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Federal Document Clearing House
Congressional Testimony
February 26, 2002 Tuesday
SECTION: CAPITOL HILL HEARING TESTIMONY
LENGTH: 2817 words
COMMITTEE:
SENATE ENVIRONMENT AND PUBLIC WORKS
HEADLINE: WATER INFRASTRUCTURE AND CLEAN WATER
TESTIMONY-BY: WILLIAM KUKURIN, PRESIDENT
AFFILIATION: KUKURIN CONTRACTING, INC.
BODY: Statement of William Kukurin President,
Kukurin Contracting, Inc.
Before the Senate Committee on Environment and
Public Works
The Water Investment Act of 2002
February 26, 2002
Good morning, Mr. Chairman and distinguished members of the Committee.
My name is Bill Kukurin and I am President of Kukurin Contracting, Inc. located
in Export, PA.On behalf of Associated Builders and Contractors (ABC), I would
like to thank Chairman Jeffords, Ranking Member Smith and the members of the
Senate Committee on Public Works for providing me with this opportunity to
discuss the Water Investment Act of 2002 and the important role it could play in
improving our nation's water quality and infrastructure. I will be summarizing
my comments, but I would request that my full statement be submitted for the
official record. For nearly 30 years, Kulcurin Contracting, Inc. has been
operating in Western Pennsylvania as a family owned and operated business.
Kukurin Contracting, Inc. has 125 employees and focuses primarily on municipal
work, specifically the construction and maintenance of water and sewer lines,
pumping stations, water tanks, reservoirs and sewage treatment facilities. We
have built our reputation through providing quality workmanship for our clients
and safe, healthy worksites for our employees. In 1997 and 1999, Kukurin
Contracting, Inc. was recognized by ABC National as one of the leaders in the
construction industry and presented the annual Excellence in Construction Award
for our work on the Long Run Sewage Retention Facility and the Plum Creek Sewage
Retention Facility, respectively.
Kukurin Contracting, Inc. has been a
member of the Western Pennsylvania Chapter of ABC for 20 years. ABC is a
national trade association representing more than 23,000 merit shop contractors,
subcontractors, materials suppliers and construction related firms within a
network of 82 chapters throughout the United States and Guam. Our diverse
membership is bound by a shared commitment to the merit shop philosophy within
the construction industry. This philosophy is based on the principles of full
and open competition unfettered by the government, and nondiscrimination based
on labor affiliation and the awarding of construction contracts to the lowest
responsible bidder, through open and competitive bidding. This process assures
that taxpayers and consumers will receive the most for their construction
dollar. With 80 percent of the nation's construction workers choosing not to be
represented by a union, ABC is proud to be their voice.
I would like to
commend Chairman Jeffords and Senators Smith, Graham and Crapo for introducing
S. 1961, the Water Investment Act of 2002. I also commend this committee for
undertaking a comprehensive look at our nation's
water
infrastructure needs. The costs of insufficient attention to clean
water issues are indisputable.
Non-point source pollution, leaking
toxics, stormwater run-off and coastal pollution pose grave risks to water
quality. Our nation's water quality and "environmental" infrastructure could not
be more vital to our health, safety and overall quality of life.
The
Water Investment Act of 2002 would serve to ensure the environmental and
financial sustainability of our nation's water programs. The measure would
authorize the Clean Water and Safe Drinking Water State Revolving Loan Fund
(SRF) Program at $35 billion over 5 years. The SRF program allows states to
provide low-cost financing to communities for the construction, repair and
rehabilitation of wastewater collection and treatment facilities. While this
legislation seeks to provide additional resources to states and localities to
aid them in meeting
water infrastructure needs and increased
state flexibility to states in administering their water programs, the
imposition of the Davis Bacon Act to this vital program would negate many of
these efforts.
While ABC members have concerns regarding a number of
wastewater needs, I will focus my comments today on funding for construction of
wastewater treatment facilities and on the detrimental impact that the
discriminatory and antiquated Davis Bacon Act would have, if included in the
legislation, on these vital projects.
BACKGROUND
Congress passed
the first Federal Water Pollution Control Act, the Clean Water Act (CWA), in
1972, which linked the federal government with states and cities to clean up the
country's waters by funding projects for water supply and wastewater treatment.
The Clean Water Act of 1987 phased-out the law's construction grant
program by the close of FY 1990. It was replaced by a State Revolving-Loan Fund
(SRF) to help finance clean
water infrastructure projects. The
SRF is a low-interest program by which states fund local wastewater treatment
facilities and similar infrastructure. From FY 1990 through FY 2001, the EPA
made available over $20 billion in grants to states. While this program has seen
significant success, it is clear that to accommodate the nation's growing
population, meet new water quality standards and repair and upgrade aging
facilities, much greater investments must be made. Estimates for future needs
for clean
water infrastructure are staggering-anywhere from
$300 billion to $1 trillion over the next 20 years.
The commitment
Congress made with the states beginning in 1972 to clean up the country's waters
by funding projects relating to Water supply and wastewater treatment is
responsible for the significant progress made in restoring the quality of our
nation's waters. When Congress decided to turn the program over to the states in
the Water Quality Act of 1987, a schedule was set to phase out direct grants for
construction and provide seed money to the states to establish revolving loan
funds. These funds would eventually become self-sustaining and fund the states'
wastewater treatment construction needs.
All states have established the
legal and procedural mechanisms to administer the new loan programs and are now
eligible to receive
State Revolving Fund (SRF) capitalization
funds under title VI. Some with prior experience using similar financing
programs moved quickly, while others had difficulty in making a transition from
the previous grants program to the one that requires greater financial
management expertise for all concerned. Moreover, many states have complained
that the SRF program is unduly complicated by Federal Rules--some contained in
the statute, others in EPA guidance--even though the states were intended to
have greater flexibility.
Small communities and states with large rural
populations are having the largest share of problems with the SRF program. Many
small towns did not participate in the previous grants program and consequently
are likely to require major projects to achieve compliance with the law. Yet
these communities often lack an industrial tax base and thus face the prospect
of very high per capita user fees if their citizens are required to repay the
full capital cost of sewage treatment projects. According to testimony from the
General Accounting Office, SRFs will only meet about one- third of the states'
funding needs and will generally be unable to meet the needs of disadvantaged
communities. States simply have not been provided enough time or seed money to
sufficiently capitalize their revolving funds. There are many small communities
that do not have the capital base necessary to support a state revolving loan
fund.
ABC believes inadequate and insufficient wastewater facilities
represent a large segment of clean water problems facing our nation today. It is
imperative that the federal government immediately address our country's need
for clean
water infrastructure investment. ABC is encouraged by
the efforts being made by the Senate Environment and Public Works Committee and
the House Transportation and Infrastructure Committee and supports the
arrangements being made for small communities, such as modifying the procedural
or repayment requirements of the SRF loan program.
Combined sewer
overflows (CSO) are an example of a significant problem in over a thousand
cities nationwide. Billions of dollars are needed to clean up previously
overlooked and outdated systems. Nearly 1,200 municipalities have combined
sewers where domestic sanitary sewage, industrial wastes, infiltration from
groundwater and stormwater runoff are collected and treated together. These
systems serve approximately 40 million persons, mainly in older urban and
coastal cities.
Combined sewers are categorized as point sources under
the Clean Water Act, yet they have not been considered a high regulatory or
permitting priority for EPA or states. There are no express provisions in the
Clean Water Act dealing with CSOs, except to the extent that they are subject to
permit requirements and deadlines as are other point sources. The cost of
controlling CSOs is potentially very high and local governments say that
resources are not available for a program of that size. Conceivably, an extended
program can also address improved drinking water filtration or solid waste
disposal facilities. ABC supports the idea of allowing localities greater
flexibility to consider costs and site-specific factors when designing various
wastewater treatment facilitates.
ABC also supports continued federal
funding to further capitalize
state revolving funds for the
construction of wastewater treatment facilities or environmental infrastructure
projects. Clearly, our clean water needs are vast and the federal government
must maintain a certain level of participation. Shifting resources to
state revolving funds to provide a self- sufficient program and
stable revenue source is a productive use of federal funds.
Requirements
for
state revolving funds should be as uncomplicated as
possible to facilitate an accessible and efficient program.
Other forms
of innovative financing and cooperative efforts will expand the power of federal
resources and should be encouraged. Privatization and public-private
partnerships for example, are being used more frequently to augment federal,
state and local activities--and they work. These efforts bring experience,
business savvy and financial strength of the private sector to government
entities for the benefit of all. ABC supports the provision in S. 1971 that
would allow private utilities to access Clean Water and Drinking Water SRFs.
ABC urges Congress to rely on market incentives rather than pursuing
taxes to induce environmental conformance. To that end, ABC commends the
sponsors of the legislation for including a provision that encourages
competitive bidding of all projects to help reduce overall project costs. In
addition, any funding plan should consider that states would have to impose user
fees to meet their share requirements.
Continued federal funding is not
a panacea. A long-term integrated plan that takes into account new environmental
problems and establishes realistic and achievable clean water goals should be
adopted. We also believe every state must develop an environmental needs
inventory and strategy for the future to ensure efficient management of
resources.
DAVIS-BACON ACT
ABC commends the sponsors of this
vital legislation for not expanding burdensome Davis-Bacon Act requirements to
the Clean Water and Safe Drinking Water
State Revolving Funds.
The SRF program has operated efficiently without Davis-Bacon since 1995, and ABC
encourages the committee to continue to allow states and municipalities the
flexibility to operate the SRFs without this expensive and discriminatory
requirement.
During this time of economic recession, while fighting a
costly war on terrorism and facing a federal budget deficit, any expansion of
the Davis-Bacon Act would be fiscally irresponsible and unjustified. In an era
of constrained resources, the promotion of higher federal construction costs to
the benefit of a few and to the detriment of the American taxpayer can no longer
be accepted. The Davis-Bacon Act unnecessarily raises the cost of federal
construction by an average of 5-15 percent and an enormous 25-38 percent in
rural areas-where clean
water infrastructure improvements are
most desperately needed. This is a needless waste of taxpayer dollars and
thwarts the progress of additional projects that could be built.
Davis-Bacon is a relic of the infamous Jim Crow era. The law, enacted in
1931, was intended to prevent minority workers, mostly from the South, from
competing with northern, mostly union construction firms for federal contracts
in the North. Conceived during a time of discrimination, the Act still has much
the same effect today. Davis Bacon disadvantages small, emerging, and minority
businesses. Davis-Bacon discourages many qualified small and minority-owned
contractors from bidding on public projects, because the complex and inefficient
wage and work restrictions make it nearly impossible for small businesses to
compete with well-capitalized corporations. To seek Davis-Bacon contracts, small
and minority owned firms must not only pay the "prevailing wages" and adopt
inefficient work practices and rigid union-based job classifications, but also
must expose themselves to huge compliance costs and burdensome paperwork
regulations. As a result, few small and minority firms win Davis Bacon
contracts, and many others give up trying.
According to the
Congressional Budget Office, repealing the Act would save taxpayers $10.5
billion over 10 years. Eliminating Davis-Bacon requirements would reduce
unnecessary federal spending and guarantee more construction for the dollar for
important public projects such as
water infrastructure needs,
schools, roads, bridges,. low-income housing, hospitals and prisons. It would
also remove barriers that preclude emerging businesses and entry-level workers
(helpers) from working on public projects paid for with their own tax dollars.
If funds wasted on Davis-Bacon wage rates were utilized in a more efficient
manner, they could be put towards meeting our overwhelming national demand for
environmental and infrastructure improvements.
The federal Davis-Bacon
law hurts states and localities because its requirements are imposed even if the
federal government contributes a minimal amount of funds. For example, the
federal government could offer a small amount of money for a primary state,
local or privately funded project, and the artificially inflated Davis-Bacon
wage rate would have to be paid to all workers on that job. Often times these
increased costs nullify the federal contribution and states are better off not
accepting federal help. The federal government should not impose costly
Davis-Bacon requirements on financially strapped state and local governments.
Especially in the case of
state revolving funds, where
the federal government does not directly appropriate money for projects..
Davis-Bacon requirements are not applicable. In the Clean Water Act of 1987,
Davis-Bacon requirements sunset on all SRF assistance in FY 1995, and has not
applied to such funds since. This loan program, whereby the funds are repaid and
then revolved, is no place for federally mandated Davis-Bacon.
Davis-Bacon violates states' rights for those twenty states that have
chosen not to have a state prevailing wage law because the wage mandates inflate
construction costs. These states should not be saddled with the outdated federal
law, which serves as an expensive and burdensome "unfunded mandate" imposed on
state and local governments. In fact, even states that have "little Davis-
Bacon" laws have voiced their opposition to federally-mandated Davis-Bacon on
Clean Water Act SRF projects. When the building trades sued to re-impose
Davis-Bacon on CWSRFs, thirteen states, six of which have their own state
prevailing wage laws, formally wrote the EPA in opposition to the reapplication
of federal Davis- Bacon requirements.
CONCLUSION
In conclusion,
Mr. Chairman, ABC strongly supports the efforts being made by the Environment
and Public Works Committee to ensure that our nation's water quality is
improved. ABC supports the
Water Infrastructure Act of 2002 as
currently written. We believe that with full funding and without any expansion
of the Davis-Bacon Act our
water infrastructure needs will
begin to. diminish and our nation's water quality will dramatically improve. It
is imperative to improve the efficiency of the State Revolving Loan Fund program
by not imposing outdated and unnecessary prescriptive administrative
requirements the federal government places on municipalities, namely the
Davis-Bacon Act.
On behalf of Associated Builders and Contractors, I
again want to thank you and the members of the Committee for the opportunity to
testify here today, and I will be happy to answer any questions you may have.
LOAD-DATE: February 26, 2002