Statement of the
AMERICAN SOCIETY OF CIVIL ENGINEERS
on
S. 1961
The Water Investment Act of 2002
before the
Committee on Environment and Public Works
U.S. Senate
February 26, 2002
Mr. Chairman and Members of the
Committee:
The American Society of Civil Engineers
(ASCE) is pleased to provide this statement for the record on the
drinking-water and wastewater infrastructure needs in the United States today
and on the bill S. 1961, the Wastewater Investment Act of 2002.
ASCE was founded in 1852 and is the
country's oldest national civil engineering organization. It represents more than 125,000 civil
engineers in private practice, government, industry and academia who are
dedicated to the advancement of the science and profession of civil
engineering. ASCE is a 501(c)(3)
non-profit educational and professional society.
Executive Summary
ASCE is
pleased to support passage of S. 1961, the Water Investment Act of 2002. The proposed funding levels in the bill are
a far-sighted, responsible attempt to rebuild the nation's aging and corroded
wastewater and drinking-water facilities and to upgrade their performance to
meet the nation's health and security needs in the 21st century.
I.
The Issue
In March 2001, ASCE released its 2001 Report Card for America's
Infrastructure in which the nation's life-sustaining foundation received a
cumulative grade of "D+" in 12 critical areas. The reasons for such a dismal grade include
the growing obsolescence of an aging system; local political opposition and red
tape that stymie the development of effective solutions; and an explosive
population growth in the past decade that has outpaced the rate and impact of
current investment and maintenance efforts.[1]
The 2001
Report Card follows one released in
1998, at which time the 10 infrastructure categories rated were given an
average grade of "D." This
year wastewater declined from a "D+" to a D," while drinking water
remained a "D." Wastewater
and drinking-water systems are both quintessential examples of aged systems
that need to be updated.
We know, of course, that the federal
budget condition is less healthy now than it was in early 2001. When the Report
Card was issued, the nation anticipated budget surpluses well into the
future. The Congressional Budget Office
(CBO) projected in January 2001 that, if the tax and spending policies then in
effect remained the same, the government would run surpluses totaling more than
$5.6 trillion over the 10-year period from 2002 through 2011. CBO revised those projections in August,
reducing the 10-year surplus to $3.4 trillion.
But in January 2002 CBO estimated that
the cumulative surplus for 2002 through 2011 under current policies would total
$1.6 trillion – a drop of $4 trillion from last January's figure. More significantly, if current tax and
spending policies remain in place, the total budget will show a deficit of $21
billion in 2002 and $14 billion in 2003, according to CBO. Indeed, total federal receipts in the first
four months of fiscal year 2002 were down by $11 billion (1.6 percent) compared
with the same period a year ago.
ASCE
is well aware of the fiscal quandary that Congress must resolve. These short-term budget realities, however,
should not blind Congress to the enduring need for a strong federal investment
in public health and in the security and stability of the nation's wastewater
and drinking-water infrastructure.
Naturally the federal government cannot overcome these problems without
help. To remedy the current nationwide infrastructure problem, ASCE estimates
we will need to invest $ 1.3 trillion in all U.S. infrastructure over the next
five years. This unprecedented need
must be met by all levels of government – federal, state and local – as well as
the private sector.
II. Drinking-Water
Infrastructure Needs
The nation's 54,000 drinking water
systems face staggering infrastructure funding needs over the next 20
years. Although America spends billions
on infrastructure each year, we estimate that drinking-water systems face an
annual shortfall of at least $11 billion to replace aging facilities that are
near the end of their useful life and to comply with existing and future
federal water regulations. The shortfall
does not account for any growth in the demand for drinking-water over the next
20 years.
Although the Safe Drinking Water Act
Amendments of 1996 (SDWA) authorized the Environmental Protection Agency (EPA)
to spend $1 billion annually to construct and repair drinking water facilities,
Congress has failed to appropriate the full amount. In FY 2002, the appropriated amount is $825 million. The total appropriated, which represents
82.5 percent of the $1 billion authorized level, is at the same level as the FY
2001 appropriation and equals less than ten percent of the total amount needed
this year.
In January 1997, EPA presented to
Congress the first drinking-water needs survey that indicated the nation's
54,000 community water systems will need to invest $138.4 billion over the next
20 years to install, upgrade, or replace infrastructure to ensure the provision
of safe drinking-water to these systems' 243 million customers.
But the most recent study by the EPA
reveals that the need is even greater.
In 1999, the Agency conducted the second Drinking Water Infrastructure
Needs Survey. The purpose of the survey is to document the 20-year capital
investment needs of public water systems that are eligible to receive Drinking
Water State Revolving Fund (SRF) monies.
The
survey found that the total drinking-water infrastructure need nationwide is
$150.9 billion for the 20-year period from January 1999 through December 2018.
Of course,
notwithstanding the great need for further investment in replacement pipes and
related infrastructure, we as a nation are making great strides in improving
the quality of our drinking-water.
Health-based
violations of federal drinking-water standards are declining steadily,
according to data from the EPA. In
1993, 79 percent of Americans were served by water systems that did not
experience health-based violations. By
2000, that number rose to 91 percent.
Nevertheless,
without a significantly enhanced federal role in providing assistance to
drinking water infrastructure, critical investments will not occur. Possible solutions include grants, trust
funds, loans, and incentives for private investment. The question is not whether the federal government should take more
responsibility for drinking-water improvements, but how.
III.
Wastewater Infrastructure Needs
Although the
federal government has spent more than $71 billion on wastewater treatment
programs since 1973, the nation's 16,000 wastewater systems still face enormous
infrastructure funding needs in the next 20 years to replace pipes and other
constructed facilities that have exceeded their design life. Congress, however, has not authorized new
funding for wastewater treatment plants since 1987, and the current benchmark
authorization of $600 million (established for FY 1994 in 1987) is far too low
to meet current needs.
With billions
being spent yearly for wastewater infrastructure, the systems face a shortfall
of at least $12 billion annually to replace aging facilities and comply with
existing and future federal water regulations.
As with drinking-water needs, this total does not account for any growth
in demand from new systems.
Funding for
wastewater infrastructure has remained essentially flat for a decade. In Fiscal Year 2002, Congress appropriated
$1.35 billion for wastewater infrastructure, the same appropriation as FY
2001. The amount represents about 11
percent of the annual need nationally.
Requirements for communities that have not yet achieved secondary
treatment or must upgrade existing facilities remain very high: $126 billion
nationwide is required by 2016, according to the most recent estimate by the
EPA.
The largest need,
$45 billion, is for projects to control combined sewer overflows. The second largest category of needs, at $27
billion, is for new or improved secondary treatment (the basic statutory
requirement of the Clean Water Act). In
addition to costs documented by EPA, states estimate an additional $34 billion
in wastewater treatment needs for projects that do not meet EPA documentation
criteria but, nevertheless, represent a potential demand on state resources.
Between 35
percent and 45 percent of U.S. surface waters do not meet current water-quality
standards. According to the EPA, sewer
overflows are a chronic and growing problem.
Many of the nation's urban sewage collection systems are aging; some
sewers are 100 years old. Many systems
have not received the essential maintenance and repairs necessary to keep them
working properly.
IV. The Water Investment Act of 2002 (S.
1961)
The Water Investment Act of 2002 (S.
1961) would amend and reauthorize the Clean Water Act and the Safe Drinking
Water Act to provide substantially greater funding for wastewater and
drinking-water facilities.
The bill is intended to modernize state
water pollution control revolving funds and the allocation for those funds to
ensure that the funds distributed reflect water quality need; to streamline
state water pollution control assistance programs and state drinking-water
treatment assistance programs to maximize the use of federal funds and
encourage maximum efficiency for states and localities; to provide additional
structure to the water supply research conducted in the United States; and to
ensure that the federal government is performing the appropriate role in
analyzing regional and national water supply trends.
The bill would authorize funding of
$35 billion over five years. It would
authorize more than $20 billion for clean water and $15 billion for safe
drinking water projects, respectively.
There are provisions for the Clean Water Act and the Safe Drinking Water
Act that are designed to help water utilities better manage their capital
investments using asset management plans, rate structures that account for
capital replacement costs, and other financial management techniques.
In addition, there are provisions
that seek to ensure that the "next generation" of water-quality
issues receives a major focus. The bill
includes incentives for use of non-structural technologies. The bill would make these approaches
eligible to receive funding under the Clean Water Act State Revolving Fund and
require that recipients of funds consider the use of low-impact
technologies. Moreover, it would
authorize a demonstration program at $20 million per year over five years to
promote innovations in technology and alternative approaches to water quality
management and water supply. This program requires that a portion of the
projects use low-impact development technologies.
V.
Recommended Improvements to S. 1961
The
Water Investment Act of 2002 could be amended to enhance its effectiveness and
improve on its ability to build modern wastewater and drinking-water facilities
and protect national security. ASCE
strongly encourages the Committee to adopt the following provisions to S. 1961
as it deliberates the legislation:
·
The bill
should give a state the discretion to use the design-build project delivery
method for each facility financed under the SRFs. The use of this method should be consistent with state law. Once a state decides that the design-build
project delivery system is appropriate for a given project, the recipient
should be required to the use of the two-phase competitive source-selection
procedures authorized under section 303M of the Federal Property and
Administrative Services Act of 1949.
·
The bill
should require that each contract and subcontract for architectural and
engineering design services, program and construction management and other
professional services should be awarded in the same manner as contracts that
are awarded under title IX of the Federal Property and Administrative Services
Act of 1949.
·
The bill
should expressly authorize the Environmental Protection Agency to use the Clean
Water Act State Revolving Loan Fund (SRF) and the Safe Drinking Water Act SRF
to provide financial assistance for the construction of physical security
measures at wastewater and drinking-water plants. Certain terrorist groups have made it clear that the destruction
of U.S. water-treatment facilities is one of their aims. Federal funds should be made available
through the SRFs to deal with specific security needs, including improved
building design and construction requirements, fencing and other physical
security measures. No funds should be
made available to hire security guards, establish private police forces or
implement other non-structural protections, which should be addressed through
operating funds.
·
Some have
argued that federal regulatory programs establishing water-quality standards under
the Clean Water Act and drinking-water standards under the Safe Drinking Water
Act are too restrictive; others argue that the current regulations may not be
protective enough of human health and the environment. Without taking a position either way at the
present time, ASCE does not believe that legislation designed to provide
indispensable financing for our aging infrastructure should be the forum to
address controversial regulatory changes about which there is little consensus
at the moment.
VI.
Future Policy Options
ASCE recommends
that funding for water infrastructure system improvements and associated
operations ultimately be provided through a comprehensive program that
addresses the infrastructure needs of drinking-water and wastewater
systems. At some point, Congress needs
to create a federal water trust fund to finance the national shortfall in
funding for water and wastewater infrastructure. Money in the trust fund should not be diverted for non-water
purposes.
Moreover, we support
the use of federal appropriations from general treasury funds and the issuance
of revenue bonds and tax-exempt financing mechanisms at the state and local
levels, as well as public-private partnerships, state infrastructure banks, and
other innovative financing procedures.
Congress
also should consider the use of federal capitalization grants to purchase or
refinance outstanding debt obligations of water or wastewater service
providers; guarantee, or purchase of insurance for, an obligation of a water or
wastewater system; and secure the payment or directly repay principal or
interest on general obligation bonds issued by the state if proceeds of the
bonds will be deposited into the SRF.
As
part of the federal funding package designed to lower the cost of capital for
recipients that choose to leverage their federal capitalization grants and for
individual issuers seeking to borrow in the public capital markets, Congress
should exempt from state private activity bond volume caps state and local
private activity bonds for water and wastewater infrastructure, where such
bonds (1) are used to finance core water or wastewater infrastructure, as
defined below, and (2) produce public health or environmental protection
benefits that are generally available to the public.
# # #
[1]
American society of civil
engineers, the 2001 report card for America's infrastructure (2001), http://www.asce.org/reportcard.