Sometimes there’s a little to say about a lot of things. Welcome back to Variable Flow.
Battle of Helm’s Deep-PFAS liability edition
Let the suits commence
When EPA announced their proposed Maximum Contaminant Limit (MCL) for PFAS a year ago, I called the proposal a full-employment program for environmental lawyers. Now the plaintiffs’ attorneys are coming for the water utilities. In October, customers of Aquarion Water Company filed a class-action lawsuit against the Connecticut water utility for PFAS contamination in the company’s water. The suit accuses the utility of knowingly endangering their customers’ health with the “forever chemicals” and seeks direct and punitive damages. Aquarion has reported PFOA and PFOS in several of its Connecticut water systems, mostly at 2-5 parts per trillion (ppt), and with one well measured at 22 ppt—above EPA’s proposed standard, but below the former advisory level of 70 ppt. Plaintiffs argue that Aquarion should have applied treatment technology that would have eliminated PFAS as soon as they detected the compounds.
More such suits are likely to follow. Aquarion’s deep corporate pockets—it’s a subsidiary of a $50 billion energy company—make it an inviting target for plaintiff’s attorneys. Such big, investor-owned utilities will be the first in the legal crosshairs, and they’re responding rationally with PFAS removal at what feels like a much faster pace than their public sector counterparts. That’ll mean lower ppt but higher prices for investor-owned utilities.
Although government utilities are tougher legal targets, the Supreme Court’s logic in Thacker v. TVA suggests that similar PFAS suits will eventually come for municipalities, special districts, and anyone else who puts water through a tap and has some assets to grab (I’m not a lawyer, so this is an amateur’s take and could be completely wrong). In any case, money for settlements and payouts from those lawsuits will come in part from suits and settlements with chemical firms; the rest will come from ratepayers! So customers will pay higher rates for PFAS removal, and then even higher rates to settle lawsuits lodged by the utility’s own customers.
This whole thing is sharp as marbles. Hopefully Congress and/or state legislatures step in and set reasonable PFAS liability rules for water utilities, or else water bills everywhere are going to spiral and the only winners will be litigators.Rearranging the deck chairs
Last year the State of Maryland formed a Task Force to investigate ways of regionalizing Baltimore’s beleaguered water and sewer systems with their suburban Baltimore County neighbors. Baltimore’s Mayor and Baltimore County’s Executive published a joint Op-Ed calling for bold leadership from the Task Force.
this will work fer shur
An impressively thorough 2021 report on the topic arrived at an unambiguous conclusion that consolidation of the region’s water/sewer utilities under a regional governance authority would be the best model for addressing the region’s needs. The Task Force's new report arrived at more or less the same conclusion. Public comments opposed to consolidation expressed worries about rate hikes, the specter of privatization, and a loss of “local control”—the phrase appears 168 times in the record, apparently part of a coordinated advocacy campaign.
Late last month, instead of endorsing consolidation under a new authority, the Task Force punted. In a time-honored maneuver, the Task Force called for further study of the issue and a reorganization that would remove the City’s and County’s water and sewer utilities out of their public works departments and into stand-alone agencies. It’s not immediately clear whether or when this rearranging of deck chairs might happen.
we iz bettur togethur
Meanwhile, in the Hawkeye State
After years of effort, a dozen water utilities in the Des Moines region have formed a new regional water authority: Central Iowa Water Works (CIWW). Des Moines Water Works is the biggest player and the prime mover behind the regionalization effort, but CIWW members include several mid-sized suburban systems and even tiny Polk City (population 2,471).The new entity will develop, operate, and manage water supply for the region; at this point the member utilities will continue to operate their own distribution and retail services. CIWW will help its member utilities spread and manage costs and risks for a more stable supply going forward. It’s an important step for a region where nitrate pollution threatens the surface water sources that utilities have used for decades. So much for Iowa stubbornness.
The state would fund the program with a new $2 per month fee assessed to every water or sewer utility customer in the state. A state agency would channel that money back through utilities and/or community action agencies, who would then apply funds to the accounts of participating customers. The program has stirred controversy among the state’s local leaders.
This proposed setup is in many ways a statewide version of the Philadelphia’s TAP. As such, the implementation problems that plague Philadelphia’s program are likely to recur in the Great Lakes State should these bills pass: the program will likely be costly to administer and burdensome for participants, and will ultimately hurt more poor folks than it helps.
But the Michigan proposal is even more troubling than its Pennsylvanian cousin:
- It’s even more regressive. The $2 monthly fee that would pay for Michigan’s new assistance program is a tax on tap water that will hit every Michigander who gets water or sewer service—rich or poor—with the same $24 annual rate hike. At least Philadelphia TAP ties its surcharges to the volume of water customers use.
- It’ll hurt poor folks even more. Participation in water/sewer assistance programs is generally quite low due to implementation problems inherent to any income-based rate scheme. Five years in, Philadelphia TAP enrolled less than 30% of its eligible population, despite significant efforts to boost enrollment. The other 70% of poor Philadelphians pay an average of an extra $16 a year and see no benefit. The proposed Michigan system is apparently as burdensome and costly as Philadelphia’s, so there’s no reason to expect that Michigan’s new program would fare any better. Every low-income Michigan water customer would pay $24 more for water every year, but only those with the time and trust to apply will see any benefit--and only if their utilities participate.
- It’ll transfer revenue from rural/small communities to large communities. Michigan’s proposed program would be administered through utilities: utilities would collect the tax revenue and send that revenue to the state. The state would then send money back to utilities, which would apply funds from the state to participating customers’ accounts. But although the tax is mandatory throughout the state, distribution of the program’s benefits will depend on utilities' administrative capacity. Enrollment, qualification, and so forth would be handled by either the utilities themselves or through third-party community agencies. But small utilities may lack the capacity to apply the benefits—even with the aid of a community action agency. Again, LIHWAP is instructive: just 268 of the state’s roughly 1,400 water providers signed up for the federal program. Although the systems that participate serve the lion’s share of the state’s population, the state’s small utilities serve some of its poorest residents. A $2 monthly tax on those utilities’ customers could effectively send money from rural Michigan to urban/suburban Michigan, with bureaucratic middlemen taking several millions of ratepayer dollars along the way.
Etc.
California lawmakers sour on income-based rates. \\ Ten years after the Elk River disaster, West Virginia continues to struggle with trust at the tap. \\ Democracy has been a rollercoaster for American Water lately: the big investor-owned utility won an acquisition referendum in New Jersey, but in California they lost a board vote for a forcible takeover of American’s Monterey system. \\ Public opinion supports SNAP-H2O.