Bush Administration puts Environment on Hold

By Dawn Kristoff

If the first six months of the Bush Administration is any indication of what lies in store for environmental policy over the next four years, U.S. environmental technology companies can expect challenging times ahead.

On the domestic front, there have been several critical decisions coming out of this Administration that clearly place economics at the forefront of the environmental policy debate. First was the President's decision to renege on his campaign pledge to seek reductions in carbon dioxide emissions from power plants. This was shortly followed by the Administration's rejection of the Kyoto accord, the international treaty on global warming. Then came the suspension of new cleanup requirements for hardrock mining companies on public lands.

Even some Republicans reacted with dismay when the Administration announced its decision to withdraw a new regulation requiring a substantial reduction in the permissible levels of arsenic in drinking water. A standard of 50 parts per billion has been in effect for arsenic since 1942. After decades of studies, hearings, negotiations and cost-benefit analyses, EPA released a new standard in January of this year, under the Clinton Administration, restricting arsenic to 10 parts per billion. The Bush Administration's decision to subsequently shelve this new rule in order to further study its 'scientific basis' was met with consternation by citizens and congressional lawmakers, alike. EPA received over 12,000 comments opposing the suspension. Fortunately, Congress intervened and included language in EPA's fiscal 2002 budget preventing the Administration from setting a higher arsenic standard than the 10 parts per billion promulgated in January.

It remains to be seen whether Congress or the courts will take action on the Administration's latest decision to delay until 2003 the implementation of the total maximum daily loads (TMDLs) rule. This regulation was scheduled to go into effect in October 2001, implementing a section of the Clean Water Act that calls on states to identify waters that are not meeting state water quality standards and establish pollutant limits designed to restore the quality of those waters. EPA estimates that some 20,000 individual river segments, lakes and estuaries are still polluted, with the primary sources of contamination coming from agricultural runoff, animal waste, construction sites, logging operations and urban stormwater.

Over the next few months, the Administration will also be deciding the fate of some additional regulations that could significantly determine whether our nation moves forth in tackling the difficult pollutants that persist in our environment, or further delays progress in meeting its water quality goals. These regulations are meant to address ground water pollution, discharges from concentrated animal feedlots, sanitary sewer overflows, and microbial pathogens in drinking water. Given the Administration's track record to date on environmental rulemaking, it is expected that these rules will also be delayed or weakened.

Promulgating regulations is just part of the equation. The Administration must be prepared to enforce these rules justly and provide financial assistance equitably to those in greatest need. On both accounts, the Administration has fallen short, as evidenced by its budget proposal for fiscal year 2002. EPA's enforcement budget would take a 12 percent cut resulting in a loss of 223 positions. Funding for the clean water state revolving fund program would also be cut by 35% in the fiscal 2002 budget proposal submitted by the White House. Congress is expected to reinstate these funds, but the message is clear that maintaining future support for environmental programs under this Administration will remain an uphill battle.

Taking a more global perspective, the United States remains one of the biggest markets for environmental products and services in terms of annual capital expenditures, though growth has been modest under the best of circumstances and could likely weaken under the new Administration. U.S. environmental technology firms must therefore seek business outside their borders for future growth and sustainability.

Competition is fierce in the water field, with U.S. companies not only having to compete with their worthy European counterparts, but also with the support given to these foreign competitors by their governments. These governments have identified the water industry as a major strategic business to be developed and have helped their companies establish a dominant position in a market that is expected to grow rapidly over the next 10 years.

Looking at our government's commitment to trade promotion, it is interesting to note that only one percent of the U.S. budget goes toward foreign aid accounts. Of that amount, one-half is dedicated for Official Development Assistance (ODA), which includes grants and loans to developing countries for humanitarian programs and economic development. Less than one percent of these grants and loans is directed toward water supply and sanitation projects. From a national security perspective, the United States cannot afford to neglect and ignore the global environment, nor can it assume a leadership position with such meager investments in these projects.

Unfortunately, what little assistance the U.S. government does afford its industries in helping to capture a greater share of the global market for environmental technologies is currently under siege in the fiscal 2002 budget proposal of the White House. The budget for the Export-Import Bank of the United States is due to be slashed by 24 percent. The Commerce Department's trade development activities would be cut by 25 percent as well. Commerce is also scheduled to zero out all of its financial assistance given to the US-Asia Environmental Partnership, a program that has proven to be exceptionally successful in helping U.S. environmental technology firms establish their presence in the burgeoning Asian market. Hopefully, defenders of these programs in Congress will persevere and reinstate funding for these critical programs.

What is evident is that the U.S. environmental technology industry must strengthen its voice and make its presence known within the Bush Administration. We represent over $200 billion in revenues, employing 1.4 million U.S. workers in over 115,000 revenue-generating enterprises. We employ six times more people than the motor vehicle and car body manufacturing industry. Most noteworthy, for every $1 the U.S. government invests in the environmental technology sector, we return approximately $10 in export revenues.

Ours is an industry of great potential in helping to bring technological solutions to the ever increasing challenges facing the domestic and global water environment, while at the same time helping to balance our nation's trade deficit. To remain viable, we must have a predictable national regulatory regime and a global water strategy that encompasses a strong public-private partnership.

Mr. President, you will be hearing from us!

About the author: Dawn Kristof is President of the Water and Wastewater Equipment Manufacturers Association, a Washington-D.C. based trade organization founded in 1908. The member companies of WWEMA are among the world's leading providers of technology to the water and wastewater industry, employing 43,000 workers with collective sales nearing $6 billion worldwide.