STORM WATER PUBLIC UTILITIES GET INCREASING ATTENTION

Two years ago, I discussed the possible formation of storm water public utilities to enable municipalities to provide comprehensive storm water management to achieve regulatory compliance ("Is A Storm Water Utility In Your Future?", December 27, 2010).

Now, it seems that more and more municipalities are forming such utilities to construct, operate and maintain storm water disposal systems. For, example, it is reported that in South Dakota, Sioux Falls, Brookings, Aberdeen, Pierre and Vermillion have such utilities and Rapid City is considering one. A typical feature of a storm water public utility is a rate structure by which property owners are charged in accordance with their estimated contribution to runoff, and both revenues and expenses are separately accounted for using enterprise accounting.

A recent decision of the Maine Supreme Judicial Court is instructive as to the propriety of storm water public utility ratemaking. (City of Lewiston v. Gladu, 2012 ME 42 (2012)). The Court held that the rate charged was a fee for service, not a tax.

The Court found that there was a link between the rates charged and the amount of impact imposed on the storm water management system. The fee was based on the amount of impervious surface of each property. Fee reductions were allowed for certain conditions, including where a property has a storm water system that does not impact the municipal system, or where the property is undeveloped.

The Court noted that all of the utility revenues were to cover only the costs of regulating storm water runoff, maintaining the storm water infrastructure and managing the utility. In other words, revenues did not cross-subsidize other municipal functions.

The Court also found that the utility provided a benefit to property owners. "The assessment applies only to developed property, the properties receive the special benefit of having their stormwater managed in an effort to comply with state and federal laws, and the assessment is properly based on the horizontal impervious surface area. Viewing this factor in light of the recent trend toward upholding fees that 'confer intangible benefits on both those who are assessed and those who are not'...it weighs in favor of upholding the stormwater fee." (pp.11-12)

The Court cited Tukwila School District No. 406 v. City of Tukwila, 167 P.3rd 1167 (Ct. App. WA 2007), which upheld a storm water utility where the rates were limited to protecting property owners and local water sources from runoff, the revenues were segregated and used only for those purposes, and the fees were approximately proportional to the amount of impervious surface of the properties.

It would seem that the formation of a storm water public utility is particularly attractive in view of the ever-increasing environmental regulatory climate for storm water control and the every-decreasing municipal revenue climate in today's economy.

SEARCHING FOR TRUTH IN SCIENCE

"Heartless science seeks truth, and truth alone, quite apart from any consequences that may arise."--Alexander Graham Bell

Bell demonstrated his concept of heartless science in his feverish labor, with much personal sacrifice, to invent a metal detector which could be used to locate an assassin's bullet in the back of President Garfield. Although it was perfected too late to help the President, the device worked and was used into World War I, even though the x-ray became available.

Unfortunately, science is not always heartless; rather, it can be influenced by bias, agendas or even ignorance. Consequently, science may not always attain the truth idealized by Bell.

For example, in the late 1880s, many doctors in the United States rejected Lister's discovery and application of antisepsis. They also rejected Pasteur's discovery that germs cause illness, believing that if one cannot see germs then they do not exist.

More recently, scientists have asserted that ancient Maya writings have predicted that the earth will end December 21, 2012. Now, scientists have discovered other Maya writings showing that no such prediction was made. (Science News, August 11, 2012).

Many scientists have asserted that global warming is human caused. Recently, for example, a group has indicated that the probability Texas will experience hot, dry weather in a La Nina year increases 20 times due to human caused global warming. (Science News, August 11, 2012). On the other hand, scientists apparently were surprised this month by a report that the amount of carbon dioxide being released in the United States has fallen to its lowest level in 20 years. The decline has occurred due to market forces (cheaper natural gas), not by governmental fiat.

So how does Bell relate to water and waste water utilities? These utilities are subject to treatment standards, regulations and enforcement actions by federal and state regulatory agencies. These agencies are assumed to have scientific "expertise", their rules are assumed to be based on scientific truth, and their "authority" is assumed to be boundless.

These assumption may not be true, in point of fact. Thus, on August 21, 2012, the U.S. Court of Appeals for the D.C. Circuit held that EPA's rule regarding emissions from coal-burning power plants crossing state lines (Cross-State Air Pollution Rule) exceeded EPA's statutory authority. Earlier in the month, the 5th Circuit Court of Appeals held that EPA's rejection of the Texas permitting process for utilities and industrial plants had no basis in the Clean Air Act or its implementing regulations.

When new standards or regulations are proposed, water and waste water utilities should carefully review the basis and support for the proposals. They should consider questioning and commenting when opportunities arise, and challenging them when costs exceed benefits or scientific support appears lacking. Likewise, in the case of enforcement actions by regulators, allegations that may not have an evidentiary basis or appear to be beyond statutory authority should be defended against.

There are times when regulation can be heartless. But if regulation is not based upon scientific and legal truth, the potential consequences can justify challenge.

JUDICIAL LIMITS ON AGENCY AUTHORITY

Over the years, courts have applied several legal principles to limit the apparent exercise of authority by an administrative agency. One of the well-established principles is that an administrative agency has only those powers delegated to it by the statutes creating it. In other words, the agency's actions must be within the statutory scope of its jurisdiction and authority.

Another principle of administrative law is that an agency must follow its own rules. This concept, in effect, is one of procedural due process.

A Washington, DC, federal District Court decision issued this week arguably illustrates application of these two principles. The Court reviewed new, more stringent water quality standards promulgated by EPA to deal with mineral deposits in streams resulting from mountain top removal surface coal mining. The mining industry allegedly argued that the new standards were not issued in compliance with the agency's own rule making procedures, which include a requirement for formal notice and opportunity for public comment.

The District Court accepted the industry position and, in addition, in effect held that the agency exceeded its authority under the Clean Water Act. Interestingly, earlier this year another Washington District Court held that, when EPA revoked a permit for a mountain top removal mine, it exceeded its authority.

Recall that earlier this year, the Supreme Court rejected EPA's arguments to the contrary and held that there is a right to judicial review of EPA's compliance orders. That decision, along with the District Courts' opinions discussed above, appear to demonstrate the continuing importance of judicial restraints on agency actions which exceed its authority and may deny due process.