WHY IS THERE A WATER UTILITY INFRASTRUCTURE CONCERN?

Recently, many have asserted that water utilities in the United States are facing costs in the billions of dollars to replace aging infrastructure. Assuming this is true, why is this?

Historically, many water utilities--particularly municipally-owned ones--have failed to set their rates regularly to produce revenue sufficient to recover the full costs of service. One explanation for this is system owners are hesitant to raise rates for fear of backlash from customers who are perceived as unwilling to pay for increased rates.

One of the important costs of service results from the necessity to repair and replace infrastructure from time to time and to fund reserves to pay for such work. Funding of such reserves is from revenue produced from rates. If rates are set to recover only operating costs, reserves will become unfunded and infrastructure issues will be deferred or disregarded. While a utility could incur debt, such as through a bond issue, to pay for plant replacement, the impact of debt service can have an unwelcome effect on rates.

Asset management begins with acknowledgement that facilities must be repaired, replaced and upgraded from time to time. That acknowledgement logically should arise with adequate and detailed records of assets, costs, depreciation, useful lives and condition reports. Water utilities, particularly municipally-owned ones, commonly acquired water plant from developer contributions in aid of construction at no cost to the municipal system. At some point in time, such plant must be replaced. If provision has not been made for depreciation or funding of replacement reserves, an infrastructure concern likely will arise.

The conclusion, it would seem, is that neither a utility nor its customers will benefit when rates sufficient to recover all costs of service, including funding of reserves, are deferred or when asset management is not adequate. The "catch-up" effect that can result when an infrastructure failure occurs, or when the system becomes inadequate to maintain quality of service, can prove a lot more costly than any perceived benefit from avoidance of timely rate adjustments.


© Daniel J. Kucera 2017

THANKSGIVING: WHO SHOULD WE THANK?

Thanksgiving Day is more than falling asleep before a television set blaring boring, non-competitive football games, after over-eating
turkey and fixings. Rather, as the name implies, it is a day designated to give thanks. For what, and to whom, are we to give thanks?

Recently, I found myself shuffling through foaming accumulations on a bookshelf. The piles of stuff cried for attention. In them, I excavated a letter that my cousin wrote on December 12, 1944 to my parents. He was 20 years old and a soldier in Patton's "blood and guts" Third Army. He was a forward spotter for artillery in the Battle of the Bulge, which was characterized by hard fighting and hard weather.

My cousin wrote, in part: "Over here we had quite a nice Thanksgiving dinner. The turkey sure tasted good and also the chocolate cake we had. That sure is a promise to spend next Thanksgiving with you, if it is at all possible. Will be sure to have Aunt Mil make some good dumplings though! That's one thing I haven't had over here...at times it's not peaches and cream."

Obviously, and to be expected, his thoughts and unexpressed thankfulness were on the homefront. More broadly, it has been said that Bing Crosby's White Christmas was the most popular song with U.S. troops in World War II because it reminded them so much of home and what they were fighting for.

So, who should we thank on Thanksgiving Day? Should we thank the presidents on Mt. Rushmore who stood and still stand for America?
Should we thank all those in our military who stood for, and still stand for, America? Should we thank all the farmers and ranchers who have produced all the food that nourishes us every day? Should we thank all who have prepared, cooked and served that food? Should we thank all of our family and all of our friends?

All of the above-all that we ever have received, all that we now have and all that we will ever receive-comes from one person. Thank God!


© Daniel J. Kucera 2017

IDOLS

We are a country of idols. They can be movie stars, singers, political leaders, military heroes, etc. We embrace idols when they are living and erect statues of them to idolize when they are not. And, because idolatry can be fickle, we tear down statues when we cease to idolize them.

At a rest stop along Interstate 90 near Chamberlain, South Dakota, on a high, windswept bluff saluting the Missouri River, a huge metal statue of Sacagawea towers over all. The Shoshone Indian, of course, made a significant and probably indispensable contribution to the success of the Lewis and Clark Corps of Discovery exploration up the River. The voyage sought to establish, in effect, an interstate highway of rivers to the Pacific Ocean. In point of fact, the Missouri River became an interstate highway between Ft. Benton, Montana and St. Louis, Missouri initially because of the fur trade. So, perhaps the location of this Sacagawea statue along a concrete interstate highway is particularly poignant.

Interestingly, there are at least 22 other statues of Sacagawea in 11 states (Montana, Missouri, Wyoming, Idaho, Washington, Oregon, North Dakota, South Dakota, Virginia, Texas and Illinois). One may wonder why another statute of the woman should be erected now at this rest stop.

It should come as no surprise that today many Indian reservations are located on lands that have limited agricultural suitability and limited water resources. It also should come as no surprise that many of these reservations suffer from prevalent high unemployment, low incomes, inadequate housing and other issues. One could question whether one more statue of Sacagawea satisfies any predominant need of any sort.

Indeed, there may be a certain irony here. Notice, in the above photo, Sacagawea is not looking over the Missouri River, which was the subject of her exploits. Instead, she is facing the rest stop building and its rest rooms, keeping a watchful eye on all who enter to use its facilities. Perhaps this statue is an idle idol.

ARE MICROBES CAUSING GLOBAL WARMING?

A report states that research suggests algae growing on the Alaska Harding Icefield is causing about one-sixth (17%) of the glacial snow melt there.* As the microbes grow, they turn the snow a crimson color. This coloring increases the amount of sunlight the snow absorbs, causing an increase in melting.

Glaciers contain nutrients that can encourage algal growth. When algal growth causes faster snow melt, that melting can, in turn, accelerate more algal growth resulting in even more melting. Researchers also are studying the Greenland ice sheet for similar findings.

According to the report, the "algal effect" on glacial snow melt should be taken into account in so-called climate change simulations. In other words, snow melt cannot be assumed to be due entirely to higher temperatures. One wonders what other natural phenomena may be increasing global temperatures but may not be considered in predictions of climate change. For example, some have asserted that cow flatulence is a significant contributor to warming.

It is said that "a rolling stone gathers no moss." In the fast moving rolling stone of climate change assertions, have we really looked for moss or do we merely assume that there is none?

_______________________________________

*Hamers, "Algae Speed Up Melting of
Glacial Snow," Science News,
October 14, 2017, p.10

© Daniel J. Kucera 2017

RAINMAKING: FOOLING MOTHER NATURE?

One of the classic scenes in Hitchock's movie North By Northwest has Cary Grant nervously standing in bleak open farmland. Another man, a stranger waiting for a bus, appears and exclaims something like "that's funny--that crop duster airplane is spraying where there are no crops!"

Much of the upper Great Plains has experienced severe drought conditions this summer, causing harsh impacts on farming and ranching. North Dakota has had a cloud seeding program for several decades. Airplanes spray particles of silver iodide and dry ice into clouds to cause water droplets to become ice crystals which can fall as rain and small hail.

Much like the crop duster spraying barren ground, it appears that some are questioning the success of cloud seeding. A recent published article has reported that some farmers believe that cloud seeding actually may be making drought conditions worse.* They have referenced alleged situations of clouds moving away after seeding, resulting in less rainfall in cloud seeded areas.

However, the article cites studies showing that cloud seeding does, in fact, produce more rainfall. The difficulty is that evidence one way or the other seems to be anecdotal. It simply is near impossible to objectively measure how much more rain fell as a result of cloud seeding compared with how much rain would have fallen without it. Also complicating the picture is the fact that it is hard to generalize because no two cloud systems are identical.

So, even if every cloud has a silver lining, it may not be a wet one.

_________________________________________

*Kolpack,"In Parched North Dakota,Cloud-
Seeding Irks Some Farmers," Rapid City
Journal, September 25, 2017, p. A3

© Daniel J. Kucera 2017

PRIVY TO HISTORY: THE INS AND OUTS OF AN OUTHOUSE

A recent newspaper article reported that archaeologists are digging up the probable site of an outhouse located next door to Paul Revere's house in Boston. The privy was in the yard of a house built approximately 1711. Apparently, the site already has yielded bits of glass and pottery. However, no fossilized human excrement yet has been discovered. If such remains do pop up, they could give clues as to colonial diets, wealth of the users and digestive health. The article notes that historically outhouses often served as landfills, coughing up interesting artifacts when excavated.

It seems that analysis of excrement is not limited to probing outhouse contents. Recently, I attended a National Park Ranger lecture about bears. He explained that droppings by grizzly bears, when studied by graduate students, have shown that only about 25% of the berries consumed by the bears actually were digested. The remaining 75% were discharged as whole berries, suggesting a straight pipe phenomenon. Hopefully, samples were collected with caution.

Another article has stated that scientists are still working on how to convert astronaut excrement into a useful product. Apparently, one project seeks to convert astronaut urine into 3-D printable plastics and to nutritional omega-3 fats.** Perhaps, one day in the future archaeologists will be excavating plastic objects from landfills that were made from space flight waste.

Modern wastewater collection and treatment systems may have a disadvantage for historians. Opportunities for discovery of cultural artifacts, dietary clues and socio-economic factors may be limited, compared to the outhouse eras.

_______________________________________

* Kole, "The Old Outhouse: Privy Tied To
Paul Revere Is Excavated", Rapid City
Journal, September 30, 2017, p. C6

**"Waste Makes Haste", Science News,
September 2, 2017, p. 4


© Daniel J. Kucera 2017

WATER UTILITY SERVICE AND THE UNIFORM COMMERCIAL CODE

Article 2 of the Uniform Commercial Code ("UCC") governs the sale of "goods". A new Illinois Appellate Court decision has stated that natural gas is considered "goods" within the UCC, and that an oral contract for the sale of natural gas by a supplier to a business customer was not enforceable because the UCC requires such a contract to be in writing.*

Under Article 2 of the UCC, a "sale" is the passing of title to goods from seller to buyer at a price. "Goods" are all things movable at the time of identification to the sales contract.

Certain implied warranties can arise from a contract for sale of goods, including a warranty of merchantability (fitness for ordinary purposes for which such goods are used) and a warranty of fitness for a particular purpose.

Over the years, several courts have wrestled with the question whether water utility service is a "sale" of "goods" under the UCC that can give rise to a breach of an implied warranty. The rulings have been quite diverse. For example, an Oregon court held that water service was not a sale of goods. On the other hand, a Georgia court held that it was. In between these opposites, are a South Dakota court that held water service is a sale of goods, but no implied warranties arise; and a Pennsylvania court that held water service is a sale of goods but only an implied warranty of merchantability is created.

Finally, a Massachusetts court held that water utility service is both a sale of goods within the UCC and a provision of service, which is not within the UCC.** The court stated that "where a contract is for both sales ad services as here," to determine whether the UCC governs, the test is whether the predominate factor, thrust or purpose of the contract is the provision of service, with goods only incidental. In the case of water service, the court concluded that the provision of service was the primary factor and held that the UCC did not apply. It stated: "water is a unique product and is essential to human health and well-being. Here, the city did not create or manufacture the water. Rather, the city, by a system of reservoirs, captured the water from brooks,streams and rainfall. It treated the water and then distributed it to its citizens. Although the city charged a sum for the water, the rate reflected the cost of storage, treatment and distribution. Thus, it is clear that the predominate factor, thrust or purpose of the activity was the rendition of services and not the sale of goods.

Interestingly, these decisions generally have focused upon the issues of "goods" and "warranties." Unresolved, perhaps, is whether water utility service involves a "sale" of goods within the UCC. That is, is there a transfer of title to water from the water utility to the water user? Further,if so, when water then is used and becomes wastewater, does the user pass title in the water to the wastewater utility?

__________________________________________

* Vanguard Energy Services v. Shihadeh,
2017 IL.App.(2d)160909

** Mattoon v. City of Pittsfield,
775 N.E.2d 770 (2002)

© Daniel J. Kucera 2017