Senate Considers Bill to Remove Cap on Private Activity Bonds

June 1, 2010
Legislation has been introduced in the Senate to remove state volume caps on private activity bonds (PABs) for water and wastewater projects, a move that would allow greater private investment in water infrastructure.

By Patrick Crow, Washington Correspondent

Legislation has been introduced in the Senate to remove state volume caps on private activity bonds (PABs) for water and wastewater projects, a move that would allow greater private investment in water infrastructure.

The Sustainable Water Infrastructure Investment Act was filed by Sens. Robert Menendez (D-N.J.), Kit Bond (R-Mo.), Mike Crapo (R-Idaho), and John Kerry (D-Mass.). It was unclear when the Senate might act on the bill.

The legislation is similar to a measure passed recently by the House of Representatives as part of the Small Business and Infrastructure Tax Act.

Current federal law limits the ability of private entities to issue PABs (with state government approval) to fund infrastructure projects that deliver a public benefit. Investors prefer PABs because interest accrues tax-free. The airport, high-speed rail, and solid waste disposal industries already are exempt from existing PAB caps.

The National Association of Water Companies and 60 other organizations support the Senate bill.

Sen. Crapo said, "This bill would allow local communities to leverage private capital markets in combination with other financial mechanisms to finance water and wastewater infrastructure projects. It makes financial sense for communities and will improve public health and water quality."

Meanwhile, the Urban Land Institute and Ernst & Young released a report urging the use of public-private investment to close the water infrastructure funding gap. They said the U.S. should establish a national infrastructure bank, modeled on the European Investment Bank, to attract more private capital to water projects.

The study said a new approach is needed because governmental budgets are tight, investors are eager to invest, and other nations have used private investment in water infrastructure for years.

Clean Water Act Debate

House Democrats have renewed the debate over what U.S. waters should be protected under the Clean Water Act (CWA).

U.S. Supreme Court rulings in 2001 and 2006 limited the CWA to U.S. "navigable waters." But Reps. James Oberstar (D-Minn.), chairman of the House Transportation and Infrastructure Committee, Vernon Ehlers (R-Mich.), and John Dingell (D-Mich.) want a broader definition.

Their "Clean Water Restoration Act" would expand CWA protection to many wetlands and small or intermittently flowing streams. The bill defines U.S. waters to include all tidal waters, all interstate and international waters, and "all other waters, including intrastate lakes, rivers, streams (including intermittent streams), mudflats, sandflats, wetlands, sloughs, prairie potholes, wet meadows, playa lakes, or natural ponds."

To ease the concerns of opponents, their bill would not apply to existing wastewater treatment systems, groundwater, or any actions other than discharges into protected waters.

Oberstar plans to hold hearings on the bill this summer and send it to the full House by September. The Senate Environment and Public Works Committee already has approved a similar bill.

Oberstar said, "Opponents of the CWA argue that the federal government should not require a permit for everything you do that might affect a wet area. I agree. The CWA never required such permits, and I do not offer legislation that would do so. Simply put, if it was not regulated before 2001, it will not be regulated with the enactment of my legislation."

However, Republican leaders on the transportation committee, John Mica (R-Fla.) and John Boozman (R-Ark.), opposed the bill.

Mica said, "This legislation is the latest version of the same controversial proposals we have seen before to federally regulate virtually every wet or potentially wet area in the U.S."

Boozman said, "Under this bill, existing state, local and private rights will be superseded by the vast authority of federal regulators. If this legislation becomes law, it is hard to imagine a state or local land use decision that will not be subject to review by a federal bureaucrat."

Jon Devine, with the Natural Resources Defense Council, said the bill would "restore the law's clear protections to our nation's fragile water bodies. Congress did not intend to leave significant amounts of our waterways vulnerable. It must act immediately to close the loopholes created by the Supreme Court."

Toxic Substances Control Act

In a move that could impact water utilities, Sen. Frank Lautenberg (D-N.J.) and Reps. Henry Waxman (D-Calif.) and Bobby Rush (D-Ill.) have filed bills to overhaul the 1976 Toxic Substances Control Act.

Under the legislation, chemical companies would have to disclose more data regarding the environmental and health effects of the chemicals they make and would have to prove their chemicals are safe to remain on the market.

The bills also require EPA to reduce unsafe chemicals in communities disproportionately exposed to toxic pollution.

John DeCock, president of Clean Water Action, said, "The dramatic increase in health problems associated with toxic chemical exposure and renewed concern over chemicals in drinking water tell us that it is time to get serious about identifying problem chemicals and getting them out of products and out of the environment."

The Natural Resources Defense Council said the bills would expand the public's right to know about the health and safety effects of most chemicals, require chemicals to meet a safety standard that protects children and other particularly vulnerable populations, and put the burden on the chemical industry to prove that its products are safe.

In other Washington news:

-- EPA has awarded East Prairie, Mo., $194,000 to improve its storm sewer system, matching an identical grant in 2009. The agency said since 2006, four sewer collapses have caused flooding in the city.

-- EPA granted Gravois Mills, Mo., $970,000 to help build sewers and provide service to 360 households.

-- The agency gave Plattsmouth, Neb., $1,164,000 for a multi-phased sewer separation project to prevent sanitary sewage discharges in storm water flowing to the Missouri River.

-- EPA will provide drinking water to the towns of Halfmoon and Waterford, NY, while a dredging project removes polychlorinated biphenyls from Hudson River sediment.

-- Hovnanian Enterprises Inc. has agreed today to pay a $1 million civil penalty to resolve alleged CWA violations at 591 housing construction sites in 18 states and the District of Columbia. EPA said the company also would implement a storm water compliance program at existing and future construction sites.

-- EPA awarded Ottumwa, Iowa, $291,000 for a project to eliminate combined sewer overflows and basement backups for residents on the south side of the Des Moines River.

-- The agency has allocated $600,000 to establish a national urban watershed small grants program.

-- EPA gave Hartville, Mo., $134,000 to help fund the replacement of a pump station and a sewer line that deliver wastewater to a lagoon.

-- At EPA's request, a federal judge has ordered the St. Croix, V.I., Waste Management Authority to continue operating a pump at the Figtree Station and install additional pumps. An equipment failure caused the discharge of millions of gallons of raw sewage over a two month period. WW

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