Rural Tennessee’s Wastewater Deregulation Battle

Policy — By on April 23, 2009 at 7:49 pm

State government pushes green wastewater systems to the free market, and a powerful industry advocate puts up a fight.

By Clint Brewer

For the better part of two years, Tennessee state government has been trying to deregulate and broaden the maintenance and use of a green form of wastewater disposal. Standing in opposition to this movement is a powerful wastewater industry concern with deep pockets and plenty of political savvy.

The Tennessee Department of Environment and Conservation (TDEC) began trying to pass new internal regulations to ease restrictions on the use of developer-friendly and environmentally advantageous decentralized sewer systems in 2007.1

The decentralized sewer industry in Tennessee has been booming this decade, coinciding with a sharp rise in the state’s new housing market in places like growth-heavy Middle Tennessee.2 The 1994 Clean Water Act and the Environmental Protection Agency (EPA), in 1997, held out decentralized sewer technology as a new way to combat ground water pollution.3 Decentralized sewer and wastewater treatment – also known as on-site or subsurface treatment – comes in many different forms.4 The system can be built for a fraction of the cost of centralized municipal sewer plants and uses a variety of filtration, aerobic and anaerobic methods to clean waste and remove nitrogen. The systems then discharge through leaching fields, spray irrigation systems, and constructed wetlands, rather than via discharge permits to natural bodies of water.5

TDEC’s Division of Groundwater Protection (GWP) offered changes to state regulations in 2007 that would allow a wider use of these systems, known in TDEC vernacular as a “subsurface sewer disposal system.” The proposed new rules allowed the systems to be used for single-family residences.6 In addition, the amended rules would allow a new class of “approved maintenance providers” to contract with homeowners to maintain these “advanced treatment systems.”7

Currently, the maintenance of this more environmentally friendly form of wastewater disposal system is almost exclusively within the purview of public utilities and county wastewater authorities. The proposed new rules would open the market to smaller sectors of the wastewater industry to contract with homeowners for monthly or annual maintenance programs.

The Loyal Opposition

Standing in opposition to the change in rules is the Tennessee Wastewater Industry Group (TWIG), a Smyrna, Tennessee non-profit corporation that shares its 849 Aviation Parkway address with a major decentralized sewer industry player, the Adenus Group,

Inc.8 The Adenus Group is an umbrella company providing a variety of decentralized sewer services nationally, including the manufacture of systems and a network of affiliated utility companies across the South and Midwest.9 Sitting one door down on Aviation Parkway from Adenus and TWIG is the affiliated Adenus utility, Tennessee Wastewater, one of only seven public wastewater utilities in the state regulated by the

Tennessee Regulatory Authority.10

All three of these entities appear to have common leadership in Charles Pickney, who is one of the founders of the wastewater industry in Tennessee.11 Pickney is the president of Tennessee Wastewater, and he addresses TDEC on behalf of TWIG in correspondence to Deputy Commissioner Paul Sloan. Sloan also responds to Pickney in a follow-up letter sent to Adenus, and corporate records for TWIG show Pickney serving as the organization’s secretary in 2008.12

In a series of letters obtained through the state’s Open Records Act by the Tennessee Center for Policy Research, Sloan and Pickney exchange arguments over the validity of the department’s rulemaking process.

Pickney complains at length that TDEC ignored comments offered by TWIG in January. Pickney further demands on behalf of the TWIG trade group that TDEC form a technical advisory committee made up of members of the affected industry any time new rules are proposed.

“It is clear that GWP intends to operate in a vacuum and make its own arbitrary decisions without the adequate input from the regulated industry,” Pickney writes in his March 30 letter to Sloan. “….The current process ensures only that regulations are developed that benefit the interest of the regulators, since all other interests are excluded from the process until the regulations are placed on public notice.”

Sloan counters in his April 11 letter back to Pickney that TWIG’s counter proposal to TDEC’s new rules would essentially prevent private individuals and companies not considered “public utilities” from competing for the new single-family residence decentralized sewer maintenance business. Sloan notes that TDEC’s proposed rules would open up the market for this line of business to a variety of companies, not just public utilities like Tennessee Wastewater.

“I believe the GWP model is clearly the most intensively supported model and stands to provide citizens the largest number of options while at the same time serving as a catalyst for the maintenance provider industry within the state,” Sloan writes.

According to TDEC staff, the rule amendment process involves three steps, the last of which is review and approval by the State Attorney General.13 In his letter, Pickney has asked the attorney general to render an opinion on whether a state agency is required to address industry comments on proposed regulations.14

The long arms of TWIG

Over the years, wastewater industry interests with ties to TWIG have not been shy about making their presence felt in state government.

TWIG is a 501(c)(6) non-profit under the federal tax code, and its corporate charter states the organization is an “industry group that promotes, improves, and advances the wastewater industry throughout Tennessee.” The organization’s board of directors has ties to groups and individuals active on Capitol Hill and that have contributed to Tennessee legislative campaigns.

According to state records, TWIG’s current president is Chris Leauber, executive director of the Water and Wastewater Authority of Wilson County (WWAWC).15 This particular wastewater authority has had a lobbying presence on Capitol Hill in Nashville for several years, and employs well-known lobbyist Nathan Poss for the current legislative session.16 Presently, the WWAWC is the only wastewater authority or entity in the state with a registered lobbyist, and during the 2007 session employed four different lobbyists from three different lobbying or law firms.17

Pickney and other employees of various wastewater interests tied to Adenus and TWIG have also been politically active in recent years.18 During the 2006 campaign cycle, Pickney and Adenus/Tennessee Wastewater employees gave thousands of dollars to political candidates, most notably the powerful former state senator, Bob Rochelle, a Wilson County Democrat, in his unsuccessful bid to retake his old Senate seat.19 Adenus as a company gave Rochelle $2,000, and various Adenus/Tennessee Wastewater employees altogether gave the former senator another $5,000. Rochelle served as the WWAWC attorney for a number of years.20

A TDEC spokesperson said the department was not lobbied by any registered lobbyists regarding the new rules issue.21

Coda

The utility interests tied to TWIG may take their objections to the new TDEC rules to the General Assembly as a next step to redressing their grievances.

There is a concern among the regulators in TDEC’s offices that TWIG’s next stop to address the changes to the rules will be the legislature– a venue in which the industry has been effective in the past.22

TWIG and its participating utility and wastewater industry concerns are also the targets of aggressive regulatory activity from TDEC as it applies 2001 permit rules handed down by the EPA for its Underground Injection Control (UIC) program.23 On this front, TWIG may have legitimate complaints about the state’s regulatory landscape for its industry with a new raft of violation notices suddenly hitting utilities for hundreds of drip effluent dispersal systems and related fees.24

Finally, one of the major players in TWIG – Tennessee Wastewater – is working through the Tennessee Regulatory Authority to secure a 70 percent increase in its rates.25

Conclusion

The wastewater industry in Tennessee has developed political expertise when it comes to dealing with state government. Like any industry, wastewater concerns represented by TWIG are looking out for their own interests and the possibility of broadening their

business. At the same time, these interests are largely those of public utilities – entities

that cannot do business under the law without the blessing of state government as they

are imbued with a certain measure of governmental authority.

Presently, sectors of the wastewater industry are fighting a rare deregulation movement within TDEC that seeks to democratize the business of wastewater system maintenance. These TDEC efforts are pro-business and pro-growth, whereas TWIG’s position is a protectionist one. Wastewater disposal is one of the main factors facing rural Tennessee when it comes to enabling growth and development, and TDEC should continue to promulgate rules that engender a competitive business environment in that industry.26

1 Rules of Tennessee Department of Environment and Conservation, Division of Groundwater Protection,

Chapter 1200-1-6/Regulations to Govern Subsurface Sewage Disposal Systems, November 29, 2007 Notice

of Rulemaking Hearing and Proposed Rules, http://www.tn.gov/sos/rules_hearingnotices/11-29-07.pdf.

2 Brian Harville, “Little Pink Houses, Part I: A special report on the impact of onsite sewer in Middle

Tennessee,” The Lebanon Democrat, 2005, http://lebanondemocrat.com/news.php?viewStory=175.

3 Ibid.

4 Michael Fielding, “Off the grid: Learning to live with decentralized systems,” Public Works Magazine,

October 1, 2008, http://www.pwmag.com/industry-news.asp?sectionID=0&articleID=787857.

5 Ibid.

6 TDEC Notice of Hearing and Proposed Rules, November 29, 2007.

7 Letter from Tennessee Department of Environment and Conservation Deputy Commissioner Paul Sloan

to Robert Pickney with Adenus Group, Inc., April 11 2009.

8 Tennessee Wastewater Industry Group letter to Sloan, April 11, 2009; Tennessee Secretary of State

corporate records; Brian Harville, “Little Pink Houses, Part II: Major players control multiple sewer

aspects, assets,” The Lebanon Democrat, 2005, http://lebanondemocrat.com/news.php?viewStory=179.

9 Adenus web site: http://www.adenus.com.

10 Tennessee Secretary of State corporate filings; Adenus web site; www.adenus.com; Tennessee

Regulatory Authority list of regulated utilities.

11 Harville, “Part II.”

12 Tennessee Wastewater website; Tennessee Wastewater Industry Group letter to Sloan, April 11, 2009;

Letter from Tennessee Department of Environment and Conservation Deputy Commissioner Paul Sloan to

Robert Pickney with Adenus Group, Inc., April 11 2009; Tennessee Wastewater Industry Group annual

report to the Tennessee Secretary of State, March 7, 2008.

13 Email from Tennessee Department of Environment and Conservation Public Information Officer Meg

Lockhart to Clint Brewer, April 21, 2009.

14 Tennessee Wastewater Industry Group letter to Sloan, April 11, 2009.

15 Annual corporate report of the Tennessee Wastewater Industry Group, February 3, 2009.

16 Tennessee Ethics Commission lobbying disclosures.

17 Ibid.

18 Tennessee Registry of Election Finance campaign finance database.

19 Ibid.

20 Harville, “Part II,”

21 Email from Tennessee Department of Environment and Conservation Public Information Officer Meg

Lockhart to Clint Brewer April 21, 2009.

22 Email from Tennnessee Department of Environment and Conservation regulator Britton Dotson.

23 Tennessee Wastewater Industry Group letter to Sloan, April 11, 2009.

24 Ibid.

25 Tennessean story, January 1, 2009.

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