Auburn, California.  September 27, 2010.  Thank you all for coming today. The purpose of today’s hearing is to air this community’s concerns over regulatory and litigatory excesses that are imposing increasingly oppressive costs on our families and businesses for the operation of local water and sewer systems.

 Colfax has been a flashpoint for this revolt – its residents are being eaten alive by litigation filed by predatory law firms who party while residents pay.  But as we will hear, Colfax is hardly alone – small communities across Northern California face the same outrages – and are now demanding relief.

 Like all movements, the impetus for stronger environmental protection of our air and water was firmly rooted in legitimate concerns to protect these vital resources.  But like many movements, as it succeeded in its legitimate ends, it also attracted a self-interested constituency that has driven far past the borders of commonsense and into the realms of political extremism and outright plunder. 

 We’ll hear today of requirements that water be purified to ridiculous standards having nothing to do with public health or safety and with absolutely no concern for prohibitive costs.  We’ll hear of communities that meet every expensive requirement heaped on them by state and federal agencies only to be told at the end of the process, “Sorry, the rules have changed and you’ll need to start over.”  We’ll hear of lawsuits filed over technicalities that reap unconscionable windfalls for the lawyers – all paid by struggling families in our communities. 

 It is time that pendulum moved back to the middle, and the purpose of today’s proceedings is to define what reforms are necessary to restore common sense and rationality to these laws at both the state and national levels.

I am very honored to be joined by my neighboring colleague, a senior member of the House of Representatives, Congressman Wally Herger.  Wally has been a leader in fighting to restore balance to our environmental laws and I’m very grateful to him for making the trip to Auburn today. 

 I am also honored to have with us Senator Sam Aanestad, representing the 4th State Senate District of California.  He is leaving after a truly distinguished legislative career due to term limits, and it is a testament to his dedication to this district that he remains at his post actively engaged in these issues.

 Finally, one of the great forces in the State Assembly, Assemblyman Dan Logue, joins us today.  Californians could not possibly have a more fearless or energetic defender against an over-reaching bureaucracy than Dan Logue and I am very glad to have him here today as well.

 We have assembled two panels of experts.  The first panel is comprised of representatives of our local communities that have struggled with this situation until it has become intolerable.  This hearing is actually the direct result of a meeting I had in my district office with local officials whose story I believed our region needs to hear.

 The second panel is comprised of representatives from the Federal EPA and the State Water Resources Control Board that administer the current law and write the regulations under that law.

 After each panel’s initial testimony, there will be up to five minutes of questioning by each of us on the dais. 

Finally, we will open the proceeding to public comments.

Since we have many to speak and much to say, I will do my best to rigorously maintain time limits of five minutes for each testimony, five minutes for each round of questions and three minutes each for public comments.

 It is my hope that at the end of this hearing, we will have accomplished two things: First, we will have established a clear view of the problem; and second, that we will have produced a list of concrete and specific legislative reforms that can be introduced in the upcoming legislative and Congressional sessions to bring these excesses and abuses under control. 

 We will be recording the hearing and submit it into official congressional proceedings at the earliest opportunity in the 112th Congress.

No one disputes that we need to maintain and enforce sensible and cost-effective protections of our precious water resources.  But legitimate environmental protections must no longer be used as an excuse for regulatory extremism and litigatory plundering of our local communities.
 

Representatives Tom McClintock and Wally Herger will conduct a forum to discuss the adverse impact of excess wastewater regulation in terms of fines, fees, litigation and resulting financial harm to local communities. 

It is the responsibility of Congress to resolve these issues, and the first step is to hear from those impacted by the underlying regulatory burdens.
 
Representatives from federal and California state regulatory agencies (U.S. Environmental Protection Agency, California Environmental Protection Agency and the California Regional Water Quality Control Board), as well as Assemblyman Dan Logue and State Senator Sam Aanestad have confirmed their participation.

Forum to be held:

Wastewater Issues Congressional Forum
Monday, September 27th at10:00 AM
Placer County Board of Supervisors Chamber
175 Fulweiler Avenue, Auburn
 

Congressman Tom McClintock announced today that the Georgetown Divide Public Utility District will receive a $5 million loan in Rural Development Funds from the U.S. Department of Agriculture to refurbish its Auburn Lake Trails Water Treatment Plant. 

The specific improvements include advanced water treatment technology options (filtration system replacement) and modifications to the existing facility.

Although there have been no known or suspected risk of microbial contamination due to the current treatment process and operation of the facility, the District is still responsible to comply with state and federal directives to use best available treatment technologies and mandated operating standards at the Auburn Lake Trails Water Treatment Plant.

“We need to reduce the regulatory burden that imposes ruinous costs on local communities,” said Representative McClintock.  “In the mean time, I am gratified that Georgetown Divide Public Utility District was able to obtain a merit-based loan to bring its facilities into compliance.  It was a pleasure to work with them through this process.”   

The improvement project is estimated to be completed by the fall of 2012.

 

House Chamber, Washington, D.C., September 23, 2010.  Full Text.

House Chamber, Washington, D.C., September 23, 2010.   M. Speaker:

Opening Statement by the Honorable Tom McClintock, Ranking Republican, House Water and Power Subcommittee before the House Water and Power Subcommittee Legislative Hearing on H.R. 3061 (Salazar), H.R. 5039 (Sanchez), H.R. 5413 (Baca), H.R. 6107 (Hastings)

Two glaring problems plague the Democrats’ water and power policy.  The first I have talked about on past occasions: that long ago they seem to have abandoned “abundance” as our central objective and replaced it with the rationing of shortages. In fact, we have vast water and hydropower resources that we have simply chosen to abandon. 

I have raised a second major deficiency on many other occasions and raise it again today: the majority’s abandonment of any attempt at rational cost-benefit analysis or sound financial principles. 

The development of federal water and power projects was once clear and simple.  Potential sources were identified through a forthright cost-benefit analysis.  Once identified, the most cost-effective projects necessary to meet demand were then constructed by joint powers authorities established for that purpose.  The federal government loaned the projects the funds necessary for construction, and these loans were then repaid by users through their water and power purchases. The communities and consumers that benefited from these projects entirely paid for them and taxpayers were held harmless.  This process resulted in cheap and abundant water and power and in turn, unprecedented prosperity throughout the arid West.

One of the bills today seeks to restore this principle, HR 6107 by the Ranking Member of the Natural Resources Committee, Mr. Hastings of Washington.  It is unfortunate that the Administration has refused to testify on this bill today.

The Western Area Power Administration markets and delivers around 10,000 megawatts of hydroelectricity produced at federal dams and paid for entirely by the users.  But now, its administrator has expanded its mission to integrate wind and solar power.  Since wind and solar power are entirely unreliable, they require a highly complex transmission system and a kilowatt-for-kilowatt backup system to maintain the electrical grid.  These systems are extremely expensive and could not possibly survive a rational cost-benefit analysis. 

To make matters worse, WAPA was granted new borrowing authority and stimulus funding that imposes enormous additional potential costs both on taxpayers and ratepayers who receive no additional benefit.  The borrowing authority even provides for forgiveness of the loans to companies that cannot repay them – forcing taxpayers and ratepayers to bail out fiscally irresponsible projects.

HR 6107 attempts to restore accountability to the financing of this system by striking the bail-out provisions of current law and requiring that beneficiaries alone bear the cost of these projects – protecting both existing customers and taxpayers from being milked dry by these mandates and mission creep.

Two bills utterly ignore cost-benefit concerns and continue to squander our resources.

HR 3061 requires taxpayers to pay $4 million to study repairs on the Pine River Indian Irrigation Project – yet before that study is even begun, it authorizes a staggering $60 million to make those repairs.  This is a prime example of abandoning any rational cost-benefit analysis and simply shoveling money at a problem that hasn’t even been defined. 

HR 5039 requires general taxpayers to underwrite and subsidize expansion of the Groundwater Replenishment System in Orange County, California.  Once again, we see the majority abandon the principle that beneficiaries pay for water systems, and instead end up plundering one community for the support of another. 

Finally, we have HR 5413 to settle legal claims by the Pechanga Indians for water rights and development funding under the Winters Doctrine.  I fully support this doctrine that assures Indian reservations legal access to water, but I also believe that we have a fiduciary responsibility in deciding legal settlements to do so within the parameters of the Federal government’s actual legal obligations.

That means the affected parties and the Department of Justice negotiate a settlement to the satisfaction of both sides.  If both sides cannot reach agreement, the matter should be left to the courts.  If both sides can reach an agreement, then it should be presented to Congress for ratification.

This bill doesn’t do that.  Instead, it ratifies a settlement before it has been agreed to by all parties.  A board of directors acting in this manner would be guilty of malfeasance for breaching its fiduciary responsibility.

I sympathize with the Pechangas.  The fault rests with the administration that has failed either to reach an agreement or declare an impasse.  But Congress cannot act responsibly until those negotiations are concluded.  The minority stands ready to join the majority in insisting that the Department of Justice give this matter its highest priority – but I do not believe we can responsibly ratify a settlement that only has the agreement of one side of the bargaining table.
 

Washington, DC – Congressman Tom McClintock today announced the award of $4 million in competitive grants to a pair of recipients in the Fourth Congressional District to research, develop and demonstrate cutting-edge geothermal technologies.  The Congressional office worked with the Modoc Contracting Company of Canby to win a $2 million Department of Energy award that will help demonstrate the use of cascading technology in tapping the energy potential of geothermal fluids.  The Oski Energy firm of Susanville also received a $2 million award to test innovative power cycle technology.

“These awards were made based on the merits of the projects,” Congressman McClintock said.  “Seven grants were awarded nationwide based on the strength and value of the proposals.  The fact that two of the awards are to companies in our resource-rich region yet again illustrates that worthwhile projects can successfully obtain funding through the regular merit-based appropriations process.” 

###

The following projects have been selected for an award:

• Modoc Contracting Company – Canby, Modoc County, Calif. - $2 million:
Modoc proposes to create a complete “cascaded” use of a geothermal resource (from low temperature power generation through several direct-use applications including a direct heating system, greenhouse operation and fish farm) that will demonstrate energy-efficient use of the geothermal fluids.  The company will procure, install and commission an engineered, scalable and duplicable generator unit to use the waste heat from an existing geothermal plant. The “cascading” application will have significant implications for the nearly 1,500 potential low to moderate temperature well sites located within towns and medium-sized cities in the western United States. 

• Oski Energy, LLC – Susanville, Lassen County, Calif. - $2 million:
Oski Energy will test an innovative power cycle technology that uses a mixture of ammonia and water as the working fluid. It will deploy novel system design techniques that will allow optimized, real-time, self-tuning of the power cycle process that will compensate for variations in the geothermal production fluid and flow rate, as well as changes in ambient temperature that adversely affect power generation.
 

House Chamber, Washington, D.C.
September 14, 2010.  Full Text.

House Chamber, Washington, D.C., September 14, 2010.

  Throughout what was supposed to be a “recovery summer,” the President has repeated a familiar theme: that Republicans ran us into a ditch and now they want the keys back. 

 That’s an important point, and we need to understand exactly what the Bush administration did to run us into a ditch.  In fact, President Bush made two major policy blunders.

 First, he presided over unprecedented regulatory intervention into the housing market that deliberately enticed people who couldn’t afford homes to buy them anyway.  At the same time, these policies deliberately encouraged lenders to make irresponsible loans by promising them that Fannie Mae and Freddie Mac would cover the risk.  This created a massive, artificial housing bubble that ultimately burst with catastrophic impact.

 My question of President Obama is: If we know this road leads to ruin – why does he continue down it at even higher speeds? 

Failing to learn from the damage that government intervention does by creating artificial bubbles in the economy, the President has repeated and amplified Bush’s blunders not only in the housing market with mortgage subsidies and home purchase credits, but also in other markets like automobiles and home improvements.  Each time, he has squandered billions of dollars merely to borrow from future demand, leaving behind economic craters each time the bubbles burst.

 Bush’s second blunder was to increase federal spending at an unsustainable rate, transferring economic decisions from the productive sector to the government sector and crowding out the capital market by excessive government borrowing.  We should remember the first $168 billion to stimulate consumer spending was a Bush brain-child – that’s when we all got those $600 checks.  If massive deficits and government spending created prosperity, the final Bush years should have produced a “Golden Age” for the American economy.

Has the President reversed these irresponsible Bush-era policies?  On the contrary, he has amplified and expanded them. 

In his first 19 months in office, Barack Obama has run up more publicly held debt than all eight years of Bush combined, with the promise this would keep unemployment under eight percent. Yet all that he has accomplished is to crowd out trillions of dollars of capital that could otherwise have gone to employers seeking to add jobs, to homebuyers seeking to re-enter the housing market, and to consumers seeking to make consumer purchases. 

Thus, instead of the sharp, V-shaped recovery that normally follows a recession, America is now entering its third year of economic distress.

The reason these policies have not worked is that they cannot work.  They did not work under George W. Bush.  And they have not worked when Barack Obama doubled down on them. 

The core of Obamanomics is the proposition that if government can inject enough money into the economy, it can stimulate consumer spending and therefore demand for production.

Unfortunately, government cannot inject a single dollar into the economy that it has not first taken out of the same economy.  It’s true that if government takes a dollar from Peter and gives it to Paul, Paul has an extra dollar to spend.  But Peter now has one less dollar to spend in that same economy. 

On paper, the economic effect of income transfers always nets to zero.  In practice, transfers net to much less than zero, because they shift huge amounts of capital away from decisions that would have been made in the productive sector based on economic return toward decisions made in the government sector based on political return.

We see very clearly the government jobs that are created when government puts that dollar back into the economy; what we don’t see as clearly are the productive jobs that were prevented from forming as government first takes that dollar out of the economy.  We see those lost jobs reflected in a chronically high unemployment rate and a stagnating economy.

It’s time we stopped wrestling for the steering wheel and recognized bad policy for what it is – whether the driver is a Republican or a Democrat.  The problem is not the driver but the direction – and the direction hasn’t changed.

We know the road to prosperity – we’ve taken it before.  When we have reduced the burdens on productivity, the economy has blossomed.  It worked when Ronald Reagan did it.  It worked when John F. Kennedy and Harry Truman did it.  And it will work again – but we will need leaders with a better sense of direction than what we have today.