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Congressional Testimony
October 31, 2001, Wednesday
SECTION: CAPITOL HILL HEARING TESTIMONY
LENGTH: 3028 words
COMMITTEE:
SENATE ENVIRONMENT AND PUBLIC WORKS
SUBCOMMITTEE: FISHERIES, WILDLIFE AND WATER
HEADLINE: WATER PURIFICATION PROGRAMS
TESTIMONY-BY: G. TRACY MEHAN, ASSISTANT ADMINISTRATOR
FOR WATER
AFFILIATION: U.S. ENVIRONMENTAL PROTECTION
AGENCY
BODY: STATEMENT OF G. TRACY MEHAN ASSISTANT
ADMINISTRATOR FOR WATER U.S. ENVIRONMENTAL PROTECTION AGENCY
BEFORE THE
COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS,
SUBCOMMITTEE ON FISHERIES,
WILDLIFE, AND WATER
UNITED STATES SENATE
October 31, 2001
INTRODUCTION
Good morning, Mr. Chairman and Members of the
Subcommittee. I am Tracy Mehan, Assistant Administrator for Water at the U.S.
Environmental Protection Agency. I welcome this opportunity to discuss the
Nations investment in drinking water and wastewater treatment facilities to
protect human health and the environment. As a Nation, we have made great
progress over the past quarter century in reducing water pollution and assuring
the safety of drinking water. The Clean Water Act and the Safe Drinking Water
Act have served us well and provide the solid foundation we need to make sure
that all Americans will continue to enjoy safe drinking water and clean river,
lakes, and coastal waters. Our success in improving drinking water and surface
water quality is the result of many programs and projects by local, State and
Federal governments in partnership with the private sector. But our cooperative
investment in
water infrastructure -- in pipes and treatment
plants -- has, more than any other single effort, paid dramatic dividends for
water quality and public health. I would like to take a moment to recognize the
events of September 11. This hearing was originally scheduled for the thirteenth
of September and, as such, this testimony was developed prior to the tragic
events of September 11. Reviewing the testimony again after one month, I was
struck by how much the world, even the somewhat circumscribed world of the water
industry, has changed. As you know, EPA has established a Water Protection Task
Force to accelerate work that had been ongoing on critical infrastructure
protection. For the last month, my staff has been working diligently with other
federal agencies, states, and water industry representatives to ensure that
measures are in place to protect our population from security threats that could
endanger our drinking water supplies or pollute our nations waterways. But this
morning I want to move forward with our original testimony and give you a brief
overview of the progress we have made in improving water quality and challenges
we still face. I will summarize what EPA knows about the need for future
investment in clean water and drinking water facilities. Clean and Safe Water--
Accomplishments and Challenges Most Americans would agree that the quality of
both surface waters and drinking water has improved dramatically over the past
quarter century. Thirty years ago, the Nations waters were in crisis -- the
Potomac River was too dirty for swimming, Lake Erie was dying, and the Cuyahoga
River had burst into flames. Many of the Nations rivers and beaches were little
more than open sewers.
The 1972 Clean Water Act has dramatically
increased the number of waterways that are once again safe for fishing and
swimming. The Act launched an all-out assault on water pollution, including new
controls over industrial dischargers, support for State efforts to reduce
polluted runoff, and a major investment by the Federal government to help
communities build sewage treatment plants. The Federal government has provided
over $
80 billion in wastewater assistance since passage of the
Clean Water Act, which has dramatically increased the number of Americans
enjoying better water quality. The economic and social benefits of improved
water quality are readily evident all across the country. Some of the most
dramatic improvements are seen in urban areas such as Boston, Cleveland, St.
Petersburg and Baltimore, where the efforts to restore the health and vitality
of our waters has also led to economically vibrant, water-focused urban
environments. The dramatic progress made in improving the quality of wastewater
treatment since the 1970s is a national success. In 1968, only 86 million people
were served by secondary or advanced treatment facilities. Today, of the 190
million people served by wastewater treatment facilities, about 165 million
people are served by secondary or better treatment.
We have also made
dramatic progress in improving the safety of our Nations drinking water.
Disinfection of drinking water is one of the major public health advances in the
20th century. In the early 1970's, growing concern for the presence of
contaminants in drinking water around the country prompted Congress to pass the
Safe Drinking Water Act. Today, the more than 265 million Americans who rely on
public water systems enjoy one of the safest supplies of drinking water in the
world. Under the Safe Drinking Water Act, EPA has established standards for 90
drinking water contaminants. Public water systems have an excellent compliance
record -- more than 90 percent of the population served by community water
systems receive water from systems with no reported violations of health based
standards in place as of 1994. In the past decade, the number of people served
by public water systems meeting Federal health standards in place as of 1994 has
increased by more than 23 million. Despite past progress in reducing water
pollution, almost 40 percent of the Nations waters assessed by States still do
not meet water quality goals established by States under the Clean Water Act. On
a national scale, States report that the leading sources of pollution include
agriculture, municipal point sources, and urban runoff and storm sewers. Other
sources, ranging from factories to forestry operations, cause water pollution
problems on a site- specific basis. Point-source pollution has been so greatly
reduced that now non-point sources (i.e., diffuse runoff) are the leading cause
of water pollution. Clean Water and Drinking Water State Revolving Loan Funds
The primary mechanism that EPA uses to help local communities finance
water infrastructure projects is the
State Revolving
Fund (SRF) established in the Clean Water Act and the Safe Drinking
Water Act. The SRFs were designed to provide a national financial resource for
clean and safe water that would be managed by States and would provide a funding
resource Ain perpetuity. These important goals are being achieved. Other
Federal, State, and private sector funding sources are also available for
community
water infrastructure investments. Under the SRF
programs, EPA makes grants to States to capitalize their SRFs. States provide a
20% match to the Federal capitalization payment. Local governments get loans for
up to 100% of the project costs at below market interest rates. After completion
of the project, the community repays the loan, and these loan repayments are
used to make new loans on a perpetual basis. Because of the revolving nature of
the funds, funds invested in the SRFs provide about four times the purchasing
power over twenty years compared to what would occur if the funds were
distributed as grants. In addition, low interest SRF loans provide local
communities with dramatic savings compared to loans with higher, market interest
rates. An SRF loan at the interest rate of 2.6% (the average rate during the
year 2000) saves communities 25% compared to using commercial financing at an
average of 5.8% (see Chart 1). The Federal government has provided more than
$
18 billion in capitalization grants to States for their Clean
Water SRFs through FY2001. With the addition of the State match, bond proceeds,
and loan repayments, the cumulative funds available for loans from the Clean
Water SRFs were more than $
34 billion of which
$
3.4billion was still available as of June 30, 2000.
Since 1988, States have made over 9,500 individual loans for a total of
$
30.4 billion. In 2000, the Clean Water SRFs issued a record
total of 1,300 individual loans with a value of $
4.3 billion
(see Chart 2). The Clean Water SRFs have provided about $
3
billion in loans each year for several years and are widely considered a
tremendous success story. In 1996, Congress enacted comprehensive amendments to
the Safe Drinking Water Act which created an SRF program for financing of
drinking water projects. The Drinking Water SRF was modeled after the Clean
Water SRF, but States were given broader authority to use Drinking Water SRFs to
help disadvantaged communities and support drinking water program
implementation. Through fiscal year 2001, Congress has appropriated
$
4.4 billion for the Drinking Water SRF program. EPA has
reserved $
83 million for monitoring of unregulated contaminants
and operator certification reimbursement grants. Through June 30, 2001, States
have received $
3.65 billion in capitalization grants, which
when combined with state match, bond proceeds, and other funds provided
$
5.2 billion in total cumulative funds available for loans.
Through June 30, 2001, States have made close to 1,800 loans totaling
$
3.7 billion. Approximately 74% of the loans (39% of dollars)
were provided to small water systems that frequently have a more difficult time
obtaining affordable financing. States also reserved a total of approximately
$
575 million of SRF capitalization grants for other activities
that enhance the management of water systems, protect sources of drinking water,
and support the drinking water program. Although the Drinking Water SRF is
considerably newer than the Clean Water SRF, it is showing the same promise as
an infrastructure financing success story.
Congress should consider
adding some of the flexibilities of the Drinking Water SRF program to the Clean
Water SRF program and should extend the provision which allows States to
transfer funds between their Clean Water and Drinking Water SRFs in order to
allow States the flexibility to better direct funds towards priority needs.
Water Infrastructure -- Future Needs The Clean Water Act ' 516
(b)(1) and the Safe Drinking Water Act '1452 both require that EPA periodically
develop a needs survey to identify needed
water infrastructure
investments. In February of this year, EPA released its second report on
drinking
water infrastructure needs showing that
$
150.9 billion is needed over the next 20 years to ensure the
continued provision of safe drinking water to consumers. The survey found that
water systems need to invest $
102.5 billion, approximately 68%
of the total need, in what the report calls current needs. In most cases,
current needs would involve installing, upgrading, or replacing infrastructure
within the next few years to enable a water system to continue to deliver safe
drinking water. A system with a current need, therefore, usually is not in
violation of any health-based drinking water standard. For example, a surface
water treatment plant may currently produce safe drinking water, but the plants
filters may require replacement due to their age and declining effectiveness, if
the plant is to continue to provide safe water. Future needs account for the
remaining $
48.4 billion in needs; for example, projects that
systems would undertake over the next 20 years as part of routine replacement
such as reaching the end of a facility's service life.
The survey
includes needs that are required to protect public health, such as projects to
preserve the physical integrity of the water system, convey treated water to
homes, or to ensure continued compliance with specific Safe Drinking Water Act
regulations (see Chart 3). Transmission and distribution costs are the largest
category, at 56% of the total need, or $
83.1 billion. Treatment
projects make up the second largest category of needs (i.e., 25%) and have a
significant benefit for public health. Approximately 21%, or
$
31.2 billion, is needed for compliance with current and
proposed regulations under the Act. Nearly 80% of the regulatory need is to
comply with rules which protect consumers from harmful surface water microbial
contaminants, such as Giardia and E. coli. Most of the total needs derive from
the costs of installing, upgrading, and replacing the basic infrastructure that
is required to deliver drinking water to consumers -- costs that water systems
would face independent of any Safe Drinking Water Act regulations. EPA's most
recent survey of clean
water infrastructure needs was released
in 1996, and we plan on releasing a new clean water needs survey in 2002. The
1996 clean water needs survey estimated needs of $
140 billion,
including $
26.5 billion for secondary treatment projects,
$
17.5 billion for advanced treatment, and
$
73.4 billion for various types of sewage conveyance projects,
including collectors, interceptors, combined sewers, and storm water, and
$
10 billion for nonpoint pollution control projects (see Chart
4). EPA is working to supplement the 1996 clean water needs survey as more
accurate information becomes available. For example, the Agency has developed a
model that better predicts costs associated with reducing sanitary sewer
overflows. Broader Context of
Water Infrastructure Financing
Over the past year, several stakeholder groups including the
Water Infrastructure Network, the Association of Metropolitan
Sewerage Agencies, and the American Water Works Association issued reports
estimating
water infrastructure needs. These estimates were all
substantially above those of EPA's Needs Surveys. Generally, these cost
estimates differ from EPA's because the methodologies and definitions for
developing them differ. For example, EPA Needs Surveys include only projects
that are eligible for SRF funding under the Clean Water Act and Safe Drinking
Water Act. Also, EPA requires that costs included in the Needs Surveys be
established by planning or design documentation. The Agency also decided to
undertake a broader review of needs and spending for water and wastewater
infrastructure, including estimating whether there is a quantifiable gap between
future needs and current spending. This analysis B known as the Gap Analysis B
has just recently undergone independent peer review by external subject matter
experts. We expect the final analysis will be ready for public release later
this year. EPA recognizes that effective decision-making concerning
water infrastructure financing benefits from a better
understanding of the broader context of this effort. Key components in the
broader context of
water infrastructure that need to be more
fully evaluated include the following:
B Population Growth: Steady
growth and shifts in population put substantial pressure on local governments to
provide expanded drinking water and sewer services. While EPA does not provide
funding for projects related to population growth per se, this is an important
factor for locals.
B Aging Infrastructure: Many sewage and drinking
water pipes were installed between 50 and 100 years ago, and these pipes are
nearing the end of their useful lives.
B Current Treatment Issues: In
1998, States, Tribes, and interstate commissions determined that wastewater
treatment facilities and combined sewer overflows were two of the leading causes
of impairment to estuaries. A June 2000 EPA report Progress in Water Quality
estimates that by 2016, pollution levels could be similar to levels observed in
the mid-1970s if there is no increase in treatment efficiency.
S
Research and Development: Innovation, research, and development are essential
elements of promoting the use of more effective, efficient, and affordable
technologies in water and wastewater treatment. A recent EPA report on public
and private R&D expenditures associated with water pollution abatement (AA
Retrospective Assessment of the Costs of the Clean Water Act 1972- 1997") showed
that expenditures decreased by half from the early 1970s to the late 1990s. The
Federal investment in drinking water research has increased substantially over
the past 5 years.
B Increasing Operation and Maintenance Costs: As the
size and complexity of water and sewer systems increase, and facilities get
older, the costs of operations and maintenance tend to increase.
B
Affordability: Although water has historically been underpriced, some systems
may find it difficult to replace or update aging water and sewer systems and
keep household user charges at affordable levels, especially for low-income
households and communities. A number of stakeholder groups have called for a
significant increase in Federal investment in water and wastewater
infrastructure. Certainly, there will be a continuing role for the Federal
government in helping to meet the challenge of extensive infrastructure
investment need, but it cannot be the only solution. The solutions will have to
be multi- faceted with Federal, State, and local, public and private investment
of time, energy, money, research, and, perhaps most needed, innovative thinking
and bold actions. We must encourage states and local governments to think
strategically as they plan for forthcoming rules and program requirements,
infrastructure repair and replacement, and overall protection of the water that
sustains their communities. Ensuring that our
water
infrastructure needs are addressed in a sustainable manner will require
a shared commitment on the part of the Federal, state and local governments,
private business, and consumers. Governor Whitman and I are committed to working
in partnership with Congress, States, local governments, the private sector, and
others to better understand the
water infrastructure challenges
we face and to play a constructive role in helping to define an effective
approach to meeting these challenges in the future. CONCLUSION
We
believe that the SRF mechanism has proven to be a powerful and effective tool in
helping states and utilities achieve their public health and environmental
goals. As your Committee continues to study
water
infrastructure needs, the Administration would like to encourage a
constructive dialogue on the appropriate role of the federal government in
addressing these needs. Thank you, Mr. Chairman, for giving me the opportunity
to speak with you this morning.
LOAD-DATE:
October 31, 2001