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June 16, 2009
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State Regulatory Relations

Seattle, Washington


NARUC Prepares for Summer Meetings

Smart Grid, climate change, cyber security, and international utility regulation will be key themes discussed next month at the 2009 National Association of Regulatory Utility Commissioners summer committee meetings.

The July 19-22 meetings, held at the Westin Seattle, will also feature discussions on stimulus funding for broadband services, demand response and energy interdependencies.

NAWC members will be well represented at the meetings. On Sunday, July 19, at the Committee and Staff Subcommittee on Critical Infrastructure, Robert Schreiber, director of Client Services and Security Operation ITS at American Water, will give a presentation on cyber security; and William Komianos, senior director of Operational Risk Management at American Water, will present on pandemic preparation and the recently crafted Roadmap to a Secure & Resilient Water Sector, developed by the Critical Infrastructure Partnership Advisory Council’s (CIPAC) Water Sector Strategic Planning Working Group.

On Monday and Tuesday at the Committee and Staff Subcommittee on Water, NAWC members will participate in the following topics:

  • Water/Energy Interdependencies: Enhancing Operating Efficiencies
  • Utility and State Experiences with the Federal Economic Stimulus Package
  • Sources of Capital for Investor Owned Water Companies – An Historical Overview and Recommended Solutions for Pending and Future Challenges
  • Affordability Concerns in Today's Economic Climate
  • Western States' Water Issues: Source Availability, Regulatory Trends and Implementation of New Technologies
  • Draft Resolution Seeking Tax Incentives to Encourage Infrastructure Investment – The Hon. David King, NM, Chair, Water Committee
  • 5th National Drinking Water Symposium Planning Update (Oct. 11-14), The Swan Hotel, Orlando, Fla.
  • Desalination Projects in California
  • Small Water Company Challenges and Solutions
  • Drought and its Effect on Drinking Water Utilities and Usage
  • Current U.S. EPA State Drinking Water Program Initiatives
  • Congressional Update on Pending Water Legislation
  • National Drinking Water Advisory Council Update

NAWC will also host a reception and dinner in honor of the Water Committee on Tuesday night.

You will not want to miss this meeting. For more information, updates and a more detailed agenda, please visit

Appeals Court Adopts “Unitary Waters” Doctrine

In a decision released on June 4, 2009, the U.S. Court of Appeals for the Eleventh Circuit determined that the transfer of pollutants from one distinct body of water to another did not constitute an “addition to navigable waters” for Clean Water Act permitting purposes (Friends of the Everglades v. South Florida Water Management District, No. 07-13829).

The decision is notable because the so-called “unitary waters” doctrine had previously been rejected by every court of appeals that had considered it, including the Eleventh Circuit itself in a prior decision that was subsequently vacated. The Court emphasized, however, that the current litigation was distinguishable from those earlier cases because the EPA, in the interim, had promulgated a regulation specifically addressing the question and that the issue now before the Court was whether the EPA’s interpretation amounted to a reasonable construction of an ambiguous statute and was therefore entitled to deference. In explaining its determination, the Court offered the following analogy:

Sometimes it is helpful to strip a legal question of the contentious policy interests attached to it and think about it in the abstract using a hypothetical. Consider the issue this way: Two buckets sit side by side, one with four marbles in it and the other with none. There is a rule prohibiting “any addition of any marbles to buckets by any person.” A person comes along, picks up two marbles from the first bucket, and drops them into the second bucket. Has the marble-mover “add[ed] any marbles to buckets”? On one hand, as the Friends of the Everglades might argue, there are now two marbles in a bucket where there were none before, so an addition of marbles has occurred. On the other hand, as the Water District might argue and as the EPA would decide, there were four marbles in buckets before, and there are still four marbles in buckets, so no addition of marbles has occurred. Whatever position we might take if we had to pick one side or the other of the issue, we cannot say that either side is unreasonable.

Like the marbles rule, the Clean Water Act’s language about “any addition of any pollutant to navigable waters from any point source,” 33 U.S.C. § 3362(12), is ambiguous. The EPA’s regulation adopting the unitary waters theory is a reasonable, and therefore permissible, construction of the language. Unless and until the EPA rescinds or Congress overrides the regulation, we must give effect to it.


Aqua Utilities Florida Granted Rate Increase

The Florida Public Service Commission has authorized Aqua Utilities Florida to increase its annual water revenues by approximately $3.2 million and its annual wastewater revenues by approximately $2.6 million, Application of Aqua Utilities Florida, Order No. PSC-09-0385-FOF-WS (May 29, 2009). In so doing, the commission departed from strict adherence to its cost of equity “leverage” formula and awarded AUF a return on equity of 9.75 percent (the leverage formula produced a 10.77 percent ROE).

In other findings, the PSC denied a recommended negative acquisition adjustment; rejected a proposal to utilize the consolidated capital structure of AUF’s corporate parent, Aqua America, in lieu of AUF’s own capital structure; and granted, in part, AUF’s request to consolidate operating systems for ratemaking purposes (reducing the number of separate rate units from 82 to 8).