By Rich Anderson
January 31, 2011

Pleasanton (CA) Mayor Jennifer Hosterman, Co-Chair of the Mayors Water Council, led mayors participating in a January 19 meeting in a discussion on sewer overflow policy, water infrastructure finance and EPA's emerging regulatory action on storm water controls and storm water fees charged to state and federal government users.

Judy Sheahan, Assistant Executive Director of The U.S. Conference of Mayors, reported that Congress approved a unanimous consent resolution on December 22, 2010 (S. 3481), the result of which requires all federal agencies to submit fee payment to local government that provides storm water services.

Chattanooga (TN) Mayor Ron Littlefield raised this issue several times over the last year, pointing out that federal agencies set a bad example by refusing to pay fees for storm water services. He said that state government agencies in his region were also trying to get free municipal storm water services. In effect, this just resulted in passing the cost on to city residents and businesses. Littlefield stated, "We should acknowledge the U.S. Environmental Protection Agency (EPA) and the U.S. Department of Justice (DOJ) for listening to the mayors on this problem, and supporting them in crafting a solution that reapportions the cost to provide this important municipal service." He also said that it would have a positive chain reaction by convincing state and county agencies that they are not immune to paying fees for municipal services.

Nancy Stoner, EPA's Deputy Assistant Administrator for Water, (Stoner has been tapped to assume the role of Acting Assistant Administrator for Water in February), presented information on a storm water rulemaking effort. This policy initiative involves development of standards for new controls on storm water in urban areas. Stoner stated that the effort is still in the early stages of development, but the agency has begun reaching out. EPA has estimated that just fewer than ten percent of regulated waters (streams, lakes and estuaries) are adversely impacted by urban runoff. The controls under consideration would set standards for new development and redevelopment, and transportation facilities in urban areas. Although not yet decided, EPA is considering voluntary and mandatory application of low impact development and incorporation of green infrastructure measures to comply with runoff reduction requirements. The goal is to increase permeability; and this may require some densely populated areas to retrofit their land use to reduce runoff. Stoner said that the agency plans to incorporate flexibility in the rule, conduct a cost-benefit analysis, and seek public input.

John Lanzoni, Global Manager for Siemens Water, made a brief presentation on some practical solutions Siemens has provided to several cities. Citing the common challenges faced by cities Lanzoni stated that equipment and service providers need to be part of the city's solution set.

He discussed the Elkton (MD) wastewater treatment plant and the regulatory pressure to reduce nutrient runoff into the Chesapeake Bay. The Elkton facility is aging, and is expected to meet new lower nutrient discharge standards. The traditional technology response to do this would be energy intensive and costly. Siemens worked with the facility managers to achieve nitrogen effluent reductions exceeding 90 percent, and phosphorus effluent reductions greater than 80 percent. The energy efficient equipment and process designed by Siemens offered a 40 percent power savings over a traditional solution.

Lanzoni also mentioned the Gills Creek wastewater treatment plant in Columbia (SC). Working with the city facility managers Siemens was able to bring major efficiencies to double the plant solids management capacity by using existing structures; meets new discharge standards for nitrogen and phosphates; and lower operational costs by reducing solids wasted by 50 percent and saving $500,000 annually.

Eric Petersen, Partner, Hawkins Delafield & Wood, discussed the partnership and financing arrangements for the county's 50 million gallon-per-day reverse osmosis (proven technology) desalination facility. The physical plant includes 11 miles of pipelines, is co-located with the existing Encino Power Station, and is non-traditional because it is publicly sponsored but privately developed. A key component of the arrangement is a "Water Purchase Contract".

The project located in Carlsbad (CA) involves a private developer responsible for design, financing and operation. The Water Purchase Contract includes a California local water authority making a 30-year "take or pay" commitment to purchase 56,000 acre-feet per year at a cost of $1,600 per acre-foot, (there is an additional $250 per acre foot subsidy transfer). The private party guarantees water quantity and quality, and electricity usage.

Petersen stated that there are many public sector benefits derived from the project. For example, there is a single point (the private party) of accountability for risks of siting, development, technology, performance and cost. The private financing is tax exempt because the project is publicly sponsored. There is no debt on the public entity's balance sheet; and no municipal bonds payable if the project fails.

A variety of "green" conditions are incorporated into the project. There is an Energy Minimization and GHG Reduction Plan as a permit condition. On'site measures include a Green Building Design; use of solar power; energy recovery at the facility; and a requirement to inject recovered carbon dioxide into desalinated water. Petersen, responding to several questions, stated that the mix of tax exempt financing for a private party, and the unique project structure, including the significant public and green benefits sets a new bar of expectation for future projects.

Hosterman provided a brief history of and status report on the sewer overflow policy dialogue with EPA and DOJ. Hosterman said that several meetings between the Conference of Mayors, EPA and DOJ took place in 2009 and 2010. Mayors participating in the meetings presented information describing the difficulties they are facing with federal officials when they engage in consent negotiations concerning EPA enforcement actions on sewer overflows (also referred to as Combined Sewer and Sanitary Sewer Overflows (CSOs/SSOs).

In October 2010, the Conference of Mayors sent a document to EPA and DOJ entitled "Local Government Recommendations to Increase Flexibility in Achieving Clean Water Goals." The document contained several recommendations to EPA to encourage the Agency to exercise flexibility in their CSO Control Policy adopted over a decade ago. On December 9, 2010 a follow-up meeting was held in Washington (DC) with EPA and DOJ. At that meeting several mayors expressed concern about the uneven and costly consent agreements cities continue to experience in the different EPA Regions. The mayors pressed the EPA to issue a joint EPA/DOJ Memorandum to the Regions to address the need for flexibility on cost, compliance schedules and incorporating green infrastructure into long-term control plans. Hosterman said that the EPA and Conference of Mayors would continue to participate in a dialogue to examine the issues raised.