Advocate Summary

Issue:  Water Infrastructure & State Revolving Funds
Advocate:  Water Environment Federation – Timothy S. Williams
Date of Interview: 6/13/02

Basic Background
We are a membership association and about two thirds of our members work for municipal agencies, either directly or as consultants or contractors, so they have a big stake in the funding for waste water improvements and other water quality programs. The waste water construction grants program was created in the 1970s, our guys were very supportive of that and then in the 1980s when the grants program was ended and it was replaced with the State Revolving Funds our members were supportive of that. In the last five years we’ve been active again trying to publicize the fact that the State Revolving Fund program even though it works well as a loan program, it doesn’t really capitalize adequately to…this idea of replacement costs. 
	At the beginning of the current Congress, we were involved in this WIN coalition, and there was a debate about whether to pursue grant funding or better to address the issue whether there should be a dedicated source of revenue, a trust fund approach, for waste water and water infrastructure. At that time there was a surplus and there was lots of talk in the 2000 races about water infrastructure. The coalition decided to avoid the issues related to a trust fund and just go for the money in the surplus. And that’s what we’ve been involved in since January of 2001.
	
There is a Clean Water Fund, that was set up in 1987, it is primarily for waste water improvements, but it can be used for other Clean Water Act projects, including non-point source, and a whole range of issues related to compliance with the Clean Water Act then there is a Safe Water SRF, which was established by the 1996 Safe Water Drinking Act, which is more narrowly focused, it is really only available for getting grants to comply with the Safe Water Act, so it can’t be used for infrastructure replacement, whereas the Clean Water SRF can be used for any purpose. 
	The main point of the Clean Water Act is to protect surface water quality, so it doesn’t say anything about ground water, and the federal government officially has no legal authority to regulate ground water. It is true that some of the Clean Water Act projects indirectly protect ground water quality, the purpose of the loans from the Clean Water SRF are to improve waste water treatment plants. 

The federal government gives the grants to the states, the states then loan the money to communities that have to pay it back, there are guidelines about how the states loan the grants to communities, priority lists, and payback schedules and things like that and what percentage would be covered by a loan. Some charge administration fees to cover their costs too. And now that a lot of states are in economic unrest, one of the issues that’s popping up right now is whether they should be allowed to charge an administrative fee. 
	One of the proposals on the table would allow states to make negative interest loans or zero interest loans which would be a grant. And there is controversy over what is a community in need. One of the things that people always say is that people lump together communities in need and small communities but the fact is that some of these big cities have a considerable portion of their population that is below the poverty level. They argue they are a community in need. 

One bill is called the Water Infrastructure Finance Act and one is called the Water Infrastructure Investment Act S1961, and HR 3930. And in general S1961 is more flexible in its regulatory approach than HR3930 is. 

[So there were reports done by the EPA, the WIN coalition and the CBO?]
Yes, but they were all really big numbers and they are a lot bigger than what is being spent now. The main point there was that this EPA Needs Survey that has been done since the 70s only looked at the cost to comply with the Clean Water Act, capital costs to comply with the Clean Water Act about categories of eligible cost and all this kind of stuff, what the EPA survey does not address is replacement costs, the fact that we spent 100 billion dollars building stuff in the past 30 years, and the average life span of this stuff is thirty years so we are looking at replacement costs of a 100 billion dollars and the EPA wasn’t taking this into account. It’s like buying a house and you know in a few years you’re going to need a new roof. So these were expensive things for a city to shoulder. And so we did a study and the EPA did a study called the Gap Analysis which has not been published yet it supposedly in OMB right now, and then the Congressional Budget Office did a study of our studies is basically how you could characterize what the CBO did, they looked at what WIN did the looked at what the EPA did and they looked at other publications, like a publication by the American Water Works Association that looked just at the cost for drinking water utilities. They looked at the differences in methodology in determining the numbers too, and it’s the only publication that really does that. The critics of federal investment, these private water companies, they funded their own research which attempted to poke holes in the WIN methodology, they said this was a bogus number because, they didn’t say it was a bogus number but that it was a construct because it used a model, it didn’t go out and survey every city and get their real estimates we just estimated based on a model what the basic cost would be. And that’s true, it is a model but it is the most complete model, or most authoritative model that anybody has ever attempted to do including the EPA. I’m terrible with numbers I know there are differences between the EPA numbers and the WIN numbers but they’re not really big differences and they are both a lot bigger than what was being invested previously. What the EPA looked at was a combination of replacing pipes and treatment facilities, new facilities that would be required, and then certain categories that were never in the EPA estimate before, for example costs related to storm water and what are called combined water overflows that are in a lot of older cities and like here in Washington, sewer systems were deliberately constructed so that in a heavy rain fall the sewage would bypass the treatment plant and go directly into the river, because otherwise the treatment plant would be swamped and knocked out of commission, and that was an accepted practice and it wasn’t until the late 80s and early 90s that people decided that these overflows needed to be corrected so it’s a multibillion dollar cost item for most cities to go back and reroute their sewer systems. So this was a category of things that didn’t used to be in the EPA estimate because it wasn’t something they required cities to do before. It is important to point out to that you can’t make the assumption that the infrastructure is already there, there are a lot of small towns particularly in the south, townships that don’t even have the sewer systems put up yet, so they have to start from scratch.   

Prior Activity on the Issue 
None mentioned.

Advocacy Activities Undertaken
Well on this issue, we have mainly worked through the WIN Coalition. There is a high degree of consensus in the coalition about the need for a greater investment and there is less consensus about the exact solutions or the design about the federal investment and how it would actually work. Whether there should be grants or loans, some organizations believe that the SRF program works and we just need to put more money into it, some of the organizations that represent municipalities feel that we should go back to a program of grants where the state could just receive a direct grant. And then there’s controversy over what the money would be used for, on the drinking water side for example the safe water SRF is used for compliance with the Safe  Drinking Water Act, and the reality of that since it’s been set up in 1996 has been there is relatively a small amount of money there, and it has gone to smaller cities that have compliance problems, most big cities don’t have problems complying with the Safe Drinking Water Act, however they have expenses related to pipe replacement. They would like the safe water SRF to be broadened so that the money could be used for replacement not just for compliance. So there’s a difference between the big and small cities. There’s a difference between municipal organizations and the states and the environmentalists, over the types of projects that would be funded under the Clean Water SRF. The environmentalist are concerned that projects will produce spread and development Sometimes these projects focus too much on the engineering solutions, big projects, lots of cement and they feel that there are projects that could be funded that are low tech and would produce less in terms of the sprawl issue. So there’s consensus about the need for more investment but there are differences over some of these issues. When the report came out in the beginning of 2001, which was a result of a facilitated process with all of these organizations, it was balancing some of these different viewpoints. A new issue that came up after the WIN report came out is the issue of conditions that might be applied to states or cities that would be receiving federal assistance. The legislation that is under review right now in both the House and the Senate, both bills have provisions that would require the cities to study their rate structures, and demonstrate that they have done everything they can with raising their rates, before they can get a grant. Another provision says that a city would have to have certain management plans in place before they can get a federal loan or grant. These proposals, the goal was to have self-sufficient utilities and there is a gap right now because these local utilities have been mismanaged or the council or mayors are not willing to take the heat for raising water and sewer rates, they’re just looking for a bail out. So a lot of these proposals, cities, in order to get a loan have to review their rate structures, possible raise their rates, and have certain management structures in place, so that they can pay for their own improvements in the future. Cities believe that it’s an unfunded mandate, and it’s too burdensome, the Clean Water Act and the Safe Water Act are federal statutes and there is a federal interest in clean water and safe drinking water and there has been a partnership for the last 30 years, and the government should continue to fund, to share these improvements and the states I guess are more than ambivalent about these requirements because they run the SRF programs, they would have to be the ones to administer and supervise the process of deciding, to comply with all of these requirements. And they are concerned about how much it would cost based on the money.  There are states where they can’t take full advantage of the federal money that is available now because the state has to provide a matching amount and they can’t afford the match and then the federal money goes unspent.
	The states are saying the SRF program works well now, without all of these new requirements. And if you add all of these new requirements onto the state loan programs, they are really regulatory requirements, they have nothing to do with financing improvements, it is kind of a back door way to regulate what is basically a local government function of water and sewer services, it’s about as pure of a local government function that you can get. So the states don’t want to have to regulate these activities and they are concerned that if the process of getting a federally funded loan through the SRP becomes so cumbersome that it is not attractive for cities to borrow money from the state revolving funds. Right now it’s a loan and you get a discounted interest rate versus what the city would get if it sold bonds, but they may decide it’s not worth it, that we’ll just raise the money in the private market instead of the revolving loan fund because of all the additional requirements. It would make the program less attractive. 

So we work with the coalition and then we work on our own, we’ve had meetings on our own. letter writing and during 2001 and early 2002 we had numerous meetings with the House and Senate committee staff responsible for drafting this legislation. In the Senate it’s the Environment and Public Works Committee and in the House its the Water Resources subcommittee of the Transportation and Infrastructure Committee, and also in the House it is the Commerce Committee. In the House the Commerce Committee has jurisdiction over drinking water and the Transportation & Infrastructure Committee has jurisdiction over Clean Water Act issues. And then in the House bill there is a provision that lifts the cap on water are called private activity bonds which are tax exempt of federally subsidized and it would basically make it easier to sell bonds to finance water infrastructure and because it’s a tax issue that has to be considered by the House Ways and Means Committee, so that gets kind of complicated. The idea there is it would, HR3930, in addition to providing federal funding to states to provide to cities to invest in infrastructure that would use more private money to go into infrastructure investment. 

Future Advocacy Activities Planned
Also a letter was sent by a coalition of environmental advocates expressing their concern
About the Senate bill, there was another issue in there, they want to prevent any city from getting a loan or grant if they are in what is called “significant non-compliance with the Clean Water Act” unless there is a court order, a consenting degree, promising things they will do to comply. So they did send a letter up which focused on a list of issues another of which was sprawl. And then there was a letter sent by the municipal organizations, and we signed that letter, expressing concerns on the Senate bill on these regulatory requirements and then the states sent a letter expressing their concerns. It was kind of a bazaar development, the full Senate environment committee marked up this bill, S1961, which was to provide billions of dollars in money for states and local governments, and all of the organizations representing states and local governments were opposed to S1961. It was a bill to improve water quality and to protect clean water, and all the environmental organizations had significant reservations with the bill. So it was kind of an odd situation. And needless to say, nothing has happened with the bill since it was marked up, because there aren’t really any advocates for it. The issue for the WIN coalition is to try to find a way for the government to invest more is “what do we do next.”  The WIN report recommendation was that there was a big budget surplus, and that the money should be spent on water infrastructure well that argument doesn’t fly anymore, because there is no longer a surplus because of Sept. 11th and because of the tax cut, there is no surplus and there was a presidential election and now the current director of the OMB says we can’t afford this, so that’s the challenge.  

Key Congressional Contact(s)/Champions
The Water Infrastructure Caucus, which was formed from the efforts of this WIN coalition, the leadership is the chairs of the House and Senate Committees and subcommittees that have responsibility for drinking water and clean water. The staff contact right now is somebody that works for the Water Resources subcommittee of the Transportation and Infrastructure Committee. The idea there was, and this is done on a lot of issues, to get a lot of members to join this caucus, and in doing so lending just kind of generalized support for the issue, they’re not cosponsors of a bill, there just showing their support. I think the caucus was formed in 1999 or 2000. The way this works is you typically get six or eight members that work on these issues to send out a dear colleague letter and then the organizations like ours, we then ask our members to write their congressmen or senator and ask them to join the caucus. 

The champion for water infrastructure in the House has been Mr. Boehlert (R) of New York, who was the chairman of the Water Resources subcommittee until this congress. And that’s been one of the challenges for the coalition, there haven’t really been a lot of other champions, the leadership of the two committees that have responsibility for this, but for the most part there haven’t been people directly identified with this issue for a long period of time. In the Senate there is one member, Senator Voinovich (R) who was the Mayor of Cleveland and the Governor of Ohio and who has sponsored SRF reauthorization legislation of his own in the past so we spend a lot of time with him.

Targets of Direct Lobbying
None mentioned.

Targets of Grassroots Lobbying
[No specific targets mentioned but a grassroots letter writing campaign was employed.]

Coalition Partners: Names/Participants
WIN Coalition – members listed in report in materials folder

Other Participants in the Issue Debate
The landscape is, the major centers of influence on this, are the cities and the people who represent municipalities, the states and then the environmental advocates.

[Opposition]
The private water companies formed their own coalition called the H2O coalition, and I think they have a website. The leader of that association is the National Association of Water Companies, that’s the private water companies – NAWC.

Ubiquitous Argument(s) and Evidence
I guess that The Clean Water Act is successful program we spent billion of dollars on improvements to protect water quality and if we stop that or we falter we run the risk of going backwards and seeing a deterioration of water quality. So we need to keep to our mission to invest in improvements and that the Clean Water Act has been successful because it was a partnership, it is a partnership between the federal government and the states and local communities. And it is necessary for the federal government to fulfill its end of the partnership.   

Secondary Argument(s) and Evidence
And everyone is using new arguments since Sept. 11, I’ve been reading articles that suddenly everything is a security issue. What happened is, I think after Sept 11th, there was a lot of focus, particularly on drinking water security and safety. And what we’ve simply said is that this underscores that these are very important local government services and there is a public health dimension, sometimes people don’t realize that – they take it for granted, you know we’ve had safe drinking water in the United States for about a hundred years, and clean rivers for about 30 to 40 years, that the basis for both of these programs is to protect public health. And the concerns about anthrax and these other kinds of things have just heightened pubic health issues. So our point there is I guess that if these facilities are important enough to secure then they are important enough to invest in. There is also some expenses cities will have related to security improvements, for example safe water supply – there is a wonderful system of reservoirs and a lot has been done to protect the New York watershed but guess what all the water comes into New York City in one big pipe. And so a logical expense for New York City as result of security, would to be to build another pipe in case the first one is blown up or blocked somehow, so those are the types of expenses cities will have, that’s a multimillion dollar project right there just for New York city, so a lot of the expenses cities will have for security will take away from their ability to refund some of these more routine projects, like replacing pipes. 

[So the funds will be able to go for security improvements?]
	Yes, the funds that are there now in the Safe Drinking Water and the Clean Water SRFs the EPA said the funds could be used for security projects now but its still up to the states to array them in a priority list. Then in the case of drinking water Congress has actually appropriated money especially for drinking water security programs, the argument used there was these are cities are already strapped with lots of security expenses and just general operating expenses so this was another form of assistance. 

Targeted Arguments, Targets, and Evidence
None mentioned.

Nature of the Opposition
The landscape is, the major centers of influence on this are the cities and the people who represent municipalities, the states and then the environmental advocates. In this case there is also, there are advocates in Washington for people who are private companies that provide water and waste water services and the drinking water business, a percentage, a small percentage but a percentage, of drinking water utilities, local drinking water utilities are privately owned and they have shareholders and things like that and they operate the local drinking water system through a franchise, or sometimes a concession is given by the city. And they believe that the solution to this investment gap is private involvement in these local government services. And they have generally been opposed to legislation that provides federal loans or greater federal loans or grants to cities, because it would complicate their marketing effort in trying to get cities to sell or rent their local water systems to a profit making company so they generally have been opposed. And they are the ones that have fostered this argument that this gap is because of local government mismanagement, and if only they were turned over to the private sector and all run like businesses you won’t have these problems. And there is a lot of literature on this issue on cities that have turned their water systems over to private companies and what has happened and some of the literature shows that there has been success stories and things have improved but then there are other stories other examples where water rates have gone up dramatically also there has been examples of corruption and things like that happening. There is also an issue about foreign ownership, especially after Sept. 11th, a lot of companies that provide these, really all of the major companies that provide these water and waste water services happen to be owned by either French or British water companies, and there is a concern about it being a central local government function and whether it’s a good idea to have these essential local government functions under foreign ownership.

The private water companies formed their own coalition called the H2O coalition, and I think they have a website. The leader of that association is the National Association of Water Companies, that’s the private water companies – NAWC.

[Impediments]
And there was a New York Times article in the spring around April 1st or so that talked about this EPA study, the gap analysis, and about the controversy over the fact that the Bush administration has held up the publication of this study because it was commissioned in the Clinton administration, and the Bush administration either doesn’t have a position yet on federal funding or their position is that we can’t afford more funding. The director of the OMB has said that the president’s priorities are Homeland Security and that we can’t afford it, the environmental things are on the bottom of the list of priorities. 
	Another thing of the politics of this, which is sort of beyond our reach, the Senate bill and the House bill both have ideological baggage over the issue of Davis-Bacon. What Davis-bacon is a law which requires that any construction project that is paid for with federal money, the workers on that project have to be paid the federal prevailing wage. Davis Bacon was passed in the 1940s or 50s and it is a very important issue to organized labor, and there was a trend in the 80s in a lot of federal bills to block Davis Bacon requirements, 31 states have their own prevailing wage laws anyway, so it is really only relevant in a few states. Organized labor kind of got its feet back and said wait a minute this is really important to us so they have made it a litmus test issue and people are for or against Davis-Bacon, it’s a labor score card vote. And the Republicans have made is a score card vote but their against Davis-Bacon, so the House and Senate bills have Davis-Bacon requirements for new funding the SRFs, and the Republicans in both houses have said that leaving aside any of the substance of clean water or safe drinking water, they have said they will oppose the legislation if the Davis-Bacon requirements are in there.  We don’t have a position on that issue, it’s not really a water quality issue, we do have labor and contractors in the WIN coalition and they have a concern about it. In general contractors are kind of sophisticated on this, they realize it’s no big deal because 31 states have prevailing wage laws anyway, and generally the types of projects that are funded by this program are projects that involve high-wage construction anyway. So they don’t feel that strongly about the wage stuff. It is really the ideological people that are against it. Organized labor feels very strongly, as I said they’ve made it a litmus issue. So this could threaten to hold up the bills in both the House and the Senate, which the WIN coalition formally has no position on. 
	Another issue which is political that we have no position on is how the money is allocated between different states. The formula for the Clean Water SRF was last revised back in 1987 and some Senators, for example Senator Graham from Fl, who is on the subcommittee that is responsible for the clean water act, they feel their states are being short changed because they have grown in population so they would like more money to go to their states under a new formula. And some other senators like Senator Smith from New Hampshire, whose state hasn’t grown a lot, they are against changing the formula. So there is a lot of political back and forth over changing the allocation of the money. And again the WIN coalition doesn’t rally have a position it’s just really pure politics between the Senators and states. And we want it to get resolved so that the bill can move forward but we don’t really have a position. Now the formula is linked to a population in 1980. One solution is that the existing formula would be used for, the Clean Water SRF is currently funded at about 1.2 billion dollars annually, so the first 1.2 billion of the new money would be allocated according to the existing formula, and any money that would be appropriated over 1.2 billion would be allocated according to a new formula. So some states that feel they are being short changed would get some more money and no states would lose any money.

[Also lack of budget surplus – see “Future Advocacy”]

Ubiquitous Argument(s) and Evidence Articulated by the Opposition 
And they believe that the solution to this investment gap is private involvement in these local government services. And they have generally been opposed to legislation that provides federal loans or greater federal loans or grants to cities, because it would complicate their marketing effort in trying to get cities to sell or rent their local water systems to a profit making company so they generally have been opposed. And they are the ones that have fostered this argument that this gap is because of local government mismanagement, and if only they were turned over to the private sector and all run like businesses you won’t have these problems.

Secondary Argument(s) and Evidence Articulated by the Opposition
None mentioned.

Targeted Argument(s) and Evidence Articulated by the Opposition (and Targets)
None mentioned.

Described as a Partisan Issue
[Only with regard to the Davis-Bacon provision, see impediments under opposition.]

Venue(s) of Activity
Senate Environment and Public Works Committee 
House Water Resources subcommittee of the Transportation and Infrastructure Committee
House Commerce Committee

Action Pending or Taken by Relevant Decision Makers
There is a bill now in the House and Senate.  It's been reported from the Senate

Policy Objective(s) and Support for/Opposition to the Status Quo
Working to get increased funding for the State Revolving Funds and to limit additional restrictions and regulations surrounding the SRFs.

Advocate’s Experience: Tenure in Current Job/Previous Experience
(Jill) I’ve been here two weeks. (Tim) I wish I could say two weeks, seventeen years next month, before this I worked for a US Senator and before that for the legislature in MD, and I have an undergraduate degree in political science and journalism. (Jill) And I worked on environmental issues for the governor of North Carolina and I have a BA in political science and a MA in public policy. 

Reliance on Research: In-House/External (Code for Organizational Advocates Only)
We have used outside contractors in the past, since we are an educational organization ourselves we would not go to a think tank, but we have used contractors to produce studies and reports and things like that to support our position. We have funded studies on our own, to document the needs and critic the EPA survey for example, we believe the EPA study understated what the true need was. On regulatory issues for example a concern of our members is water quality standards program, we had commissioned a relatively small study to look at what some of the issues there are related to the water quality standards program. We also have a sister organization that is a research foundation which primarily does technical scientific research, but a lot of the technical and scientific research that they do is driven by regulatory issues and questions that come up as a result of regulations. It is called the Water Environment Research Foundation and it is funded by water utilities who pay an annual membership to the foundation and also we are funded by the EPA.

Number of Individuals Involved in Advocacy (Code for Organizational Advocates Only)
Five 

Units in Organization Involved in Public Affairs/Policy (Code for Organizational Advocates Only)
WEF is an educational organization we are a 501 c3 which means that we don’t have a PAC and we don’t get involved in partisan politics. We are allowed to lobby as long as we don’t spend a significant amount of our total budget on lobbying. We have a staff here of about 110 and then a five person government affairs department, I’m the director and Jill is the legislative manager. We have a committee of our members who are volunteers that determine what our policy positions are and work with us on tactics and get directly involved themselves with Hill staff by coming to Washington. 

Advocate’s Outstanding Skills/Assets (Code for Organizational Advocates Only)
None mentioned.

Type of Membership: None, Institutions, Individuals, Both (Code for Organizational Advocates Only)
Individuals and Institutions

Membership Size (Code for Organizational Advocates Only)

Organizational Age (Code for Organizational Advocates Only)

Miscellaneous

If you haven’t already I’d send you to the WIN website win-water.org, and the opposition website, the private water companies formed their own coalition called the H2O coalition, and I think they have a website. The leader of that association is the National Association of Water Companies, that’s the private water companies – NAWC. And a lot of their propaganda is probably up on their website. And the WIN report is available on the WIN website and the author of that report is a Dr. Ken Rubin, who is an expert in public finance and infrastructure, he was hired by the WIN coalition. And then the main spokes person for the opposition is a person by the name of Dr. Janice Beecher, and I don’t know exactly what her qualifications are a lot of people think that she’s a little bit out there, some of her stuff is not well supported. The CBO report is on cbo.gov/reports.

-Letter sent by states on NGA.org (national governors association)