Sewerage Systems

SIC 4952

Companies in this industry

Industry report:

This category includes establishments primarily engaged in the collection and disposal of wastes transported through a sewer system. These private and public organizations usually treat the wastewater they collect before discharging it into the environment.

Industry Snapshot

Wastewater management became big business with federal amendments to the Safe Drinking Water Act (SDWA) of 1996 and the Clean Water Action Plan of 1998 putting new life and new money into environmental protection. Even with calls for greater federal spending in wastewater management through the first decade of the twenty-first century, however, local governments and their ratepayers covered more than 90 percent of the costs to build, operate and maintain public water and sewer systems by the late 2000s.

Earlier in the decade, the U.S. wastewater infrastructure was aging and often inadequate to handle the needs of growing populations. When it rained, many sewer systems were overwhelmed, and wastewater spilled directly into rivers and lakes. The Environmental Protection Agency (EPA) continued to implement regulations regarding the amount of sewerage that overflowed into the U.S. water supply. As municipalities worked to meet the EPA's expectations, all were looking at the huge price tag of repairing or replacing failing sewage infrastructures. A report the EPA delivered to Congress in January 2008 based on information from the 2004 Clean Watersheds Needs Survey estimated that $202.5 billion in capital investment was needed nationwide to control wastewater pollution for up to 20 years.

According to the National Association of Water Companies, there were an estimated 4,200 privately operated wastewater facilities (POTWs) throughout the U.S., 20 percent of the total. According to USA Today in April 2010, that number may rise as "Tight budgets and falling revenues are prompting cities across the USA to consider selling municipal water and sewer systems to private companies."

Organization and Structure

Organizations in the wastewater industry are responsible for collecting wastewater from homes, businesses, and institutions; treating wastewater to acceptable standards before discharging it into a waterway; and disposing of residues called sludge. These activities entail building, operating, and maintaining a transport system and constructing and operating primary treatment facilities that remove or dilute toxins, synthetic debris, human waste, and other refuse.

Wastewater managers are expected to devise a system that transports wastewater as much as possible by gravity and that offers almost no threat of disruption in flow or service. Managers must also ensure that wastes do not seep into water supplies and that plant effluents are treated in a manner that does not significantly harm the environment. In accomplishing their duties, managers must comply with numerous state and federal regulations, financial restrictions, and political pressures. In addition, wastewater managers are often charged with developing resource recovery programs.

The majority of wastewater treatment plants consist of holding reservoirs that contain, chemically treat, and aerate wastewater until pollutants have settled out and the water can be safely jettisoned into a natural waterway. A few treatment plants use other systems. Approximately 300 municipal and industrial artificial marshland wastewater treatment systems were in operation across the country in the late 1990s. These marshes use plants and microorganisms to absorb and biodegrade the organics.

The two main sources of wastewater are residential and industrial. The majority of residential wastewater is discharged into local sewer systems and treated by local utilities or publicly owned treatment works (POTWs). According to the EPA, in the mid-2000s, there were about 16,000 POTWs across the nation serving about 70 percent of the population, or 200 million people. The infrastructure also included an estimated 100,000 major pumping stations, 600,000 miles of sanitary sewers, 200,000 miles of storm sewers. POTWs treated more than 32 billion gallons of wastewater every day. POTWs range widely in size, with daily treatment capabilities from less than 100,000 gallons to more than 500 million gallons. About 80 percent of all POTWs treat less than one million gallons per day, but the remaining 20 percent of the largest systems serve 89 percent of the population.

The EPA estimated that 25 percent of U.S. residents still maintained on-site, or decentralized, disposal systems, including septic tanks, cesspools, and outhouses. The EPA does not regulate decentralized systems unless the systems process commercial or industrial wastewater or service more than 20 people.

Industrial waste is often pretreated at its source to remove hazardous wastes that require special handling. After being treated in surface impoundments or on-site treatment plants, the water is either discharged directly into the environment or released into local POTWs. About 80 percent of all industrial wastewater is eventually processed by POTWs. Industries that discharge waste into POTWs become subject to many of the same state and federal standards that regulate municipal wastewater facilities.

Types of Organizations.
Most organizations that provide wastewater treatment services are publicly owned and operated as nonprofit entities. They may be established under a variety of organizational structures. A regional wastewater authority, for example, provides service either directly or through governmental entities such as cities, townships, water and sanitation districts, and counties. The regional authority may provide direct service and billing to individual customers, or it might offer wholesale service to several governmental entities that would in turn provide service and billing to local customers.

Large centralized treatment facilities, such as regional authorities, benefit from economies of scale. The drawback of this type of arrangement, however, is that centralized facilities often require pumping of wastewater over long distances. As a result, they tend to be less energy efficient and produce greater amounts of residue in a concentrated area than satellite (or local) treatment plants. Municipal special service districts, which represent a more localized wastewater organizational structure, avoid these drawbacks. Localized utilities, however, often have higher costs and lack capital for investment in new technology.

In addition to POTWs, some wastewater treatment facilities are operated by private companies that have a profit motive. These companies bid to either own or manage the wastewater plants or a portion of the operation for a set period. The private company's incentives for providing quality service are profit and the hope of winning the bid again when the contract ends. The private companies also inject private capital into the operation, which frees the community's capital for other uses.

Background and Development

The first sanitary sewer system was built in 1843 in Hamburg, Germany. Twelve years later, construction began in Chicago on the first U.S. sewer system. In the 1870s, the first U.S. wastewater treatment plants were built. By the end of World War II, wastewater treatment plants served nearly 30 percent of the 145 million Americans. As population and housing increased significantly after the war, so did wastewater treatment plants and sewer systems.

The proliferation of professional wastewater treatment was stimulated by federal government efforts to control pollution caused by residential and industrial discharge. The Federal Water Pollution Control Act (WPCA) of 1956, for instance, established a grant program to help communities construct state-of-the-art facilities. Amendments to the WPCA in 1972, as well as the Clean Water Act of 1977, boosted development of wastewater infrastructure by mandating clean water standards. For example, the National Pollutant Discharge Elimination System (NPDES), created by the Clean Water Act, set limits on the amount and quality of effluent and required all municipal and industrial dischargers to obtain permits. Phase I of NPDES affected the largest cities in the nation.

A few of the other laws and regulations that affected the wastewater industry, either directly or indirectly, were the Water Facilities Act of 1937, the Water Resources Research Act of 1964, the National Environmental Policy Act of 1969, and the Safe Drinking Water Act of 1974. In the 1980s, important legislation included the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) of 1980, amendments to the Safe Water Drinking Act in 1986 and 1996, the Resource and Conservation Recovery Act (RCRA), and the Water Quality Act of 1987. The Safe Water Drinking Act was amended in 1996. The Clean Air Act and the Clean Water Act of 1998 were essentially reauthorizations of the earlier acts.

When the number of contaminants, particularly chemicals, began increasing at a rapid pace, Americans began to demand a cleaner environment, and federal regulations became more stringent. As a result, the number and capacity of wastewater treatment plants ballooned. Privatization was one technique used to control the rising cost of POTWs. Private wastewater companies typically existed only in areas that were too small or remote to support a municipal treatment system. New legislation encouraged many communities to privatize utilities to achieve cost savings. Initial results of privatization efforts were mixed, and some analysts suggested that private companies often operated at a higher cost than municipally owned systems.

The federal government, however, continued to encourage municipalities to take on wastewater treatment responsibilities. An EPA grant program was announced in 1997 for rural communities with fewer than 3,000 residents. These communities were eligible to receive grants from a $50 million fund established by the EPA and authorized by congressional appropriations in 1996 as part of the Clean Water State Revolving Fund loan program. This loan fund offered loans at low interest for wastewater treatment and projects.

This loan source was shrinking just at the time equipment from the 1970s and 1980s needed improvements, resulting in more plants looking at the feasibility of privatization. In addition, changes in 1997 to Internal Revenue Service (IRS) regulations regarding fees, length of contracts, and the sale of facilities were considered a positive sign to an estimated 30 U.S. cities considering this type of public-private "partnership." The percentage of public to private wastewater plants was anticipated to reach 50/50 by the year 2020.

There are many variations of private involvement in public wastewater plants in the locales where water and wastewater are under the same roof. Some companies may operate just one phase of the operation, while in another city, one company may operate and maintain the entire water and wastewater process. Some cities had successful arrangements while others found private involvement problematic. Some of the cities that had some form of privatized wastewater systems were Indianapolis, Indiana; Cranston, Rhode Island; New Orleans, Louisiana; and Schenectady, New York.

In 1999, the Association of Metropolitan Sewerage Agencies (AMSA), which was renamed American Association of Clean Water Agencies in 2005, represented more than 210 wastewater treatment facilities nationwide, up from 160 members just a few years earlier. By 2005, membership had grown to 300. AMSA members served the majority of the country's population with sewerage services. Collectively, AMSA facilities treated and reclaimed approximately 18 billion gallons of wastewater each day in 1999.

The main problem facing the wastewater industry is involuntary release of sewage into the country's water supply as well as a rapidly deteriorating sewage infrastructure. The EPA was responding with increased regulations, but many municipalities were feeling the financial burden of upgrading systems to achieve compliance. The EPA targeted combined sewer systems that use the same pipes to transport wastewater, sanitary sewage, and storm water, which can overflow into the local water supply during heavy rains. At the beginning of 2003, 772 U.S. cities used combined systems. Municipal sanitary sewer systems, which collect only sanitary sewage and wastewater, were also facing stricter regulations from the EPA under revisions to the National Pollutant Discharge Elimination System permit, namely an increased effort to avoid spillovers and improve reporting when spillovers do occur.

The Environmental Protection Agency (EPA) strengthened its legislation by imposing criminal and civil penalties on violators of the wastewater cleanup mandates. From Royal Caribbean Cruise Line's 1999 multi-million-dollar fine for dumping waste into the intracoastal waters to the $1.3 million fine and prison sentence for a Richmond, Virginia, wastewater treatment executive, EPA continued to show that it meant business when it said "clean up."

Despite the controversy surrounding the nation's wastewater infrastructure, sewerage spillover decreased since the EPA instituted its control policy in 1994, down to about 860 billion gallons from over 1 trillion gallons. Also the number of reported spillover events fell by 28 percent, from 60,000 annually to 43,000. During the mid-2000s the EPA was implementing Phase II of its NPDES program, which affected 5,000 additional smaller cities with populations of 10,000 to 50,000 people.

Security issues were also being addressed during the 2000s as agencies assessed the safety of the American water supply and treatment facilities. Homeland Security Presidential Directive-7, issued in 2003, designated the EPA as the lead agency to examine and address water infrastructure security issues. Top concerns, as noted by a panel of experts assembled by the Government Accountability Office, were terrorist access to sewer lines, which could provide entrance to intended targets, and sabotage or theft of chemicals used in the treatment process, especially the intentional release of gaseous chlorine, which can cause irritation to the eyes and skin and death if inhaled.

According to the Water Infrastructure Network, local fees and taxes accounted for about $60 billion in operating revenues. The main source of federal funding is the Clean Water Act State Revolving Loan Fund (SRF), which helped local communities repair and replace clean water infrastructures since it was created in 1987.

In a 2005 settlement with the EPA, the Louisville and Jefferson County, Kentucky, Metropolitan Sewer District agreed to a $500 million project to upgrade its sewer system. The EPA had similar agreements with other cities that were not meeting the Clean Water Act requirements, including Atlanta; Baltimore; Birmingham and Mobile, Alabama; Cincinnati and Toledo, Ohio; Los Angeles; Miami; and New Orleans. Also in 2005, Providence, Rhode Island, announced the largest public works project in the state's history--a 20-year, $1 billion development of a three-mile-long tunnel to address sewage overflow that occurs when the city receives more than a half-inch of rain. Increased rates were expected to pay for 93 percent of the first phase. "While [the tunnel project] is a fabulous solution, it's real expensive, and there's virtually no federal money for things like this," Jamie Samons, public affairs manager for the Narragansett Bay Commission, told Waste News in March 2005. "So we're having to raise sewer rates, raise sewer rates and raise sewer rates."

The EPA' $202.5 billion estimate for capital investment needed to control wastewater pollution in the United States for the next 20 years included $134.4 billion for wastewater treatment and collection systems, $54.8 billion for combined sewer overflow corrections, and $9 billion for stormwater management. In the mid-2000s, federal funding for drinking water remained level at $850 million annually. The projected annual shortfall to replace and improve aging drinking water facilities was more than $11 billion.

Current Conditions

According to the EPA's Clean Watersheds Needs Survey (CWNS) released January 1, 2008, $298.1 billion was needed over the next 20 years to repair and update the water infrastructure that was reaching its life expectancy. The survey called for $192.2 billion for publicly owned wastewater pipes and treatment facilities, $63.6 billion for combined sewer overflow (CSO) correction, and $42.3 billion for stormwater management. This represented a 17 percent increase compared to the 2004 CWNS survey. Communities were dealing with one of the worst economic downturns in recent memory, making it difficult to uphold the Clean Water Act standards.

The industry reported an estimated 2,108 wastewater treatment plants located in the U.S. during the late 2000s, with industry-wide employment of 32,753 workers. The wastewater industry generated $26.8 billion in 2009, with Texas responsible for $23 billion of that total. On average, there were 16 workers per plant with revenues averaging $18.6 million. States with the highest concentration, in descending order, were Pennsylvania, California, New Jersey, and Texas.

Legislation and regulatory issues were at the forefront throughout 2009. As data surfaced surrounding traces of pharmaceuticals and personal hygiene products detected in drinking water, the National Water Research and Development Initiative Act of 2009 was introduced. Soon thereafter, the Safe Drug Disposal Act was introduced and even though the bill was still in Congress, some states acted swiftly to attack the problem. Elsewhere, some wastewater plants didn't have to comply with OSHA (Occupational Safety and Health Administration) regulations, but that was about to change. The most significant development, however, was the introduction of the Green Infrastructure for Clean Water Act. "The bill would establish an official green infrastructure program at the EPA to help communities plan and implement green infrastructure projects," accordng to the January 2010 issue of Waste & Water Digest.

Industry Leaders

Veolia Water North America Operating Services, Inc. (which changed its name from USFilter Operating Services in 2003), based in Houston, Texas, is the leading operator of water and wastewater services. Owned by French conglomerate Veolia Environnement SA, in the late 2000s Veolia Water North America served about 100 industrial facilities and more than 650 communities, typically through public-private partnerships, treating roughly 2.5 billion gallons of wastewater daily.

American Water Works Company, spun off in 2008 from Germany's utility giant RWE's water unit, Thames Water, which retained a 25 percent stake, is one of the largest U.S. water utility holding companies. Along with providing water utilities to 15 million customers in 32 states, it also operated wastewater treatment facilities in some areas. The company reported revenues of $2.4 billion in 2009. The company employed 7,700.

United Water, Inc. (formerly United Water Resources), of Harrington Park, New Jersey, provided water and wastewater treatment services to approximately seven million people. The company, owned by French utilities giant SUEZ S.A., managed utilities in 20 states in the U.S. The company employed 1,370 workers in the late 2000s.

One of the largest publicly owned and operated wastewater utilities in the United States was the Hyperion treatment facility, the largest of four wastewater plants in Los Angeles, California. The plant could handle 450 million gallons of wastewater per day and was unique in that it burned its sludge residue to help produce the energy that operates the plant. It serviced more than two-thirds of Los Angeles.

Workforce

Workers in the wastewater treatment industry are typically employed by POTWs, engineering and construction companies that build and improve facilities, or consulting firms. The industry hires a disproportionate share of engineers and chemists. Consultants typically provide services such as hydraulic analysis and modeling, feasibility and financial studies, design and specifications for construction, lab services, resource recovery, hazardous waste management, and environmental litigation. According to the U.S Bureau of Labor Statistics (BLS), water and wastewater treatment plant and system operators held about 111,000 jobs in 2006, with almost four in five operators working for local governments. The median annual salary was just more than $36,000.

Research and Technology

Several companies continued to offer marsh wastewater treatment, called constructed wetlands, for smaller communities. This treatment method is estimated to cost 50 percent less than traditional mechanical treatment systems and operates without chemicals. The "living machine" is an artificial marsh, using tanks rather than a pond, where organisms and plants do the same work of biodegrading and absorbing. This method is an alternative in locations where soil conditions prevent the use of a pond. Living Earth Technology Co. installed its system in one municipality and found it about 15 percent less expensive in terms of capital costs than competing technology and approximately the same in terms of operating costs. There was 66 percent less sludge than conventional methods, and no chemicals were used to treat the wastewater. Therefore, none of the remaining waste was considered an environmental hazard.

One process for wastewater treatment systems in cold climates uses modified snowmaking equipment to treat wastewater without the use of chemicals. The process, similar to freeze drying, flash freezes the wastewater after solids have been removed. The quick freezing explodes bacteria and separates gases as the water is sprayed into the air. Harmless nutrients remain, which are released into the soil during the spring thaw.

Of course, making lemonade from lemons is the "American Way." In September 1999, the ThermoEnergy Corporation announced the creation of a thermochemical process that made combustible fuel oil out of wastewater sludge. The Sludge-to-Oil Reactor System (STORS) boasted a nonbiological technology that eliminates the anaerobic sludge digestion unit from wastewater treatment. The company alleged that the resulting fuel product had 90 percent of the heating value of diesel fuel. In April 2005, ThermoEnergy received a patent for the process, dubbed the ThermoFuel Process.

On-site sewerage treatment plants are used by companies such as Anheuser-Busch, Inc., which reduced its wastewater treatment costs by installing anaerobic/aerobic bio-energy recovery systems. The new technology required about 75 percent less energy than traditional aerobic treatments and cost about half as much to install. Methane gas produced by the new system replaced about 15 percent of the natural gas used as fuel at the breweries. On-site treatments are not limited to factory settings--a Santa Monica office park has an on-site sewage treatment plant that uses the treated water for its lake and landscaping.

As water supply issues continue to raise concerns around the globe, new technology to treat and reuse water is expected to be a growing business sector. During the mid-2000s, BASF donated its patent for wastewater treatment that addresses nitrification and denitrification of wastewater in a single treatment tank to the Water Environment Research Foundation in Washington, D.C.

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