Jackson Backs Revolving Funds Over Grants, Will Review Plight of Smaller Communities

From BNA Daily Environment Report

Environmental Protection Agency Administrator Lisa Jackson told a House subcommittee May 19 that she favors using revolving fund loans to grants for state and local sewage treatment and drinking water projects because they provide an ongoing source of revenue.
Providing loans, instead of grants, for water infrastructure programs under the state revolving fund (SRF) forces “tough decisions” in a program that is largely administered by states, Jackson told members of the House Appropriations Subcommittee on Interior, Environment, and Related Agencies.

But she said in written testimony that “because repayments and interest are recycled back into the program, these state revolving funds generate funding for loans, even without federal capitalization.”

Jackson was testifying on the Obama administration's $10.5 billion fiscal year 2010 budget request for EPA.

The administration proposed $2.4 billion for the clean water revolving fund and $1.5 billion for the drinking water revolving fund. Jackson said that amount would finance 1,000 clean water and 700 drinking water projects, and generate many new jobs.

Members Concerned About Small Communities
Jackson also told the panel's chairman, Rep. Norm Dicks (D-Wash.), that she would “personally take a look at [the grants] issue.” Dicks and Rep. Michael Simpson (R-Idaho), the subcommittee's ranking Republican, expressed concern that small towns with small revenues would be unable to undertake water projects.

“Small communities simply cannot afford these loans,” Simpson said.

The 1987 amendments to the Clean Water Act replaced the federal construction grants program with revolving loan funds. Under the revolving loan program, for example, states can establish low- or no-interest loans for small and disadvantaged communities, according to the EPA's Clean Water State Revolving Fund website.

A Senate measure would authorize clean water funds of $3.2 billion for each of fiscal years 2010 and 2011 (88 DEN A-12, 5/11/09).
Panel members also questioned the EPA chief on issues such as the proposed $475 million for Great Lakes restoration program; plans for reducing greenhouse gas emissions, including a cap-and-trade system; rulemaking on coal waste; the superfund program; and funds for environmental research.

Great Lakes Issues Aired
The Great Lakes project would target some of the region's most significant problems, Jackson said. Those problems include invasive aquatic species, such as the zebra mussel; nonpoint source pollution; toxics in sediment; and the loss of habitats and species.

Rep. Steven LaTourette (R-Ohio) said the proposed funding is “not enough to get the job done” and asked why nearly half of the funds would remain with EPA under the budget, given that they are designed to be shared with other federal agencies.
“These are initial allocations” based on discussions among the agencies, Jackson said.

Appropriations Committee Chairman David Obey (D-Wis.) urged the EPA administrator to ensure a “substantial, coordinated, detailed, and disciplined plan” for the Great Lakes program. He also suggested forming an independent scientific review panel to make sure the plan is based on “sound science.”

Cap and Trade Could be Distorted
Subcommittee members raised several concerns about greenhouse gas control, including whether a cap-and-trade program is the best way to control carbon dioxide emissions.

Rep. Tom Cole (R-Okla.) said he is a “tremendous skeptic of cap and trade” because some investors could distort the program.
“A lot of people are going to get very rich and the markets will get manipulated,” Cole said, adding that he supports a carbon tax to reduce emissions.

The EPA budget seeks $19 million for projects such as designing, developing, and testing a greenhouse gas emissions data management system; and developing source measurement technologies for greenhouse gases to support President Obama's “effort to develop a comprehensive energy and climate change plan,” Jackson said in her written statement.

The House Energy and Commerce Committee began consideration May 18 of a climate bill that includes a cap-and-trade program.

Superfund Budget, Tax Renewal
On other matters, Jackson said the president's $1.3 billion superfund request would “enhance enforcement and removal work” as well as support the program. She also cited the administration's call for reinstating the superfund tax that expired in 1995, which she said could generate $1 billion annually for cleanups, beginning in 2011.

Jackson further cited requests for $55 million to fund screening, assessing, and reducing chemical risks, as well as $25.6 million to help states and tribes “strengthen their ability to address environmental and public health threats.”

By Bill Pritchard.