[00:00:00] Speaker A: It'll be really interesting to see how the court sort of addresses that question, whether they take some sort of middle ground or whether they decide that everything has to be 100% numerically based and how that portends for the future.
[00:00:18] Speaker B: I am Reese Tisdall, and this is the future of water, which we talk about all the ways which companies, utilities, and people are addressing the challenges and opportunities in water. Welcome to episode 104, and I know it's going to be a good one. Even with some of the drilling that seems to be happening behind me, there's a little bit of infrastructure work happening. So we'll just use it as a background color for the conversation that I'm going to have with Greg Goodwin, which we're going to talk about. Upcoming Supreme Court case, the city and county of San Francisco versus the Environmental Protection Agency. This case, which is going to be heard in the next week or two in Washington at the Supreme Court, addresses a challenge brought forth by San Francisco against the EPA regarding the EPA's authority under the Clean Water act. The city is arguing that the EPA's current discharge rules are overly vague and that they prohibit water pollution without specifying clear numerical limits. So the outcome of the case could significantly, once again impact water quality standards, but also redefine the balance of regulatory authority between the federal and state governments. But it also comes, as we've talked about on this podcast, it comes following a string of Supreme Court decisions that are influencing the regulatory direction of the federal government, the EPA, and a number of other agencies. But in the case of this podcast and this discussion, it's also influencing what's happening within the water and wastewater sectors. But before we do that, bear with me and let me talk about what's caught my attention recently or over the past week or so. Well, everybody, at least in the US, knows about this, so I'll just put it out there. In the aftermath of Tropical Storm Helene in western North Carolina, including Asheville and the surrounding areas, the region's facing a severe water crisis. It's not just death and destruction. It's more than that. The storm's flooding has damaged critical water infrastructure. It's left, sadly, 200 people dead. But last time I checked, approximately 100,000 people were still without reliable access to drinking water if the systems had not been completely destroyed, and they're being forced to rebuild altogether. Residents, as a result, are scrambling to find potable water, with many resorting to doing things like boiling Creek water or using bottled water delivered by relief agencies. So the destruction of water mains and wastewater treatment plants has left many communities in the area uncertain about when they're going to regain consistent water access again, and it's forcing them to rely on emergency supplies wherever you want to define that for the foreseeable future. Now bring this up somewhat selfishly. One, because I'm from the south, I'm from South Carolina and spend a lot of personal time in western North Carolina, outside of Asheville. So not only does this sadden me, but I bring it up because there are other reasons the water sector should care because it goes beyond just this one event. So to put all of this in context, and I brought this up before, water related impacts make up about 81% of NOAA's economic impact data when it comes to storms and the climate. The total financial impact on property and agriculture since 2000 has been about $558 billion. And that continues to climb with every event. We're looking at hundreds of thousands of events, but the total bill is getting bigger and bigger. And when it comes to the economic impacts, guess which region makes up the biggest toll? The south makes up about 65% of the total. So from Florida to Arizona, from drought to hurricanes to winter storms, all you got to do is ask Texans about winter storms what the sad, unfortunate impacts of all of this unforeseen climate activity is. So I think just to put a bow on it, climate impacts really have no boundaries. Thats why we talk about it is when we founded Bluefield Research, one of the things we really thought about was the opportunity to address all the challenges that lie before us.
We are helping clients navigate their own company strategies, but also helping develop approaches to things like advanced treatment. This could include water reuse, could include desalination, typically in terms of getting ahead of any market disruptors such as climate. And in some cases we're also helping companies mobilize for new market entry. If they're in one market, they have expertise and knowledge and may be applying it to others. A good case would be somewhere like Australia. They've had a number of droughts, millennium drought most recently, which has driven water efficiency and helped them build up their water expertise. So there are applications that can be applied in places like the US or southern Europe and other regions of the world. So something to think about and just to steal it. Once again, I like to use this because I think it's fairly descriptive. If climate is the shark, water is the teeth. So keep that in mind when you're talking about 81% of the economic impact coming from water related events, that's it. So while thinking about this, it makes me a little bit thankful or a lot thankful. That's not fair. So without being sappy, I want to thank Mike Galer, Kelly Talbott, Ryan Sullivan, and Steph Aldoc for helping me put not only this podcast together, but the 103 other ones that are in the archive. We put these together every two weeks. So whatever is hitting your ears today or in the future, it's largely because of them. I just talk, but they're the ones that make it happen. So thanks to those guys for putting in the effort and helping me keep it between the ditches every, every two weeks or so. With that being said, and I'll thank Greg Goodwin as we go forward as well, let's get to Greg Goodwin and talk about Supreme Court and what these pending cases may mean for the water and wastewater sectors.
All right, so I'm joined here by Greg Goodwin. Greg, how goes?
[00:06:45] Speaker A: It goes pretty well. How about you, Reese?
[00:06:47] Speaker B: Pretty good. You and I, I think the time this drops, hopefully we will be in New Orleans Weftech, but we're both in the Boston office today, although in separate rooms, and brought you on because there's a lot happening on the policy front, at least as far as Bluefield research in the water industry is concerned. We've talked a bit about this in the past, whether it be in our election impact white paper we put out a couple months ago, but more recently, there's something happening in the Supreme Court in terms of the Clean Water act and the EPA. So why don't we just talk a little bit about that, what's pending, or at least the arguments pending, and give us some insights and we'll go from there.
[00:07:29] Speaker A: Sure. So this is sort of part of a recent trend, I would say kind of in the regulatory space. But the Supreme Court has agreed to hear a case that's titled San Francisco v. EPA. So essentially this case looks at Nifty's permitting pursuant to the Clean Water act. And basically the city of San Francisco is alleging that their permit is too vague in terms of how it is written by basically the EPA, and that this violates sort of the clean water acts provisions. And so the court will be intervening to see whether that vague standards, narrative based permitting is in line with the statute. And that's basically kind of the question at hand. So it has to do with basically kind of the, the way that permits are written and could have implications for the wastewater sector going forward.
[00:08:29] Speaker B: Yeah. And it sounds like it's really a matter of, do you have exact limits? Right. You know, guidance and limit set, or is it, I think they're calling it, you know, narrative based limits, right, where there's some fluidity, no pun intended, caught. And you know what that means. And it's also a little strange given what's been happening here. We have a water utility and wastewater discharger, wastewater utility operator. They're being potentially held accountable for extreme volumes of discharge, all of which may not be completely theirs.
[00:09:06] Speaker A: Right. It's an interesting backstory. San Francisco is sort of the not super common west coast utility that has a combined system. So they have a consent decree associated with that. And they put in a lot of investment in the last decade or so related to that. They're alleging that they're being held accountable essentially for the entire water quality of San Francisco Bay and that they're just one discharger to that body of water and they shouldn't be held to that standard. The city attorney released a statement earlier in the week basically saying that in order to comply with the permit as currently written, they would need to invest, like another $10 billion or something like that and raise rates to a level that would put, like, half the city in poverty. I mean, some of that might be hyperbole in terms of how theyre presenting things, but its not small amounts of investment that theyre sort of alleging. And its also kind of an interesting, you know, in terms of the parties involved, other plaintiffs that have signed on. So people think of the city of San Francisco as being rather progressive and sort of environmentally friendly in terms of the stance and so forth. They're being joined by the US Chamber of Commerce and the National Mining association on this. So there's obviously interests on sort of those business side to kind of have a regulatory regime that's tighter and maybe less effective overall in terms of water output. And then on sort of the side of the EPA, there are 13 attorneys general across various us states that are, I think, in most cases, democratically controlled, who are saying that in some cases, I think particularly related to certain nutrient type of discharges, that a narrative based permit could actually be potentially more effective or more accurate and sort of easier to comply with in some cases, just the way that that water quality issue tends to play out. So it'll be really interesting to see how the court sort of addresses that question, whether they take some sort of middle ground or whether they decide that everything has to be 100% numerically based and how that portends for the future.
[00:11:15] Speaker B: Trey, I guess given some of the other cases we've looked at in our own analysis, whether it be loper bright, Lopez the Chevron deference case, I always confuse it bright loper or loper bright enterprises. Sorry, apologies to all the listeners. But then the other, you've got the waters of the US or Sackett versus EPA. You've got the air quality case, which is West Virginia versus EPA. And so there has been a question of undermining EPA authority and ability to provide guidance such as this and pushing it down to either the state, local, or really the judiciary in many cases. So where does this fit within that framework? Do you get a sense at this point? And I know it's early in the stage, the arguments haven't been made yet, but where might this fall? Do you have any sense or what the temperature is?
[00:12:13] Speaker A: Yeah. So I mean, I think to your point there, around recent cases, there's clearly been sort of a sea change within the court itself in terms of how it's going to address, you know, the regulatory space on the federal level in general. Right. So like those cases that you mentioned, those have all been in the past three or four years. And, you know, the court has heard way more cases specific to, like, EPA regulation in the last couple of years than in like past decades. So just the fact that the case is being heard is significant in itself in terms of how this court is going to view, you know, the regulatory apparatus and power of executive branch in general.
I would not be surprised to see narrative based permitting or anything that has any amount of vagueness to it be eliminated. I mean, that's part of what the whole case around Chevron was about, of letting executive agencies sort of fill in the gaps of any sort of statutory ambiguity. So that would sort of fit in line with some of the, I guess, kind of philosophy of how this court operates. But I mean, I think a bigger point is weve talked a lot about how the election could affect the water and wastewater space going forward based on White House and congressional control. But I mean, this is the part thats already kind of baked in the cake. This has already occurred.
So this case will be heard on October 16. Im sure many analysts, court watchers, will sort of see what types of questioning occurs during that hearing and kind of read the tea leaves from there. But essentially, as in the past several years, next June, we'll get an actual decision on this and then that will be the new normal going forward if there's some deviation from current level of permitting. So definitely something for people to look at that's outside of politics as it exists now. This is something that's already occurred and sort of a lagging effect of previous elections.
[00:14:14] Speaker B: Yeah, and I think some, there are real financial implications here. I think San Francisco, I don't know if you mentioned this, but just if you did, I'll just revisit it. And that is they're claiming up to $10 billion of additional capital expenditure would require to comply with any changes to this if they had to, had to address, like you said, San Francisco Bay and other waters, which they may only be partially impacting. And so, I mean, I think given that, is there anything else that I think maybe the listeners should be thinking about as October 16 arguments come forward, is there anything else to be considered?
[00:14:53] Speaker A: Well, I mean, I would just in terms of sort of long term effects, you know, it's not inconceivable that certain permits that exist now could be either invalidated or, you know, be required to be revisited. So in terms of the actual kind of regulation or treatment that would be required at certain sites, both kind of public and private dischargers who have Nifty's permits, that's something that could be affected going forward. I mean, a lot will depend on how the court sort of decides to split the baby on this, but it's definitely something, I mean, I feel like we talk so much about the actual sort of electoral effects of things. And again, just to sort of reiterate, this is something that will occur regardless of what happens in November and regardless of what happens in any individual state. This is, you know, the court deciding to change course on issue a or issue b, I don't think it gets enough attention overall in terms of when we look at what's happening in the space, because they're the last line of everything. They're unreviewable, basically. So that's the way things are set up.
[00:16:03] Speaker B: You get a sense if there could be any potential impact. Perhaps it's wide open at this point. But in terms of things like PFAS, whether it be for drinking water, mcls or, you know, I know there's a lot of discussion and we've done a lot of work on biosolids and what that might mean going forward, the size of that market overall. But as well as things like lead service lines, could there be any potential impacts there as well?
[00:16:29] Speaker A: Yeah, well, I mean, this specific case is around Nifty's permitting. But to your point, though, like this does fit with kind of the overall court stance around if there's any vagaries or ambiguities and any sorts of limitations for either a nutrient or a contaminant or what have you, they're now more open to challenge than they would have been, say, like a year ago before this recent sort of raft of decisions. So I know I've heard some folks in industry say that they think the MCLs on PFAs are likely to be challenged just based on the methodology that was used to create those. Some say that it was not following a strict sort of science based regime. So certainly, I think some of those types of regulations are under more threat of sort of legal challenges now than they used to be. And then this is sort of kind of adding to that in a different area of water quality.
[00:17:28] Speaker B: Yeah. And I think, you know, we looked at the upcoming elections. That was really the question that was posed to us by clients about what are the potential impacts of, whether it be a change in the executive branch or the legislative branch and its potential impacts on the water wastewater sectors, which we address. But I think behind all of this is the role of the Supreme Court that cannot be overlooked.
This has been playing out since, really the first Trump administration when he took, when he was in the White House, by selecting, let's say, if you want to call them, more conservative justices. And as a result, a number of these decisions are playing out because of that, become polarized in and of itself and pushing everything down to the state, local, or judiciary levels of government rather than agency based or agency guided. And the Chevron ruling this summer, that was really, everybody kind of knew it was coming. There was no surprise, quite honestly. You had, in fact, been talking about it since the beginning of the year, saying, hey, be on the lookout for this. This could be significantly consequential, but its not so much today. It could take 510, 15 years to really roll out.
[00:18:47] Speaker A: Trey. Yeah, theres a lot of uncertainty, I think, on some of that. I mean, Loper, the chevron one was the big one, right, in terms of how much it patiently affects the three branches of government in general. But, yeah, I mean, I don't think any of this stuff will materialize immediately, but it does open the door to certain types of legal challenges and end rounds that probably would not have been available, say, even a year or two ago. So how those reverberate over time and play out as kind of anyone's guess, but there's definitely more of a tool for people who are trying to challenge existing regulations than there would have been in the past.
[00:19:33] Speaker B: Okay, so sounds like 16 October 2024. That's the day of oral arguments.
[00:19:41] Speaker A: Yes, that's the day there'll be sound bites from that and court watchers and legal analysts will have some takeaway after that. They usually know which way people are going to go after the oral arguments, so it'll be interesting to see what happens. But then, yeah, next June or early July, there will be the official votes on how things happen, but something for people to keep an eye on.
[00:20:05] Speaker B: Well, that's why I wanted to bring you onto this. So this is something you and I have been discussing over the past couple of months, quite honestly. And so while we have some research sort of developing on it for clients, I thought it would be a good idea to bring you on, just to talk about the policy landscape and what it might mean. Because like a lot of these things, people don't talk a lot about them. Court watchers do, but they. It's all behind the scenes, but has a, has a big impact. So I appreciate you jumping on and providing some perspective on what's happening.
[00:20:42] Speaker A: Yeah, absolutely.
[00:20:43] Speaker B: All right, Greg, I will let you go. This was quick and easy. So thanks, man, for jumping on, and I will see you at Weftec on Monday.
[00:20:51] Speaker A: Sounds good. Have a good one.
[00:20:53] Speaker B: You too. Take care.
All right, that's a wrap for our 104th episode. So thanks. Being part of the journey, it's always awesome to have Greg on. He's got lots of insights. He's also really measured in the way he looks at the market. So that is appreciated. Not emotional, as maybe I get sometimes about some of these things. So we're excited about the future of water and the journey that we're on and also the innovations, a lie ahead, policy related or not. So stay tuned for more insightful discussions on this podcast, and also be on the lookout for expert interviews with my colleagues here in other places. So here's to the next 96 episodes to get to 200. So we got a ways to go, but there will be milestones along the way. Before we sign off, if you're in Boston, Barcelona, Paris, Chicago, New York, San Francisco, let us know and we'd enjoy the opportunity for a meeting. It's always good to meet in person. It's always. That's happened last week at the science water event, and I look forward to being at Weftech and a couple other events this fall as well. Please subscribe to the Future Water podcast and give us a review. You don't even have to say anything, just hit five stars if you like it. Admittedly, if you only want to give it one start, try to convince you not to do that. But hey, I don't want to put my thumb on the scale. Send us a note to water experts lfieldresearch.com with any topic ideas you'd like us to discuss. We're doing this for you. Then lastly, tell a friend about it. That's how these things spread. This podcast and these water industry insights have been brought to you by the one and only Bluefield research. To learn more about us, visit
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