February 26, 2002

Good day, Mr. Chairman and other distinguished members of Committee. I am Paul Schwartz, National Policy Coordinator of Clean Water Action, a national environmental organization working for clean, safe and affordable water, prevention of health-threatening pollution; creation of environmentally-safe jobs and businesses; and empowerment of people to make democracy work. Clean Water Action has organization in 15 states and has 700,000 members across the nation. Additionally, I serve as co-chair of the Clean Water Network=s Wet Weather and Funding Workgroup and am on the Steering Committee of the Campaign for Safe and Affordable Drinking Water.

Mr. Chairman, thank you for holding this hearing today on S. 1961, the Water Investment Act of 2002, and other water infrastructure proposals. The Committee=s sustained focus on water infrastructure funding and the two state clean and safe water revolving funds is timely and of vital importance to the nation=s environment, economy and public health. This hearing is a crucial next step toward securing more dollars for critical drinking water and wastewater infrastructure needs. While Ms. Stoner of NRDC focused on the “clean water” issues, I’ll be focusing most of my remarks today on drinking water issues.

1. Funding Needs & Drivers

It has been well established by the USEPA, the Water Infrastructure Network (WIN) and others that there is a gap between all available sources of revenue and the financial resources needed by our communities, small and large; rural, suburban and urban; well off and hard-pressed, to meet urgent public health and environmental protections. WIN puts the estimate of the need at $1 trillion dollars and projects that $23 billion must be invested annually over the next 20 years to begin to close the gap. Others have set the number at a somewhat lower level.

Ø Over the next few years communities across America are facing the need to deal with many pressing drinking water issues including: arsenic, cryptosporidium and other microbial risks, radioactive radon, and the groundwater rule.

Ø Also, the U.S. national drinking water infrastructure (both pipes and treatment works), once the envy of the world, is old and out of date. There is no other sector of the nation’s infrastructure that relies primarily on a physical infrastructure built 50 to 100 years ago, and that mostly utilizes treatment technology that was developed during the Victorian-era before WWI. As municipalities and private operators delay repair, replacement and modernization, the costs escalate exponentially.

Ø Further, Clean Water Action notes with dismay how few drinking water providers have moved from a purely end-of-the-pipe engineering focus to an integrated watershed approach to dealing with many pressing drinking water issues. There are many reasons for this failure, including: the lack of integration between the Clean Water Act and the Safe Drinking Water Act in both the policy and implementation arena, and at all levels of government; an institutional bias towards big pipe and plumbing projects and against incorporation and integration of green infrastructure, distributive and low impact development pollution prevention approaches; and finally, an almost total freezing out of the tax-paying and rate-paying public from the priority setting and approval process that determines which projects and approaches are funded and move forward.

2. Necessary Next Steps

Below are some elements that Clean Water Action wants to be incorporated in any water infrastructure bill that moves forward this year:

¨ Clean Water Action advocates that any new pot of dollars gets used primarily to deal with core water quality problems by being targeted: (1) to modernize our water distribution system, and (2) to assist the move to modern-broad spectrum water treatment. But drinking water spending cannot be focused just on the traditional modes and methods of end-of-the-pipe engineering solutions. Heretofore, 98 % of water infrastructure funding has gone to brick and mortar projects. But the Committee also needs to support those pollution prevention measures that enhance the performance and cost effectiveness of needed traditional infrastructure investments.

¨ The Committee needs to give the states the flexibility to invest in pollution prevention as part of an integrated core infrastructure package. Traditional “core” infrastructure needs can be mitigated by putting an emphasis on funding a combination of non-structural, preventive projects (green infrastructure), with innovative and alternative appropriate engineering strategies. When joined with needed modernization of old, decaying and out of date treatment plants, and collection and distribution systems we will finally lay the foundation that will forestall the need for even more costly approaches and investments in the near future.

¨ Clean Water Action and the Clean Water Network and the Campaign for Safe and Affordable Drinking Water all stand behind the proposal to set aside a full 10% of the Clean Water SRF to allow for these approaches and hope that subsequent versions of the S. 1961, or other bills, reflect this cost-effective priority.

¨ While S. 1961 proposes a substantial increase for the two water SRF accounts over the next five years, from $3 billion to $7 billion per year, the assumption of the bill is that the federal role in funding water infrastructure ends after this injection of cash takes place. Clean Water Action appreciates the substantial increased authorizations proposed in S. 1961 but challenges this Committee to set in place a permanent Clean Water Trust Fund and “polluter pays” funding mechanisms that will augment the funding burden which falls primarily on the small consumer and taxpaying public.

¨ Clean Water Action seeks for Congress to inject more accountability along with more dollars into the SRF programs. Any reauthorization of the Clean Water and Safe Drinking Water SRF’s must incorporate mechanisms that ensure open information and public involvement. Many communities don’t know how to access the SRF accounts; all too often it is the politically connected that are able to take away the dollars not those with the most pressing existing needs. Also, meaningful public participation in the decision making process about which projects get funded is usually absent. S. 1961 makes a rhetorical nod towards fixing this problem but does not back up its rhetoric with meaning steps and measures that will turn this problem around.

¨ In addition environmentally sound principles for project design and siting should be observed. In many cases state NEPA--like procedures are not followed or do not include any real review by the public. With little oversight by USEPA and almost no public involvement in the intended use plans (IUPs) there is very little indication whether or not federal dollars are supporting real public health, compliance or environmental needs. Effective public participation is the best way to ensure that environmental and fiscally sound choices are made. Ensuring such participation is the best way for Congress to protect and build support for its clean safe water investment.

¨ One concern that makes the call for increased water infrastructure funding very urgent, and clearly marked as a federal matter, is the growing permanence of a two-tier water infrastructure picture across the country. Both, big cities that have lost much of their rate base while their infrastructure, beyond its useful life, deteriorates, and small systems that lack the necessary scale to spread out costs to install or maintain new technologies, are threatened to be left behind. Not only are millions of people=s health on the line, but the basic economy=s of many cities and whole regions of the country are put at risk.

¨ Clean Water Action believes that it should be made mandatory that priority be given to projects that help systems/communities with the greatest need based on affordability criteria. An example of this need can be seen in all the small communities where millions of American=s are currently drinking water with significant amounts of arsenic. The conundrum is clear, either we can help these communities with necessary funding and technical innovation support or we can bury our collective heads in the sand and just shift the standard until we ensure that most communities are in compliance. And the fact is that in Fallon, Nevada and in small communities like Fallon across the country, no matter how un-health protective the final arsenic standard is set, Fallon will still have to get the arsenic out of its water. That is why Clean Water Action supports efforts such as the Reid/Ensign Small Communities Safe Drinking Water Infrastructure Funding Act, S 503.

¨ The intention of S. 1961 to help small communities, cities with declining and impoverished rate bases, and needy consumers, address affordability concerns is on the face of it evident. Clean Water Action thinks that the Committee must revisit these provisions and consider a true grant program that supplements (not replaces) the existing loan program. The loans, which in fact act in part as grants, are a good base to start from, but more direct help is needed. Additionally, Clean Water Action wants clarification as to how the low-income assistance program would work.

¨ While Clean Water Action supports additional funding to address existing wastewater and drinking water needs we oppose using scarce federal dollars to subsidize drinking water and waste water systems that support new sprawl development. Core water infrastructure systems, most of which were built using taxpayer funds, are now in need of rehabilitation, replacement and repair. As we have said before, this is an investment in the future worth making to ensure that our lakes and streams are safe and support revitalization of our waterfronts and to provide safe drinking water throughout America. On the other hand funding should not be used to subsidize new systems (unless it can be shown that the new system would simply serve existing populations -- new capacity should not be subsidized).

¨ S. 1961 misses an opportunity to make sure that state SRF funds do not funnel scarce dollars to sprawl development. S. 1961 should clarify the “reasonable growth” loophole in the Safe Drinking Water Act (SDWA). Under the Drinking Water State Revolving Fund (DWSRF) it is left up to each state to determine some standard for defining “reasonable growth.” An uneven and all too flexible set of practices has sprung up among the states in some cases allowing for major diversion of funds into sparking sprawl development not for meeting existing environmental and public health needs. On the clean water side the problem is even more egregious. States with a much more elastic definition of “reasonable growth” are rewarded by EPA’s drinking water needs survey which is the basis for determining the allocation of the federal drinking water infrastructure dollars to the states. Thus states that constrain the use of their dollars more narrowly to existing needs instead of growth lose out when it comes time for allocating the scarce DWSRF dollars.

¨ Even though the states must develop a priority list for doling out the Clean Water State Revolving Fund (CWSRF) dollars based on a clear set of public health and environmental criteria, the state has the right to ignore the priority list rankings altogether and fund whatever project it wants. S. 1961 should fix this unfair, dangerous and unaccountable loophole. This loophole, which is used heavily in some states, goes beyond needed flexibility and potentially undermines the integrity of the CWSRF.

¨ Clean Water Action is heartened by the restructuring and consolidation language contained in S. 1961 and feel that many drinking water problems of small systems could be solved by the taking of such measures. More should be done to insure that states are doing all they can to carry out such cost effective steps.

Additionally, Clean Water Action believes that S. 1961 takes a good stab at extending SDWA capacity development principles over to the world of wastewater. However, S. 1961does not do enough to limit federal investment to those facilities that have the financial, technical and managerial capacity to ensure compliance. Facilities which are in significant non-compliance, should only be allowed funding to restructure or consolidate to achieve compliance or where consolidation or restructuring is impossible, if the facility has made a good faith effort to comply and the facility is adhering to an enforceable compliance schedule, and the funding is necessary to avoid making water or sewer unaffordable to a significant portion of the facility=s retail customers.

3. Conclusion

Clean Water Action applauds the $35 billion five year authorization proposed in S. 1961, the Water Investment Act of 2002. We also are heartened by proposed increased authorizations in Senator Reid’s “Small Community Drinking Water Funding Act, S. 503; and, S. 252, Senator Voinovich’s bill. While there are many refinements and improvements to S. 1961 that Clean Water Action would like to see it is important that the final bill be both fair and clean.

Make the Bill Fair – Keep the Bill Clean

As S. 1961 moves forward from today, the key question for the Congress is how do we act in a way that invokes, to the maximum extent possible, water infrastructure equity, affordability, and sustainability while meeting the triune goals of preserving the environment, enhancing the public=s health and helping to lay a new foundation for broad economic prosperity. How Congress disposes of this question is why Clean Water Action is at this table. We do not want this process to devolve into narrow interests fighting over turf. We are concerned about the possibility that this process might be used as a way to revisit important but contentious Clean Water Act and Safe Drinking Water Act reauthorization issues. Our approach, and we hope your approach, is to stick narrowly to the issues before us -- to define what the needs are and to figure out how best we can collectively structure a new water infrastructure funding paradigm which meets the criteria and goals enumerated by Nancy Stoner of NRDC earlier. The environmental and consumer movements are united in their demand that any final water infrastructure legislation:

1. Substantially increases funding for state clean and safe drinking water funding projects.

2. Provides significant incentives to states to direct more Clean Water SRF funds to nonpoint pollution and non-structural approaches, ensuring that (1) today’s greatest source of water pollution (nonpoint runoff) is addressed; and (2) that cost-effective “green infrastructure” solutions are used to repair and improve existing wastewater and drinking water systems.

3. Ensures that SRF funds are not used to subsidize new sprawl development, but instead are used to repair and improve existing wastewater and drinking water systems.

4. Funds SRF projects based on the states’ priority system ranking after meaningful public input, by closing the loophole (in the Clean Water SRF) that allows states to fund projects not on their own priority list.

Also, tighten-up and make consistent the “reasonable growth” loophole in the Drinking Water SRF.

5. Removes incentives for noncompliance with the Clean Water Act, to ensure that CWSRF funding is only going to utilities that are making efforts to come into compliance with the law.

As the Committee considers the myriad of policy options and funding levels, know that the American public is fully behind your effort to address this pressing problem. Clean Water Action is heartened by the introduction of the Water Investment Act of 2002, and other serious efforts introduced by Senators Reid and Voinovich. The emergence of the Senate’s bills and the hearings today and this Thursday are most encouraging. Let=s keep the bipartisan and interest group comity and pursue water infrastructure solutions that lay the foundation for clean and safe water for the next century to come. On the other hand, failure to move a clean and fair funding bill will be a sure sign of Congress having failed the clean and safe water test. The time to act is now.

Thank you for the opportunity to comment. I would be happy to entertain any question or concern. My phone number is (202) 895-0420 ex 105 and my e-mail is pschwartz@cleanwater.org