Copyright 2002 eMediaMillWorks, Inc.
(f/k/a Federal
Document Clearing House, Inc.)
Federal Document Clearing House
Congressional Testimony
February 28, 2002 Thursday
SECTION: CAPITOL HILL HEARING TESTIMONY
LENGTH: 2346 words
COMMITTEE:
SENATE ENVIRONMENT AND PUBLIC WORKS
HEADLINE: WATER INFRASTRUCTURE & CLEAN WATER
PROGRAMS
TESTIMONY-BY: HOWARD NEUKRUG,, DIRECTOR
AFFILIATION: OFFICE OF WATERSHEDS
BODY: AMERICAN WATER WORKS ASSOCIATION
BEFORE THE FISHERIES, WILDLIFE AND WATER SUBCOMMITTEE COMMITTEE ON
ENVIRONMENT AND PUBLIC WORKS UNITED STATES SENATE
STATEMENT ON S.1961
WATER INVESTMENT ACT OF 2002
FEBRUARY 28, 2002
PRESENTED BY
HOWARD NEUKRUG, DIRECTOR OFFICE OF WATERSHEDS
INTRODUCTION
Good
morning Mr. Chairman. I am Howard Neukrug, Director of the Office of Watersheds
for the Philadelphia Water Department in Pennsylvania. The Philadelphia Water
Department is a municipal water, wastewater and storm water utility serving over
two million people in the Philadelphia metropolitan area. I serve as the Chair
of the American Water Works Association (AWWA) Water Utility Council (WUC). I am
here today on behalf of AWWA. AWWA appreciates the opportunity to present its
views on S.1961, Water Investment Act of 2002 and drinking
water
infrastructure needs. Founded in 1881, AWWA is the world's largest and
oldest scientific and educational association representing drinking water supply
professionals. The association's 57,000 members are comprised of administrators,
utility operators, professional engineers, contractors, manufacturers,
scientists, professors and health professionals. The association's membership
includes over 4,300 utilities that provide over 80 percent of the nation's
drinking water. AWWA and its members are dedicated to providing safe, reliable
drinking water to the American people.
AWWA utility members are
regulated under the Safe Drinking Water Act (SDWA) and other statutes. AWWA
believes few environmental activities are more important to the health of this
country than assuring the protection of water supply sources, and the treatment,
distribution and consumption of a safe, healthful and adequate supply of
drinking water.
AWWA and its members commend you for introducing S.1961
to address the growing needs facing public water systems and their customers in
the coming years. In previous testimony before this committee last year and in
our report entitled Dawn of the Replacement Era: Reinvesting in Drinking
Water Infrastructure, that we provided to all members of the
Committee, AWWA called for a new partnership for investing in drinking
water infrastructure. AWWA recommended changing and expanding
the existing Drinking Water
State Revolving Fund to
significantly increase federal funding for projects to repair, replace, or
rehabilitate drinking
water infrastructure to include the aging
distribution pipes. We are pleased that many of our recommendations have been
incorporated into S.1961. We appreciate the time and consideration given to
drinking water suppliers by the committee staff in the drafting of this bill.
AWWA looks forward to working with the committee to continue making improvements
and to see this bill passed and signed into law this year. In our testimony
today, we will confine most of our specific comments to the Safe Drinking Water
Modifications in Title II of the bill, with a general comment about wastewater
funding issues.
FEDERAL MANDATES AND THE CONTEXT FOR WATER AND
WASTEWATER FUNDING ISSUES
Both drinking water and wastewater utilities
face enormously expensive federal mandates that set the context for all other
funding issues. The drinking water community faces a complex array of expensive
new federal requirements and new standards, including standards for arsenic,
radon, disinfection byproducts, enhanced surface water treatment, and others.
Wastewater utilities also face enormously expensive federal mandates, such as
those relating to Combined Sewer Overflows (CSO) and Sanitary Sewer Overflows
(SSO). For both water and wastewater utilities, these needs significantly skew
financing for other investments, including the replacement of aging pipes,
appurtenances, and other infrastructure. Local ratepayers are often seriously
challenged to pay for these mandates, and little, if any, room is left in the
ratepayer's budget for other vital spending. In many cases, it appears that
mandatory spending for clean water mandates has "driven out" the ability to
raise rates for drinking water services.
We believe that significant
federal assistance, including grants, is necessary and justified to help meet
the cost of these very expensive federal mandates on water and wastewater
utilities, and to meet the costs of infrastructure repair and replacement that
have been, in many cases, deferred because federal mandates have consumed the
ratepayer's budget.
We would point out that, in the case of CSO and SSO
mandates, federal support for the cost of those requirements is not only
justified in the community receiving federal support, it also lowers costs for
drinking water utilities downstream in the form of improved water quality. This
is especially true in critical source water protection areas.
DWSRF
AUTHORIZATIONS
AWWA applauds the increase in authorizations for the
Drinking Water
State Revolving Fund (DWSRF) capitalization
grants from the current $
1 billion per year to
$
6 billion dollars per year in fiscal year 2007. This
represents more than a three-fold increase in total authorized funds above the
current authorized levels for this period of time. We believe that this
authorization marks a significant step by Congress towards assisting in the
enormous challenge public water systems and their customers face in meeting
federal mandates and at the same time replacing aging distribution pipes in the
coming years. As illustrated in AWWA's report entitled Dawn of the Replacement
Era: Reinvesting in Drinking
Water Infrastructure, the
"demographics" of pipe replacement is real, it is big, and the bill is coming
due soon. This challenge is exacerbated by population shifts and growth patterns
over the years, economic conditions and the changed demographics of urban
populations. While AWWA certainly appreciates the significant increase in
federal funding for the DWSRF, we must note that the authorization is a very
small fraction of the $
250 billion in infrastructure
replacement needs identified by AWWA. And even if every penny of the funds in
this bill is appropriated and every state gives out loan subsidies to the
maximum extent allowed under the bill, federal loan subsidies will amount to
less than four percent of total spending by drinking water utilities over the
coming five years. It is clear that the burden of paying for public water system
improvements will remain overwhelmingly with utilities and their rate-paying
customers.
In recognition of these facts, we believe that, if the needs
of older cities with large economically disadvantaged populations are to be met,
an increase in the authorization is warranted. The
Water
Infrastructure Network has recommended an authorization of
$
57 billion over five years, and we ask you to consider that
level of funding. We look forward to working with the committee to ensure that
authorization levels will be adequate to address the needs of older cities with
economically disadvantaged populations.
LARGE PUBLIC WATER SYSTEMS
AWWA does not believe that S.1961 adequately addresses the challenges
presented by large urban public water systems and particularly those with
declining and economically disadvantaged populations. In Section 203, the bill
authorizes up to fifteen percent of a state capitalization grant to be used for
subsidizing the water bills of economically disadvantaged customers. AWWA
believes that is a significant step forward for the nation. However, during the
short history of the DWSRF, large public water systems have not been receiving a
fair share of SRF loans. According to EPA, states have made approximately
seventy- five percent of all SRF loans to small communities. In per capita
terms, assistance to very small communities has averaged over
$
400, while loans to large communities (with over 100,000
people) have averaged a little over $
50 per capita.
Committee staff has told AWWA that they believe that the overall
increased authorization for the DWSRF will provide states the ability to provide
assistance for more projects and thus be able to provide more assistance to
large public water systems than was possible previously. AWWA is not convinced
that the authorization levels in this bill are sufficient to ensure this will
happen.
Current law mandates that fifteen percent of a state
capitalization grant shall be reserved for small systems serving populations
under 10,000 to the extent that such funds can be obligated for eligible
projects. AWWA supported that set-aside in 1996, to ensure that small systems
could participate in the loan program. We did not anticipate that large systems
would be left out of the program, relatively speaking, and there is no
corresponding set-aside for large public water systems serving populations over
100,000. As noted, the bulk of DWSRF funding is going to small systems. To
assure that systems of all sizes can participate in the SRF program, AWWA
believes that a corresponding set-aside of fifteen percent of a state
capitalization grant should be reserved for public water systems serving a
population of 100,000 or more, assuming there are eligible project applications.
This will ensure that large system can participate in the DWSRF program in all
States.
ELIGIBLE PROJECTS
Aging Infrastructure: As mentioned in
the introduction in the AWWA report entitled Dawn of the Replacement Era:
Reinvesting in Drinking
Water Infrastructure, AWWA recommended
changing and expanding the existing Drinking Water
State Revolving
Fund to significantly increase federal funding for projects to repair,
replace, or rehabilitate drinking
water infrastructure to
include the aging distribution pipes. This, we believe should be the major
purpose of the increased DWSRF authorizations. However, S.1961 makes no mention
of this purpose for the DWSRF. In discussions with committee staff, the staff
notes that the U.S. Environmental Protection Agency (USEPA) has interpreted the
current provisions of the Safe Drinking Water Act (SDWA) to authorize the use of
DWSRF funding for the replacement and rehabilitation of aging distribution pipes
as furthering the health protection objectives of the SDWA as authorized in
Section 1452 of the Act. While this interpretation of the SDWA is welcome, it is
not universally accepted. Nor does it signal EPA and the states that the
Congress believes repair and replacement of aging infrastructure is an important
priority. AWWA recommends that the DWSRF eligibility of projects for the
replacement and rehabilitation of aging distribution system pipes and
appurtenances be made explicit in the statute.
Security Upgrades: Since
September 11, 2001, AWWA has been advocating for federal assistance for public
water systems to help pay for security upgrades to protect public water systems
from terrorist attack. Since that time events have validated this concern, and
water utilities are undertaking comprehensive vulnerability assessments and
emergency planning to protect both water quality (for health protection) and
water supply (for fire suppression and sanitation). Of note are documents found
in the possession of al Queda terrorists in Afghanistan that could be used to
help plan an attack on a drinking water utility. Security concerns thus
represent a large, immediate, and unprecedented cost for public water systems.
AWWA strongly recommends that bill make explicit the DWSRF eligibility of
capital projects to address security concerns.
In discussions with
committee staff, staff notes that the U.S. Environmental Protection Agency
(USEPA) has interpreted the current provisions of the Safe Drinking Water Act
(SDWA) to authorize the use of DWSRF funding for security upgrades as furthering
the health protection objectives of the SDWA as authorized in Section 1452 of
the SDWA. While this interpretation of the SDWA is welcome, it rests on
interpretation and is subject to change. Moreover, it does not signal that
Congress believes capital projects to address security concerns should be
priority projects for DWSRF funding. We strongly recommend that congress send
that signal to both EPA and the states.
Source Water Protection. We
applaud the provisions of the bill that authorize the use of DWSRF monies to
support source water protection projects. It is increasingly important to
consider source water protection as an integral part of utility resource
planning, and to do so on a watershed basis. Many utilities have been in the
forefront of doing this, and the ability to use DWSRF funds to support source
water initiatives can be of significant assistance in those efforts.
ADDITIONAL SUBSIDIZATION
AWWA endorses the intent of Section 203
concerning additional subsidization for disadvantaged users. AWWA believes this
is a significant step forward to address the affordability of drinking water for
economically disadvantaged drinking water customers. AWWA remains committed to
the principle that utility operations should be fully supported by rates in the
long run. This provision will enable a public water system to charge higher
rates if they are appropriate, without placing an unacceptable burden on
economically disadvantaged customers.
However, we believe it is
important to ensure maximum flexibility in how this provision is carried out.
Many public water systems currently provide some form of rate subsidy for their
economically disadvantaged customers. This is done in a variety of ways. AWWA
wants to ensure that this flexibility remains, and that no public water system
is mandated to create a bureaucracy to administer what is essentially a social
welfare program that is beyond the capability and expertise of most public water
systems. Many public water systems contract with a third party, such as a
community service organization, to administer their rate subsidy programs. AWWA
recommends that Section 203 be amended to clarify that a public water system has
flexibility in how to meet this requirement, including contracting with third
party organizations.
LOAD-DATE: March 28, 2002