White House Cool to Water Infrastructure Bill By Maureen Lorenzetti

April 1, 2002
The Bush Administration says a bipartisan water infrastructure bill being considered by the Senate Environment and Public Works Committee is too expensive.

By Maureen Lorenzetti

The Bush Administration says a bipartisan water infrastructure bill being considered by the Senate Environment and Public Works Committee is too expensive. Environmental Protection Agency Deputy Assistant Administrator for the Office of Water Benjamin Grumbles told the committee in early March his agency would not support a measure that would dramatically expand authorization levels of the Clean Water State Revolving Loan Fund (SRF) and Drinking Water State Revolving Loan Fund (DWSRF) to $36 billion over five years.

EPA wants more private sector involvement, cost-based rates, technology innovation, and expanded water reuse and conservation.

Despite the White House's problems with the bill, Chairman Jim Jeffords (I-VT) said he wants his proposal, S. 1961, "The Water Investment Act of 2002" ready for the floor before the July 4 recess. Environmental groups praised the bill.

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But some industry groups agree with the administration that the figure Jeffords proposes to repair the nation's water systems is over the top.

"There is little likelihood of amounts of this magnitude ever being appropriated, and it may encourage counterproductive behavior," said Peter Cook, Executive Director of the National Association of Water Companies. "Utilities may defer making the necessary investments today hoping for significant federal assistance in the future that will never be forthcoming."

Cook, however, praised other portions of the draft legislation.

"This bill brings to the Clean Water and Drinking Water State Revolving Funds many of the innovations which the NAWC and the H2O Coalition have been advocating for more than a year, and wisely does not create a new wasteful, counterproductive grant program," Cook said.

The bill requires systems to consider public-private partnerships, consolidation and other non-structural alternatives if they want SRF assistance. The bill also requires that systems receiving SRF assistance have in place both a rate structure that reflects the actual cost of service and an asset management plan.

"These provisions will go a long way to assure that the taxpayer's money is used in a measured and efficient manner, avoiding as much waste as absolutely possible," Cook said.

Cook added that his group is "pleased to see the draft bill uses an innovative targeting approach to assure the benefits of financial assistance are received by the economically disadvantaged."

The legislation requires a community to demonstrate before it can receive assistance that the assistance they receive will be used to lower the water bills of the economically disadvantaged.

"We are also pleased that the state cannot include private utilities in the needs survey unless private utilities are eligible for assistance from the SRF," Cook said.

The Association of Metropolitan Sewerage Agencies meanwhile said the bill should be "significantly streamlined to direct the bill's funds to support the core needs of our communities, infrastructure repair and replacement and compliance with costly regulatory requirements."

AMSA's Executive Director Ken Kirk called S. 1961 "an important first step toward recognizing the need for increased wastewater infrastructure funding."

Still, Kirk stressed that the legislation should focus more specifically on the "urgent water and wastewater infrastructure needs this country faces, without new hurdles placed in the way of municipal access to these key funds."

The group offered up its own wish list to lawmakers that would include the following: focus more on core infrastructure needs, including repair and replacement of aging pipes and facilities; fully fund the documented water infrastructure funding needs at an authorized level of $57 billion over five years through a combination of grant and loan funding options and ensure federal participation over the long-term; streamline state funding procedures; and invest in clean and safe water technology and management innovation to reduce infrastructure costs, prolong the life of US water and wastewater assets, and improve the productivity of utility enterprises.

Meanwhile, the House is moving more slowly and some industry observers give prospects that a final bill will be passed only a 50-50 chance. Still, there is momentum for significant new water legislation by next year.

"One factor increasing the level of interest among legislators is the concerns about security of water infrastructure post Sept. 11. While bio-terrorism threats against water systems seem relatively low on the overall ranking of likely threats, increased congressional attention to water infrastructure has raised political awareness of the broader issue of under-investment in these systems during the past 20 years," said Debra Coy, senior analyst with Schwab Capital Markets LP.

A recent report by the nonpartisan General Accounting Office ordered by the House Energy and Commerce Committee said key aspects of EPA's revolving fund program for drinking water need to be strengthened.

S. 1961 would update the Clean Water Act and the Safe Drinking Water Act, the legislation which EPA uses to administer the SRF and DWSRF, the largest part of the agency's budget. Those programs are now authorized at $1.35 billion and $1 billion, respectively.

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