By Maureen Lorenzetti
Policymakers from Congress and the White House came back in September after a month-long hiatus with camaraderie and bipartisanship still in short supply as the annual budget deadline looms in October.
The Senate Democratic leadership is expected to renew a stronger focus on environmental issues, including clean air and water legislation. Water infrastructure investment is also on the legislative agenda for the first time in over a decade and water analysts expect this will likely encourage private sector investment.
Growing concern over the fiscal health of the federal government is expected to lead to a particularly contentious budget cycle this year. But in the case of water infrastructure, budget worries are a blessing in disguise, say water analysts.
"This is one case where we think shrinking surpluses at the federal, state and local level will actually expand the opportunity for more private sector participation instead of less," said Debra Coy of Schwab Capital Markets, LP in Washington, DC.
"While U.S. water stocks have performed well, they remain a relatively small capitalization group. The arrival and expansion of foreign multi-utility players in the United States will provide, in our view, an opportunity for utility funds to participate in this sector's growth through the upcoming ADR listings of firms with larger market capitalization."
Congressional hearings are expected this fall on various proposals to upgrade water systems nationwide, with some municipal groups seeking a staggering $50 billion in federal money.
Coy notes that given the current budget environment it is "highly unlikely" Congress will appropriate even a fraction of that request. That in turn may improve the prospect for increased private sector participation, she said. Congressional sources said they expect to see key lawmakers in the House and Senate seek more federal money for infrastructure but given the crowded legislative calendar, and hot button clean air issues like climate change dominating the agenda of the White House and the public, consensus on a water infrastructure bill will likely wait until next year.
What may pass this year that is of interest to industry is more favorable treatment on access to bond financing and modest gains regarding debt structures and regulatory treatment that it has made in past years, Coy said.
Congress, as part of the budget process, may also be successful in reimposing a stronger arsenic standard over the objections of EPA.
Hydraulic FracturingMeanwhile, Congress and the White House this fall will be looking at whether federal drinking water laws should be considered when oil producers use hydraulic fracturing methods.
In comments to EPA, oil industry officials maintain that hydraulic fracturing, which involves temporary injection of fluids into underground formations, is not the kind of underground injection federal drinking law was meant to regulate. They reiterated those statements earlier this April before a Senate subcommittee.
EPA last July said it was seeking more comment on the use of hydraulic fracturing in coalbed methane wells. The comment period ended Aug. 29 and regulators are now analyzing the responses to see what action, if any, should be taken.
The agency will then incorporate the comments and other existing information in a summary report.
Congress is also expected to weigh in. A new proposal by Sen. Jeff Bingaman (D-NM), chairman of the Senate Committee on Energy and Natural Resources, would require a more detailed study on the impacts of hydraulic fracturing than EPA is now planning. The interagency study would have to be completed in 24 months and its conclusions reviewed by the National Academy of Sciences.
MTBE BanCongress will also consider this fall a nationwide ban on the clean fuel additive methyl tertiary butyl ether because of ongoing groundwater concerns by some states, particularly California.
MTBE is extremely water soluble. State and local officials are worried that gasoline mixed with MTBE can pose hazards to drinking water supplies. Petrochemical producers have argued that contamination into the groundwater only happens when an underground gasoline storage tank leaks and that MTBE is actually less harmful than the gasoline it is mixed with.
But growing concern that MTBE contamination is spreading may likely lead to federal action.
The Senate Environment and Public Works Committee is considering legislation sponsored by Sen. Bob Smith (R-NH) that would ban the petrochemical in four years and allow EPA to provide grants to MTBE producers to help convert their plants to other clean fuel additives. States would also win more flexibility in meeting federal clean fuel rules, designed to reduce air pollution.
USGS SoftwareIn other administrative news, the U.S. Geological Survey (USGS), a bureau of the US Department of Interior, has chosen a new software package from Informatica Corp. to extract and integrate information used to catalogue the agency's water resource programs.
"Our team routinely accesses data from a wide cross section of providers. In many cases, they store their information in disparate systems with unique formats and reference systems," said Harry House, leader of the USGS Database Application Team in the Survey's Wisconsin Water Resources office. "These systems often need to be resolved into a new common format in accordance with user requirements, which often involves complex transformations that need to be documented and stored for later reuse. We determined that Informatica offered the most robust data integration software available to support our needs."
Court ActionOn the judicial front, a federal appeals court last month ruled that EPA did not violate the Clean Water Act when it supported a decision by the Montana legislature to change state water quality laws.
The 10th U.S. Circuit Court of Appeals upheld a lower court ruling that supported EPA's decision to allow Montana to grant a wider range of exemptions for logging, mining, and manufacturing operations. Environmental groups, which brought the suit, vowed to appeal saying the 1995 law could allow a dangerous precedent in other states and violates the main tenets of federal clean water laws.
Beach Closings Soar Following Better ReportingThere were nearly twice as many beach closings and advisories last year than there were in 1999, according to the Natural Resources Defense Council's 11th annual report, "Testing the Waters: A Guide to Beach Water Quality at Vacation Beaches."
Although some states experienced heavy rainfall, prompting more closings and advisories, most of the increase in closings and advisories followed increased monitoring, better testing standards for bacteria and other pathogens, and more complete reporting. There were 11,270 closings and advisories in 2000 compared to 6,160 beach closings and advisories in 1999.
This year's report also found another disturbing trend: The number of beaches reporting pollution problems from an unknown source jumped from 40 percent in 1999 to 56 percent in 2000.
"We're seeing a much more realistic picture of the beach water pollution problem now that more states are monitoring and reporting, but we haven't turned the corner on identifying the sources of pollution and preventing them in the first place," said Sarah Chasis, an NRDC senior attorney and director of the organization's water and coastal program. "It's outrageous that more than half of the time local authorities didn't know where all the pollution was coming from when they had to close a beach or post an advisory." WW/
