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Clean Water Advocacy - Newsroom - NACWA in the News

Corporate Taxes, Bottle Fee for Trust Fund Pushed by National Wastewater Utility Group

The head of a wastewater utility group Oct. 19 said he had identified revenue sources for setting up a federal trust fund to finance upgrades of aging sewage plants, water quality improvements, wetlands research, and programs targeting regional water bodies such as the Chesapeake Bay and Great Lakes.

Ken Kirk, executive director of the National Association of Clean Water Agencies, told participants at the Clean Water Act: Law and Regulation seminar that the trade association would release a list of revenue sources in December that could be used to establish a trust fund as proposed in the Clean Water Trust Act of 2005 (H.R. 4560; 79 DEN A-3, 4/25/06 ).

Rather than directly raising $7.5 billion each year for the Clean Water Trust Fund, H.R. 4560 would direct the Environmental Protection Agency to submit its recommendation for "an equitable system of user fees" to Congress. Congress would have to approve the fees, which would be used to come up with the $7.5 billion, in a separate legislation.

Kirk told seminar participants that a "dedicated, deficit-neutral, five-year, Clean Water Trust Fund" could be set up either by levying a corporate environmental tax similar to the one that was used for Superfund Trust Fund or by imposing a fee on bottled water.

"We are not going to put all our eggs in one basket.... We are going to look at a whole slate of revenue source options," Kirk said.


Revenue Source Needed to Move Bill

Lack of a dedicated revenue source has been the primary issue holding up support for H.R. 4560, which Rep. John Duncan (R-Tenn.) introduced in December 2005, according to Jonathan Pawlow, Republican counsel to a House Transportation and Infrastructure subcommittee on water resources and environment.
"If there is money in the bank, other issues will get resolved as well," Pawlow told participants Oct. 19 in a separate seminar panel discussing the status of current and upcoming Clean Water Act legislation.

Pawlow told BNA Oct. 20 that it is "conceivable" that H.R. 4560 would be reintroduced in the 110th Congress, which will convene in January 2007. He said Duncan would be "amenable" to reintroducing the bill in the upcoming Congress with the current language requiring EPA to recommend an "equitable and fair" fee structure.

As for inserting language that calls for a fee or taxes, Pawlow said, NACWA and others have been floating the same concept since August 2003. "It appears that [Duncan] is not prepared to move on any particular proposal until its been fully vetted" for its impacts on industry and customers, however, he said.

Pawlow also said it was unclear whether Republicans or Democrats will control the House of Representatives. If Democrats take over, then the issue of including Davis-Bacon Act provisions in the bill will arise. The Davis-Bacon Act requires workers to be paid "prevailing wages" for any construction project that is federally funded.

Democrats and some Republicans have attempted to introduce bills to reinstate the corporate environmental taxes, which expired in 1995, to replenish the Superfund Trust Fund but to no avail, as EPA and the White House have clung to their steadfast opposition to increased taxes (46 DEN A-3, 3/9/06 ).


EPA Strategy Not Enough to Close Gap

The EPA Office of Water is encouraging both wastewater and drinking water utilities to embrace its sustainable water infrastructure strategy, which calls for managing assets, conserving water, taking a watershed approach, and charging customers for the full cost of providing wastewater services.
Pawlow said Duncan supports EPA's sustainable infrastructure strategy, but he recognizes that these measures will not be enough to close the funding gap, which EPA roughly estimates will be $540 billion by 2020 if the utilities do not increase their revenue base.

Kirk, however, dismissed EPA's sustainable infrastructure strategy, saying it allows the federal government to avoid taking responsibility for assisting with utility upgrades, while placing the burden on local governments.

He excoriated the EPA for its plans to eliminate federal funds for the Clean Water State Revolving Fund (SRF) by 2018. EPA said it plans to provide $6.8 billion from 2004 through 2011, which would provide enough money to establish a self-sustaining revolving rate of $3.4 billion-a-year for the years 2015 through 2040.

Kirk said he blames both the Clinton and the Bush administrations for targeting the SRF for budget cuts and for failing to take on the aging wastewater facilities issue.

Under the Clean Water State Revolving Fund, state governments are provided with federal money based on need. States then make low-interest loans to communities to construct municipal wastewater infrastructure and for other projects. Over time, the fund is expected to "revolve" and sustain itself through funds leveraged from other sources and from loan repayment.

In March, Benjamin Grumbles, the agency's assistant administrator for water, told BNA that EPA plans to provide $6.8 billion for the SRF from 2004 through 2011, which would yield enough money to establish a self-sustaining, revolving funding rate of $3.4 billion-a-year for the years 2015 through 2040 (58 DEN A-2, 3/27/06 )

NACWA does not expect the political climate change will change the federal government's mind about funding the SRF, Kirk added.



By Amena H. Saiyid