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WATER: 'Clean Water' Needed But on Whose Dime? T&I Panel's Hearing Leaves Questions Unanswered
Lucy Kafanov, E&E Daily reporter
It is an assessment that has been repeated many times before: The nation's aging water infrastructure is in desperate need of modernization, and it will take billions of dollars to make that happen. But when a House water panel last week took up the issue at a hearing, the question of who should foot the investment bill remained unanswered.
The hearing in the House Transportation and Infrastructure Committee's water resources panel specifically focused on the Clean Water State Revolving Loan Fund -- a program under the Clean Water Act that helps states pay for the construction of wastewater treatment facilities via low-interest loans.
The fund has suffered serious budget cuts over the years, having seen a $200 million reduction from current funding in Bush's fiscal 2007 budget request. U.S. EPA predicts it will take more than $380 billion to meet the nation's wastewater needs over the next two decades, while the nonpartisan Congressional Budget Office estimates that the CWSRF's annual funding gap ranges anywhere from $3.2 billion to $11.1 billion.
The U.S. population is expected to grow by another 100 million over the next three decades, which will undoubtedly stress the already-overburdened system of treatment plants. By 2016, the improvements in water quality ushered in by CWA could be erased, according to EPA.
And upgrading the system -- a network of 16,000 wastewater treatment plants, 100,000 major pumping stations and 600,000 miles of sanitary sewers -- will not be an easy task. Many cities still rely on century-old sewer pipes, as well as sewer systems that were built to eject waste directly into surface waters during heavy rains.
So Democrats and some Republicans on the T&I Committee are looking to the federal purse to address the funding shortfall.
T&I Committee Chairman James Oberstar (D-Minn.) and Water Resources Chairwoman Eddie Bernice Johnson (D-Texas) said last week they hope to move legislation to the floor before the February recess that would authorize the program for the first time since 1991. Johnson added that she plans to take up other legislative proposals such as a bill to reauthorize appropriations for EPA's Combined Sewer Overflow grant program, and the pilot program for alternative sources of water.
The committee's top Republican, Rep. John Mica of Florida, agreed that the nation's infrastructure is in need of major help but cautioned that the federal government will not solve the issue without the aid of private-sector investment.
According to the EPA's assistant administrator for water Ben Grumbles, developing "innovative, market-based" initiatives for water infrastructure is the way to go. Grumbles spoke of the agency's "four pillars" approach to sustainable infrastructure -- a strategy that focuses on incorporating water efficiency, full-cost pricing and alternative programs like water quality credit trading and "green" infrastructure.
Unlike utilities subject to state regulation such as electric and natural gas service and privately owned water systems, many utilities in the nation have not historically charged their users the full cost of service, Grumbles said, adding that an average American family spends more each year for soft drinks than water and wastewater services.
But the EPA strategy would just pass the burden onto utilities, argued Kurt Soderberg, who testified on behalf of the National Association of Clean Water Agencies. He said that the "four pillars" approach will leave utilities "without support" to remedy the funding gap.
Soderberg said the emphasis on full-cost pricing mistakenly assumes that municipalities are not charging customers sufficient rates for wastewater services. In reality, he said, rates have soared over the past four years at double the rate of inflation. Minnesota, for example, saw a staggering 13 percent rate increase in 2005 alone.
"There is a limit to how high rates can go, and we are pushing the envelope every day," Soderberg said. "In this case, the four pillar approach is not really an 'approach' at all but constitutes a 'retreat.'"
The sole witness who had an optimistic view of the water industry's future was investment research analyst Debra Coy. If current barriers to private investment in municipal water sewer markets are lifted, the nation could take advantage of the "tremendous amount of money now becoming available for infrastructure investment," she said.
"The global financial markets have 'discovered' infrastructure in the past couple of years, and this is fast becoming a popular asset class that is attracting many billions of dollars," Coy said. "[But] it has become increasingly difficult to put the money to work" because of government ownership of most water utilities.