May 2, 1997
The Honorable Jerry Lewis
Chair
House Appropriations Subcommittee on VA, HUD & Independent
Agencies
H-143 The Capitol
Washington, DC 20515
Dear Chairman Lewis:
I am writing to you today on behalf of the members of the Association
of Metropolitan Sewerage Agencies (AMSA) regarding fiscal year
1998 Appropriations for the Environmental Protection Agency (EPA).
Please accept this letter as AMSA's Statement for the Hearing
Record for hearings held by your subcommittee on April 30 and
May 1, 1997.
AMSA represents over 170 of the nation's largest wastewater treatment
facilities. AMSA members provide wastewater treatment to the majority
of the sewered population and collectively treat and reclaim over
15 billion gallons of wastewater every day. We have enjoyed a
long and productive relationship with EPA that includes participation
on a number of FACA committees as well as involvement in developing
innovative environmental programs. We appreciate your support
of the Agency's efforts.
AMSA recently completed its sixth membership survey on POTW financing.
The 1996 AMSA Financial Survey provides a national overview
of municipal wastewater management and financing trends and was
completed by 107 AMSA members. A copy of the report has been included
with this letter.
Through the survey, AMSA found that 93% of the responding agencies
were providing secondary -- or greater -- wastewater treatment,
and that by the year 2007, 95.3% expect to reach this goal. Additionally,
the survey found that 31.1% of responding agencies treat wastewater
to advanced secondary or tertiary levels. A major performance
indicator of improved service by POTWs is the reduction of heavy
metals in treatment plant influent flows due to the pretreatment
program, pollution prevention, and public education. AMSA's survey
has tracked the loadings of nine metals and found that loads from
all nine have significantly decreased over time. The reductions
range from 44% for copper to 97% for mercury since 1986. These
numbers translate into real improvements in our environment and
further protection of public health.
Even as we document significant progress, the need for clean water
investment to be a national priority is clear. Since AMSA last
surveyed its membership in 1993, five-year capital improvement
needs have shifted away from treatment expansion and upgrades
to collection system needs, increasing from 43% to 53% of total
reported needs. Treatment needs decreased from 56.2% to 46.1%
of total needs. This shift can be directly attributed to facilities
attaining secondary or greater treatment, and costs associated
with controlling pollution caused by wet weather events, including
stormwater, combined sewer overflows and sanitary sewer overflows.
Overall, 93 AMSA member agencies noted capital improvement needs of $22.5 billion for 1996 - 2000. This is a 41% decrease from the 1993 capital needs total of $32.4 billion, but with a corresponding 48% increase in per capita debt. Over the past three years, municipalities have invested heavily in their treatment facilities and completed many major capitol improvement projects. AMSA's survey shows that most of those projects were completed using local dollars. In 1993, members reported per capita debt at $189. The number has soared to $279 in 1996. The debt increase directly translates into higher service charges to households. The 1996 AMSA Index (a service charge survey) shows rates increasing at 2.6 times the rate of inflation over the past six years. For the years 1996-2000, local ratepayers can expect to carry over 85% of capital improvements costs for POTWs.
In addition to upgrades and improvements needed to meet regulatory
standards, facilities are aging. Many wastewater treatment plants
were built over twenty years ago and are now in need of capital
intensive repair. AMSA's survey shows that over the past three
years, there has been a significant shift in expenditures from
capital improvements and reserves to operations and maintenance
(O&M). O&M expenditures have increased from 37% to 43.6%,
while capital improvements and reserves expenditures have decreased
from 41.5% to 33.9% of total expenditures.
For what was spent in the 1970's and 1980's, these facilities
are irreplaceable. We urge you and Members of your Committee to
continue to provide the funds needed by municipalities to maintain
and upgrade these valuable public assets.
Last year, the Appropriations Committee included language in its
Committee Report to H.R.3666, the 1997 funding bill for EPA, encouraging
the Agency to investigate opportunities for funding wastewater
infrastructure needs through public/private partnerships. The
Committee "urged the Agency to do everything it can administratively
to remove impediments to such public/private partnerships and
encourage state and local governments to look to the private sector
instead of the Federal government as the financial source of choice."
AMSA recognizes that wastewater utilities will face new financial
and management challenges in the decades to come and we share
the Committee's very legitimate concerns over future funding of
major municipal wastewater projects. However, we also have concerns
with promoting privatization as a source of capital for these
projects.
This year marks the 25th Anniversary of the enactment of the Clean
Water Act. Since 1972, we have made incredible progress in cleaning
up and protecting our nation's water quality. Most of this progress
can be directly attributed to an enourmous public investment in
wastewater infrastructure. Overall, federal, state and local governments
have invested some $500 billion to support the goals of the Clean
Water Act. Our members are very interested not only in the protection
of this major investment, but in the future of our national clean
water program.
In mid-March AMSA had the opportunity to review a draft response document to the Appropriations Committee's request for additional information on privatization from the Environmental Protection Agency (EPA). We have serious concerns with both the content and the quality of the response and feel that it does not adequately address, or even identify, all of the issues associated with public/private partnerships. Last spring, AMSA published Evaluating Privatization: An AMSA Checklist. This document throughly examines public/private partnerships and wastewater utilities and we hope that you find it useful as you and your committee address this issue.
Above all, it is important to recognize that POTW privatization
doesn't mean that someone else is footing the bill. Ratepayers
are still ultimately responsible for the cost of building, operating
and maintaining wastewater facilities. To date, no analysis has
been performed on the effects of privatization on ratepayers.
It's just too new and there are not enough examples. We urge you
to carefully consider the ramifications of any legislation that
would actively promote the transfer of POTW operations and maintenance
or assets to the private sector without serious evaluation.
If AMSA can be of any assistance to you in your discussions on POTW funding, please call me (202/833-4653).
Sincerely,
Ken Kirk
Executive Director
ENCLOSURE
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