WATER INFRASTRUCTURE FINANCING

The first major amendment to the Clean Water Act and Safe Drinking Water Act in several years was introduced in both the House and Senate this session of Congress. On the Senate side environmental leaders introduced legislation February 15 that would provide additional funding for the clean water and safe drinking water state revolving loan funds (SRF) and provide administrative revisions to the funding program. The "Water Investment Act of 2002" would authorize $35 billion over five years equally split between both SRF programs, while allowing states the flexibility to transfer funds from the clean water SRF to the drinking water SRF and vice-versa. One provision in the bill would require potential recipients of SRF funds to demonstrate "technical, managerial, and financial capacity."

Senator Jeffords (I-VT), who chairs the Environment and Public Works Committee, called the bill the "next generation" of water infrastructure investment while ranking republican Senator Bob Smith (R-NH) said the bill would "provide communities throughout the Nation with essential resources to defray the costs of federal mandates and meet their sewage and drinking water needs." Both the chair and ranking member of the Fisheries, Wildlife, and Water subcommittee, Senator Bob Graham (D-FL) and Senator Michael Crapo (R-ID) also co-sponsored the legislation. Two hearings on the bill are set for February 26 and February 28. The bill does not contain a grant component that many organizations, including the Water Infrastructure Network (WIN) and WEF have advocated, however it does provide for principal forgiveness, at the option of the state, for loans that are targeted for disadvantaged systems of all sizes.

During two hearings on S. 1961 on February 26 and February 28 Environment and Public Works Committee received mixed reviews from stakeholders. Paul Pinault, executive director of the Narragansett Bay Commission (Providence, RI), told committee members that S. 1961 falls short of the $57 billion that the Water Infrastructure Network (Washington, DC) said is needed over the next 5 years to truly address core infrastructure investments.

Meanwhile, Ben Grumbles, the U.S. Environmental Protection Agency (EPA) deputy assistant administrator for water, said that the Bush administration supported the goals of S. 1961 but was concerned about the size of the funding increase. "The president clearly defined his priorities in the State of the Union as defense and homeland security," he said, and "the increased spending called for in this bill is not consistent with those priorities."

The Bush administration also was concerned about S. 1961 provisions that would expand the scope of projects eligible for SRF funding, in effect taking away resources from core water and wastewater infrastructure issues. However, the administration does support other S. 1691 provisions promoting technology innovations and allowing states to transfer money back and forth between the two funds.

House Legislation

On the House side the Transportation and Infrastructure Committee introduced a similar bill (H.R. 3930) on March 12 and held a related hearing on March 13. Similar to the House side the bill would authorize $20 billion per year for the clean water SRF and make similar administrative changes to the program. However, since the House has separate committees with jurisdiction over the Clean Water and Safe Drinking Water Act, H.R. 3930 only addresses the clean water SRF. The Transportation and Infrastructure Committee oversees the Clean Water Act, while the Commerce Committee oversees the Safe Drinking Water Act).

H.R. 3930 was approved by the Transportation and Infrastructure Committee on March 20 after an amendment that would apply Davis-Bacon provisions to SRF funding was approved. Davis-Bacon requires that prevailing wages are paid to all contractors that receive federal money. Most republicans and some democrats believe that the addition of Davis-Bacon to H.R. 3930 may cost the legislation needed votes when it goes before the full House of Representatives later this year.

FISCAL 2003 BUDGET UPDATE

President George W. Bush's proposed fiscal year (FY) 2003 budget, issued on Feb. 4, would cut the U.S. Environmental Protection Agency (EPA) budget by $200 million and the U.S. Geological Survey (USGS) water program budget by $37 million.

The FY 2003 budget would allocate $7.7 billion to EPA, including $1.25 billion for the Clean Water Act state revolving loan fund (SRF), $200 million for the brownfields program, $124 million for homeland security, $21 million for a new watershed initiative, and $15 million for a state enforcement grant program. (When added to funding provided under the Emergency Supplemental Appropriation Act of 2002, EPA's homeland security allocation would increase the 2-year homeland security total to $300 million.)

EPA Administrator Christine Todd Whitman has said the Administration proposal promotes the President's commitment to the environment and "will enable us to transform this agency's 30-year mission to meet the challenges of the 21st century." Whitman stressed EPA's efforts to strengthen partnerships with other levels of government, noting that the proposed request would provide approximately $3.5 billion in grants to "states, tribes, and other partners."

Potential USGS Budget Cuts

Meanwhile, the fiscal 2003 Department of Interior budget would allocate $867 million to the USGS water program. The proposal would eliminate the Toxic Substances Hydrology Program, which conducts long-term research to improve understanding of contamination behavior in rivers and aquifers, and the State Water Resources Research Institute Program, which provides federal grants for the education of future water scientists and engineers.

As part of the USGS 2003 budget $5.8 million for the National Water Quality Assessment (NAWQA) program, which collects data on water quality and biological conditions in large river basins and aquifers across the nation, would be cut. This cut would force USGS to eliminate six more study units from the program, which already has been reduced from 59 study units to 42. According to a National Research Council (NRC) report on the NAWQA program, further study unit reductions would severely hinder the program's ability to analyze national trends. FY 2003 budget cuts also would require NAWQA to eliminate plans for sampling emerging contaminants, including microbes.

More details on proposed cuts and USGS programs are available on the Web at http://www.usgs.gov/. For the complete text of Bush's FY 2003 budget request to Congress, including EPA funding, access http://www.whitehouse.gov/omb/.

When Congress reconvened on Jan. 23 after its winter recess, lawmakers quickly turned their attention to funding the war on terrorism.

In FY 2002 the most significant source of funding for water security projects will come via an antiterrorism package (P.L. 107-38) passed on Sept. 14. The law authorized $40 billion in supplemental spending for the U.S. government in response to the Sept. 11 terrorist attacks. Under the agreement reached by Congress and President George W. Bush, the President would spend the first $10 billion without congressional oversight and the next $10 billion with congressional oversight, while the remaining $20 billion would be subject to the traditional congressional appropriations process.

Congress passed a $20 billion supplemental appropriations bill (H.R. 3338) required by P.L. 107-38 on Dec. 19. H.R. 3338 allocates $8.3 billion for homeland security efforts and $175.6 million to the U.S. Environmental Protection Agency (EPA) for antiterrorism efforts related to science and technology ($90.3 million), environmental programs and management ($39 million), hazardous substance Superfund programs ($41.3 million), and state and tribal assistance grants ($5 million).

About $80 million of EPA's allocation is earmarked for vulnerability assessments of drinking water treatment facilities. EPA Administrator Christine Todd Whitman announced in March that the Agency will begin to distribute the majority of the money directly to drinking water facilities via a grant program. Details are available at http://www.epa.gov/. Additional fiscal 2002 money is being distributed to WEF and the American Water Works Association (AWWA) to conduct vulnerability assessment training for water and wastewater treatment plants managers and operators.

While drinking water facilities currently do not have to conduct such assessments, they soon may be required to under the Public Health Security and Bioterrorism Response Act of 2001 (H.R. 3448), sponsored by Reps. Billy Tauzin (R-La.) and John Dingell (D-Mich.). Approved by the House of Representatives on Dec. 12, H.R. 3448 would fund several critical infrastructure areas, including $120 million for EPA to protect against chemical, biological, or radiological attacks on drinking water systems. It also would amend the Safe Drinking Water Act to require U.S. water systems serving more than 3300 customers to conduct vulnerability assessments. (Funding for wastewater facilities security was not specifically included in FY 2002.)

The Senate version of the bill ¾ the Bioterrorism Preparedness Act of 2001 (S. 1765) sponsored by Sen. Bill Frist (R-Tenn.) ¾ lacks the vulnerability assessment provision, however. According to Capitol Hill staff, a conference committee of House and Senate members is expected to meet early in 2002 to work out differences between the two bills, including whether drinking water assessments would be included in a broad antiterrorism measure.

Two other pieces of Senate legislation relating to water security also may receive attention during this congressional session. S. 1608, sponsored by Sen. Bob Smith (R-N.H.), would "establish a program to provide grants to drinking water and wastewater facilities to meet immediate security needs." The bill would allocate $50 million to EPA in FY 2002 for such grants. S. 1608 does not include mandatory regulatory requirements for facilities that receive the grants, although EPA could add such provisions.

Meanwhile, the Water Infrastructure Security and Research Development Act (S. 1593), sponsored by Sen. James Jeffords (I-Vt.) and its companion bill, H.R. 3178 sponsored by Rep. Sherry Boehlert (R-N.Y.), would authorize EPA to provide research grants to organizations to help determine how to "prevent, detect, or respond to physical, and cyber threats to the national water supply infrastructure." Both bills would provide $12 million a year in research grants, but the Senate bill would authorize spending over 6 years while the House version only would authorize spending over 5 years. Both bills would allocate funding beginning in 2002.

Another major difference between the bills is that S. 1593 would allocate $20 million per year in 2002 and 2003 "to provide assistance for small water supply systems to comply with requirements relating to arsenic in drinking water." Sources on Capitol Hill believe this addition to an otherwise "clean" bill may jeopardize its passage because EPA's proposal to reduce the arsenic level from 50 to 10 parts per billion was controversial. The House bill passed on Dec. 18 and was referred to the Senate for action. At press time, the Senate bill had passed the Environment and Public Works Committee and awaited action by the full Senate. If it passes, a joint House and Senate conference committee would convene to work out differences between the two bills.

Information Resources

The federal government is providing grant money to the Association of Metropolitan Water Agencies (AMWA; Washington, D.C.) to develop a central information center for utilities to maintain "the smooth operation" of water infrastructure. The Information Sharing and Analysis Center (ISAC) was underway before the recent terrorist attacks, but attention to the center has accelerated in recent weeks. In addition to providing a background on federal government efforts to combat terrorism, ISAC will collect information on reports of attempts to contaminate or disrupt the nation's water supply; provide threat alerts, warnings, and vulnerabilities; and offer response and recovery suggestions. For more information on ISAC, access http://www.amwa.net/isac/ on the World Wide Web.

FARM BILL LEGISLATION

Although a conservation-friendly Farm Bill passed the Senate in early 2002, several contentious issues will have to be resolved for the legislation to survive the House-Senate conference committee. The Senate bill (S. 1731), which was passed on Feb. 13, would allocate $44.9 billion to agriculture programs over 5 years, including nearly $22 billion in conservation measures.

Sen. Tom Harkin (D-Iowa), chair of the Senate Agriculture Committee, and Majority Leader Sen. Tom Daschle (D-S.D.), called S. 1731 a bipartisan success and an "important victory for the economy of rural America." However, Sen. Richard Lugar (R-Ind.), the Agriculture Committee's ranking Republican, voted against the bill because he said "it does not include good provisions that increase the U.S. commitment to conservation." Lugar vowed to lead the charge in conference to change many of S. 1731's current provisions, such as the continual funding of farmer subsidies.

The major issue of contention between the Senate and House versions of the Farm Bill is the degree to which farm subsidies, including those of dairy products, would continue. According to its critics, S. 1731 would encourage overproduction of subsidized crops. The conference committee was expected to complete work on the Farm Bill when it returns from its Easter recess in April.