWanganuipublicandratepayers,Istillcannot
properly discern all the evidence as to why the plant failed. Whether the cause was a cataclysmic
designfaultorthecounciloperationoftheplantorsomecombinationofthetwoͲtheevidenceisnot
availableformetomakeafinaljudgement.
WhatIcansayͲhavinginheritedtheoriginalWWTPdesignandoverseentheconstructionprocessͲisthat
seniorcouncilmanagementattheWanganuiDistrictCouncilpresentedaunifiedandunwaveringview
thatthedesignconceptandthedesigndetailoftheWWTPwouldwork.
Anypotentialrisksconcentrateduponthecostsoftheproject,itstimingand itsresourceconsent
guidelinesͲnotitsdesign.
In addition, the peer group reviews did not state that the MWH design would not work. Their
contributionsseemedaroundoperationaldetailratherthanstatingtherewasafundamentalflawin
anotherwiseuntriedanduntesteddesign.
Three separate senior management teams Ͳ those led by chief executives Colin Whitlock, David
WarburtonandKevinRossandcomprisingexpertengineeringpersonnelͲendorsedandpromoted
theMWHdesignandblamedanylaterdeficienciesuponexternalcompaniesandcontractors.
Insuchcircumstances,thequestionsarerightlyposed.
Evenwiththebenefitofhindsight,whatcouldthegovernanceteamsledbyChasPoynter,MichaelLaws
andAnnetteMainhavedonedifferent?
Iftheoptimisedlagoondesignwassofundamentallyflawedthenhowcouldthosegovernanceteams
havediscoveredthaterror,giventheoverwhelmingsupportthatseniormanagementandengineering
professionalsindicatedfortheoriginalandamendeddesigns?
86|P a g e Finally, how could the governance teams have later discovered the fundamental design flaw in the
optimisedlagoonoption,whenalltheevidenceavailablemadeavailabletothegovernanceteamswas
thattheinadequateoperationoftheconstructedWWTPwasduetoaeratorandsubcontractorunderͲ
performance?
Ishallbefascinatedbytheinquiry'sreplies.
MichaelLaws
26August2016
5.9
DavidWarburton
DavidWarburtonwastheChiefExecutiveOfficerofWhanganuiDistrictCouncilfrom2005to2008,which
includedthepreandpostconstructionperiodsforthetreatmentplantbutnotforanysignificantperiods
oftime.ThefollowingquestionswereputtoDr.Warburtonon5August2016:
1. BasedonyourknowledgeandexpertiseatthetimeofyourcommencementwithCouncilin2005,
didyouholdanyconcernsorissueswiththeOptimisedLagoonTreatmentprocessdesignthat
hadbeenconfirmedbyCouncilinFebruary2004?
2. Toyourknowledge,howwereanyissuesandconcernsraisedbythePeerReviewPanelinlate
2004addressedbyMWHinthesubsequentdetaileddesignoftheOptimisedLagoonTreatment
plant? Are you aware whether they were adequately addressed and whether any advice was
providedtoCouncilbystaffinthisregard?
3. Wasthewastewaterprojectbudgetsizedcorrectlytodeliveraviabletreatmentoutcomeinyour
opinion?Doyoubelievestaffheldanyperceptionsthattheyhadtodeliveralowercostoption?
4. Fromyourexperience,doyoubelievethatCouncil’sinternaltechnicalandengineeringstaffhad
therequisiteknowledgeandexpertisetoadequatelycontractmanageCouncil’sexternaltechnical
andengineeringconsultantsonthetreatmentplantproject?
5. Please describe how Councillors were informed by staff of the operational difficulties at the
treatmentplantaftertheplantcommencedin2007andupuntilyourdeparture.WereCouncillors
adequatelyinformedbystaffofthenature,extentandcauseofthesedifficultiesinyouropinion?
6. DidyoubrieftheMayorontheplant’soperationaldifficultiesin2007and,ifso,whatwasthe
natureandextentofthosebriefings?
Response:Dr.Warburtonrespondedbyemailon10August2016anddeclinedtomakeasubmission.
87|P a g e 5.10 JulianReweti
Julian Reweti was employed at Whanganui District Council from 1993 to May 2012, including as
InfrastructureManagerfrom2007onwards.ThefollowingfivequestionswereputtoMr.Rewetion5
August2016andhiswrittenresponsestoeachquestionreceivedon12August2016aresetoutbelow:
1. Wasthewastewaterprojectbudgetsizedcorrectlytodeliveraviabletreatmentoutcomeinyour
opinion?Doyoubelievestaffheldanyperceptionsthattheyhadtodeliveralowercosttreatment
plantoption?
Response: The budget was determined and indicated to Council prior to 2007. Construction was
completedin2007.Itwasmyunderstandingthatthewastewaterworkingpartyalwayswantedthelowest
costͲ effective design and had recommended options which were considered viable. The Resource
Consentsthatwereapprovedwerefundamentallybasedonthedesignoptionsoftheworkingparty.The
treatmentoptionsrecommendedandpreferredbythewastewaterworkingpartywerealwaysadvisedby
theconsultantsasaviablesolutions.Oncethedesignwasfinalised(basedontheworkingpartyoption),
itwasfurtherbeingrefinedbefore2007.Atonelaterstagehoweverpriortoconstruction,thestaffasked
the consultant if it was possible to marginally INCREASE the size of the plant (ie higher cost) so as to
potentiallytakeslightlymorestormwater.Thiswouldallowpotentialreductionordelayofstormwater
pipelineseparationandhencecostsintheCity.Theconsultantadvisedthatthiswaspossibleandhence
theplantpondwasmadebiggerindesignpriortoconstruction.AreportwenttoCouncilonthismatter
whichwascalledtheoptimisedsolutiontakingintoaccountseparationworks.Hence,inmyview,the
workingpartyhaddeterminedtheoptionsandhadverymuchsetinplacetheactualoutcomeandcosts
that followed to be constructed. The plant was made bigger and hence cost increased to potentially
accommodatemorestormwaterand/orprovidealargerbuffer.
2. Did the plant operations staff provide adequate and timely reports to management, including
yourself,oftheoperationaldifficultiesthatoccurredfrom2007onwards?
Response: This question covers a number of years and is not a singular issue nor event. There were
significant operational difficulties immediately after construction. This started with major mechanical
issuesofaerationandaeratorsfailing.Theabilitytoremedythiswassignificantandultimatelyrequired
completeoverhaulandreplacementoftheaeratorsandlengthyanddifficultsuppliercontractresolution.
(thiswasnotashortperiodoftime,approx.2years).Management,Council,andRegionalCouncilwere
fullyinformedaboutthisduringandthroughtheaeratorreplacementandrepair,astheplantwasnot
abletobe“tested”andanyoutputsoftheplantweremeaninglessatthattime.Theplantcouldnotbe
tested as to performance as the major mechanical system had failed which required repair and then
subsequently,becauseoftiming(winterandmuchlowerloads)theongoingprocessissuestookmuch
longertobecomesignificantlyapparent.Therewereinitialindicatorsandthestartsofcomplaintsofsome
odourearlyon,butittookafewseasonsbeforeitwasbecomingapparentthatodourandoperational
issues were increasing but only initially during hot weather and what was thought may have been
increasingindustryloads.Onceawinterseasoncameagaintheissuesappearedtoreduce,butnottotally.
Asoperators,aftertheaeratorswerefinallyreplaced,andonlyafterpeaksstartedtooccur,thatactually
starting the long process of plant performance was possible. It was initially assumed that aeration
difficultiesandindustryloadswerekeymattersforthedevelopingissues.
88|P a g e 3. Please describe how Councillors were informed by staff of the operational difficulties at the
treatmentplantaftertheplantcommencedin2007andupuntilyourdepartureinMay2012.
WereCouncillorsadequatelyinformedofthenature,extentandcauseofthesedifficultiesinyour
opinion?
Response: Aeration matters were part of Council reports, and discussions with Regional Council.
Subsequently,afewseasonsonfromconstructionandintermittentodourbecameanissue,therewere
dailymediareleaseswhichwenttoallCouncillors.Thislastedgenerallyforthedurationofanevent(and
generallynotinwinter).Councilreportshadregularsectiononwastewatertreatmentissues.Councillors
wereawareasoperationalstaffwereawareoftheissues.Theissueshowever,wereintermittentafter
theaerationwasrepaired(afteracoupleofyears)andwerenotatthesamescalethatwasobviously
experiencedafter2012.Thefundamentalissuessurroundingaerationandindustryloadswereacommon
theme,however,during2011Ͳ2012theinabilityofoperationstoremedytheseatanoperationallevel
meantwelookedtoalternateconsultantadvicetotryandremedymatters.Thatadvicehoweverstarted
tohighlightamuchgreaterconcernthatquestionedthefundamentaldesign.IhadleftCouncilpriorto
the same consultant shortly thereafter being more fully commissioned by staff to provide this
fundamentalassessment.
4. DidyoubrieftheMayorontheplant’soperationaldifficultiesfrom2007onwardsand,ifso,what
wasthenatureandextentofthosebriefings?
Response:Asperabove,theMayorrequireddailyreportswhichwerewidelycirculated(andasmedia
releasesaswell)foreventsandwhatactionswerebeingtaken.PlusreportstoCouncil.
5. AreyouawareofanyevidencethatthewetindustriesaddednonͲconsented,excessiveornonͲ
permittedinputsintothetreatmentplantthatmayhavecontributedtoitsinabilitytofunction?
Response:Fromrecollection,oneindustryhaddumpedeithermilkandanotherindustryhaddumped
acidofsomesort,whichaddedtothedifficultyofoperationsanddeterminingplantperformance.The
staffhadoncenoticedthatthemachineswereshinyinthewetwellsofBeachRd(almostanacidclean).
Wesubsequentlyinstalledwarningsystemsinthewellareastoprotectouroperators.Operatorsduring
thesetimesvisitedindustriestotryandassesstheiroperationsandtalkwiththeiroperatorstominimise
impactsonthetreatmentplant.However,theseproblemswereintermittentanddifficulttobeconclusive.
Thewastewaterindustryconsentshadbeeninplacebutsincetheplantdidnotperformintheearlydays
ofaerationfailureanyway,substantialtimepassedbeforeindustrywasstartedtobescrutinisedinterms
ofcompliancesense other than ouroperatorsregularly visitingtheir sitestoensure basicoperational
housekeepingwasbeingdone.Priortomydeparturetheseconsentswerebeingmorecloselyscrutinised.
However,myobservationwasthatthewastewatertreatmentplantwasbecomingmoreoperationally
difficultafteraerationhadbeenrepaired(2yearsafterconstruction)inoffpeaktimeswhenloadswere
notconsideredexcessive.Thesystemwasprogressivelyworseningbutstillhadn’treachedthedifficulties
thatwereobviouslyexperiencedafter2012.
89|P a g e 5.11 KevinRoss
Kevin Ross was the Chief Executive Officer of Whanganui District Council from 2008 until 2015. The
followingquestionswereputtoMr.Ross,whorespondedtotheemailsenttohimon3August2016and
advised he would be travelling to remote areas in South America and returning to Whanganui in
September2016.Mr.RossreturnedtoWhanganuijustintimetomakeanabbreviatedsubmission,which
issetoutbelow:
1. Pleaseexplainhowplantoperationsstaffprovidedreportstomanagementoftheoperational
difficultiesthatoccurredattheplantfrom2007to2012.Wasthereportingadequateandtimely
inyourexperience?
2. Who was responsible for reporting any significant operational difficulties and breaches of
resourceconsenttoHorizonsRegionalCouncil?
3. Please describe how Councillors were informed by staff of the operational difficulties at the
treatmentplantaftertheplantcommencedin2007upuntiltheendof2012.WereCouncillors
adequatelyinformedbystaffofthenature,extentandcauseofthesedifficulties?
4. DidstaffregularlybrieftheMayorabouttheseoperationaldifficultiesbetween2007and2012?
5. AreyouawareofanyevidencethatthewetindustriesaddednonͲconsented,excessiveornonͲ
permittedinputsintothetreatmentplantthatmayhavecontributedtoitsinabilitytofunction?If
so,pleasedetail.
Response:
YouhaveaskedformyrecollectiononhowtheCouncilpoliticianswereinformedbystaffofoperational
difficultiesattheTreatmentPlantfrom2007until2012.
From 2007 untiltheendof2012myrecollectionis thatthenormal monthlyreportingpracticeswere
followedforallupdatesontheoperationofthenewWastewaterTreatmentPlant.
Obviously the Mayor and Chairman of the relevant Committee would have been briefed on any
infrastructuralissuebytheManagerresponsibleforWastewaterandthenCouncillorsinformed,eitherby
the normal monthlyreport,orby a separatereportonanyparticularissueshould onebewarranted.
BearinginmindthiswasahugeinvestmentforWhanganui,interestinprogresswassignificant.
Frommyrecollectiontherewerealwaysissuesarisingfromtheoperationofthenewplant,butatno
stage did we (management), ever contemplate that the new plant had the potential to suffer a
catastrophicfailure.Consequently,theCouncilengineeringteam,withthesupportoftheprofessional
designers,werefocussedonaddressingtheinitialteethingproblems.Theaeratorissuethatarosealmost
immediately undoubtedly focussed the team on resolving that problem. As time went on, biological
expertisewassoughttosupplementtheadvicebeingprovidedbyMWH.Tomyknowledge,alltheissues
and potential solutions were reported through the normal Council committee rounds or through the
Annual/LongTermplanningrounds.
Both with Mayor Michael Laws and Mayor Annette Main there was a clear "no surprises" culture
promotedwithintheorganisation,soIseenoreasonwhyanysignificantinformationwouldhavebeen
deliberatelywithheldduringthisperiod.
90|P a g e 5.12 RickGrobecker
RickGrobeckerwasemployedatWhanganuiDistrictCouncilduringtheperiodof2006toJuly2009,which
includedbeingDeputyInfrastructureManagerfrom2008to2009.Thefollowingquestionswereputto
Mr.Grobeckeron5August2016:
1. Did the plant operations staff provide adequate and timely reports to management, including
yourself,oftheoperationaldifficultiesthatoccurredfrom2007onwards?
Response:ThecommissioningoftheWWTPcommencedinJuly2007oncetheeffluentdischargefrom
Beach Rd began to be pumped to the treatment plant. The "failure" of the Tornadoes[aerators] to
performtospecificationwasidentifiedduringtheconstructionphaseͲpreJuly07Ͳthistogetherwith
theinitial"foaming"and"lackofsettlement"issuesͲpostJuly07Ͳwasreportedatthetime.Idon'trecall
anyformalreport(s)fromtheplantoperatorstomyself,butasIwasworkingcloselywithMWHonthe
deliveryoftheWWTP,Iwasalreadyawaretheissuesthattheywereencountering.
2. Who was responsible for reporting any significant operational difficulties and breaches of
resourceconsenttoHorizonsRegionalCouncil?
Response:IbelievethattheWWTPwasnotabletocommenceitsformalcommissioningphaseuntilJuly
2009(postTwisterinstallation)andthedeliveryofthedesignaerationcapacity.Collectionofdatafor
ResourceConsentcompliancewasundertaken.Idon'tknowwhowasdirectlyresponsibleforproviding
informationtoHorizons.Reportsmayhavegoneoutundereithermyor[InfrastructureManager’s]name.
IdorecalltakingHRCaroundtheplantwhilstwewereencounteringourdifficultiesandadvisingthemof
themeasuresweweretakingtoaddressissues.
3. Please describe to the best of your knowledge how Councillors were informed by staff of the
operationaldifficultiesatthetreatmentplantaftertheplantcommencedin2007andupuntil
yourdeparturein2009.WereCouncillorsadequatelyinformedofthenature,extentandcauseof
thesedifficultiesinyouropinion?
Response: I believe Council / Councillors were kept informed, or had the facility to be kept fully
informed,viatheActivityReportingprocess.
4. AreyouawareofanyevidencethatthewetindustriesaddednonͲconsented,excessiveornonͲ
permittedinputsintothetreatmentplantthatmayhavecontributedtoitsinabilitytofunction?
Response:IwasmadeawareofoccasionalblockagesatBeachRdͲprobablycausedby"excessiveinput"
ratherthan"nonͲconsented"effluent.
91|P a g e 5.13
PhilGilmore
PhilGilmoreisalongͲtimeCouncilemployee,commencingin1984,andSeniorWasteWaterOperator.
ThefollowingquestionswereputtoMr.Gilmoreon5August2016:
1. Pleaseexplainhowplantoperationsstaffprovidedreportstomanagementoftheoperational
difficultiesthatoccurredattheplantfrom2007onwards?
2. Who was responsible for reporting any significant operational difficulties and breaches of
resourceconsenttoHorizonsRegionalCouncil?
3. AreyouawareofanyevidencethatthewetindustriesaddednonͲconsented,excessiveornonͲ
permittedinputsintothetreatmentplantthatmayhavecontributedtoitsinabilitytofunction?
Response:Mr.Gilmoredidnotrespondtothequestionsputtohim.
5.14 MayorAnnetteMain
AnnetteMainhasbeenMayorofWhanganuiDistrictCouncilsince2010.Thefollowingquestionswereput
totheMayoron5August2016andherresponsesaresetoutbelow:
1. Please describe how Councillors were informed by staff of the operational difficulties at the
treatmentplant during your period as Mayor andupuntilthe endof2012. WereCouncillors
adequatelyinformedbystaffofthenature,extentandcauseofthesedifficultiesinyouropinion?
Response:Withoutgoingthroughtherecordsofthattime,Idonotrecallbeingadvisedofoperational
difficultieswiththeoperationoftheplantfromwhenIbeganinOctober2010butintheyearpriortothe
finalfailureCouncilreceivedregularupdatesontheproblemsandthemethodsbeingusedtoensurethe
plant functioned. We were kept well informed on progress, including the implementation of actions
suggestedinareferencedreportreceivedbyCouncil.Ireadthereferencedreportatthetime.Irecall
beingverysurprisedtohearthatthereportsasrequiredbytheRegionalCouncilhadnotbeenprovided
andaskedwhythishadnotbeenraisedwithCouncilbytheRegionalCouncil.Whentheplantfailedover
theholidayperiodIwasnotsurprisedasitwasclearfromtheupdateswewerebeingprovidedwiththat
theproblemswereinsurmountable.
2. Withhindsight,doyoubelievethatCouncillorsuptotheendof2012hadbeensufficientlyrobust
inexercisingtheirgovernancefunctioninrespecttostaffmanagementofthetreatmentplant
project?
Response:WereceivedthereportsregularlybutIdoknownowthattherewasinformationwecould
havebeenprovidedwithwhichraiseddoubtabouttheabilityoftheplanttoperformbeforeitwasbuilt.
Thisbackgroundwouldhaveassistedinknowingwhattoaskasanewcouncillor.
IbelievetheCouncilhasstruggledtounderstandtheadviceonwhytheplantfailedwhenitdidwhile
beingbombardedwithconflictingviewsfromthosewithvestedinterests.
Theviewthatsomecouncillorsheldthattheyknewbetterthanstaffbecameincreasinglyobvious,making
itdifficultforotherstolistenimpartiallytotheadviceofstaff.
92|P a g e 5.15 ArnoBenadie
ArnoBenadieisacurrentemployeeofCouncilwhocommencedasSeniorWastewaterEngineerinearly
February2010.ThefollowingquestionswereputtoMr.Benadieon8August2016andhisresponses
receivedon23August2016aresetoutbelow:
1. Pleaseexplainhowplantoperationsstaffprovidedreportstomanagementoftheoperational
difficultiesthatoccurredattheplantfromthetimeofyourcommencementinFebruary2010and
onwards?Wasthereportingadequateandtimelyinyourexperience?
Response:TheMWHdesignedtreatmentplantwasdesignedandsoldtoCouncilasastandͲaloneprocess
withminimaloperatorandhumaninputnecessary.InrealitythiswasnotthecasewhenIstartedworking
at Council in February 2010. The staff members employed to operate the city networks, small pump
stationsandBeachRoadpumpstationwerealsotaskedwithoperatingthenewtreatmentplant.The
largenumberofmanͲhoursrequiredtomaintainandoperatetheMWHplantcausedproblemswiththe
limitedstaffavailabletocoverallwastewaterrelatedduties.
Sincetheopeningofthetreatmentplantin2007,theoperatorshadtospendunrealisticandunreasonable
hourstryingtomaketheplantperformbetterandtryingtofinallycomplywithourresourceconsents.
Thereportingtomanagementwashappeninginoneofthefollowingways:
x
x
x
x
x
x
x
DailyverbalreportsfrommyselftotheDeputyInfrastructureManager
WeeklyreportsattheInfrastructureManagementmeetings.
MonthlyreportstotheInfrastructureManager.
QuarterlyWDCKPIsperformancerecordedonourKPIsystem.Theseresultswerereportedtothe
SeniorManagementTeamonaQuarterlybasis.
ReportingofimportantissuesintheannualplanandtheLongTermPlan(10yearplan).Allthese
planswerereadandapprovedbyCouncil.
AssetManagementPlans
AnnualchecksbytheAuditorGeneralforourannualaudit.TheperformanceoftheMWHplant
wasachallengefortheauditorsandeveryyeartheyhadmanyquestionsabouttheperformance
oftheplant,theconsentbreachesandtheplanstofixtheproblems.Allofthiswasreportedto
SeniorManagement.
2. Who was responsible for reporting operational difficulties at the plant to the Mayor and
Councillors?
Response:ItwastheresponsibilityoftheInfrastructureManager.
3. Who was responsible for reporting any significant operational difficulties and breaches of
resourceconsenttoHorizonsRegionalCouncil?
Response: This question attracted a lot of attention in 2012 when the MWH plant finally failed. The
annualConsentReportisasummaryreportonthecompliancewithalltheconditionsoftheConsent.This
includesallconsentconditionsincludingasummaryreportoftheeffluentqualitymonitoring.Adetailed
investigationofbothWanganuiDistrictCouncilandHorizonsRegionalCouncilprocessesshowedthatthe
93|P a g e annual Consent reports were not sent to Horizons due to administrative errors made by both
organisations.
SincethestartͲupoftheplantin2007,anduptothefailureoftheplantin2012,onlyoneannualconsent
reportwassenttoHorizonsRegionalCouncil.HRChowevercompletedalltheirannualsitevisitsandonͲ
sitediscussionswithoperationalstaffduringthistimeperiod,andwasawareoftheoperationaldifficulties
andpoorperformanceoftheplant.
4. AreyouawareofanyevidencethatthewetindustriesaddednonͲconsented,excessiveornonͲ
permittedinputsintothetreatmentplantthatmayhavecontributedtoitsinabilitytofunction?If
so,pleasedetail.
Response: At the time when the plant failed, the monitoring of the wet industries were done in
accordancewiththe2008tradewastebylaw,andinaccordancewiththeagreedtradewastemonitoring
methodology that accompanied the trade waste charging model. According to the agreed monitoring
methodology,allwetindust6rieswassampledfor10workingdaysatatimeoverfoursamplingperiods
peryear.Theideawiththefoursamplingperiodswastocapturethechangingseasonalnatureofsome
ofourwetindustries.Unfortunatelythisformofmonitoringdidnotallowustorecordallindustrialloads
deposited into our system at all times of the day and night, and as such we do not monitor all load
variationsatalltimes,otherthantheloadsproducedduringthefoursamplingperiodsperyear.
Since then we have improved the monitoring of our wet industries, and today we have 24/7 online
monitoringatallthelargeindustrialeffluentpoints.TheonlineequipmentisconnectedtoourSCADA
system,andthedatarecordedonadatamanagementsystem.Notwithstandingtheimprovementswe
have made to date, the monitoring of the industrial effluent is still a challenge with the monitoring
equipmentsubjecttotamperingandthirdpartyinterferences.Inanefforttoovercometheseproblems,
we are planning on making further improvements with the installation of new, dedicated effluent
monitoringstationsforeverywetindustry,beforethecommissioningofthenewplant.
5.16 MarkHughes
Mark Hughes is the current General Manager of Infrastructure at Council who commenced as
InfrastructureManager inJuly2012shortlybefore thefailing treatmentplantceasedoperations. The
followingtwoquestionsputtoMr.Hugheson8August2016andhisresponsesreceivedon16August
2016aresetoutbelow:
1. Basedonyourpriorknowledgeandexperience,pleasedetailyourassessmentoftheviabilityof
thetreatmentplantfollowingyourcommencementinJuly2012.
Response:IcommencedworkingforCouncilonthe23rdJuly2012.DuringAugust2012Iwasmadeaware
ofcomplaintsfromthepublicofodouremanatingfromthewastewatertreatmentplant.Onenquiry,it
wasapparentthattheodourhadbeenanissuewiththeplantfromwhenitfirststartedin2007.
Furtherenquiryrevealedthatthebiologicalperformanceoftheplantwassubstandard.Ithadfailedto
meetitsResourceConsentconditionsinanyandeveryyearsinceitstartedoperating.
AnanalysisofthelatestperformanceindicatorsforthequarterendingJune2012,showedthatdespite
thisperiodbeingoneoflow(offpeak)loadsthat:
94|P a g e x
x
Theplantwasbypassedarecorded13%ofthetimei.e.thewastewaterwaspumpeddirectlyout
toseainsteadoftotheplantfortreatmentfirst.
Despitethelowloads andtheamountofbypassingitstillfailedtocomply withitsResource
ConsentConditions61%ofthetime.
Historically,therehadbeenissueswiththeplantaeratorsandthesehadbeenreplaced.However,the
dataindicatedthatfollowingtheirreplacementin2009,theapparentimprovementinperformancewas
accompaniedbyalargeamountofbypassingandaperiodoflowload.
A“commissioning”reportpreparedinearly2010,afterthenewplantaeratorswereinstalled,failedto
commissionthebiologicalprocess.
Visuallytheplantwasshowingsomeveryworryingsigns.Theaeratorsweredragginglargeamountsof
sludgefromwithinthepondtothesurfaceandindeedthrowingitintotheair.Otherareasofthepond
were sparging (releasing large amounts of gas into the surface from within its sludge). Both causing
significantodourissues.
TheviabilityofthisplanthadtobeseriouslyquestionedandthisconcernwascommunicatedtotheChief
ExecutiveandCouncilduringSeptemberandOctober2012.
2. AreyouawareofanyevidencethatthewetindustriesaddednonͲconsented,excessiveornonͲ
permittedinputsintothetreatmentplantfrom2007onwards?Ifso,inyouropinionwouldthis
factorhavecontributedtotheplant’sinabilitytofunction?
Response:Thewetindustrieshadandcontinuedtoperiodicallysendexcess/nonpermittedloadstothe
plant.Thesewereusuallyofshortdurationandwereattributedtoeithermanagementormechanical
failuresatthesourceindustry.Awellperformingplantcouldhavebeenabletoabsorbandrecoverfrom
theseloadsrelativelyquickly.However,giventheperformanceoftheexistingplantwassopoor,there
waslittlechanceofrecoveryandtheseloadsexacerbatedthenonͲcomplianceandodourissues,theydid
notontheirowncausethem.
95|P a g e 5.17HorizonsRegionalCouncil
HorizonsRegionalCouncilistheenvironmentalregulatorforWhanganuiDistrictCouncil.Thefollowing
threequestionswereputtoHRCon8August2016anddiscussedatatelephoneconferenceon10August
2016.Horizonsrespondedwithalengthydetailedsubmissionaddressingthequestionson26August2016
andthisissetoutinfullbelow:
SubmissionfromHorizonsRegionalCouncil
Introduction
TheWhanganuiDistrictCouncil(WDC)hasinitiatedanindependentreviewintotheprocessesfollowed
byitinrelationtothewastewatertreatmentplantfortheperiod2003to2013.
AspartofthisindependentreviewHorizonsRegionalCouncilhasbeeninvitedtorespondtoanumber
ofquestions.
Thepurposeofthismemorandumistorespondthequestionsraisedintherequest.
GeneralComments
PriortorespondingtothequestionsraisedintherequestIthinkitisimportanttomakethefollowing
generalcomments:
1. ThenatureandscaleoftheWWTPfailurewouldnothavebeenidentifiedviathecompliance
monitoringprogrammeassociatedwiththeresourceconsent.Theconditionsofconsentare
settocontroltheenvironmentaleffectsassociatedwiththeWWTPasopposedtomeasuring
operationalperformance.
2. Asaregulator,Horizonsroleistoensuretheenvironmentaleffectsassociatedwithactivities
areappropriate.Horizons,doesnotlookatthedesignofWWTPandhowtheyareoperated.
3. SincetheWWTPbecameoperational,therehavebeennonͲcomplianceissues.Horizonsinitial
approachwastorecordthesenonͲcompliancesandensurethatWDCwasmakingattemptsto
resolvethenonͲcompliantissues.UponcomingawareofthefundamentalfailureoftheWWTP
and the consequential serious environmental effect in relation to objectionable odour
Horizonstookmoreformalenforcementaction.
Question1
WasHorizonsRegionalCouncilnotifiedbytheWhanganuiDistrictCouncilofanybreachesoftheterms
ofitsresourceconsentcoveringtheoperationofitstreatmentplantafteritbecameoperationalin2007.
If so, please detail the nature of any such notification and any action taken by Horizons as a
consequenceofanybreaches.
96|P a g e Resourceconsent101706hastwoconditionsthatrequireWDCtonotifyHorizonsintheeventofanonͲ
compliance,namelyconditions13(a)and23.Theseconditionsaredetailedbelow.
Condition13(a)
ThePermitHoldershallreportanynonͲcompliancewiththeconditionsonthesePermitstoManawatuͲ
Wanganui Regional Council Environmental Protection Manager within 10 working days of the nonͲ
compliance. That report shall detail the steps that have been taken to remedy the nonͲcompliance,
whetherfurtherremedialworkisnecessaryandwhatchangestothemonitoringfrequenciesoutlined
underConditions11,12and13willoccurasoutlinedunderthoseconditions.
Condition23
ThePermitHoldershallreportanynonͲcompliancewiththeconditionsonthesePermitstohorizons.mw
TeamLeaderCompliancewithin10workingdaysofthenonͲcompliance.Thatreportshalldetailthe
steps that have been taken to remedy the nonͲcompliance, and whether further remedial work is
necessary.
TheWWTPhas,onanumberofoccasions,failedtocomplywiththeconditionsofitsresourceconsent
sinceitbecameoperational1.InformationinthefileindicatestheprimarysourceofnotificationofnonͲ
complianceshasbeenviatheAnnualReport,whichisrequiredtobeprovidedtoHorizonsbecondition
24. Information in the Annual Reports identified onͲ going issues with WWTP performance and
continued nonͲcompliance with those conditions that related to Total Suspended Solids (TSS) and
enterococciconcentrationsinthedischarge2.
ItisclearfromthefilethatWDChaveconsistentlyfailedtonotifyHorizonsaspertherequirementsof
conditions13(a)and23.FailuretonotifyHorizonsasrequiredbytheseconditionshasbeenrecorded
invariousreportstoWDC.
Question2
IsHorizonsRegionalCouncilawareofanyfailurebytheWhanganuiDistrictCounciltocomplywithits
reportingobligationstoHorizonsregardingtheoperationofitstreatmentplantfrom2007onwards?If
so,pleasedetailthenatureofanyfailuretoreportandanyactiontakenbyHorizonsasaconsequence.
AsnotedabovetheWWTPhasconsistentlyfailedtocomplywithTSSandEnterococciconcentrations
intheresourceconsent.ItisclearthatWDCfailedtoreportthesenonͲcompliancesasperconditions
13(a)and23,butratherseemedtorelyonreportingthisinitsAnnualReport.Theonlyexplanation
givenbyWDCwasthat“theplanthasalwaysbeennonͲcompliantandthishasbeendiscussedwithHRC
since2007”3.Itappearsthat,givenHRCwereawareofthenonͲcomplianceissues,WDCdidnotbelieve
itneededtoreportnonͲcomplianceasperconditions13(a)and23.
97|P a g e Secondly, WDC failed to provide Annual Reports for the 2011 and 2012 reporting years. The only
explanationinrelationtothisnonͲcompliancewasthatwhistthereportswereprepared,duetoan
administrativeerror,theywerenotsenttoHorizons4.
On5October2012WDCadvisedHRCtheWWTPwassignificantlynonͲcomplyingacrossabroadrange
ofconditions.ThiswasthefirstnotificationHRCreceivedthattherewasaseriousongoingissuewith
theWWTP.
InrelationtoWDC’sfailuretocomplywithitsreportingobligations,Horizonshasnottakenanyformal
enforcement action. However, Horizons was advised of steps being considered to improve the
performanceoftheWWTPduringtheinitialstagesofitsoperation.Horizonstookformalenforcement
actionwhenitwasadvisedtheWWTPhadfundamentallyfailedanditwasevidentthiswashavinga
significantandonͲgoingeffectontheenvironment.
Question3
What was the process followed by Horizons Regional Council for monitoring Whanganui District
Council’scompliancewiththetermsofitsresourceconsentcoveringtheoperationofthetreatment
plantfrom2007onwards?
HRC takes a risk based approach to assessing compliance with resource consents. Accordingly the
compliance monitoring programme is based around key factors, including risk to environment,
compliance history, complexity of resource consentconditionsand public interest. Based on these
factorsasiteisgivenacategorybetween1and5,with1beingthehighestcategoryanda5beingthe
lowestcategory.
Between2008and2012theWDCwasclassifiedasCategory2site.DuetotheseriousonͲgoingissues
theWWTPwasreclassifiedasacategory1sitein2013.Theserespectiveclassificationsmeantthesite
wassubjecttoanumberofcomplianceassessmentsthroughouttheyear,includingsiteinspections
andreviewingtheAnnualComplianceReport(ACR)requiredbycondition24.
Whenassessingcompliancewithconditionsofconsent,theseassessmentscanbedividedintovisual
andnonͲvisualassessments.Visualassessmentsrelatetothoseconditionsthatcanbeassessedbythe
nakedeye,ornose(e.g.forodour),whilstnonͲvisualassessmentsrelatetoassessingconditionswhich
requirescientificanalysisorprovisionofreports.Sincetheinceptionofresourceconsent101706,the
WWTPhasbeensubjecttoacombinationofvisualandnonͲvisualcomplianceassessments.
FromreviewingthefileitiscleartherewerenumeroussiteinspectionsundertakenoftheWWTPitself
(thesearesummarisedinAppendix1).Thepurposeofthesesiteinspectionswastoassesshowthe
WWTP was complying with those visual conditions, which typically relate to odour and colour of
discharge.Itwasalsoanopportunitytoidentifyotherfactorsthatmayeithercontributeto,orleadto
anonͲcompliance(e.g.colourofthepond,lackaeratorsetc)
DesktopassessmentswerealsoundertakenonceAnnualReportswereprovided.Asnotedabovethere
wasaperiodoftwoyears,whichcoveredthe2011and2012reportingperiods,whereWDCfailedto
98|P a g e providetherequiredAnnualreports.ThesereportswereprovidedtoHorizonsonoraboutNovember
2012,wheretheyweresubsequentlyassessed.
UponbecomingawareofthefundamentalfailureoftheWWTP,Horizonsinitiatedformalenforcement
action.ThiscommencedwiththeissuingofaformalwarningandculminatedintheEnvironmentCourt
issuinganEnforcementOrderonWDC.
InJunethisyearHorizonsgrantedWDCashortterm(threeyear)consentauthorisingthedischargeof
preliminarytreatedwastewaterintotheCMA.Insummarythisconsentprovidesapathway,bywhich
WDCmusthaveanoperationalWWTPthatcomplieswiththeconditionsofresourceconsent101706.
HorizonsfocusoverthenextthreeyearswillbetoensurethatWDCcomplywiththeprovisionsofthis
shorttermconsent.
Summary
FromreviewingthefileitiscleartherehavebeenfailingsbyWDCtocomplywiththeprovisionsofits
resourceconsent,particularlyinrelationtonotificationofnonͲcompliances.WDCexplanationfornot
complyingwiththenotificationconditionsoftheconsentisthatHorizonswereawareofattemptsto
addressthem.Thiswasparticularlythecasebetween2007and2010,whentheAnnualReportswere
providedtoHorizons.FailuretoprovidetherequiredAnnualReportsoccurredduetoadministrative
errorsonbehalfofWDC.
The WWTP has been subject to a number of visual and nonͲvisual assessments since 2007. These
assessmentshaveidentifiedonͲgoingissueswithcompliance,whichtypicallyrelatetofailuretocomply
withTSSandEnterococciconcentrations.OnceitbecameapparenttheWWTPhadfundamentallyfailed
andtheenvironmentaleffectswereseriousandongoingHorizonstookformalenforcementaction.
Since2013thefocusforHorizonshasbeentoensureWDCisprogressingtowardsalongtermsolution
fortheWWTP.TheissuingoftheEnforcementOrderinApril2013wasthefirstsubstantivesteponthis
pathway.ThegrantingoftheshorttermconsentinJune2016waseffectivelytheculminationofthe
consentingprocess,whichnowsetsacleartimeframebywhichalongtermsolutionistobeachieved.
Horizonsarenowfocusedonassessingcompliancewiththisresourceconsent.
1InaWanganuiDistrictCouncilcompliancereportdated3September2008atpage6itisnotedunder
comments associated with conditions 5 and 6 therehas been significant operational problems that
have had to been overcome over the past year. These issues included inadequate aeration, failing
aerators,odourproblemsandtransfercontrolproblems.Asaconsequenceoftheseissuesdryweather
flowbypassedtheplantandweresentdirectlytothecoastaloutfall.
2 Annualreportsreviewedwerethosefortheperiods2007Ͳ2008,2008Ͳ2009,2010Ͳ2011,2011Ͳ2012
and2012Ͳ
2013.
3 Refer to Letter from WDC CEO Kevin Ross to Michael McCartney, dated 30 November 2012 and
attachedresponsestolistofquestions,paragraph11.
4Ibidparagraph10.
99|P a g e APPENDIX1.COMPLIANCEEVENTS2007Ͳ2013
Date
January
2007
Event
HorizonsassesstheAnnualReport.NonͲCompliancegradinggivenduetoWDCfailure
toundertakesamplingasrequiredbycondition13.Failuretocomplywithsulphide
andtotalchromiumconcentrationsalsonoted(condition10)
June2007
HorizonsadvisesWDCtheycanuseownlaboratoryfortesting,providedtheyfollow
standard procedures and send an audit sample to an accredited laboratory every
fortnight.Complyratinggiven.
September
2007
WDCsubmitAnnualReport.
September
2008
WDCsubmitAnnualReport
December
2008
HorizonsassessesAnnualReport.Assessedascomplying
September
2009
WDCsubmitAnnualReport
January
2010
HorizonsassessAnnualReport.Failuretocomplywithdryweatherflowmaximums
noted (condition 2), and suspended solid, faecal and enterococci concentrations
(condition10)
August
2011
Horizonsundertakeasiteinspectiontoassesscompliance.WDCgradedascomplying
againstthoseconditionsassessedaspartofthesiteinspection.
May2012
Horizonsundertakeasiteinspectiontoassesscompliance.WDCgradedascomplying
againstthoseconditionsassessedaspartofthesiteinspection
October
2012
WDCreportstoHorizonstheWWTPisfailingtocomplywiththeconditionsofresource
consent.
November
2012
WDCreportstoHorizonsonoptionstomitigatetheodoureffectsassociatedwiththe
WWTP.
November
2012
Horizons write to WDC advising it has commenced a formal investigation into the
WWTPfailuretocomplywithconsentconditionsandodourissues.Horizonsprovidea
listofquestionsforWDCundercaution.
Horizonscompletesinspectionreport,basedonsitevisitoninDecember2008.Report
notesthedisposalofsludgefromthepondtotheoutfallwasnotauthorisedbythe
resourceconsentnorwasthedischargeofwastewatertoland,viaaspillway.
100|P a g e November
2012
WDCprovideareplytoHorizonsquestions.WDCalsoprovideanupdateonoptionsit
isconsideringtoimplementtomitigatetheodoureffects.
November
2012
HorizonsassesstheAnnualReportforthe2009Ͳ2010period.ReportgradestheWWTP
as nonͲcompliant. Reasons for nonͲcompliance included: failure to comply with
enterococciandsuspendedsolidsconcentrations(condition10),failuretoundertake
the required samples (conditions 11, 12 and 13), failure to notify Horizons of nonͲ
compliances(condition13(a))andfailuretoprovideAnnualReportontime(condition
)
HorizonsassesstheAnnualReportforthe2010Ͳ2011period.ReportgradesWDCas
November
2012
nonͲcomplaint. Reasons for nonͲcompliance include: failure to comply with
enterococciandsuspendedsolidsconcentrations(condition10),failuretoundertake
required sampling (conditions 11,12 and 13), failure to report nonͲ compliances to
Horizons(condition13(a))andfailuretoprovidetheAnnualReportontime(condition
)
WDCupdatesHorizonsonthecurrentsituationfacingtheWWTPinrelationtoodour
December
2012
generation.
December
2012
Horizons issues WDC with a formal warning in relation to the objectionable odour
beyondthepropertyboundary.
January
2013
Horizons issue WDC an abatement notice requiring it to cease the discharge of
objectionableodourbeyondtheboundaryoftheWWTP.
5March
2013
WDCnotifyHorizonsthatishasusedsection330oftheRMAtobyͲpasstheWWTP
duetohighhydrogensulphideconcentrationsattheBeachRoadpumpstation.
23April
2013
EnvironmentCourtissuedEnforcementOrder
Note:WhenHorizonswasawareoftheonͲgoingissuesattheWWTPandtheobjectionableodour
effectsmanifestedthemselves,aspecificmonitoringprogrammewasdevelopedaroundassessing
theobjectionableodour.ThisprogrammeoccurredovertheperiodJanuarytoMarch2013and
wasacombinationofproͲactiveandreactivemonitoring.
101|P a g e 6 FINANCIALIMPLICATIONSOFFAILEDPLANT
AreviewofCouncil’sfinancialsystemhascapturedthefollowingbreakdownofthecostsofdesigning,
building,operatingandeventuallydecommissioningthefailedwastewatertreatmentplant.Thetotal
costtotheratepayersisestimatedtobe$27.1millionasdetailedinthetablebelow.
The$27.1millionfigurewouldbepartiallyoffsetbycertainelementsofthefailedplantbeingabletobe
utilizedinthefutureconstructionandoperationofthenewplant.Thiswouldincludematterssuchasthe
landthatwaspurchasedat1AirportRoad,basicpowerinfrastructuretothesite,thepipelineunderthe
WhanganuiRiverfromtheBeachRoadPumpStation,roadsandsecurityinfrastructure,elementsofthe
aeratedlagoonandsettlingpondetc.
WhilstacopyoftheconfidentiallegalsettlementreachedbetweenCouncilandthefailedplant’sdesigner
couldnotbeprovidedtotheIndependentReview,werethatsettlementtoinvolveapaymenttoCouncil
inexcessofitslegalcoststhenthisamountwouldalsobeanoffsettingfactoragainstthe$27.1million
costofthefailedplant.
Itshouldbenotedthat,Councilasapublicsectorentitywouldordinarilybeobligedbyitsauditorsto
accountforallfinancialtransactionsinthefinancialstatementscontainedwithinthe2015/2016Annual
Report.
CostsIncurredbyCouncilasaResultofthe
FailureoftheMWHͲDesignedWastewater
TreatmentPlant
CostCategory
$M
1.MWHdesignfees
$2.9
2.Capitalcosts
$17.3
3.Shorttermmitigation
$2.3
4.Desludginganddecommissioning
$4.6
$27.1
102|P a g e Notes:
1.July2000toFebruary2013Ͳ(includingpeerreviewcostsOPUS&URStotalling$21.9k)
2.2006Ͳ2010ͲincludesWestbourne,easements,rivercrossingetc
3.February2012toMarch2014Ͳincludesodourcontrol,bioaugmentation,limedosing,hydrogenperoxide,replacementaeratorsetc
4.August2013toJune2015Ͳincludesbypasspipeline,sludgeremoval,removalofaeratorsetc
5.Thefiguresinthetableaboverepresentexternalcostsonly,notCouncilinternalcosts
103|P a g e 7 CONCLUSIONS
TheobjectivefactsexaminedduringthecourseoftheIndependentReviewrevealanumberofcritical
shortcomingsinthedecisionͲmakingprocessesfollowedbyCouncilfrom2003to2012whichhavetended
tobemarginalizedbytheprevailingtechnicaldebateaboutthecausesoftheplant’sfailure.
Theseshortcomingscreatedthecircumstanceswheresignificantmistakesintheearlydesignphaseofthe
wastewatertreatmentplantweremadewhichhadflowͲonconsequencesforthedurationoftheproject
untilthetreatmentplanteventuallyfailed.
CriticalshortcomingsinCouncildecisionͲmakingprocessesledtosignificantoperationalshortcomingsand
thentototalplantfailure.
Councilhadbeencompelledbyitsresourceconsenttohavethenewtreatmentplantoperationalby1
July2007.
CostreductionwasakeydriverforCouncilstaffindevelopinganewtreatmentprocess.
Thecostandtimefactorscreatedthecircumstanceswherethedesignandconstructionphasesofthe
projectgainedanalmostunstoppablemomentumoftheirownaftercritical decisionͲmakingmistakes
weremadebytheWorkingGroupinOctober2003andbyaCouncilthatwasmisinformedinFebruary
andNovemberof2004.
The following is a summary of the major systemic and consequential operational shortcomings
commentedonthroughouttheIndependentReview:
A. SUMMARYOFMAJORDESIGNPHASESHORTCOMINGS–2003TO2005
x
Council’smanagementandgovernancecultureinthisperiodwasentrenchedandoverlytrusting.
x
Thenotionoftestingthemarketforconsultancyservicesappearsnottohavebeenconsidered.
x
Theprocurementpracticeatthetimelackedrigour
x
Toomuchresponsibilitywaseffectivelydelegatedtoasmallnumberofstaffandconsultantsto
developtheconceptdesign.
x
CouncildidnothavesufficientinͲhouseengineeringexpertisetoadequatelycontractmanageits
consultantsontheproject.
x
Council’sstaffandtheconsultantsenjoyedacloseandlongͲstandingworkingrelationshipwhich
mitigatedagainstobjectivitybeingappliedtothepreferreddesign.
x
ThepreferredOptimisedLagoontreatmentplantdesignwasuntriedanduntestedanywherein
theworldandwasahybridoptioncreatedentirelybyCouncilstaffandtheirconsultants.
104|P a g e x
CounciltechnicalstaffandconsultantsmeetinginWellingtonon20October2003unilaterally
decidedtodevelopthehybridoptioninsteadofevaluatingthefourshortlistedoptionsasCouncil
hadpreviouslybeenadvised.Costreductionwasexpressedasakeydriverforthedevelopment
ofthehybridoption.
x
CouncilwasmisinformedatcriticaldecisionͲmakingmeetingsinFebruaryandNovemberof2004.
x
Councilwasadvisedatitsmeetingof16February2004thattheOptimisedLagoondesignwas
relativelylowriskandbasedonproventechnologiesandatthesametimeitwasalsoinnovative
and unique. Council was not adequately advised that the proposed design was untried and
untestedandbydefinitionthereforeitentailedsignificantriskatthatpoint.Staffpromotedthe
big cost savings associated with the recommended design but Council nevertheless only
approveditsubjecttoapeerreview.
x
The newlyͲelected Council on 29 November 2004 was seriously misinformed that the
independentPeerReviewPanel hadaffirmedtheOptimised Lagoondesign. Thisadvice was
incorrect.CouncilwasnotadequatelyadvisedbystaffoftheoutstandingIssuesandrisksraised
bythePeerReviewPanel.
x
TheindependentPeerReviewwasshutdownprematurelybyCounciltechnicalstaffinOctober
2004andbeforeevenviewinganydetaileddesign.TheoutstandingissuesandrisksthePeer
Reviewhadraisedwerenotadequatelyaddressedduringthesubsequentdetaileddesignphase.
x
Councilstaffdidnotappeartohaveanadequateappreciationoftheconceptofriskandrisk
management.
x
Cost cutting was clearly the key driver in selecting the preferred design and risks were
consequentlydownplayed
B. SUMMARYOFMAJORCONSTRUCTIONPHASESHORTCOMINGS
x
Constructionwascompletedovertimeandoverbudget.
x
Theoriginalaeratorsthatweresuppliedwerefaulty.
Tradewasteloadsweremiscalculated.
x
x
Sludgeaccumulationwasunderestimated
C. SUMMARYOFMAJOROPERATIONSPHASESHORTCOMINGS
x
InadequateadvicewasprovidedtoCouncilregardingtheoperationaldifficultiesafter2008.
x
Replacementandadditionalaeratorswereunabletoprovidesufficientaerationgiventheplant’s
fundamentaldesignflaw.
105|P a g e x
Staff failed to comply with their statutory reporting obligations to Horizons Regional Council,
particularlyregardingnonͲcompliances.
x
Resourceconsentswereconsistentlybreached,forexampletomitigateodourproblems.
x
x
Theplantneverfulfilleditsresourceconsentsinfiveyearsofoperation
Theplantstruggledtocopewithwetindustryloads.
x
Plant management staff were underͲresourced and under stress as a consequence of the
operationaldifficulties.
THETIMETOMOVEFORWARDS
TheIndependentReviewhaslookedatthefailureofthetreatmentplantfromamanagementperspective
ratherthanthemorelimitedengineeringperspective.
The evidence is very strong that significant flaws at critical early stages of Council’s decisionͲmaking
processin2003and2004allowedanuntriedanduntestedplantdesigntobeconstructed,contrarytothe
historicallymoreriskͲaverseandsensibleapproachofthewastewatertreatmentindustry.
The motivation to reduce capital and operating costs had a disproportionate influence on the
developmentofaplantdesignwithoutanyknownprecedent.Significantrisksweredownplayed.
CouncillorswereincorrectlyadvisedatcriticaldecisionͲmakingstages.
Acrude,lowͲtechnology,lowͲcostplantwasconstructed.Itultimatelyfailed,atacosttotheWhanganui
communityof$27million.
Therearethoseinthecommunitywhoarguethatthefailedplantcouldstillbemadetoworkwiththe
expenditureofsayanother$15millionandthatthiswouldbealowͲcostsolutioncomparedtobuildinga
moresophisticatedandprovendesign.
Thisisthesamefalseeconomythatprevailedin2003and2004resultingingreatcosttoratepayers.
The Whanganui community needs to move forwards by learning from mistakes of the past, not by
repeatingthem.
Thefollowingrecommendationsareprofferedinthisspirit.
106|P a g e 8
RECOMMENDATIONS
8.1TheAuditorGeneral’sExpectations
TheAssistantAuditorGeneralforLocalGovernmentintheOfficeoftheAuditorͲGeneral(OAG)wroteto
Councilon29July2016settingouttheOAG’sexpectationsinrespecttotheproposednewWhanganui
wastewaterplant.
TheOAGexpectsthatCouncilwillhave:
x
x
x
x
x
Independentqualityassuranceovertheproject
Goodcontractmanagement
Strongprojectmanagement
Goodgovernanceovertheproject,and
Clearandtransparentreportingabouttheproject’sprogress
Itis recommendedthat thecurrentpracticeofCouncil inaccordancewiththeOAG’s expectations be
reflectedinpolicywhereappropriate.
8.2ReformofProcurementPolicyforMajorProcurements
It is recommended that the Whanganui District Council Procurement Policy 2014 be amended to
incorporateenhancedprovisionsforMajorProcurements.
‘MajorProcurements’maybedescribedasprocurementsforgoodsand/orserviceswithacontractvalue
greaterthansay$1million.Acontractmaynotbedividedintosmallercontractsbringitunderthelimit.
ThepolicyshouldrequirethatallMajorProcurementsasdefinedbesubmittedtocompetitivemarket
tender,exceptinaspecialcase(eg.onlyonesupplierofthegoodsand/orservicesexistsinthemarket)
orinthecaseofanemergency(eg.anaturaldisasterwhichnecessitatesarapidresponse).Specialcases
or emergency procurements may only be approved by the Chief Executive in accordance with the
ProcurementPolicy.
Any special case and emergency exceptions for Major Procurements approved by the Chief Executive
shouldbereportedtoCouncilonaperiodicbasiswithfullparticularsprovidedpertainingtothereasons
forapproval.
Theonusonstaffshouldbetoseekmajorprocurementthroughthecompetitivemarketratherthandirect
negotiation,subjecttothetwoexceptions.
Council’s current procurement policy already contains requirements for procurements greater than
$200,000, however there seems to be no onus to undertake open or closed marketͲbased tendering.
Rather,itseemsthatcurrentlyitisuptotheTendersBoardtoapprovethecontractmanager’sproposed
procurementmethodologyandprocess andthenthe Board inturnmakesits recommendationtothe
ChiefExecutive.
107|P a g e 8.3ReformoftheTendersBoard
Consistent with8.2above, itisrecommended thattheTenders Boardprocessescontainedwithinthe
Council’sProcurementPolicybereviewedtoconsidertheirefficiencyandeffectivenessinfosteringgood
procurementoutcomessuchasvalueformoney,quality,fairnessandprobity.
Inordertoenhancegoodgovernance,thereviewoftheTendersBoardshouldincludeconsiderationof
whethertheoutcomeofallMajorProcurementtenderprocessesshouldbeconsideredbyallCouncillors.
8.4PolicyEncompassingCouncilReporting,PeerReviewsandRiskAssessments
ItisrecommendedthatcurrentreportingpracticesbeformalizedintoCouncilpolicywhichincludesthat
independent peer reviews and risk assessments related to major projects must be considered and
approved by the full Council. The policy should require staff to provide Council with all consultancy
reportsonthesemattersandnotjustprovideadviceonwhatthereportscontain.Whereverpossible,
thepeerreviewpanelshouldalsobeinvitedtopresenttheirreportsdirectlytoCouncil.
Thepolicyshouldalsoestablishproperprocessesonmatterssuchasclearandtransparentreportingto
Councilonaproject’sprogress–forexamplethroughthedesign,constructandoperationsphaseswhere
applicable.Theprojectshouldbeassessedthroughoutagainsttheoriginalbusinesscaseapprovedby
Council.
8.5ImprovedResourceConsentComplianceReporting
ItisrecommendedthatCouncil’sinternalproceduresforprovidingannualconsentreportsandnoticesof
nonͲcompliance to Horizons Regional Council be revised and strengthened so that in future Council’s
statutory obligations are complied with. This should also include concurrent reporting to Whanganui
District Council of all reports required to be provided to Horizons Regional Council. Failure by
management to comply with reporting requirements without reasonable cause may be treated as a
disciplinarymatterbytheChiefExecutive.
8.6NationalApproachtoWastewaterInfrastructure
It is recommended that Local Government New Zealand and the Central Government consider the
development of consistent national development guidelines for water and wastewater treatment
infrastructure.Importantly,theproposednationaldevelopmentguidelinesshouldseektoassistsmaller
councils to avoid having to ‘reinvent the wheel’ with their development of water and wastewater
infrastructureanddeterthemfromtakingunacceptableandunaffordablerisksbyexperimentingwith
untriedanduntestedtreatmentprocesses.
108|P a g e 8.7Enhancingbestpracticeandsocialresponsibilityofwetindustries
ItisrecommendedthatCouncilreviseandstrengthenitsTradeWasteByͲLawtoenhancethebestpractice
and social responsibility of wet industries in their operational relationships with Council’s wastewater
treatmentplant.DuringthecourseoftheIndependentReview,ithasbecomeapparentthattheexisting
TradeWasteByͲLawhasstruggledtopromotebestindustrypracticeandsocialresponsibility.
109|P a g e ATTACHMENTS
A.
B.
C.
D.
E.
WWTPProcessCapacityReviewandOptimisation.ExecutiveSummary.CardnoBTO–
28November2011.
WanganuiWWTPOdourIssues–OdourMitigationMemoforInfrastructureMeetingͲ
CardnoBTOͲ27March2013.
Wanganui Wastewater Treatment Plant – Evaluation of LongͲTerm Improvements for
ConsentComplianceͲExecutiveSummary.
CardnoBTOͲ24April2013(fullreportonCouncilwebsite)
Wanganui WWTP – Presentation to Wanganui District Council by Humphrey Archer,
CH2MBECAͲ28October2015(alsoonCouncilwebsite)
MinutesofMeetingofWhanganuiDistrictCouncilͲ17January2013.
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