INFRASTRUCTURE SCAM: Insituform vs. Cosmic-S, Insituform vs. Amerik Supplies, Insituform vs. LMK Enterprises. What will happen to Top Hat? Perma Liner you can chime in any time now Denversewerscam knows you’ve been watching.

ON May 26, 2009 @ 12:29 pm Jerry D Hustler (President and CEO of Perma Liner) sent the March 1^st 2009 DSS article: “Infrastructure Scam”…“Product kept off the Market”  to Travis Bohm, his West Coast Sales Business Development Manager.

The Infrastructure Scam article in question treats readers to the details of Insituforms (decade late and seemingly opportunistically timed)“patent infringement law suit” against a rival manufacture of Service Lateral CIPP. The defendants in the case are Cosmic S BV and its American distributor Amerik Supplies of Marietta Georgia. The product is called TOP HAT.

Only in America Folks read all about it!! 

Insituform a formally a Dutch company sets up a network of installation companies for its pipe lining product in the US. Within ten years one of the US affiliates from Missouri takes over the whole shooting match. Insituform becomes a Delaware corporation, sues another rival Dutch company with a distributorship in Georgia but in a Virginia court. That case will determine how much people in Denver Colorado must spend for the product that will protect their sewer pipes from Insituforms sewer main lining product!!!! Perma Liner positioned to cash in. The same type of thing happened in 1998 over lateral lining in Georgia but the case was tried in a California court. Denver Wastewater Management Department engineers being ridiculed by Denversewerscam for their shady deal with Insituform. Stimulus money lines contractor’s pockets Denver residents pay the bill. Insituform now hiring in Denver.

Come again? …Cosmic Service Lateral what? What’s a service lateral?  In-si-tufor- what? Protect what from what where in Georgia or Denver?   

Well: CIPP is Cure in Place Pipe and it’s a system more than a product. It’s quite possibly one of the most important inventions of the 20^th century. Its Service Lateral component completes the system. And the systems saves pipes and protects the environment when applied properly. And Insituform is the company that owns the rights to Eric Woods’ 1971 invention called CIPP.  Okaay you say…but why should I care about some law suit over a Top Hat?

 Well CIPP is a way to place a “new sewer pipe system” inside an “old and failing sewer pipe system” in the city sewer trench without digging it up. And America alone has about 800 thousand miles of failing sewer trench system. And an equal and perhaps greater amount of “Sewer Service Laterals….aka Homeowner’s sewer pipes. TOP HAT is a brand name for the lateral lining portion of the CIPP pipe lining system.

Insituforms Service Lateral liner requires the homeowner to have a clean out fixture located somewhere in the private sewer line otherwise CIPP liner can’t be installed. And beyond that Insituforms product costs $4500.00 at the Municipal Project price and raises all kinds of legal issues for the city to install. So though it’s been around for a long while many cities just haven’t been installing the lateral CIPP when they have rehabilitated the pipes buried in the sewer city sewer trench.In other words they’ve been just lining the sewer mains.

Because of the products price and the legal issues the product raises some cities prefer just not to mess with and thus cut themselves out of the loop. In other words they let the “retail market” solve the issues. The price and legal issues are hammered out between homeowner and CIPP lining company and they alone. The city is doesn’t get involved and the city prefers it that way. Heck some cities have municipal codes that already established that as a rule…Denver is one of them. The EPA doesn’t like the state of things because broken sewer pipes cause water contamination and that’s a danger to the public. So the EPA has been trying to get these cities involved solving all the issues in the interest of the public. On the other hand some cities feel they are just fine with things they way they are..and Denver is one of them. While Insituform would make more money and our environment would be better off as well if they took a more active role in resolving these issues. (Insiforms moto after all is: “Clean Water for the World)..Insituform really hasn’t.

To tell the truth Insituform hasn’t been all that unhappy about this arrangement. Firstly they work for the city, and even though the CIPP system needs its Lateral component in order to work properly. It’s the city’s problem if they don’t want it. The retail market offers Insituform a higher price anyway. Though Insituform has been missing out of on a lot of revenue from “municipal lining of laterals”, they’ve been able to make it up on the retail market.

But there’s a Big problem with that. While by allowing the issues with CIPP lateral to be resolved on the retail market solve certain problems (for the city) it creates others that are possibly far worse. Without it’s lateral lining component the CIPP main liner causes groundwater infiltration to “migrate” to the joint that connects the private service pipe to the city sewer main. And also any roots that are growing in the area are routed to the tap as well. The combination of both causes that joint to fail and the private sewer service pipe along with it. Insituform sewer main lining products cause private property damage.

So the city could be held legally responsible for applying a product that damages private property…so might Insituform. Thus many cities have found  ways to get around the price and legal issues and install the CIPP lateral liner for the homeowner anyway. Some cities split the cost with the homeowner some just have them pay for it and sign property damage waivers…some cities just do ti for free..there are many solutions.  

Other cities instead just keep the issue between the homeowner and their plumber and allow plumbers to install CIPP Lateral liners on the private market…Denver is not one of them. And so for the past 35 years CIPP lateral lining has been done in one way or another in most US cities. Either in municipal projects here and there or by retail work one at a time..Denver is not one of those cities.

But since this damage doesn’t happen right away some cities (Denver) have been keeping mum about it. This is because depending on what state of deterioration the sewer main trench is in, this joint could last several more years. No one but city engineers and Insituform are the wiser when the inevitable eventually does happen. Denver’s municipal code makes the lower lateral pipes the homeowner’s problem so if the joint does break whatever the cause Denver’s municipal code provides the perfect cover.

But If someone were to discover little know facts about CIPP the City could lose a lot of money in an “inverse condemnation” law suit. Like that of Palo Alto California a few years back. Guess what someone did discover WMD’s & Insituforms secrets…its me.  That’s what I’ve been working on the past three years and writing about for several months:

That Palo Alto case changed the way many cities in California did sewer rehabilitation work. From then on the municipal work included CIPP lateral liners. So CIPP manufactures and installers made out…in a sense and in California. But in Denver no one even knew that the WMD  was rehabilitating sewers and had been since the 70’s. the only people who knew were WMD engineers, Insituform and some elected officials. But elected officials didn’t know the secrets the “No Dig” methods WMD engineers were using. WMD had been using the lower cost method of applying chemical Joint sealing compounds to sewer mains in the early stages of failure. And WMD would only have Insituform apply CIPP in sewer mains pipes and in trenches that were too far gone for joint compound to work anymore. In other words WMD was using CIPP in trenches that needed to be excavated and replaced and as a lower cost alternative to excavation and replacement. So said their official press release and that’s all their press release said about CIPP….Oh they did mention that CIPP “reduced water treatment costs” as well ,and, that WMD was keeping homeowners sewer bill’s lower by using it. Other than those bits of information CIPP and sewer rehab in general was a mystery in Denver. That  goes hand in hand with the fact that nobody in Denver really knows that the sewers are failing.

WMD would apply the joint compounds “in house” and hired Insituform to install the CIPP.  In any case, independently from the method “Joint Compound” or “CIPP” WMD would never apply this technology to the lower lateral service pipes. The pretence for this was of course: Denver’s Municipal Code.  According to code the lower lateral pipes belonged to the homeowner. WMD couldn’t legally spend city money on privately owned pipes…could they! Things like that. You could just imagine the arguments that came up as WMD engineers struggled over the issue internally.  

But though the partial application would cause damage to private pipes and would have given them good reason to use their “engineer’s discretionary powers” to “engineer” a way around this legal hick up as other cities had…. Though they had the authority and duty as directors of a public utility to do so.. What they did instead was just shut up about it. So when complaints came in to city council from homeowners whose taps had broken and about WMD forcing homeowners to pay for the repair WMD answers was: So sad to bad ..”Its the homeowners fault for not protecting their pipe”..”Its the law we can’t do anything about it”. So the implication was that the law needed to be changed and more money was to be given to WMD to take care of the problem (very unpopular subjects for politicians).

But out of the other side of their mouths WMD engineers were telling the EPA that Denver had fewer reported complaints about back up into the home than any city in the US!! And that all the sewers in a certain area had been inspected sealed and weren’t contributing to the high e.coli and fecal coli contamination levels in the watershed!! Which was miraculous!! Because through decades of study the EPA knew that the 1^st generation sewers were causing 100% of groundwater contamination problems and this contamination had been finding its way up to surface waters. This one particular area NW Denver was having a lot of trouble.. But If the EPA was overmanned and overfunded I wouldn’t be writing this article.

So a very strange decade’s long relationship was created between Insituform and WMD engineers…one of “I won’t tell if you don’t tell”. A secret keeping relationship akin to that of the Sicilian Mob’s rule of “Omerta” A relationship that was legally and financially beneficial to everyone concerned except the Denver Homeowners.

Yet there was another even deeper darker secret that WMD engineers weren’t telling anyone: While “for legal reasons” WMD wouldn’t apply the no dig technology that protects the homeowners pipes from the ravages of systemic failure of the city trench.. unlike other cities WMD wouldn’t let private plumbers/homeowners use CIPP to protect their private lines! This even though this technology was available and in use all over the country and even though Denver homeowner were required by Denver’s municipal code “to protect the private pipe and fixtures even those buried in the municipal trench”!!  In other words: Even though WMD was using the technology themselves. Even though the homeowner needed it..were required by law to protect the private pipes and CIPP was the only way to do it fulfill that obligation..and WMD had the authority to allow it use ..WMD didn’t allow it to be used!!

So what does this have to do with Perma Liner …and its CEO sending a Denversewerscam article about a patent infringement law suit to his West Coast Business Development Manager?

WELL..

See a need fill a need someone saw and finally filled the gap in the rehab market that wasn’t being covered.  Cosmic S B.V. (Netherlands ) brought to the US market a lower lateral lining product TOP Hat(circa 1990) that installed fully from the sewer main and cost about $1200.00. This resolved the issues the Insituform product created price wise and clean out fixture wise. It was as easier to install and lower cost product. The only problem was that Cosmic S and TOP HAT weren’t licensed by Insituform. That wasn’t a problem for Cosmic and for the American market but it was a big problem for Insituform….

You see ever since Insituform. B.V. (Netherlands) brought CIPP to the US in 1975 they’ve been struggling with US antitrust (monopoly) law. Monopolies in the US are illegal and Insituforms patents gave them a monopoly.  So since 1975 (somewhat like how the Feds forced Microsoft to do with EarthLink in 1995) Insituform had to licenses US competitors to use its CIPP technology. Worse yet for Insituform it’s US patents would begin to expire in 20 years. All in accordance with US law to create fair competition and open market.

By 1998 most all of Insituforms original patents had expired. This allowed other companies like Perma Liner and LMK Cosmic to develop their own companies and open the market to greater competition. But because of the “price issue” and the “legal issues” over lateral lining the bulk of the work being done in the US was municipal work on sewer mains. And so the bulk of the competition was in that market on the municipal sewer main market. The lateral lining market was left largely unexploited (A condition that would not last very long). As more and more private lines would fail in older city sewer trenches the market would demand a remedy.  

In 1992 one of Insituforms BV licensed installers “Insituform Mid America” (founded by Bob Affholder & Jerry Kalishman in 1982) became wealthy enough and powerful enough to buy out/force out all other US installers. Mid America formed a collation and purchase the exclusive worldwide rights to CIPP from Insituform BV.

Presto Change-O: Insituform BV a European company becomes Insituform Technologies an American Company. Bob Affholder’s partner Jerry Kalishman is a very savvy Chesterfield Missouri attorney.So what I call Insituforms “patent wars begin.” Not only is Kalishman a savvy lawyer he’s a savvy business man and gains the controlling share of Insituform Technologies the company.

Not only does Kalishman have control of the company he has a son Tom who is just as savvy as he is. Tom helps his dad create institutions like the Trenchless Technology Center (TCC)at the University of Louisiana(circa 1992). There they get government assistance to “develop the technology” and perhaps more importantly to develop engineers in the industry. There Insituform as well as other CIPP companies donate money for scholarships to create more engineers in the industry. Tom creates a lesser known program called the EM3. It’s a business school program for engineering graduate students that promises placement in key positions in the industry throughout the world. Then together with other CIPP players they create the sales promotion branch of the industry (circa 1997) the North American Society for Trenchless Technology. The NASTT starts sales promotion conventions to which they invite customers..like wastewater engineers and pipe laying contractors who are wanting to go trenchless. It’s a 22 trillion dollar industry.

Then of course since we’re dealing with municipal contracts and product that ultimately are used by the public these products have to be tested and meet a national standard just like any other construction product. The one entity that governs sewer pipes and plumbing as well as others is the American Society of Testing Materials.  The ASTM is made up of manufactures engineers and engineers from the private sector like university scholars (TCC) and public utility wastewater engineers. So Insituform and a group of other manufactures founded the ASTM on trenchless methods of sewer rehabilitation.

Perhaps the most interesting of Insituforms patent wars was the one between them and American Pipe & Plastic in Northern California. This war spilled over onto the ASTM subcommittee on lateral rehabilitation products. Insituform claimed that AP&P’s Easy Liner lateral lining product infringed on Insituforms Nu Pipe product.  At the same time the ASTM was denying AP&P’s Easy liner its stamp of approval. The complaint went out from Graner Co (AP&P licensee) who had penetrated Insiforms Mid Americas market in Florida & Georgia. The Graners complaint was that there was “no material or scientific reason” that the ASTM should deny approval. The panel was being accused of bias. The patent suit ended up with proving that Easy Liner was identical to Nu Pipe in every way. The California Court put a ban on the sale of the product in the US and ordered AP&P to pay damages.  The damages were settled out of court eventually. The court case actually proved that the ASTM had held up Easy Liners approval for “no material or scientific reason” as it EasyLiner was identical to Insituforms NuPipe. After the law suit was won Easy liner was banned from sale and the settlement made the ASTM incident mute.

Above this all reign’s Insituform as the number one US CIPP manufactured and installation company. To render an idea of its size relative to the market; Insituform declares 500 million in revenues and employ’s +/- 1100 people. Admittedly relatively small for such a big market but they are the largest and Insituform is evidently and extremely powerful company. The market will grow hand in hand as more sewers fail. But there market is finite as about 50% of sewer in the US are made of VCP pipe prone to failure. The 1972 clean water act changed the way sewers are built. Sewers are now made of PVC and don’t have any joints. So Insituform has to make hay while the sun is shining and they do. 80% of their revenue comes from installation (not manufacturing or licensing) of CIPP.

However, right now at this moment, approximately 10% of city sewer trenches are at or over 100 years old.  Denver for example has 200 miles of these 1^st generation sewer mains. And Denver is one of the 9 largest cities in the US who in 1972 the EPA declared a “Sanitary Sewer Outflow Community” just because of its outdated and leaking sewer system. Why is the EPA involved? Well because failing sewers contaminate water and create a health hazard for humans. By 2012 many more Insituforms patents will expire (they just happen to be lateral lining patents). Is this coming together for you now?

Insituform legal move seems to have been spurred by a once in a life time “planetary alignment” in the yet to be fully charted universe of the US sewer rehabilitation industry. This alignment is as follows:

·         Reynolds Inliner July 2007 purchase of American Water Services Underground Infrastructure Group. This purchase made Reynolds the next largest CIPP rehab company in the Nation second only to Insituform.

·          And Reynolds December 2007 purchase of Denver’s Tierdael Construction Company (long time municipal projects contractor). The president of Tierdael is the former president of Nation Association of Sewer Service Companies NASSCO

Reynolds a very aggressive competitor in the east US market was the inventor of the industry unprecedented performance based contract in 2002,and, perhaps Cosmic S/TOP HAT’s number one customer.

·         A Jan 2008 EPA publication (who arrival was well telegraphed for about a decade) that essentially stated “no wastewater utilities Operation & Maintenance/ sewer rehabilitation program can be effective without service lateral rehabilitation”.

Denver has been Insituform exclusive territory since the mid 80’s when Affholder and Kalishman set up shop in Denver (dba Insituform Rockies/ Plains a fully owned affiliate of their Insituform Mid America company). Reynolds move into Denver threatened to upset the apple cart in the municipal sewer rehab market as well as the retail lateral lining market.

Insituforms law suit proves that in 2006 Insituform approached Cosmic/America offering them a “Lateral Lining Licensing Opportunity.”  In short Insituform wanted Cosmic pay Insituform $200 (royalties) for every TOP HAT liner that had been installed in the US since 1990 and for every TOP Hat liner that would ever be installed in the US. Cosmic said no. Insituform sued and asked that TOP HAT be barred from sale in the US.

What the court documents don’t disclose is that in July 2007 Insituform came to a Lateral Lining Licensing  agreement with Perma Liner ..That information was disclosed in trenchless technology media not the court documents. Coincidently the Lateral Licensing agreement came at the same time Reynolds purchased UIG…isn’t that interesting?

I sure hope the judge sitting over the case..in whatever court is been transferred too now…or the FBI & Department of Justice is reading this articles…

Here’s a strange fact: in 2002 Insituform used TOP HAT in San Diego California not Perma Liners products. San Diego forced Insituform to use TOP Hat because of its lower cost. Why did Insituform wait to sue Cosmic??

Here’s another strange fact: Though Insituform claims to have the patents rights over Cosmic S Top Hat product …thought they’ve been in business since 1975…have their own R&D center..have founded and funded the Trenchless Technology Center and got paid by the federal Government to develop their technology in 1992(CARP)…Insituform never marketed these lower cost and easier to install lower later liners that they now lay claim over!!

Now (2005) Bob Affholder and Tom Kalishman have broken off from Insituform (Jerry Died in 2005 in the middle of a battle between him and Insituform board of directors over control of the company), and have formed a company called SAK construction LLC (Shaw, Affholder, Kalishman construction ) Though the nation’s second largest CIPP player (Reynolds) has come to Denver this little start-up company has just become WMD engineers only other CIPP contractor in 25 years.  The very same people who set up office in Denver 25 years ago …what a coincidence!!

Here’s another coincidence the place where Affholder & Kalishman set up office was in NW Denver less than a mile away from where Joe Barsoom WMD director of Engineering (1970-2005) &WMD OPS Director Reza Kazemian were conducting a sewer rehabilitation field test on NW Denver Sewers.

In 1984 Joe Barsoom WMD director of engineering founded the first ever ASTM committee on lateral rehabilitation. He’s been chairman of that committee ever since and is now the chairman over the entire ASTM on sewer rehabilitation.

In 1992 Barsoom became active at the Trenchless Technology Center (TCC) at the University of Louisiana and in 1998 became the chairman of its Industry Advisory Board and still is.

In 1998 from his position at as IAB Chairman Barsoom became one of the EPA’s 5 person Technical Advisory Committee which created surveys and conducted studies that led up to the EPA’s 2004 Sanitary Sewer Overflow Abatement guidance Manual and the Jan 2008 publication which all but mandated that laterals be rehabilitated…what a co- in- ci-dence!!  

Coincidentally In 2004 Reza Kazemian performs a foot by foot video inspection (SSES) of all the sewers in NW Denver and orders Insituform establishes a project to line 200 feet of sewer main around Rocky Mountain Lake. The project began in 2006 and will end in 2010. Insituform is lining 100 thousand feet and in 2007. Guess who got the contract to line the other part? SAK!. Affholder & Kalishman who started Insituform in NW Denver 25 years ago ended up in that very spot 25 years later with SAK…That’s like Cosmic dude.. Isn’t it weird how the big events in Barsoom’s career seem to parallel big events in Insituforms history?  Isn’t in weird how big events in the EPA work on sewer rehab have a relationship to what happens in the market..and how the EPA work is tied to this Barsoom guy… It’s Karma dude. The chairman of the ASTM committee on lateral lining when the Easy liner incident happed was Joe Barsoom and Joe is Chairman over the entire ASTM now..and TOP HAT is having its problems since it came to Denver isn’t that wild?

Beyond Affholder & Kalishman breaking off to form SAK LLC in 2005, Joe Barsoom retired that year as well. The day of his retirement he became Chairman of the Trenchless Technology Center (TCC) Municipal Users Forum.  The forum shares contractor’s bids and municipal engineers projects bid with members of the forum and is where WMD engineers get their pricing information for WMD projects..now isn’t that precious!!.

Insituforms corporate maneuvers have been legal. In same sense (at least in Denverswerscams oppion) of that guy from “Girls Gone Wild” fame and his “I just turned 18 barely legal” videos are legal. “They’re not minors  Judge” ..: “it’s not kiddy porn” ..”Look these girls are adult.. It says so right here on this paper the minors.. ooOPS I mean the adults signed.”

I don’t know if WMD engineers Barsoom & Kazemian’s secrets are legal…I don’t think they are. If they are illegal they are immoral. In any case WMD’s policies practices and programs couldn’t have worked out better for Insituform than if Insituform had created them itself.

In essence WMD has had Insituform line our sewer mains with a product (CIPP) that makes our taps fail. While WMD should protect or taps by having Insituform line them with CIPP they don’t..What they do instead is prohibit the homeowners use of CIPP..which prohibits the homeowner from protecting their taps. So this goes on for 25 years of so without no one knowing about it. Ten years or so ago a cheaper and easier to install product come on to the US market Joe Barsoom Knows about it but doesn’t allow it in Denver because WMD doesn’t apply lateral CIPP and doesn’t allow Denver homeowners to either. But in 2007 when Reynolds is posed to introduced the cheapest product on the US market TOP HAT to Denver hook or crook.

Insituform (WMD exclusive contractor) sues the manufacture of TOP HAT for patent infringement; tying the product up in court ,and, at the same time Insituform comes to an agreement with Perma Liner over its lateral lining products. Reynolds counter sues.

So while homeowners taps are breaking at the rate of 500 to 700 per year..and the water contamination problem in NW Denver is getting increasingly worse, this Insituform company is playing its monopoly games..The product that we need to protect our property from Insituforms CIPP main liner is being tied up in court by Insituform and kept off the retail market by WMD…but Insituform now has lined up the more expensive Perma liner for us..How nice of them to do that for us!! If Cosmic looses the suit Top Hat will be banned from sale in the US…what then?

Insituform is innocent until proven guilty and so are WMD engineers. And so was the guy from “I just turned 18 barely legal” fame.. Until someone actually challenged him by producing one his films and a birth certificate proving one of the girls that was bare on film was not legal..sending the guy to jail. Nobody even challenges Insituform they’re just to powerful.

Joe Barsoom recently appeared on Denversewerscam’s web site during an interview to have me correct some errs in my “Joe Barsoom career trivia”. I took advantage of the occasion to have him answer some very precise questions about WMD’s engineers and Insituform secrets.. He skipped around them questions and ultimately refused to answer.

Of course prior to that on July 8, 2009 @ 7:35 am a Joe Blow (joeblow@gmail.com) emailed the same articles to David Huntsinger (David.huntsinger.ci.c.us.gov) a Denver Public Works engineer..I can’t say that this Joe Blow was instead Joe Barsoom. But I’ve now heard from Joe Barsoom. Not from Joe Blow… Huntsinger…Reza Kazemian…Affholder, Kalishman, Insituform, SAK, Perma liner or Reynolds.

I have spoken to Cosmic S… and several other CIPP installation companies in the US. I’m just waiting for certain developments to write about that.

We live in the age of information technology guys! Key words to remember “cut and paste then email”.. Like I said guys you can chime in any time you want…we’d love to hear from you. I’m meeting with some Denver City Council …soon and hope to get some things resolved.