Clean Water Advocacy - Newsroom - AMSA in the News
No. 50
Thursday, March 14, 2002 Page A-3
ISSN 1521-9402
News
Water Pollution
EPA Supports State Revolving Fund Bill, Opposes Funding Level in House Measure
The Bush administration supports many aspects of bipartisan House legislation
to improve water infrastructure but opposes suggested funding levels, an
official said March 13.
The Environmental Protection Agency advocates capitalizing the state revolving
loan fund under the Clean Water Act at a $2 billion average annual level, Ben
Grumbles, deputy assistant administrator for water at EPA, said at a hearing on
the bill.
The measure (H.R. 3930) would authorize funding for the SRF at about $20 billion
over the next five years. EPA opposes such a high figure because of its budget
for defense and homeland security, Grumbles told the House Transportation and
Infrastructure Subcommittee on Water Resources and Environment.
EPA does, however, support provisions of the bill that would clarify what
projects are eligible under the SRF, place a greater emphasis on setting
priorities for funding eligible project applications, and establish additional
subsidization of loans, Grumbles said.
EPA also supports the objectives behind new provisions to impose certain
conditions on loan applications, as well as a provision to make permanent the
states' authority to transfer funds between the clean water and drinking water
SRFs, Grumbles said.
Senate Bill Would Authorize Drinking Water SRF
The House legislation is similar to a bipartisan Senate bill (S. 1961),
introduced Feb. 15 by Sens. Bob Graham (D-Fla.), James Jeffords (I-Vt.), Robert
Smith (R-N.H.), and Mike Crapo (R-Idaho). That bill, however, would authorize
$35 billion over five years for the SRFs under the Clean Water Act and Safe
Drinking Water Act (27 DEN A-8, 2/8/02).
Under S. 1961, about $20 billion would go to the clean water SRF and about $15
billion to the drinking water SRF.
The House bill does not authorize the drinking water SRF because the House
Transportation and Infrastructure Committee only has jurisdiction over the Clean
Water Act. The drinking water SRF must be addressed through the House Energy and
Commerce Committee.
The House and Senate bills also differ slightly in how they would address
incentives for improving asset management, the consideration of alternatives to
achieve water quality improvements, and restructuring.
Elements of House Bill
The House bill proposes to change the existing clean water SRF program to:
encourage investment in control of nonpoint source pollution and watershed
approaches, as well as traditional infrastructure;
encourage innovative and alternative approaches to solving water quality
problems;
encourage alternative methods of financing water quality improvements;
encourage appropriate management of infrastructure assets, including planning
for the payment of the costs of repair and replacement;
require states to use at least 15 percent of the federal contribution to the
state's SRF on providing assistance to communities of less than 20,000;
provide additional subsidization to disadvantaged communities through 30-year
repayment periods, forgiveness of loan principal, and negative interest loans;
require states to use water quality benefits as the primary criteria for
determining which projects receive funding; and
authorize technical assistance to small communities.
More Activities Should Be Eligible
Thomas Morrissey, representing the Association of State and Interstate Water
Pollution Control Administrators, said his group supports increased SRF
authorization in the bill since clean water infrastructure needs are "well in
excess of $200 billion."
ASIWPCA believes that the implementation of total maximum daily loads and
watershed protection plans under Section 303 of CWA should also be eligible for
funding. Facilities and best management practices for concentrated animal
feeding operations and pollution prevention activities should be eligible as
well, he said.
Michael Wolff, representing the Council of Infrastructure Financing Authorities,
urged that the bill include addressing arbitrage rebate rules "that in current
form limit the ability of the SRF program to generate substantial additional
resources."
Arbitrage is the difference between the interest rates at which tax-exempt bonds
are issued and the rates at which the proceeds are invested, Wolff said. Under
current arbitrage rules, states that operate leveraged SRF programs are required
to either limit the rate at which funds can be invested or rebate to the
Treasury the earnings on the portions of the funds considered to be bond
proceeds, he said.
Wolff said that without these restrictions, affected states could earn an
additional $100 million to $200 million annually on their SFR capitalization
funds. When leveraged, these funds would permit an additional $200 million to
$400 million annual investment in water projects, he said.
Funds Should Not Subsidize Urban Sprawl
Paul Schwartz of Clean Water Action called on Congress to immediately authorize
and appropriate $57 billion over the next five years for infrastructure under
the Clean Water Act.
The bill should also provide significant incentives to direct more clean water
SRF funds to nonpoint pollution and ensure that the funds are not used to
subsidize new sprawl development, he said.
Pat Karney, representing the Association of Metropolitan Sewerage Agencies, said
the legislation should give states flexibility to target grant funding to a
wider array of infrastructure projects.
"We believe it is essential to ensure that states have the authority to define
these affordability criteria broadly, with the result that municipalities with
priority projects due to public health risks and environmental impairment--as
well as those meeting traditional affordability parameters--are eligible for
such funding," he said.
By Patricia Ware