Associations Promote Water Infrastructure Finance Measure

U.S. Rep. Bob Gibbs (R-Ohio) has continued to draw input from the water community as he drafts a bill to offer low-interest loans to enable drinking water and wastewater systems to build "significant" infrastructure projects.

May 1st, 2012

By Patrick Crow, Washington Correspondent

U.S. Rep. Bob Gibbs (R-Ohio) has continued to draw input from the water community as he drafts a bill to offer low-interest loans to enable drinking water and wastewater systems to build "significant" infrastructure projects.

Gibbs, who chairs the Committee on Transportation and Infrastructure's Subcommittee on Water Resources and Environment, held another hearing on the subject Mar. 21. At the initial hearing on Feb. 28, he outlined his proposed Water Infrastructure Finance and Innovation Act (WIFIA), which is similar to an earlier proposal by water groups.

Under WIFA, the Environmental Protection Agency (EPA) would give loans, loan guarantees or credit support to drinking water and wastewater infrastructure projects needing more than $20 million. Some congressmen have suggested that WIFIA funding be routed through the state revolving fund (SRF) programs rather than be loaned directly by EPA.

Gibbs said testimony at the first hearing was "that there is a tremendous amount of capital from the private sector and other sources potentially available for investment in our wastewater and drinking water infrastructure.

"This is important because we need to make a variety of financing 'tools' available for the infrastructure financing 'toolbox.' This includes both public and private funding and investment mechanisms," he said.

The Association of Metropolitan Water Agencies (AMWA) told the subcommittee that WIFIA appeals to large water systems because their infrastructure projects are often too big to benefit from meaningful assistance through their states' SRF programs or are ranked too low on the states' priority lists.

The American Water Works Association (AWWA) said WIFIA would supplement, not replace, the existing SRFs. It said not only would the legislation lower interest rates for large infrastructure projects, it would be more cost-effective since it would be federally, not state, operated and thus would reduce administrative costs.

Ben Grumbles, president of the Clean Water America Alliance, told the subcommittee, "We urgently need water innovation and collaboration, not only to sharpen and polish existing tools, but also to forge new tools for communities and ecosystems."

Meanwhile, another study has urged the federal government to increase its support for water infrastructure investments.

Corporate Accountability International said there is bipartisan support for bridging what it estimated as a $23 billion/year shortfall in project spending. The Boston, Mass.-based organization (formerly Infact) campaigns to protect health, the environment and human rights.

It said that over the past 35 years, the federal commitment to public water systems has plunged from covering 78% of clean water spending to 3%. "In fiscal 2010, federal appropriations reached a 16-year high of $1.4 billion –- but less than one-tenth of what was needed to close the annual water infrastructure investment gap."

The group's report said that closing that gap would generate $265.6 billion in economic activity and create close to 1.9 million jobs over the next five years. It said businesses also would avoid $734 billion in costs and sales lost due to unreliable water infrastructure.

The report said that due to reduced budgets, the water industry has advocated privatization of public water systems, primarily in the form of "public-private partnerships."

It noted some failings of privatizations and said that polls have found 71% of respondents trust local governments over private corporations to provide public water.

Groups Support SRFs

Seven national water and wastewater associations have urged House of Representatives and Senate lawmakers not to cut fiscal 2013 appropriations for the drinking water and clean water SRFs.

The Obama Administration's budget proposal would reduce SRF spending by $359 million next year. House appropriations leaders are expected to push for even further cuts during the appropriations process.

The water organizations asked the congressmen to maintain 2012 funding levels of $1,468,806,000 for the clean water SRF and $919,363,000 for the drinking water SRF.

They said, "It is critical that states receive sufficient funding to carry out core clean and safe water functions in partnership with the federal government, including administration of the SRFs. Accordingly, we also ask that you provide $330 million for the Clean Water Act Section 106 Operating Grant program and $130 million for the Public Water Work System Supervision Program."

The seven groups were AWWA, AMWA, the National Association of Clean Water Agencies, the Association of Clean Water Administrators, the Water Environment Federation, the American Public Works Association, and the Association of State Drinking Water Administrators.

They noted that EPA's has estimated that the nation needs more than $500 billion in additional water infrastructure funding over the next 20 years.

EPA Administrator Lisa Jackson defended the SRF cutbacks during testimony about the agency's proposed budget before the Senate Environment and Public Works Committee.

Even with the cuts, Jackson said the SRFs would receive a combined $2 billion, fully 25% of EPA's total funding. She said that several years of reduced budgets have forced the agency to begin cutting infrastructure funds.

Jackson said eventually loan repayments would fully fund the SRFs, requiring no annual appropriations, but said the agency is "years away" from that point.

In other Washington news:

--The Senate-passed transportation bill contains a provision that would suspend state volume caps on private activity bonds used to fund water and wastewater facility projects. Private entities may issue the bonds if they have a public benefit, but federal law limits the amount that may be issued in a single state in a single year.

--Cynthia Dougherty, director of EPA's Office of Ground Water and Drinking Water since 1995, has retired. Pam Barr, head of the Standards and Risk Management Division, is acting director.

--EPA has issued a guidance to help drinking water and wastewater utilities plan for climate change. It explains what climate change-related impacts cities may face and outlines strategies they can adopt.

--AWWA and the Institute for Sustainable Infrastructure will jointly develop a rating system for underground water infrastructure projects that will include cost assessment, environmental evaluations, outcome-based objectives, and achievement of higher levels of sustainability.

--The Water Research Foundation and the U.S. Bureau of Reclamation plan research aimed at extending the life of pipelines through improved understanding of corrosion processes and corrosion protection techniques.

--EPA has updated discharge permits for Boise, Idaho, that will cut 98% of the phosphorus pollution entering the Boise River during summer months from the city's two wastewater treatment plants. The permits also tighten limits on mercury and ammonia discharges.

--The agency said Buffalo, N.Y., discharges nearly four billion gallons per year of combined sewage into the Niagara River. It ordered the city to draft a control plan, which could cost $500 million over 15 years.

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