WHO IS RESPONSIBLE FOR RAIN?

A major rain event occurs. In basements, raw sewage backs up from floor drains and wash tubs. Manhole covers pop open and raw sewage fills yards and streets. A wastewater treatment plant is deluged and bypasses raw sewage to the local stream. Who is responsible for these rain consequences?

Is it the city, which permitted homes to be built in flood plains without adequate storm water collection systems? Is it the homeowner, who has connected sump pumps and downspouts to the sanitary sewer? Is it the utility, whose collection mains may be undersized or blocked or manhole covers porous? Is it the wastewater treatment plant, which may have insufficient capacity to receive excess wet weather flows?

A USEPA press release of December 14, 2011 announced a significant consent decree settlement between it and the Metropolitan Water Reclamation District of Greater Chicago. The District provides wastewater treatment essentially for all sewage collected in Cook County. Historically, in major wet weather events, District interceptors and plants often have become surcharged by storm water inflows and infiltration. The consent decree appears to shift responsibility for the problem to the District. It establishes a schedule for completion of the District's deep tunnel and reservoir system to store untreated sewage so as to control untreated releases to rivers and Lake Michigan. It also requires the District to implement a "green" program by doing such things as distributing rain barrels and engaging in projects for green roofs and rain gardens.

Generally, however, it would seem that all involved parties have responsibility for inflow and infiltration of storm water into a sanitary sewer system. Cities have a responsibility to engage in reasonable land planning and effective storm water disposal. Homeowners have a responsibility to disconnect sump pump and downspout illegal connections to the sanitary sewer. Utility systems have a responsibility to police for illegal connections (for my clients, I developed illegal connection inspection and enforcement programs), to inspect mains and manholes for breaks and blockages, and to install sealed manhole covers. Wastewater treatment plants have a responsibility to assure that all excess flows that may be bypassed receive requisite treatment.

So, who is responsible for rain? Everyone!

WHO IS SANTA CLAUS?

In December, Santa Claus is everywhere...in stores, parades, street corners, yards, television, songs, advertisements, etc. In my early youth, was traumatized when I was told that Santa was my parents. How could my parents be in all those places? So, who really is Santa Claus?

To resolve my question, I naturally turned to the law...the alleged universal source of all wisdom. First coming to mind, of course, was the movie Miracle on 34th Street, where the judge held that Kris Kringle was Santa Claus because the post office delivered to him all letters addressed to Santa. However, on reflection, could I give credence now to this precedent given that the postal service claims to be on the edge of bankruptcy and primarily delivers to me tons of catalogs with pictures of Santa hawking gadgets I neither need or can afford. More research was needed!

"No one owns Santa Claus. The legend and the symbol have a solid place in the public domain." (Santa's Workshop v. Sterling, 153 N.Y.S 2d 839 (1956)). So, Santa is his own man who is some kind of symbol.

In another case, a shopper sued a store after a wood Santa fell from a shelf and hit her on the head. The court held for the store (Davis v. Wal-Mart Stores, 774 So.2d 84 (La. 2000)). So, Santa his own man, lives in the public domain, is made of wood and hits people on the head. Does it get any better?

Well, in another case, plaintiff's had received, and the court upheld, a copyright for a plastic Santa stuffed newspapers. The court described Santa: "the major component of plaintiffs' Santa Claus is a large bag cut from red plastic material, sewn together, and provided with a slit in the back for the insertion of crumpled newspaper. This bag is cut from an appropriate pattern so that it defines the arms, legs and torso of a human form. White trim is utilized at the end of the arms to give the appearance of mittens, while black plastic at the end of the legs serves as boots. At the top of the torso, a smaller bag is included to represent the head. At the back of this smaller bag there is a flap to receive a stick for supporting the head. The second component of plaintiffs' Santa Claus consists of a face and hood, which are slipped over the head of the figure. Finally, a tunic snapped around the waist performs the dual function of providing the illusion of a coat and holding in the stuffing. A square molded belt buckle, inscribed with scroll work and including a central opening, is attached to the top of the tunic. At the bottom is a horizontal white plastic stripe representing fur trim." (Doran v. Sunset HOuse Distributing Corp., 197 F. Supp. 949 (S.D. CA. 1961)).

Now I am really confused. No one owns Santa but he can be copyrighted. He can be wooden or he can be a bunch of plastic bags stuffed with newspapers--you know those sheets we used to read--with a stick up his head. But, after more research, I found a case that clarifies everything, because the law always is clear.

"It is generally accepted that the concept of Santa Claus can be traced to St. Nichols, a bishop of the early Catholic Church...Santa Claus of today is a figure endowed with mythic trappings having no conceivable connection to his real progenitor--he is a jolly bearded figure who lives at the North Pole and emerges on Christmas Eve in a flying sleigh pulled by eight reindeer to distribute toys manufactured by elves by climbing down chimneys." (Donnelly v. Lynch, 525 F. Supp. 1150 (D. RI. 1981)).

So, Santa is both real and unreal. This Christmas Eve, instead of leaving milk and cookies for Santa's visit, try leaving a glass of cool, fresh water. You may discover the real Santa Claus.

ADEQUATE RATES ARE IMPERATIVE

A municipality is considering hiring a consultant to prepare its first cost of service study since 1985 for its water utility. A large government-owned water utility uses reserve funds to subsidize operating expenses so that rate increases to satisfy revenue requirements are deferred. A small municipal water utility refuses to turn off water to customers who do not pay their bills because officials do not want to upset their neighbors.

What do these examples have in common? A general principle of public utility law is that rates must be reasonable and not unreasonably discriminatory. The only acceptable methodology to assure compliance with this principle is to base rates and rate design on a current, comprehensive cost of service study. Such a study will assign costs to the cost causers so as to avoid any cross-subsidization and unreasonable discrimination as between classes of customers. The study also will develop revenue requirements using test year principles and recommend appropriate rate design to recover those revenue requirements.

Deferring needed rate relief based upon perceived appeasement of customers will benefit neither customers nor the utility. Instead, it can result in deferral of necessary maintenance and capital improvements, with adverse consequences for quality of service.

Prudent management will realize that appropriate recovery of revenue requirements can only be achieved with timely rate adjustments founded upon cost of service analysis. Moreover, frequent review of costs and resulting application of smaller rate changes can militate against rate shock controversies that likely will arise from occasional proposed large rate increases.

WATER IS A MANY SPLENDORED THING

During a visit to the Czech Republic this Fall, I heard repeatedly: "in Central Europe, all things are possible." When it comes to drinking water, I certainly believe it. In point of fact, Czechs produce four different types of excellent drinking water.

First, of course is their fine tap water. In Prague there has been a water system serving Prague Castle dating back to the 14th Century. Wood pipes brought water from a nearby brook. Indeed, residents proudly point to water towers still standing like ancient sentinels guarding a bridge over the Vlatava river.

The first modern water system in Prague was built at the turn of the 20th Century. After the Velvet Revolution of 1989, many improvements were made. Prague Water Co. became part of the Veolia Water Group. Today, most of the City's water supply comes from a reservoir called Svihov, which is the largest in Central Europe. The raw water is treated a a facility some 65 kilometres south of Prague. The balance of the water supply is treated at a second facility which receives water from artesian wells and a river.

A second type of drinking water is the plethora of bottled water produced from springs and artesian wells in the country. In every restaurant, it seems, a waiter routinely will offer a choice of local "still" or "fizzy" bottled water. At meetings, conference tables will be cluttered with a variety of bottles of each kind.

A third type of drinking water is "spa water", a kind of water provided at such spa towns as Karlovy Vary (Carlsbad). People come from all over the world to drink this special water for its medicinal properties. Doctors often prescribe spa time for their patients to take part in the purported curative effects of the experience. I have sampled this water; and frankly, it tastes awful and smacks of sulphur and hydrogen sulphide. One sips the water slowly from a cup that looks like an inverted tea kettle while walking through town; but, if smart, one never wanders very far from toilet facilities.

A fourth form of drinking "water" is the beer (pivo) for which Czechs are famous. Beer may be consumed at any hour of the day, and it is said that Czechs drink more beer per capita than in any other country. I can attest that it is that good! Once, to my wife's horror, I ordered a "gran pivo" at one of those tourist wet stations that line the Old Town Square. To my horror, the waiter brought a vessel the size of a hot water heater tank. I had to drink it all, to save face. However, as in the case of spa water, I quickly learned that if one should order a gran pivo, if smart, one also should not wander very far from toilet facilities.

THANKSGIVING: A TIME TO GIVE THANKS...AND TO SUE?

I brake for holidays, so permit me a digression from the world of water law for Thanksgiving. What can the courts possibly say about "turkey day?"

A prison inmate once sued, alleging that the prison dietician violated his religious rights by including turkey in the turkey stuffing served at the Thanksgiving meal. The Court affirmed judgment for the dietician, noting that the prisoner "alleges that the turkey stuffing had turkey in it. Of course it did. If it did not have some part of the turkey in it, it would not be turkey stuffing. Milkshakes have milk. Egg noodles have eggs. Chili has chili powder." The Court concluded that the dietician was not being deceptive or intruding on the prisoner's religious freedom "by making turkey stuffing, putting turkey in it, calling it turkey stuffing and serving it to the prisoners." Thus, the stuffing case was snuffed. (Karmasu v. Hughes, 654 N.E.2d 179, Ohio App. 1995)

Another possible use for a turkey appears in litigation between two brothers involving a business dispute. According to the Court, when one of the brothers received a Thanksgiving turkey as an employee holiday bonus, he allegedly promptly hurled it toward his brother's head. Thankfully, he missed. (Broccoli v. Broccoli, 710 A.2d 669, R.I. 1998)

Growing up in my family, there always was stiff competition for the turkey wishbone...the Super Bone game, if you will. One year, after I successfully grabbed the bone, I set it aside for future use, instead of snapping it...much like a Monopoly "get out of jail free card" is saved for when need arises. Perhaps my concern was unnecessary. In a copyright infringement case, one Thanksgiving plaintiff came up with an idea for a mass produced breakable plastic wishbone. He kept the actual wishbone from his Thanksgiving turkey to use as a model for a prototype and later production. (Lucky Break Wishbone Corp. v. Sears, Roebuck & Co., 528 F.Supp.2d 1106, W>D> Wash. 2007)

I do not know whether wishes made on a plastic wishbone are more or less likely to be granted. I do not mind turkey giblets in my turkey stuffing. I have no plans to hurl at a relative a turkey like a football thrown during a Thanksgiving game.

However, one sure thing I can wish for, and be thankful for, is a tall glass of cool drinking water with my turkey dinner. Happy Thanksgiving!

USING EXCULPATORY PROVISIONS TO LIMIT UTILITY LIABILITY

In a recent opinion, the Illinois Supreme Court held that claims for damages allegedly arising from utility service outages are barred by liability limitations for service interruptions contained in a regulated utility's tariff. (Sheffler v. Commonwealth Edison Company, Docket No. 110166, June 12, 2011).

The Court stated that a tariff, once duly filed with the utility regulatory agency (in this case, the Illinois Commerce Commission), binds the utility and its customers and governs their relationship. Once the tariff is approved, the Court said, it is a law and has the force of a statute.

The Court explained that a utility's ability to provide service at reasonable rates depends, in part, on having rules that limit liability.

The Court cited its prior decision in Illinois Bell Switching Station, 161 Ill. 2d 233, where it held that a tariff exculpatory clause barred recovery of consequential damages due to service interruptions.

In both the Edison and Bell cases, the exculpatory tariff limited liability to recovery of the proportionate charge for service for the period of interruption.

In the Edison case, the Court said, plaintiffs' claims of negligence were based upon equipment malfunctions due to weather, and the tariff specifically exempted such claims from liability. The Court also noted that even if a negligence claim was not barred by a tariff, jurisdiction of the claim would be with the regulatory commission, not with the courts.

Regulated water and wastewater utilities should consider including in their tariffs appropriate exculpatory provisions applicable to claims relating to service. Except for a few states, municipal owned water and wastewater utilities generally are not subject to regulatory agency jurisdiction and do not have tariffs. However, they do have, or should have, service rules contained in ordinances which become incorporated as part of customer contracts. Accordingly, municipal owned utilities should consider including appropriate liability limitation provisions in their service rules for the same reasons that regulated utilities have such tariffs.

IS A PICTURE WORTH A THOUSAND WORDS?

Earlier this month, my wife and I attended an outdoor auction of possessions of an artist who was moving to a smaller home. One of the auctioneer's farm wagons was mounded with piles of the artist's unsold oils, watercolors and sketches. About mid afternoon, a ring man hoisted a framed oil of a water hand pump popping up in the middle of a farm field of wheat-a pump similar to the one pictured in this blog. It was well done and rather autumnal, matching the sunny cool of our actual day.

The auctioneer vigorously chanted, seemingly at a thousand words a minute. But to my utter surprise, there was no bidding interest in the painting. Since then, I have been wondering why. Perhaps for the younger bidders pressing against the wagon, the painting had no significance for their reality. On the other hand, for the older bidders gawking over the younger ones, perhaps such nostalgia may not have been a positive memory. And perhaps for most bidders, who no doubt receive water from faucets, a hand pump--who cares?

However, in the water and wastewater industry, particularly, for litigation, a picture may well be worth a thousand words or even more. Whenever a client has asked me to assist with an issue involving its facilities, I always have made it a point to view and understand the plant and operations involved. Whether one is a lawyer, engineer, consultant or even an accountant, seeing the plant components involved in an issue can result in enhanced comprehension and development of solutions. Of course, early in my career, I learned never to wear a wool suit when visiting a wastewater treatment plant.

Oh yes, I did not bid on the hand pump painting either--because I already have a similar one hanging on my office wall!

BEAM ME UP, SCOTTIE

Looking for water in all the wrong places? Scientists report finding a cloud of water surrounding a giant black hole in a galaxy. It is said to be the oldest and largest amount of water in the universe, holding an amount equal to the mass of at least 100,000 suns. The vapor disk is estimated to be 3,500 light years across (Science, September 10, 2011, p.4).

Although no one has yet found clear evidence of water on Mars, some scientists have concluded that salt water oozing from rocks causes seasonal dark streaks at some locations on that planet. The assumption is that the water freezes below ground and later boils above ground (Id. at p. 8)

Studies in California and Wisconsin reportedly suggest that many urban sanitary sewers are leaking and permit raw sewage to enter into storm sewers that drain into waterbodies that serve as sources of water supply (Id. at p.13).

I am not sure what all this means. But these stories could suggest that if we continue to avoid needed upgrade of sewer infrastructure, and if we want to avoid brine water on Mars, maybe we should seek water in another galaxy.

INTIMIDATION AND THE REGULATORY PROCESS

Regulatory agencies permeate daily living, including the operations of water and wastewater utilities. Administrative agencies not only make rules but they also enforce them. Accordingly, they may exercise both legislative and judicial type functions, although they are neither a legislature nor a court. Moreover, they generally are not bound by precedent or the strict rules of evidence.

In reality, the administrative processes of regulatory agencies can be subjected to, and affected by, pressures outside the scope of any record before them. Consider, for example, the current toxicology review being conducted by U.S. EPA as to whether to establish a drinking water compliance standard for hexavalent chromium (chromium 6).

California, on its own, in July established a "public health goal" for chromium 6. While a "goal" is not yet a compliance standard in California, the action suggests a "tail wagging the dog" attempt which may offer pressure on U.S. EPA. Indeed, it has been reported that one of California's U.S. senators has filed a bill in Congress to force U.S. EPA to set a compliance standard for chromium 6 and will hold hearings on the bill in January.

The California developments apparently have given rise to media pressure as well. Recently, a major newspaper carried an article alleging that testing of Chicago water found levels of chromium 6 substantially higher than the California "health standard" adopted in July. The article acknowledged potential pressure on U.S. EPA from the California action. Of course, California has not yet adopted a compliance standard for chromium 6.

The article also alleged that U.S. EPA has been slow to act because municipal utilities and industrial polluters object to a new standard that could cost them money. In point of fact, several water associations have urged U.S. EPA simply to include in its risk assessment for chromium 6 important current research on health effects of chromium 6, expected to be completed shortly.

In this one example, there appear to be efforts by an activist state, a senator and media to pressure an administrative agency to adopt a compliance regulation. None of these efforts, it would seem, are a matter of the record before the agency.

THE PARADOX OF WATER

While enjoying hours of delay at my O'Hare gate recently, I cracked open my book "Homesteading in the Badlands-1912." Attempting to fly somewhere these days and homesteading in the badlands of South Dakota seemed to have a great deal in common.

Water, of course, had and continues to have great involvement in the formation of the badlands. Originally the product of sea, river and stream deposits, then the carving and erosion by water and wind.

In 1912, the author of my book, Earnest Bormann, began homesteading at the age of 21 on a quarter section of land about 12 miles southwest of what is now Wall Drug, still the home of 5 cent coffee. Under the law at the time, a homesteader could acquire title to such a parcel if the person lived on the land and cultivated it.

The author's parcel comprised 80 acres of flat ground, which he cultivated with the help of his horse "Ike." The other 80 acres were badlands-peaks and gulches of moonscape that today help to make up the Badlands National Park. His house was an 8 foot by 12 foot tar paper shack.

Water in the badlands is an extremely scarce commodity. When found, generally it is alkali in nature and unfit to drink. The author found a good water spring in his 80 acre badlands in a deep crevice, one-half mile from his shack. He had to haul water containers up a steep peak by holding on to Ike's tail as the horse tried to scramble up the slippery slope. He then hauled the water on foot the one-half mile to his shack-in all sorts of weather.

Sometimes, water came to close, as in the form of three day blizzards in the winter. In fact, a late blizzard came in May that killed many cattle in the area, wiping out several local ranchers.

After homesteading for 18 months, the author acquired title to his 160 acres. He then rented his land and returned to his parents in eastern South Dakota. In 1948, he sold his homestead to an adjoining neighbor. With the money, he bought a 1949 Ford.

Water helped to make the badlands, helped to enable living there and helped to make that living difficult. For most in the United States today, drinking water is readily available by a twist of a faucet. But for millions in the world, water still is hauled on foot from great distances, and for everyone everywhere, water in the form of floods, snow and ice still can be difficult.

As I finished my book, my flight began boarding. On the last page, the author quoted a sign he saw in 1912: "Please do not ask any questions. If we knew anything we would not be here." Guess where I was going-the Badlands!

WHAT IS WATER?

At least since 1805, when Gay-Lussac and Humboldt discovered that water is comprised of two parts hydrogen and one part oxygen, people have been trying to figure out exactly what is water. What we commonly know is that water can be a liquid, a solid, a gaseous vapor and even a supercritical fluid having properties of both a gas and a liquid.

But the discovery beat goes on. Recently, researchers at MIT have been examining the transition of water between two liquid states. According to MIT's press release, the lead author of a paper on their findings, Yang Zhang, stated that water is "probably the most weird substance on Earth."

The study found that water can be "supercooled" so that it remains a liquid well below the normal freezing temperature. Or, it can be "superheated" to well above the normal boiling temperature without boiling. "Normalization"-freezing or boiling at the normal temperatures requires a nucleation point, such as a bubble or ripple, to start the expected freezing or boiling.

The research appears to suggest that it may be possible to lower the transition points of the various states of water so as to protect animal and plant life as well as certain types of buildings and roads.

So, what is water? It can be in the sky and come down as rain, snow and hail; it can be in the air as fog; it can be on the ground as oceans, lakes, rivers, ponds; it can be in the ground as aquifers. It is in us and all other life; it makes our food; heats our homes; runs our industry; and puts out our fires. What is water? A gift.

SOCIAL ENGINEERING OF UTILITY RATES

The governing principle for water and wastewater utility rates is that rates should be based upon costs of service. These costs are to be assigned and recovered respectively from classes of customers who create such costs. Cross-subsidiztion of one class of customers by another is contrary to the cost of service concept. Well-established case law and AWWA Manual M-1 enunciate this ratemaking principle.

Social engineering of rates can occur when charges are based upon perceived social objectives and/or subsidization instead of costs of service. Recent media stories about federal government subsidization of ticket prices for flights to rural airports provide an example. According to the Wall Street Journal, taxpayers subsidize air service at 109 airports at a cost of $175 million per year. Allegedly, these subsidizes can be as much as $200 to $3,000 per ticket.

Now, it appears that federal social engineering may be entering utility ratemaking. In July, 2011, the Federal Energy Regulatory Commission (FERC) entered an order which apparently allows non-utility developers to construct segments of interstate electric transmission lines to connect remote wind and solar generators to the grid. The obvious purpose of the order is to promote wind and solar generation. FERC asserts that the costs of such new transmission lines are to be borne by utility customers who benefit. It is to be noted that these costs will not be created by utility customers but by developers and the wind and solar generators. Further, determination of who benefits from these costs can be questioned, particularly if the costs of wind and solar generation coupled with the new transmission costs are not competitive with other electric sources of supply. It also should be kept in mind that some jurisdictions may require electric utilities to purchase a portion of their supply as higher-priced wind/solar generation, which suggests that ultimate customers may be bearing no benefit.

There may be another consideration. Currently, some federal regulatory agencies appear to be extending rules and authority into areas where Congress has not spoken. Apparently, there was a Senate bill to socialize the costs of new electric transmission lines. After the Senate bill stalled, FERC initiated its regulatory proposal culminating in the July order. That order, therefore, seems to do what Congress refused to do.

The potential implications of social engineering for water and wastewater ratemaking are not wholly speculative. Simply stated, costs of service can be manipulated to be vulnerable to social "adjustments." Diligent utilities, and their customers, should remain vigilant in their application and acceptance of appropriate cost of service ratemaking.

TOILETS: AT THE SEAT OF TECHNOLOGY?

A hot topic today, along with the debt ceiling, climate change and weather, apparently is the toilet. Suddenly, something that seems to be useful but mundane has become quite exciting.

One of the lesser publicized achievements of the recent, and last, voyage of the shuttle Atlantis was the astronauts' testing of the "baggie system." This system is intended to recycle sweat and urine on the mission into drinkable water. It has been reported that the system can make about a litre of "sports drink" in 4 to 6 hours. The energy potential for such drinks in sports and politics may have no limits.

This month, the Gates Foundation announced a new program to "reinvent the toilet." A spokesperson for the foundation acknowledged that there are no silver bullets in reinventing the toilet. Given the price of silver, that is understandable. The concern, of course, is that over 2 billion people in the world are said to have no access to flush toilets.

A university scientist who received a $400,000 grant from the foundation is reported to have developed a solar-powered portable toilet as a solution. The sun powers an electro-chemical reaction to break down water and waste into hydrogen gas that in turn could be stored in fuel cells to provide energy for cloudy days and night use. In one of those useless catalogs that clog one's mailbox, I once saw an automatic toilet seat that went up or down depending on use and user. I wonder whether sun power could be used for that, too.

All this news again causes me to reflect upon the cottage outhouse days of my faded youth. The outhouse worked on both sunny and cloudy days and at night. It required no maintenance except for some painting, which was my job. It also provided shelter for many spiders and other varmints. Frankly, the current "modern" toilets sometimes frighten me. They remind me of the system of pneumatic tubes that were used to send messages to different departments in department stores years ago. The toilets today flush with such a whoosh that it causes me to fear loss of flesh were I not jump up quickly.

And so the mundane can be exciting.

THE PHILOSOPHY OF WATER

Recently, I lumbered through an antique shop, in my most serious hunter-gathere mode, grazing for whatever might catch my eye and release my checkbook In one jumbled booth, I spied a vintage cast iron hand water pump--you know the kind that would tower over kitchen sinks in most rural houses many years ago. It had been painted many times over its many years, but was primarily red, peppered by rainbow chips peeking through.

The paint on the handle was worn where many hands had grabbed it. Excitedly, I grabbed the handle, too, and vigorously pulled and pushed it up and down. But, only air flowed from the spout. How silly! A pump sitting on a shelf in an antique store can produce no water.

One of my college philosophy professors enjoyed repeating that "philosophers bake no bread." In other words, they do not produce anything tangible except for thoughts. In a way the vintage hand pump on a shelf in an antique store is like a philosopher. It pumps no water. But, what stories it could tell if it could talk. Who grabbed its handle over its many years of use? Where was it used? Why is it now on a shelf in an antique store?

Of course, answers to such questions are unlikely, and so the pump's history remains mysterious. But then again, water, which it once pumped, remains mysterious as well. A recent study has found that in the top layer of a water surface, about a quarter of water molecules have one hydrogen atom which actual vibrates in the air. (Science News, July 2, 2011, page 13.) "Despite covering roughly 70 percent of Earth's surface and constituting about 60 percent of the human body, water still puzzles scientists. For example, according to water's structural properties, it shouldn't be liquid, but rather gas, at everyday temperature and pressures." (Id. at p.13).

Well, who knows--maybe when I grabbed that handle of the pump on the shelf, I may actually have been pumping water in some form! Oh yes, I did not purchase the pump after all that--but, I may be back.

WHO REGULATES THE REGULATORS?

Water and wastewater utilities-both municipal-owned and investor owned- are subject to regulatory agency dictates, policies, rule makings and adjudications. While in many states municipal -owned utility rates may not be set by a utility commission, all rates of all water and wastewater utilities indirectly become regulated by actions of USEPA and state environmental agencies. For example, when USEPA establishes MCL standards or treatment techniques, compliance by utilities imposes costs which must be recovered in rates charged the users of water and wastewater service.

In the case of water utilities, compliance costs often are driven by contamination to sources of water supply caused by polluters. However, utilities and their customers are charged with the financial burden of removing such contamination in order to use the source of supply. In other words, regulatory compliance imposes both operating and capital costs on utilities for both monitoring and treatment. Pursuing the causes of contamination, however, may not be simple. In one case, a group of water systems sued a manufacturer of a herbicide to recover costs to monitor and remove the herbicide from their source of supply. The court dismissed the case, finding that the utilities had not sought relief from the MCL for the herbicide and had not exhausted their administrative remedies. (Iberville Parish Water Works District No. 3 v. Novartis Crop Protection Inc., 48 ERC 1905 (U.S.Dist Ct., S.Dist Ala.1999)).

Are there limitations on regulatory authority over water and wastewater utilities? Frequently, when court challenges to an agency rule are initiated, courts defer to the agency itself, citing alleged agency "expertise" or the agency's "primary jurisdiction" over the subject matter. However, experience indicates that such claims of "expertise" can be misplaced.

Sometimes, however, challenge to regulation can be successful. For example, in one case a federal court of appeals held that regional water supply utility did not have to comply with USPEPA's filtration requirement because the rule would impose costs substantially in excess of benefits , given that less costly alternatives were available to provide safe water. Thus, the court, appropriately, became the regulator of the regulators in this case. (U.S. v. Massachusetts Water Resources Authority, 256 F.3d 36 (1st Cir, 2001)).

We live in a highly regulated culture. A possible risk is that regulatory agencies may have agendas to take actions which Congress or state legislatures have declined to approve or are unable to approve. Administrative agencies have only delegated power. However, at times their action may approach what Justice Cardozo once called the tendency of a principle to extend itself to the limit of its logic.

In a real way, the utilities themselves become regulators of the regulators by pursing administrative and judicial remedies for relief from rules which may impose unreasonable costs upon the utilities and their customers.

WATER USE LOWER, WATER RATES HIGHER?

One of the current "hot" topics in the drinking water industry is the declining water use that many water utilities are experiencing. (For example, see Hunter, et al "Declining Residential Water Use Presents Challenges, Opportunities," AWWA Outflow, May, 2011, pp. 18-20).

"Cause" for declining water use is attributed to federal law (Energy Policy and Conservation Act of 1992 and Energy Independence and Security Act of 2007), which has resulted in efficiency standards for fixtures and appliances such as toilets, faucets, showers, dishwashers and washing machines. Other presumed causes include declining number of occupants per residential unit, conservation programs and rate increases. Two other potential causes are foreclosures translating into empty homes and older water meters which do not fully register use.

While reductions in water use can result in reductions to certain utility operating costs, obviously not all costs of service are variable. Water utilities may have incurred substantial fixed costs for infrastructure, which as time goes by must be replaced and upgraded. Further, a decline in usage does not necessarily translate into a comparable, if any, decline in demand. Treatment, storage and distribution assets must be able to satisfy peak demand periods.

Two other factors should be considered. New regulatory requirements continue to impose increased operating and infrastructure costs on water utilities, which in turn create higher costs of service to be recovered in rates. Further, water utilities may have incurred financing costs for current facilities, which costs must be recovered in rates and paid.

The paradox, therefore, is that a decline in customer usage does not necessarily correlate with a corresponding decline in customer water bills. Even if some costs of service are mitigated, other costs continue or may even increase. Neither utilities nor their customers should assume that water use efficiency means rate relief. An efficient utility will carefully monitor its revenue requirements, adjust rates to fully recover costs of service, and keep customers informed.

SEWAGE: POWER FROM THE PEOPLE

In the quest for alternative sources of energy, domestic wastewater-human sewage-is becoming an electricity magnet for researchers. In particular, gases and other waste products extracted from the wastewater treatment processes are being studied as means to generate electricity--by inclusion in fuel cells, by turning generators, etc. The objective is not confined to powering a treatment plant, but extends to adding electricity to the grid.

Even the mere flow in sewers is being looked at for production of hydro power. One inventor has come up with the idea of placing a small generator in a house sewer pipe. When a toilet is flushed, electricity would be generated to light the house or television set. However, such a concept may be practicable only during television commercial breaks or Super Bowl half time.

One researcher has estimated that one gallon of wastewater contains enough energy to light up a 100 watt bulb for 5 minutes. Unfortunately, federal law will prohibit production of 100 watt light bulbs after 2011.

Waste to energy is not a new idea. In the frontier west. pioneer homesteaders heated and cooked by burning buffalo chips. I recall a grade school science experiment by which electricity was produced from a potato. Now that the federal government wants to prohibit or limit the serving of potatoes in government subsidized school lunch programs, perhaps potatoes could be used to generate electricity for the grid instead of the griddle.

Using wastewater as an energy source perhaps should be tempered by some reality. It takes energy to build and operate a wastewater treatment plant and tributary sewer mains. Perhaps a more efficient wastewater energy source is the old fashioned outhouse. It requires minimal energy to build. While it does not generate electricity, it also does not use electricity. By saving electricity, it reduces demand on the grid. Has technology gone full circle?

DO "INSIDE-OUTSIDE" RATE DIFFERENTIALS CONSTITUTE UNFAIR DISCRIMINATION?

Many municipal-owned water and wastewater utilities have maintained "inside-outside" rate differentials. In such situations, customers of such systems located outside of municipal boundaries are charged higher rates than rates charged municipal residents of the same class. Often the outside rates are a multiple of the inside rates.

Such inside-outside rate differentials clearly constitute discrimination, which can be justified only if the costs to serve outside customers are shown to be higher than the costs to serve inside customers of the same class. Rate differentials can be supported only by cost of service studies. See Massachusetts Municipal Wholesale Electric Company v. City of Springfield, 726 N.E.2d 973 (Mass. App. 2000); Village of Niles v. City of Chicago, 558 N.E.2d 1324 (Ill. App.1990). "[A}though not obligated to serve non-residents in the absence of a contractual relationship, a municipality is prohibited from discriminating unreasonably in rates or manner of service when it elects to serve non-residents." Schroeder v City of Grayville, 520 N.E.2d 1032 (Ill. App. 1988).

However, at least two cases have held that the burden of proof is on the outside customer to show that the rates charged it do not reasonably reflect actual costs of service. See City of Novi V. City of Detroit, 446 N.W.2d 118 (Mich. 1989; Farley Neighborhood Association v. Speedway, 765 N.E.2d 1226 (Ind. 2002).

Some conclusions may follow:

1. Water and wastewater rates, and their design, should be based upon full cost of service studies-regardless whether inside or outside rates.

2. In setting rates, applicable rate-making principles should be followed per the law, bond ordinances and AWWA manuals.

3. Outside customers may have the burden to prove their rates are unreasonable, which effort may involve costly litigation and expert witnesses.

IT'S NOT YOUR ANCESTOR'S CESSPOOL

Some travelers claim that one does not visit England for the food-unless one craves porridge, baked beans on toast, or mystery sausage. On our recent London excursion, we were surprised to discover a television series called "Britain's Best Dish." In our excitement, we immediately switched off Coronation Street for what could become a replacement for Masterpiece Theatre. We were delighted, if not shocked, to see just folk competing to produce attractive, innovative and edible starters, main dishes and puddings. ( For non-anglophiles, puddings are desserts-not sure why they are not called "finishers" to balance with starters.)

But, television can be a many splendored thing. After "Best Dish", we watched a new series called "Filthy Cities". Appropriately, the first program was about London.

The focus was on London in medieval times-somewhat disappointing for our current visit and our appetite for a "best dish." Medieval times in in London, of course, were not romantic, as some novels may portray. They were times of polluted drinking water, no safe wastewater disposal and disease. Indeed, the plague killed about one half of London's population. Garbage, human and animal waste layered the streets with a muck that required boots to navigate or were tossed into the Thames, which also served as a source of drinking water. The images of filth in a filthy medieval city were horrific. No wonder the average life expectancy was about 35 years.

We may feel that some of our cities still are "dirty." However, we are fortunate today to live in a culture that both values and enables safe drinking water and safe wastewater disposal-made possible by innovative engineering advancements created from the necessity to extricate society from its filth. Also bear in mind that safe drinking water and safe wastewater disposal are removed from medieval times by only the last 100 years or so.

PROVIDERS OF RELIABLE WATER SERVICE

When we turn on a faucet, we expect a strong flow of clear, safe water. We understand that such water is delivered to our faucet through a system of underground pipes and some kind of treatment facility. Reliable, safe water service, however, requires more than unseen infrastructure. Behind that infrastructure are numerous unseen men and women who design, install, operate and maintain the pipes, pumps and treatment facilities that make reliable water service possible. Perhaps we tend to take these people for granted much as we may take good water service for granted.

I want to highlight four of these people. I have worked extensively with each through my career and have learned much from each of them.

Bill was a civil engineer and head of a one hundred year old engineering firm. He worked at a roll top desk from 1880, and his office had the aura of time standing still to match. However, Bill was an expert in water system design. He designed water facilities for major cities as well as small communities. He lectured on water issues not only in the united States but internationally as well. Bill also was an expert on ratemaking. In one of my trials, he deftly explained complex rate concepts to the judge in an understandable manner.

Bob also was a civil engineer, but he followed a different path that led him to becoming president of a large investor-owned water utility. Bob took great pride in the quality of the utility's operations and the quality of the water it provided. His water earned several taste awards. Bob worked hard to foster and maintain good relations with the communities he served. For example, in one rate case field hearing held by the regulatory agency to hear customer concerns, no customers even attended. Bob also successfully sought to bring his good water service to nearby communities whose own water systems had become inadequate or unreliable. Indeed, one of his pipe lines is some 30 miles in length.

Phil was the general manager of a regional water supply public agency. During his long career with his agency, he facilitated expansion of the water treatment facilities, development of a new source of supply, computerized operations to generate operational efficiencies, and maintained water quality that met applicable standards. Phil had great faith in people, and he managed his small staff consistent with that faith.

Ed was an accountant for a large investor-owned water utility having systems in several states. He developed financial and accounting statements to show cost of service requirements for rate cases as well as for operations. To be able to provide reliable and efficient water service, a utility must have an understanding of its costs to provide such service and its corresponding revenue requirements. Ed had an uncanny ability to grasp the meat of an economic or financial issue and to demonstrate solutions through his accounting statements and testimony.

What do these men all have in common? They dedicated their careers to providing safe, reliable water service. They were gentlemen, who treated others with respect. They have passed but are not forgotten.

FISHING IN RIVERS IN THE SKY

We are familiar with the "usual suspects" which have become our sources of water supply-surface waters such as lakes and rivers and ground waters of various depths. Currently, science appears to be focusing on "rivers in the sky"--atmospheric bands of water vapor which induce or affect water supply, flooding and the earth's water cycle when they drop their moisture load.

"Like freight trains loaded with water vapor, atmospheric rivers are long, narrow bands whose winds funnel huge amounts of moisture through the sky." (Science News, February 26, 2011, p.20). These rivers can discharge large quantities of rain or snow.

The sky rivers appear to arise due to temperature differences between the tropics and the poles, especially in winter. A strong temperature difference can cause low pressure storms to spin off, with winds within such storms creating an atmospheric river. (Science News, p.21).

It appears that research is being directed toward predictability of such rivers as well as a better understanding of their cause and nature. No doubt, there is concern not only as to flooding effects, but also the potential for replenishment of surface water sources of supply for water service. For further information on NOAA research studies, see www.esrl.noaa.gov/psd/atmrivers

EPA'S PROPOSED NEW DRINKING WATER STANDARDS QUESTIONED

On February 2, 2011, EPA announced at a Senate hearing that it will develop a regulation to establish a national drinking water standard for perchlorate. This decision reverses a position taken by the agency under the Bush administration. Perchlorate is both naturally occurring as well man-made, used in such products as rocket fuel and explosives. It is believed that perchlorate may affect the thyroid's ability to produce hormones for developing fetuses and infants. EPA also said it will develop a regulation to establish a drinking water standard for up to 16 toxic chemicals called volatile organic compounds (VOCs) such as industrial solvents, which are believed may cause cancer. (See:water.epa.gov/contaminants/unregulated/perchlorate.cfm)

At the same hearing, the American Water Works Association (AWWA) presented testimony questioning the wisdom of EPA's decision to regulate perchlorate. According to one AWWA witness, "EPA's decision to move forward on perchlorate regulation is perplexing....Water providers share the Agency's interest in protecting public health through the provision of safe water. However, the weight of scientific evidence suggests national regulation of perchlorate in drinking water does not accomplish this goal." Another witness stated "We should allow the best available science, not the political process, to be the ultimate driver in regulatory decisions." AWWA also pointed out that the Food and Drug Administration and EPA's inspector general previously had concluded that a national standard for perchlorate would not provide a meaningful opportunity to reduce risk, and AWWA'a own assessment was consistent with these conclusions. (See:awwa.org/files/GovtPublicAffairs/GADocuments/AWWAtestimonyEPWFeb2011.pdf)

This interplay between a federal regulatory agency and a major regulated trade group, before a Congressional committee hearing, suggests some observations:

1. EPA's decision may have been a preemptory move to avoid Congress dictating a political mandate as to a specific drinking water standard for perchlorate and VOCs. As such, the decision is understandable, but at the same time, it also becomes a political decision itself.

2. This interplay illustrates EPA's broad regulatory reach, which affects public water supplies of every size. As such, this reach could be viewed as well beyond the original intent of the commerce clause of the U.S. Constitution, which was to control trade barriers and tariffs imposed by states against trade from other states.

3. Drinking water regulations should have sound scientific justifications, and not be the result of knee-jerk reactions to media, interest groups and politicians.

4. Every regulation imposes costs upon water utilities for monitoring, testing, reporting and treatment. These costs ultimately are borne by customers. Imposition of new standards should be supported by a sound cost/benefit justification.

WHERE DID WATER COME FROM?

Water truly is a mysterious and wonderful substance! As a liquid, it nevertheless can change form, ranging from ice to steam. It is essential for life and commercial activity. Yet, when it floods, it can destroy life and commercial activity.

Part of water's mystery is its origin on earth, an issue that has challenged science for years. More recently, it has been assumed water was delivered to earth as ice by comets or asteroids.

However, according to Science News (January 15, 2011, p.26), there are two new theories as to how water originated on earth.

One new theory is that, at the time when the inner planets of the solar system were forming, Jupiter and Saturn moved around. They entered into the inner solar system and then backed out, kicking some ice bodies from the outer solar system into orbits which enabled the ice bodies to reach earth.

According to the article, a second new theory is that water came into being on earth from the cosmic dust from which the earth was formed. The dust grains held onto water molecules so tightly that high temperatures had no adverse impact.

Of course, there always has been a third explanation: that God created water on earth.

The Science News article points out that theories as to formation of water on earth may be helpful and encouraging for discovery of water in other locations in the universe.

Perhaps just as important, or even more so, is understanding that fresh water on earth, regardless of source, is a limited resource, a resource that must be understood, protected and conserved. We cannot expect bodies from outer space to deliver any more water to earth.