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Exhibit MSD 3B - Direct Testimony, Susan Myers MSD MSD Exhibit No. MSD 3B 2019 Rate Change Proceeding SUSAN M. MYERS Direct Testimony Metropolitan St. Louis Sewer District March 4, 2019 Table of Contents Page Witness Background and Experience ........................................................................................... 1 Criteria Governing Rate Change - Wastewater ............................................................................ 1 Past Environmental Litigation Regarding Wastewater ................................................................. 4 Direct Testimony of Susan M. Myers, MSD March 4, 2019 2019 Rate Change Proceeding 1 MSD Exhibit No. MSD 3B Witness Background and Experience 1 Q1. Please state your name, business address, and telephone number. 2 A. Susan M. Myers, 2350 Market Street, St. Louis, Missouri 63103, (314)768-6366, 3 smyers@stlmsd.com 4 Q2. What is your occupation? 5 A. I am the General Counsel for the Metropolitan St. Louis Sewer District (District). 6 Q3. How long have you been associated with the District? 7 A. I have been with the District continuously since August 6, 2001. 8 Q4. What is your professional experience? 9 A. I have been employed by the District as in-house counsel since 2001 and was promoted 10 to General Counsel in April 2011. I have a unique combination of environmental 11 engineering and legal experience. Prior to joining MSD, I served as an environmental 12 engineer for two years with EPA Region VII in Resource Conservation and Recovery Act 13 (RCRA) Permitting and for nine years on a billion dollar DOE Superfund Clean-up 14 project. 15 Q5. What is your educational background? 16 A. I hold a Bachelor of Science degree in Geological Engineering from the University of 17 Missouri – Rolla (Missouri University of Science and Technology). I also received my 18 Juris Doctorate Degree from St. Louis University School of Law. 19 20 Criteria Governing Rate Change - Wastewater 21 Q6. Is the Proposed Wastewater Rate Change consistent with constitutional, statutory 22 or common law as amended from time to time? 23 A. Yes. First, the wastewater user charge is consistent with the District’s Charter. Under 24 Direct Testimony of Susan M. Myers, MSD March 4, 2019 2019 Rate Change Proceeding 2 MSD Exhibit No. MSD 3B Section 3.020(16), the District may “establish by ordinance a schedule or schedules of 1 rates, rentals, and other charges, to be collected from all the real property served by the 2 sewer facilities of the District, whether public or private, and to prescribe the manner in 3 which and time at which such rates, rentals, and charges are to be paid, and to change 4 such schedule or schedules from time to time as the Board may deem necessary, proper, 5 or advisable, and to collect or enforce collection of all such charges.” Moreover, the 6 Proposed Rate Change complies with the rate change procedures set forth in Charter 7 Section 7.280. Second, in Missouri Growth Association v. Metropolitan St. Louis Sewer 8 District, 941 S.W.2d 615 (Mo. App. E.D. 1997), the Missouri Court of Appeals held that 9 the District’s wastewater service charges were user fees, not taxes, and therefore rate 10 increases did not require voter approval pursuant to Article X, Section 22(a) of the 11 Missouri Constitution (the Hancock Amendment). The structure of the wastewater 12 charge contained in the Proposed Wastewater Rate Change is the same as that approved 13 in the Missouri Growth decision. 14 Q7. Does the Proposed Rate Change enhance the District’s ability to provide adequate 15 sewer and drainage systems and facilities, or related services? 16 A. See MSD Exhibit Nos. MSD 3C and MSD 3D, Rich Unverferth and Bret Berthold’s 17 direct testimony. 18 Q8. Is the Proposed Rate Change consistent with and not in violation of any covenant or 19 provision relating to any outstanding bonds or indebtedness of the District? 20 A. See MSD Exhibit No. MSD 3F, Tim Snoke’s direct testimony. 21 Q9. Does the Proposed Rate Change impair the ability of the District to comply with 22 applicable Federal or State laws or regulations as amended from time to time? 23 A. No. The District is subject to an array of Federal and State environmental laws 24 Direct Testimony of Susan M. Myers, MSD March 4, 2019 2019 Rate Change Proceeding 3 MSD Exhibit No. MSD 3B concerning such things as discharge and effluent levels, each of which carry with them 1 the imposition of financial fines of various amounts. Administration of the Federal Clean 2 Water Act has been delegated to the Missouri Department of Natural Resources 3 (“MDNR”) by the U.S. Environmental Protection Agency (“EPA”). The District is 4 regulated by the MDNR to ensure compliance with the requirements established under 5 the Clean Water Act. It is critical to note the proposed rate change is needed to provide 6 the District with the funds necessary to address the aging wastewater system and 7 resulting wet weather impact. The Clean Water Act provides for statutory penalties up to 8 $50,000 per violation per day. Failure to meet the requirements imposed at the Federal 9 and State level would be extremely burdensome financially and could directly hamper or 10 even thwart the efforts of the District. In addition, Section XI of the Consent Decree (see 11 Q11 below) outlines stipulated penalties for which MSD may be liable if the District does 12 not comply with the Consent Decree. These penalties range from $500 to $4,000 per day 13 depending upon the type and length of noncompliance. Therefore, the proposed rate 14 change is necessary to meet legal requirements in that the failure to construct mandated 15 projects or properly maintain existing lines and facilities bring with them the possibility 16 of immediate and direct legal and financial consequences. 17 Q10. Does the Proposed Rate Change impose a fair and reasonable burden on all classes 18 of ratepayers? 19 A. Yes, the Rate Change Proposal retains the same general methodology used in the past 20 with respect to the wastewater rate structure. This rate structure has been in place since 21 1993 and has been approved as fair and reasonable in a number of Rate Commission and 22 Board of Trustee determinations since 2000. 23 24 Direct Testimony of Susan M. Myers, MSD March 4, 2019 2019 Rate Change Proceeding 4 MSD Exhibit No. MSD 3B Past Environmental Litigation Regarding Wastewater 1 Q11. What was the basis and outcome of the environmental action brought against the 2 District in United States and State of Missouri v. Metropolitan St. Louis Sewer District, 3 United States District Court, Eastern District of Missouri, Case No. 4:07-CV-01120? 4 A. The United States and the State of Missouri jointly filed a complaint against MSD on 5 June 11, 2007 in the United States District Court for the Eastern District of Missouri 6 seeking injunctive relief and civil penalties pursuant to the Clean Water Act. The 7 complaint alleged that MSD allowed the discharge of untreated sewage from its 8 Combined Sewer Overflows, Sanitary Sewer Overflows, and Basement Backups, and 9 violated conditions of its National Pollutant Discharge Elimination System (NPDES) 10 permits. The Missouri Coalition for the Environment Foundation (MCE) was permitted 11 to intervene in the action. The District already had been working on these issues for 12 several years, steadily increasing rates to fund the improvements sought by the EPA and 13 the MDNR. In September 2008, the case was stayed to allow the parties to mediate the 14 issues. Thereafter, a proposed Consent Decree (CD) was negotiated and agreed to by the 15 parties. Pursuant to MSD Ordinance No. 13277, MSD executed the CD on July 15, 2011. 16 On April 27, 2012, the District Court approved and entered the Consent Decree, thus 17 concluding the litigation of the lawsuit. Initially, the CD required the District to spend 18 approximately $4.7 billion, in 2010 dollars, over a 23-year period, including 19 improvements to the District’s separate sewer system, combined sewer system, and 20 wastewater treatment plants. The MDNR approved MSD’s CSO Long Term Control 21 Plan on June 1, 2011. In compliance with the CD, the District submitted its SSO Master 22 Plan, which was approved by the EPA on June 24, 2014. On June 22, 2018, the U.S. 23 District Court approved an amendment to the Consent Decree extending it by five years 24 Direct Testimony of Susan M. Myers, MSD March 4, 2019 2019 Rate Change Proceeding 5 MSD Exhibit No. MSD 3B to a 28-year program. Recent regulatory changes have compelled MSD to accelerate 1 certain non-CD work. 2 Q12. Does this conclude your prepared direct testimony in this matter? 3 A. Yes, it does. 4 5