January 2009, Vol. 21, No.1

2009 State of the Industry

statesmall

Will Washington Rediscover Water Infrastructure?

With the next Congress more firmly under Democratic control and a new president set to enter the White House, the outlook for water-related legislation is sharply different than at any point in the past 8 years. Although prospects appear strong for increased federal funding for infrastructure, particularly as part of an “economic stimulus” package, the nation’s dismal financial condition could hamper efforts to boost long-term spending on water infrastructure.

In frastructure as Stimulus
At press time, prospects looked bleak for passage of an economic stimulus bill that included funding for water and wastewater infrastructure. Blocked by opposition from Senate Republicans and President George Bush during the “lame-duck” session of Congress following the elections, the measure was expected to wait until later in January, when the 111th Congress convenes and the administration of President-elect Barack Obama takes office.

On the campaign trail, candidate Obama emphasized the need to augment federal spending on infrastructure, a fact not lost on organizations supportive of increased infrastructure funding. “We were encouraged by the attention that was paid to the infrastructure topic, in particular,” said Tim Williams, managing director for government affairs at the Water Environment Federation (WEF; Alexandria, Va.). Issues related to water infrastructure appear likely to receive greater attention from the White House next year, Williams said. “We have a lot of anticipation about what may happen with the new administration,” he noted.

Congressional Democrats, their ranks set to swell in the new Congress, have indicated that new spending on infrastructure, including water and wastewater, is a priority. Water infrastructure advocates are aiming high, hoping to persuade lawmakers to provide billions of dollars in a stimulus bill for water-related projects. For example, in October the U.S. Conference of Mayors (Washington, D.C.) called on Congress to include $18.75 billion for water and wastewater infrastructure as part of any stimulus package.

Meanwhile, the National Association of Clean Water Agencies (NACWA; Washington, D.C.) is touting the existence of wastewater projects that could be started rapidly in the event that funding is made available. “We’re seeking $10 billion for wastewater projects that can be ready to go in 90 to 120 days,” said Susan Bruninga, director of public affairs at NACWA.

However, the funding targets suggested by the U.S. Conference of Mayors and NACWA significantly exceed what the House considered spending on wastewater infrastructure as part of the stimulus bill (H.R. 7110) it passed in September. The measure would have provided $6.5 billion for wastewater infrastructure, along with $1 billion for drinking water projects. Meanwhile, the stimulus bill (S. 3689) introduced in the Senate by Democratic leaders during the lame-duck session in November called for spending $1.75 billion on wastewater and $750 million on drinking water.
 
Targeted Spending
Other parties are working to ensure that at least a portion of new wastewater spending is dedicated to so-called green infrastructure projects — for example, rain gardens, green roofs, and permeable pavements — that seek to protect, restore, or recreate natural hydrological conditions. To this end, the environmental organizations American Rivers (Washington, D.C.) and the Natural Resources Defense Council (NRDC; New York City) are calling on Congress to devote at least 16% of any wastewater funding in a stimulus bill to green infrastructure. “Green infrastructure has got to be part of the future solutions to our water infrastructure crisis,” said Katherine Baer, senior director for the clean water program at American Rivers.

Green infrastructure projects confer a host of benefits beyond simply improving water quality, including addressing climate change and air pollution, said Nancy Stoner, co-director of the water program at NRDC. With many such projects “ready to go,” Stoner said, “there’s good potential for a stimulus bill to include green infrastructure as a component” of any funding that may be provided.

Should Congress and the new administration opt to include funding for water infrastructure as part of a stimulus bill, a decision will have to be made as to whether to make this money available in the form of loans that are distributed through the existing state revolving fund (SRF) programs or grants. “We are pushing for the funding to be in the form of grants,” Bruninga said. The Association of Metropolitan Water Agencies (AMWA; Washington, D.C.) also champions this approach. “If the goal of the stimulus plan is to quickly get money to communities where it can be put to use,” said Diane VanDe Hei, executive director of AMWA, direct grants to municipalities “will achieve the most effective results.”

However, H.R. 7110 and S. 3689 both sought to deploy new spending through the SRF programs, rather than simply “earmarking” funding for individual projects. This decision is supported by those who fear that the process of allocating grants would become overly politicized. “I truly hope that Congress resists that temptation and sticks with proven and prioritized systems such as the state revolving loan funds,” said G. Tracy Mehan, principal for The Cadmus Group Inc. (Boston) and a former U.S. Environmental Protection Agency (EPA) assistant administrator for water. By contrast, an earmarking process would amount to a “political free-for-all” that might fail to fund the most pressing needs first, Mehan said.

Clean Water Act Update
In the eyes of many, the Clean Water Act (CWA) needs updating to address certain issues that have become more pressing since the law was last reauthorized in 1987. Although lawmakers have shied away since the mid-1990s from attempting a major overhaul of the CWA, Congress has tried in recent years to reauthorize the SRF program, mainly in an effort to increase the authorized funding levels for the program. This goal remains a priority for many advocates of water infrastructure. For example, NACWA “will continue to press for an increase in SRF funding and a reauthorization of the SRF program,” Bruninga said.

The chances of the next Congress reauthorizing the SRF program are “very good,” Stoner said, noting that the House passed legislation to that effect in 2007 and the Senate Committee on Environment and Public Works (EPW) approved its own version of such a bill last September. These measures appear “ready to move forward rapidly in the next session,” Stoner said.

Of course, congressional committees with jurisdiction over other infrastructure sectors must contend with other pressing needs, including the reauthorization of the surface transportation program, said Linda Eichmiller, executive director of the Association of State and Interstate Water Pollution Control Administrators (ASIWPCA; Washington, D.C.). “There is a lot of competing priorities,” Eichmiller said.

Moreover, lawmakers may have difficulty boosting spending significantly on water and wastewater infrastructure in the long term. Given the ballooning federal debt and signs of an impending economic recession, the outlook is anything but certain for “any sort of sustained infrastructure investment program,” Mehan said.

Some water infrastructure groups, including WEF, would like to see the CWA undergo a more comprehensive rewrite. In the past year, WEF has held a series of meetings on this issue, concluding that a “consensus” exists among the federation’s members that the CWA needs to be revised, Williams said. The law “would benefit from some greater clarity of direction from the Congress” on such issues as nonpoint source pollution and watershed management, Williams noted. However, WEF does not expect to see any legislation to this effect introduced during the first session of the 111th Congress, he said.

Climate Change and Security
Leaders of key congressional committees — among them U.S. Sen. Barbara Boxer (D–Calif.), the chair of the Senate EPW Committee, and U.S. Rep. Henry Waxman (D–Calif.), the newly appointed chair of the House Committee on Energy and Commerce — have indicated that they intend to make climate change a top priority. Advocates of water and wastewater agencies would like to see some recognition that such organizations require assistance in preparing for and addressing effects on water resources and utility operations brought about by climate change.

For example, implementation of a “cap-and-trade” program to reduce emissions of carbon dioxide could generate revenue to fund research devoted to helping utilities adapt to climate change. Such research would afford an “excellent opportunity for water systems to learn what impacts climate change will have on their operations,” VanDe Hei said. Publicly owned treatment works (POTWs) likewise could be affected by climate change. “Many POTWs are located in low-lying floodplains or coastal areas” that “could be affected by sea-level rise or more intense storms,” Bruninga said. Meanwhile, states need models and other tools for evaluating the effects of climate change on water resources and helping water and wastewater agencies to mitigate them, Eichmiller said.

Legislation intended to address climate change could present other opportunities, as well as challenges, to water and wastewater utilities. For example, wastewater agencies may be able to sell credits under a cap-and-trade program, Bruninga noted. However, water and wastewater agencies alike would experience higher energy costs if such a program results in higher electricity rates, VanDe Hei said.

During 2009, Congress also must extend or revise the Chemical Facility Anti-Terrorism Standards, regulations developed by the U.S. Department of Homeland Security (DHS) for high-risk chemical facilities. Although chemical usage by water and wastewater agencies currently is regulated by EPA, some in Congress likely will seek to include water and wastewater agencies in the DHS program, said Tom Curtis, deputy executive director for the American Water Works Association (Denver). If that happens, water and wastewater agencies must ensure that they do not cede control to the federal government regarding such critical decisions as the type of disinfection used at their facilities, Curtis said. “Not everyone in Washington has understood the kinds of unintended consequences that can flow from a decision to order a utility to change its disinfectant,” he said. “It’s not like choosing between different brands of soft drink.”

— Jay Landers, WE&T