Tremendous strides have been made in cleaning up and protecting the nation's waters, but much more needs to be done. Several fundamental themes cut across water quality issues that we ask the Committee to consider in reauthorizing the Clean Water Act programs.
Functional Equivalency: Successful resolution of water quality problems will require the cooperation of many levels of government and approaches that go well beyond the Federal Clean Water Act tool box. Clean Water Act requirements should be performance-based.
Integrated Approaches: Issues we face involve many program and funding authorities. The Clean Water Act needs to enable them to be integrated or harmonized at the State/local levels.
Better Science: The Clean Water Act needs to increase USEPA's priority on the fundamentals, i.e., up-to-date effluent guidelines, improved best management practices (BMPs), enhanced monitoring and-assessment techniques and improved water quality 304(a) criteria.
Funding: Resolution of clean water issues places enormous resource demands on States. Clean Water Act programs need to be much better funded.
THE TITLE VI STATE REVOLVING LOAN PROGRAM
As this Committee well knows, the State Revolving Loan Fund (SRF) was created under the 1987 Amendments to meet not only traditional municipal wastewater treatment needs, but also emerging issues, including nonpoint source pollution control and estuary protection. The 50 States and Puerto Rico have all created SRF programs. They are using them very effectively to solve a diverse array of water quality problems. Projects have been built at less expense and 50% faster than through Federal grants. The SRF has 4 times the buying power than the Title II grant program.
Future Role and Capitalization: Congress has important decisions to make regarding the future role of SRF. The Association believes the SRF is the only viable long-term water quality financing mechanism and should be viewed as a multi-purpose tool box. The SRF is unique in its ability to use limited Federal and State funds efficiently, effectively, and equitably to foster compliance and waterbody use attainment. At the same time, States recognize the need to make program reforms in the SRF so that it is equipped to meet future challenges.
Over the past few years, USEPA has been using a "target" for capitalization that is sufficient to allow $2 billion per year to be available from the SRF nationally. The rationale for that number has never been clear or adequately justified. We agree with USEPA that it is important to have a capitalization goal, but we do not agree with the notion that the target of $2 billion is adequate.
ASIWPCA believes that needs under the Act are well in excess of $200 Billion and are likely to grow as TMDLs are implemented, nonpoint source programs develop and more watershed initiatives are underway. The Clean Water Act Needs Survey is incomplete, because it captures primarily traditional publicly owned treatment works construction, rather than the expanded eligibilities or new policy initiatives for nonpoint sources, estuaries, watersheds, AFOs, TMDLs and SSOs. While, we expect USEPA's upcoming Funding Gap Analysis to better identify the SRF funding need, it is likely to be an incremental step.
Recommendation: All infrastructure assistance should be incorporated under the Title VI umbrella.
An authorization of $5 billion per year for Fiscal Years 2000 through 2004 is justifiable. The Association urges the Committee to work with the States and other stakeholders to explore viable ways to achieve the goal.
States should be able to make SRF loans to privately owned confined animal feeding operations (CAFOS).
We suggest that it is time for the Committee to explore with States more creative ways they could use SRF funds to address the next generation of water quality problems. For example:
States could have the flexibility to use funding above the $2.4 Billion level for a watershed restoration matching grant/cost share program for NPS control. These funds could be available to both the public and private sector, including Federal agencies.
Incentives could be considered as a means to challenge States or watershed projects to overmatch, leverage or otherwise enhance the program (e.g., to buy open space, restore habitat, remove dams, and create a market for trading).
Set-Asides: States oppose the creation of mandatory separate SRFs or set-asides for particular clean water needs. Each State has different needs. If Congress should chose to offer set-asides, they should be optional, as in the Safe Drinking Water Act SRF.
Recommendation: Congress and the Administration should carefully consult with the States and ASIWPCA regarding the creation of any set-asides for the SRF. In no event should set-asides occur without making additional funds available beyond the needed core SRF authorization level.
Appropriations: Consistent and predictable levels of SRF appropriations are critical. Recent fluctuations have been damaging not only in terms of immediate funding, but also for strategic planning. This is especially critical for small and hardship communities and new or innovative approaches. States appreciate the support the Committee has provided in the past.
Recommendation: The Committee should place a very high priority on bringing the appropriation level up to the level envisioned for a reauthorized Act. Other programs should not be funded at the expense of the Title VI SRF, and vice versa.
Small and Hardship Communities: Existing funding eligibilities are broad and States, with USEPA's assistance, have worked hard to modify the SRF to meet those needs. A major outstanding issue relates to disadvantaged communities.
The Association believes hardship and small community needs are best addressed in the SRF. With interest rates that can range from below market to zero percent, SRF loan recipients can save up to 50% in project costs. In many cases, however, States need to be able to offer
additional subsidies to make facility improvements affordable. SRFs are also uniquely positioned to provide an added benefit to disadvantaged communities -- technical assistance.
USEPA successfully harmonized the FY 1997 $50 Million hardship program with the SRF and avoided the creation of a potentially conflicting program. With a few modest amendments, the SRF can accomplish these objectives on a much larger scale.
Recommendations: States should be able to blend principal subsidies with SRF loans to achieve a target State level of project affordability. Each State should be able to define "small and hardship" to fit its circumstances.
The SRF should provide "one stop shopping" by expanding eligibility to include acquisition of land. easements and rights of way.
Loan recipients should be exempt from Title II/Federal crosscutting laws, including the Davis-Bacon Act.
Up to a 40 Year loan repayment period (or the facility's useful life) should be allowed for projects not exceeding $10 Million.
States should be able to use administrative funds for outreach/technical assistance.
Refinements in Eligibilities: While the current SRF eligibilities are broad, some refinements would be helpful to better serve those in need of such funds:
Recommendations: Authorize the use of SRF assistance for the purchase of any necessary land easement. or right-of-way not already owned by the recipient, provided the assistance does not exceed the acquisition price determined in accordance with the Uniform Relocation and Real Property Acquisition Act of 1970. "One stop shopping" improves the effectiveness of the SRF and reduces total project costs.
Regarding HR 2720's provision on innovative technology, the Committee is urged to proceed with caution. Under the Title II grant program, projects had mixed success and communities are still paying high operations and maintenance costs.
Regarding S. 968 authorizing source water development grants, this issue appears to be a drinking water issue and should not be funded at the expense of either the Clean Water or Drinking Water SRF.
Application Of Title II Requirements: On September 30, 1994, Title II requirements and crosscutting federal laws sunsetted under the Act. With the expiration of these requirements, States have streamlined and simplified program requirements to better allocate SRF funding to priority water quality concerns.
Recommendation: Congress should not reimpose these requirements. States, on a case-by-case approach, should be allowed to adopt any or all of these former requirements on their own merit. And, many States currently address their intent. Any Federal laws and authorities that Congress decides to apply should be tied only to funds directly made available by Federal capitalization grants. Section 602(b)(6) should not be revised.
Administrative Expenses: The majority of States have no independent, long-term ability to provide for the expenses of SRF administration. They need a predictable and secure source of administrative funding which is not dependent upon year-to-year appropriations.
Recommendation: It is essential that Title VI be amended to recognize the needs of States for administrative funding. A State should be allowed to use up to 4% of its SRF capitalization grant amount, $400,000 per year, or one-half of one percent per year of the current valuation of its SRF's assets, whichever amount is greater, for administering its SRF. Technical assistance should be an eligible activity.
COMBINED SEWER OVERFLOWS (CSOs)
As S. 914, recognizes, much remains to be done to correct CSO problems that impair water quality and the Association appreciates the improvements that have been made in the bill in response to comments received. CSO correction is a high priority of State Water Quality programs and in States with CSOs, a very large potion of SRF funding is allotted for that purpose. The Association was a major stakeholder in the development of the USEPA CSO Control Policy and is committed to its implementation. Regarding S. 914:
Recommendations: National CSO Policy: S.914 makes significant contributions to facilitating the effort to carry out the national CSO policy. Recognizing the policy in the Act would be appropriate. Getting public input and issuing the polices to promote and facilitate wet weather use reviews is also beneficial. It is also helpful for USEPA to report periodically to Congress. The Association looks forward to working with the USEPA and other stakeholders on implementation.
Funding: A better capitalized SRF is the most efficient and effective way to meet CSO needs over time. Additional flexibility is also needed so that States can meet the needs of CSO hardship communities (e.g., principle subsidies).
The Association does not support reinstitution of a grant program and is concerned that any grant program authorized not be funded at the expense of the SRF or serve as an incentive to delay compliance.
The grant percentage ("at least" 55%) is linked to no criteria upon which to decide what level would be appropriate. In the alternative, if bill specified a match and included provisions for hardship (principal subsidy) there would be a better basis to make decisions. Parameters should be articulated for "in-kind services".
Any appropriated grant funds should be allocated to and administered by the States. State priority systems should determine which projects are in most need of funding.