January 2010, Vol. 22, No.1

State of the Industry

State of the Industry

With a new year comes new predictions for what lies ahead. Hear about what wastewater experts say is in store for the industry in regard to the economy, infrastructure funding, and White House perspectives on environmental regulations for 2010. Read more

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2010: Economic Relief Ahead?
Lingering recessionary conditions and increasing water scarcity will play significant roles in the coming year, but new utility financing strategies could help ease the economic burden

After Stimulus, What’s Next for Water Infrastructure Funding?
As states rush to meet key deadline, debate continues regarding how to close ‘funding gap’ 

Climate Change, Clean Water Enforcement Emerge as Administration Priorities
Links between climate change and the water sector are among issues likely to receive notice in Washington during 2010

 

 

2010: Economic Relief Ahead?

Lingering recessionary conditions and increasing water scarcity will play significant roles in the coming year, but new utility financing strategies could help ease the economic burden

Last October, Dan McCarthy, president and CEO of the global water business of Black & Veatch (Overland Park, Kan.), attended the CEO Conference for Engineering and Consulting Firms sponsored by the Environmental Financial Consulting Group (New York), in which a panel of CEOs discussed the impact of the current economic environment on markets and growth strategies, among other issues.

“There was general agreement that engineering and construction, including water quality, lags the general economy by 12 to 18 months, and that explains why 2008 was still a pretty good year,” McCarthy said. “The consensus view holds that 2009 will show zero growth in the markets, but while there is optimism for 5% to 6% growth in the coming year, there is also skepticism and a belief that 2010 will actually be tougher.”

Indeed, heading into 2010, McCarthy said that underlying conditions in the general economy remain challenging to the water quality industry. Revenues are down, he said, due to lower tax receipts and nonpayments, and people are also using less water. “This has been an unusual economic event, one that we can’t measure the same way as other recessions,” McCarthy said.

On a regional basis, McCarthy said that while the Northeast is outperforming other U.S. regions in construction due to consent orders from combined sewer overflow programs, traditional growth-driven markets, such as Florida, Arizona, Southern California, and Nevada, have slowed to a trickle because housing starts are down significantly. Texas, however, remains strong and should continue to perform well because of major conveyance system projects that are needed in response to drought and growth in the market. But considering the whole of North America, McCarthy said the Canadian market is the strongest, and despite recessionary conditions in the United States, Canada never slowed down. “The Toronto region is very robust and is spending more than $1 billion on new infrastructure per year,” McCarthy said.

Globally, Australia is vibrant and still growing, McCarthy said, while the performance of China, Southeast Asia, and Singapore will be significant and important to watch because these markets will be responsible for leading the rest of the world out of the global recession.

“In Europe, the United Kingdom has been hit hard by the recession, and government regulators in Scotland, England, and Wales are now trying to determine what they will allow water companies to charge their customers and to spend on infrastructure investments,” McCarthy said. “Until these determinations are final, the U.K. market will be stagnant.”

Last year was also slow for construction in the U.S. water quality industry, as many publicly funded agencies scaled back considerably on capital improvement projects, said Heather Stephens, manager of the Portland Water Environment Group with Kennedy/Jenks Consultants (San Francisco). “This resulted in low bids for the relatively few projects that are still moving forward,” she said.

For the coming year, however, Stephens said two potential drivers for increased construction include projects backed by the American Recovery and Reinvestment Act (ARRA; see related story, p. 17) and public utilities ramping up other projects that were deferred because of slow growth. “Many of the ARRA projects are … scheduled to start construction in the early part of 2010,” Stephens said. “Deferred capital improvement projects may move to construction later in 2010 to accommodate increased growth if the economy continues to improve through 2010 and 2011. This could be very positive for contractors in our industry and across the board.”

Challenges at the Regional Level

As is the case with other growth-
dependent markets, the ongoing economic recession and housing downturn has contributed to significantly lower revenues for the Sacramento (Calif.) Regional County Sanitation District (SRCSD). According to Marcia Maurer, SRCSD chief financial officer, the district’s sewer impact-fee revenue for the fiscal year ending June 30, 2009, was $13 million. This is a drastic drop, considering the district’s average impact-fee revenue of $50 million to $55 million the last several years. “Sewer impact fees have always been treated as an ongoing revenue source, but last year, they all but disappeared,” Maurer said. “This is a significant source of concern, and moving forward into next year, our biggest challenge is going to be maintaining our debt coverage, which is currently running very close to minimum.”

Maurer said SRCSD is using its rate-stabilization reserves to meet coverage requirements while also using its available cash to prepay its bonds so they will not be included in the debt coverage collections.

Because of the region’s severe housing downturn, Maurer said SRCSD has been forced to re-evaluate its capital program by either cutting or delaying new projects. “The capital program has been scrubbed to the bone,” she said. “We are only completing projects that have already been started or are extremely important, such as those concerning flood protection. These projects are also being financed with cash, not debt.”

But still, on the heels of an already difficult year, Maurer said more economic difficulty in the region is anticipated to affect SRCSD operations negatively in the years to come. “California has been hit harder than many other U.S. areas,” she said. “The housing crisis has been more severe here. New housing starts are still way down, and extremely low growth is projected moving ahead.”

SRCSD measures growth in terms of new equivalent single-family dwellings (ESDs), which account for a single household or comparable business sewer connection. According to SRCSD forecasts, an average of 2000 new ESDs per year is expected during the next 5 years. This estimate is down considerably compared to previous years, when the average number of new ESDs was 9000.

These dwindling growth projections have prompted SRCSD to propose rate increases to its board. Additionally, SRCSD has initiated a rate and fee study to find ways to reduce its reliance on sewer impact fees. “We have to be proactive in developing solutions for managing this situation over the coming years,” Maurer said. “This involves finding other methods of generating revenue.”

Utility Financing and Privatization

In contrast to last year, when the utility debt markets had frozen, Maurer believes SRCSD will have more market access to financing in the coming year. This is because more investors are shying away from sophisticated types of financial instruments. “With bond issuances, we are seeing a flight to simplicity,” Maurer said. “Instead of variable-rate options or derivative products, investors are now seeking ‘plain vanilla’ fixed-rate bonds, which are low risk.”

According to McCarthy, there is a considerable amount of money on the sidelines that is looking for a safer investment opportunity. “Many investors see water and wastewater as a steady play in comparison to where their money has been in the past,” he said. “As a company, we are meeting with private equity and investment groups that are interested in targeted segments of the market, such as green infrastructure, that offer predictable returns and a long investment life.”

But while the utility debt market continues to recover, McCarthy said many city balance sheets are still not very healthy, and as a result, many cities and communities are looking to fill these voids with more innovative and strategic ways of financing to optimize their business approach. “In some instances, utilities are looking to monetize their assets through sales or leases in order to generate capital for infrastructure improvements,” McCarthy said. “In other cases, utilities are exploring the possibility of forming long-term strategic partnerships with private groups. This can be advantageous for utilities due to the benefits of more available funding.”

Frank McGrew, a managing director of investment banking firm Morgan Joseph & Co. Inc. (New York), said that despite growing opposition from private consumers due to their fear of unregulated rate increases and declining service levels, a trend toward more privatization of water utility assets is occurring. “Privatization would help utilities run more efficiently, as well as provide them with greater access to capital in the public markets for funding incremental infrastructure needs,” he said. “Another dynamic is that it would add more transparency to their operations. We are anticipating that some private utilities may migrate toward becoming publicly traded utilities and service businesses.”

Water Supply Concerns

According to “Liquid Assets: Nature’s Truly Regenerable Resource,” an October water industry overview from Morgan Joseph, a key industry driver in the coming year and beyond is public concern with respect to the increasing scarcity of water and the quality of the nation’s drinking water. “Water is becoming an economic commodity, and the public is really beginning to understand its value,” McGrew said. “Along with this comes an increasing worry about supply and contamination. At the municipal level, this is becoming a real priority.”

These factors also are bringing about a heightened sense of urgency regarding corporate water security. “Historically, water has always been viewed as a low-cost and unlimited commodity,” McGrew said. “But that is rapidly changing now. Water is the primary ingredient in so many different manufacturing and discharge processes and is essential to numerous industries, such as steel manufacturing, irrigation, and pharmaceutical production.”

This is a primary reason for so much merger-and-acquisition activity in the water industry, McGrew said. “Companies are looking to grow their water footprints,” he said. “However, the larger consolidating companies are paying a high price due to their desire to access a greater share of large and perceived growth areas, such as treatment, infrastructure, and distribution.” Along with consent decree programs, McCarthy said measures related to adaptation to climate change and water scarcity will provide a baseline of opportunities for the water quality industry in the year to come. “In many regions, we are seeing events that the historical record would not help us predict, especially given the longer droughts and higher-intensity storms we’ve seen lately,” he said. “Many utilities have been responsive to these changes, but others have deferred. Utilities should prepare for these changing conditions sooner than later. They need to make the necessary investments now.”

Infrastructure and Energy Recovery

Another catalyst for the water quality industry in 2010 is the nation’s deteriorating infrastructure, which is driving demand for funding, as well as for equipment and services, McGrew said. “There is a significant need for municipal and private spending to help drive major improvement projects,” he said. “We are also seeing municipal efforts to raise sewer and water fees to help pay for infrastructure improvements, but with raising fees comes political risk.”

The economics of energy recovery should also continue to expand in the coming year, McCarthy said. “There is considerable opportunity to develop revenue streams out of waste processes that have traditionally been cost outflows,” he said. “This includes marketing and selling grease-trap waste because it can be converted into energy. There are also economic opportunities for capturing gas and onsite electricity generation, as well as utilizing waste streams for phosphorus recovery.”

 

Jeff Gunderson, WE&T

 

 

After Stimulus, What’s Next for Water Infrastructure Funding?

As states rush to meet key deadline, debate continues regarding how to close ‘funding gap’

As the deadline nears for states to commit billions of dollars provided by the American Recovery and Reinvestment Act (ARRA) for water and wastewater infrastructure, hundreds of projects are under way across the nation. Meanwhile, various proposals for further increasing infrastructure funding are circulating on Capitol Hill.

Tracking Progress in Implementing ARRA

Enacted last February, ARRA provided $4 billion for the Clean Water State Revolving Fund (SRF) and $2 billion for the Drinking Water SRF. To try to stimulate the economy quickly, the law mandated that states disburse the money within 1 year or lose it. To avoid losing funds, a state must ensure that all projects financed using ARRA money are under construction or contract by Feb. 17, 2010. Because the law included provisions not normally required as part of the SRF process, states have had to move nimbly to meet the deadline.

On Nov. 4, the U.S. House of Representatives Committee on Transportation and Infrastructure released data regarding the status of projects receiving Clean Water SRF funding from ARRA. As of Sept. 30, 873 projects in 43 states had been put out to bid. With a value of $1.8 billion, the projects represented roughly 48% of the total funding for the wastewater sector. Of the projects for which bids had been sought, 530 projects in 40 states were under contract, representing $1.1 billion, or 30% of the available funding. Finally, 394 projects worth a total of $872 million were under construction in 36 states, amounting to 23% of the available funding.

The committee also ranked the states according to their progress as of Sept. 30 in allocating their portions of the Clean Water SRF funding. The top-ranked state, Minnesota, had nearly 97% of its projects under way, according to the committee. However, the District of Columbia and seven states — Arkansas, Delaware, Georgia, Mississippi, North Dakota, Rhode Island, and Utah — had not reported having any projects out to bid, under contract, or under construction.

Complying With Contradictions

Testifying before the House committee, Nanci Gelb, deputy director of the Office of Ground Water and Drinking Water in the U.S. Environmental Protection Agency (EPA), said she has “concern” about the ability of some states to meet the Feb. 17 deadline. However, EPA is working with the states to help them avoid the loss of ARRA funding, she said.

When implementing ARRA requirements pertaining to SRF funding, “every state is facing challenges,” said Matt Millea, acting president of the New York State Environmental Facilities Corp. (Albany). The difficulty stems from the “contradicting message” that Congress gave to states in ARRA, Millea said. Although it tasked the states with quickly disbursing the funds, Congress also included mandates related to buying American-made products and adhering to so-called Davis–Bacon prevailing wage requirements. Meanwhile, ARRA also included significant funding for inspectors general in various federal agencies to ensure that states “cross every ‘t’ and dot every ‘i,’” Millea said. “There’s a significant challenge in moving quickly and also moving in a manner that follows all of the requirements of the bill,” he said.

Complying with ARRA’s requirements has been “a lot of work,” acknowledged Paul Marchetti, executive director of the Pennsylvania Infrastructure Investment Authority (Harrisburg). Although it expects to meet the Feb. 17 deadline, the authority has struggled somewhat with the law’s requirements to dedicate 20% of SRF funding to “green infrastructure” projects, Marchetti said. Part of the challenge has involved “making sure that what we think is green comports with what EPA says is green,” he noted.

Despite the challenges, states on the whole likely will “do very well” in terms of meeting ARRA’s deadline and directives, Millea said. Along with the hard work of the states, this success will result from the decision by Congress to use existing SRF programs. New York, for example, had an “established pipeline” of potential projects that could be evaluated quickly for their ability to comply with ARRA requirements, Millea said. Because of the emphasis on starting construction rapidly, the projects most likely to benefit from ARRA funding were those “most likely to get shovels in the ground the quickest,” he said.

Benefiting From Advance Work

“Shovel readiness” appears to have been a deciding factor for projects in Indiana, too. For example, Marion (Ind.) Municipal Utilities received a $220,000 grant to assist with the construction of new lime-slaking units at its 45,420-m3/d (12-mgd) drinking water facility. The grant covered 40% of the cost of the $550,000 project, which has since been completed, said Bill McElhaney, director of Marion Municipal Utilities.

Because of fierce competition for ARRA funds, “you almost had to have the project designed and ready to bid in Indiana to get the money,” McElhaney said. Fortunately, Marion had designed and bid the lime-slaking units before ARRA was enacted. “That’s the reason why we got money,” McElhaney said.

However, Marion did not receive all the funding it sought. The utility had requested money to help defray the cost of components of its long-term control plan for addressing combined sewer overflows. Located in an economically depressed area and required to make costly improvements related to overflows, the utility would have benefited greatly from additional funding, McElhaney said. “We had high hopes,” he said.

Boosting SRF Funding for FY 2010

Following the passage of ARRA, some in the water sector expressed concern that Congress might seek to scale back SRF funding allocated as part of the annual appropriations process. However, these fears were unfounded, as the recently enacted fiscal year (FY) 2010 appropriations bill for EPA provides $2.1 billion for the Clean Water SRF, a sharp increase compared to the FY 2009 level of $689 million. The Drinking Water SRF likewise enjoyed a boost, receiving nearly $1.4 billion, up from $829 million the previous year.

The hikes in appropriations, together with the ARRA money, have led to significant increases in funding for the SRF programs. “There’s been a lot of money put in the system,” said Tim Williams, managing director of government affairs for the Water Environment Federation (WEF; Alexandria, Va.). Despite this uptick in spending, SRF programs across the country continue to receive significantly more requests for funding than can be accommodated. In part, this outcome has to do with the recent economic downturn and its negative effects on the private financial markets. During the past decade, localities with good credit ratings could borrow money from private sources and get terms “as good or better” than those available from the SRF programs, Williams said. Today, however, SRF programs appear a “lot more attractive again,” he said.

Pursuing a Clean Water Trust Fund

In recent years, the concept of a clean water trust fund has emerged as a strategy for helping to close the “funding gap” between what wastewater and drinking water utilities currently spend on infrastructure upgrades and what is required to maintain their systems adequately. Similar to the highway trust fund that relies on federal gasoline taxes to raise revenues for various transportation programs, a clean water trust would impose taxes on certain products to finance water infrastructure improvements. In July, Rep. Earl Blumenauer (D–Ore.) introduced the Water Protection and Reinvestment Act (H.R. 3202), which would tax pharmaceuticals, certain beverages, and products, such as soaps and detergents, that are commonly disposed of in wastewater. H.R. 3202 also calls for a tax on corporate income above $4 million.

The legislation faces certain obstacles, not the least of which is its plan to levy new taxes. “The idea of raising taxes in this current climate is probably not looked upon with general favor, outside of people who are worried about water infrastructure,” said Carl Myers, WEF’s assistant director of government affairs. In fact, industries that would be subject to the proposed taxes opposed the plan when asked about it by the U.S. Government Accountability Office (GAO), said Anu Mittal, director of the natural resources and environment team at GAO, which released a report analyzing the feasibility of a clean water trust fund in May. Furthermore, the U.S. Internal Revenue Service indicated that establishing the necessary framework for collecting the taxes associated with such a trust fund “would be a huge task,” Mittal said.

Because of these hurdles, adoption of a clean water trust fund is a “long-term process,” Williams said. “We don’t expect to see any final legislation about a clean water trust fund in this Congress.”

Creating a Water Infrastructure Bank

Rather than advocating increased federal funding for water infrastructure, the American Water Works Association (AWWA; Denver, Colo.) has long called for encouraging local systems to set appropriate rates that adequately address investment needs. Early in 2009, AWWA proposed the idea of a Federal Water Infrastructure Bank (FWIB). Modeled on previous congressional proposals that sought to create a National Infrastructure Bank, FWIB would focus exclusively on water-related projects, said Kurt Vause, engineering director for the Anchorage (Alaska) Water and Wastewater Utility and chairman of the legislative subcommittee of AWWA’s Water Utility Council. “We wanted to make sure that the needs of water infrastructure were considered on an equal footing” with transportation and other infrastructure sectors, Vause said.

FWIB would employ two main funding mechanisms: providing loans directly to owners of projects valued at more than $75 million and buying bonds from SRF programs. The first approach would benefit large, regional projects that rarely receive support from SRF programs, while the second would enable states to use proceeds from the bond sales to augment their existing SRF funds and make more loans. Either way, FWIB would “help lower the cost of capital” available to water and wastewater utilities, Vause said. AWWA is seeking congressional support for its proposal.

Debating Additional Federal Funding

As more regions seek to implement green infrastructure and adopt watershed-based approaches to address nonpoint source pollution, additional state and federal funding will be needed, said Kevin Shafer, executive director of the Milwaukee Metropolitan Sewerage District. Rather than simply dealing with large point sources, municipalities today must contend with runoff from urban and agricultural areas. In such cases, there is a “less defined path for local funds to be used on those approaches,” Shafer said. As a result, “we need to have more state and federal funding to really address these watershed issues beyond the local political boundary,” he said.

Others, however, view increased federal funding as a mistake. “In the main, I don’t think subsidies are efficient or equitable, nor are they going to solve our problem” of inadequate infrastructure investment, said Tracy Mehan, a principal of The Cadmus Group Inc. (Boston) and a former EPA assistant administrator for Water. Although Congress will likely continue to provide subsidies in the near future, the poor fiscal condition of the federal government ultimately will curtail its ability to pay for infrastructure, Mehan said. “At the end of the day, it’s all going to come to tears,” he said.

 

— Jay Landers , WE&T

 

 

Climate Change, Clean Water Enforcement Emerge as Administration Priorities

Links between climate change and the water sector are among issues likely to receive notice in Washington during 2010

As the administration of U.S. President Barack Obama enters its second year, climate change remains a top concern in the White House and in the U.S. Congress, and its effects on the water sector are receiving increased attention. Other efforts likely to occupy the U.S. Environmental Protection Agency (EPA) during the coming year include revamping enforcement of the Clean Water Act (CWA) and improving the Chesapeake Bay.

Coming to Grips With Climate Change

In environmental matters, the “greatest priority” for the Obama administration is climate change, said Tim Williams, managing director of government affairs for the Water Environment Federation (WEF; Alexandria, Va.). To capitalize on this focus, water and wastewater professionals are seeking to educate policy-makers about the anticipated effects that climate change will have on the water sector. For example, changes in precipitation and weather patterns could affect the quantity and quality of water supplies, while rising sea levels and increased storm surges could inundate low-lying treatment facilities. “The effects of climate change will be delivered by water,” Williams said. “There will be profound impacts on what WEF members do.”

The effects of climate change on the water sector are expected to be costly, according to a report released in late October by the National Association of Clean Water Agencies (NACWA; Washington, D.C.) and the Association of Metropolitan Water Agencies (Washington, D.C.). Titled Confronting Climate Change: An Early Analysis of Water and Wastewater Adaptation Costs, the report estimates that U.S. water and wastewater agencies will need to spend between $448 billion and $994 billion through 2050 to adapt to the effects of climate change. To ensure that infrastructure continues to protect public health and the environment, “significant adaptation measures will be required,” according to the report.

Convincing lawmakers that climate change “may indeed be more about water than anything else” has involved an “almost herculean effort,” said Ken Kirk, executive director of NACWA. However, such efforts appear to be paying off. In early November, the U.S. Senate Committee on Environment and Public Works (EPW) passed the Clean Energy Jobs and American Power Act (S. 1733). The massive bill, which aims to reduce sources of so-called greenhouse gases and foster greater use of “clean” energy, includes language that would establish a program for providing federal grants to water and wastewater providers to undertake projects intended to prepare for the effects of climate change. Known as the Water System Mitigation and Adaptation Partnerships, the program would provide a “safety net” for drinking water and wastewater agencies to help them adapt to climate change, Kirk said.

However, climate change legislation (H.R. 2454) passed by the U.S. House of Representatives last July contains no such program. As a result, ensuring that the pertinent language from the Senate bill appears in any future climate change legislation will be “extremely important,” Kirk said. Fortunately, the Obama administration “seems to be cognizant of” the need to include funding for adaptation efforts by drinking water and wastewater agencies, Williams said.

EPA, meanwhile, is looking to partner with water and wastewater agencies to develop approaches for addressing the effects of climate change on the industries. Climate change is “one of the key issues” for the Water sector, said Peter Silva, EPA assistant administrator for Water. “There’s a number of direct relationships in terms of climate change and water and wastewater utilities,” he said. Therefore, EPA has created a task force involving the agency and representatives of utilities and Indian tribes from across the country. “What we’re trying to come up with is a model or a handbook” to help utilities plan for the effects of climate change, Silva said.

 

Emphasizing Enforcement

CWA enforcement will receive renewed attention at EPA during 2010. Prompted by a series of New York Times articles documenting widespread CWA violations, EPA Administrator Lisa Jackson released in mid-October the “Clean Water Act Enforcement Action Plan,” an effort to revamp the process by which EPA and the states enforce the CWA. Testifying before the U.S. House Committee on Transportation and Infrastructure, Jackson noted that the number of dischargers covered by the National Pollutant Discharge Elimination System (NPDES) has increased dramatically since the CWA was enacted in 1972. “This increase has significantly affected the ability of EPA and the states to administer and enforce” the NPDES program, Jackson told the committee. To address this problem, she said, the action plan will involve developing “innovative approaches to target enforcement to the most serious violations and the most significant sources,” strengthening oversight of state permitting and enforcement programs, and improving transparency and accountability.

Within EPA, the Office of Water and the Office of Compliance and Enforcement Assurance are developing an implementation plan for carrying out the changes called for in the Clean Water Act Enforcement Action Plan, Silva said. “We are going to work with the states and [EPA’s regional offices] to make sure we have the right approach,” he said. A key focus will involve “better monitoring and reporting,” he said, including increased use of electronic reporting by states.

Any enforcement strategy by EPA must account for “other parallel issues,” Kirk said, chief among them the ability of municipalities to afford to comply with consent decrees and other regulatory requirements. “In some places, communities are not going to be able to continue to fund projects at the level they are required to under their consent decrees,” Kirk said. “We are hopeful that EPA will take an objective view of the situation and address those concerns.” Furthermore, EPA also must clarify the extent to which it wants states and municipalities to resolve water quality problems using a watershed approach and “green” infrastructure, Kirk said.

Collaborating on the Chesapeake Bay

The Chesapeake Bay has emerged as a clear environmental priority for the Obama administration, one that could serve as an example for federal efforts to address water quality problems elsewhere. Last May, Obama signed an executive order directing a handful of federal agencies to develop a coordinated strategy for restoring and protecting the troubled waterbody. “It is very significant that the president has already weighed in on” an issue such as the Chesapeake Bay so early in his administration, Williams said.

Led by EPA, the agencies released in November a draft strategy that outlines how the federal government will work with states in the bay’s watershed to improve water quality, conserve habitats and wildlife, and consider the effects of climate change in the context of the bay and its watershed. Among the actions to be taken include establishing total maximum daily loads for nitrogen, phosphorus, and sediment for the bay. Other possible approaches could entail developing bay-specific rules related to confined animal feeding operations and stormwater.

Working with the U.S. Department of Agriculture, EPA intends to conduct pilot projects aimed at limiting the amounts of sediment and nutrients that enter the bay from agricultural areas, Silva said. Both agencies would use a “watershed approach” that targets available funding to “areas that have the most pollution and try to attack those first,” Silva said. “It’s going to be a first-of-its-kind program,” he said.

Overall, the approach that is adopted for restoring the Chesapeake Bay could serve as a model for how the federal government addresses other large waterbodies, Silva said. For example, using a watershed approach to target water quality problems related to agricultural areas could help with efforts to alleviate hypoxia in the Gulf of Mexico, he said.

 

Shifting Focus on the SRF

Supporters of increased federal funding for water infrastructure are hopeful that 2010 will see the long-awaited reauthorization of the State Revolving Fund (SRF) program. Last March, the House passed legislation (H.R. 1262) authorizing nearly $14 billion for the Clean Water SRF over 5 years. In the Senate, a similar bill — the Water Infrastructure Financing Act (S. 1005) — was approved by the EPW Committee in May. S. 1005 would authorize $20 billion for the Clean Water SRF and nearly $15 billion for the Drinking Water SRF over 5 years. Although it has yet to come up for a vote by the full Senate, the bill is a “likely candidate” for passage in the Senate in 2010, said Nancy Stoner, co-director of the water program for the Natural Resources Defense Council (New York).

If enacted, S. 1005 would continue a trend of increased federal support for wastewater infrastructure that began with last year’s American Reinvestment and Recovery Act (ARRA). Taken together, S. 1005 and ARRA represent a “change in policy in Washington” toward the SRF program, Williams said. Whereas debate in recent years focused on decreasing and even eliminating federal contributions to the SRF program, the current Congress is not only increasing federal support but calling on states to furnish some of the funding in the form of subsidies rather than loans. “There has been a definite policy shift in the last year,” Williams said.

 

— Jay Landers , WE&T