THE HONORABLE BRUCE TOBEY
MAYOR OF GLOUCESTER, MASSACHUSETTS
on behalf of
THE NATIONAL LEAGUE OF CITIES
ENVIRONMENT AND PUBLIC WORKS COMMITTEE
SUBCOMMITTEE ON FISHERIES, WILDLIFE AND WATER
UNITED STATES SENATE
SUCCESSES AND NEEDED IMPROVEMENTS IN DRINKING WATER
AND WASTEWATER INFRASTRUCTURE FINANCING PROGRAMS
May 23, 2001
Note: The Hearing Scheduled for May 23, 2001 was not held. This
testimony is provided for information only.
Mr. Chairman, members of the committee: I am Bruce Tobey, Mayor of Gloucester,
Massachusetts and a member of the National League of Cities Board of Directors. I am here
today to testify on behalf of the 18,000 cities NLC represents on the Environmental
Protection Agency's support for water and wastewater infrastructure.
I believe the subject of today's hearing involves more than just the Environmental
Protection Agency. I think we would more accurately reflect the true nature of our
discussion if we focus on the role of the federal government, because, in fairness, the
agency can only do what Congress and the president authorize and allow within the confines
of the funding available.
In that context, I would like to elaborate on:
- Clean Water Act funding mechanisms;
- Safe Drinking Water Act funding authorities;
- research and technical assistance;
- nonpoint source requirements and funding; and,
- assistance to address the municipal drinking water and wastewater infrastructure funding
Clean Water Act
Over the past several decades, my colleagues who have come before this committee have
indicated that, in the opinion of local elected officials, the Clean Water Act was the
nation's most successful environmental statute. The 1972 law and, to a lesser extent the
1981 amendments, clearly reflected the belief - across partisan lines and among all three
levels of government - that financing the restoration and protection of the nation's water
bodies was in the national interest and a shared responsibility. The federal government
and the States have invested more than $96 billion over the past 25-plus years. Local
governments have provided over $117 billion from local tax and ratepayers. It is without
question that these investments by all three levels of government have yielded benefits to
our country and our cities that have far outweighed the costs.
For the past decade, this partnership has been in decline. Federal financial
participation in grants for the construction of wastewater treatment facilities dropped
from 75 percent to 55 percent of the cost of construction and subsequently all but
vanished. The exception has been the "earmarks," or grants, for specific cities,
provided through the annual appropriations process. In addition, Congress approved urban
wet weather legislation in late 2000 that once again recognizes that neither
municipalities nor their ratepayers can bear the entire financial burden of compliance
with complex and extraordinarily costly sewer overflow mandates.
To sum up where we are now:
- There is a loan program to which the federal government contributes slightly more than
$1 billion annually and to which the States add an additional $200 million nationwide.
This program allows municipalities to borrow - and repay - money for wastewater purposes
specified in the Clean Water Act.
- There are - and have been - "earmarks" in appropriations measures, usually
totaling over $500 million a year. These "earmarks" are the equivalent of
grants, and are used for specified wastewater treatment purposes and do not have to be
- Last December, Congress passed, and the president signed, a measure which authorizes
$850 million in grants each year - assuming full funding of the Clean Water State
Revolving Fund - for the next two years to assist communities meet their combined and
sanitary sewer overflow infrastructure needs.
NLC has supported the Clean Water State Revolving Fund (CWSRF), albeit reluctantly,
since its inception. When the loan program was first proposed in the mid-1980s as the
means to phase out federal financial participation in helping to meet the wastewater
treatment needs of the nation, it was clear that support for a revolving loan program that
would be temporarily financed with federal contributions was not optional.
At that time, the federal government was facing an unprecedented deficit that was
affecting the nation's ability to function effectively. Being willing partners in support
of the federal government's efforts to get its fiscal house in order, NLC supported moving
to a revolving loan program as an alternative mechanism for providing financial assistance
to municipalities not yet in compliance with the law's secondary treatment requirements.
Deficits are no longer an issue for the federal government, and in fact, Congress and the
Administration are about to enact a $1.3 trillion tax cut. We believe these revised fiscal
circumstances justify another look at the types of assistance made available by the
federal government for the nation's drinking water and wastewater infrastructure - which
plays a vital role in the nation's economic well being.
Since 1987 NLC's National Municipal Policy* has consistently stated
that our organization "supports state revolving loan programs (SRFs) as a supplement
to, not a substitute for, [emphasis added] a grants program."
There have been times when local officials have been dismayed at some of the terms and
conditions involved in implementing the CWSRF. For example, the initial guidance for the
program developed by EPA, authorized the States to use the interest paid by local
governments on loans from the CWSRF to meet the State matching requirement. In other
words, not only would local governments be required to pay 100 percent of the costs of
constructing their wastewater treatment facilities, they have to pay the state's matching
share as well. We were totally nonplussed when Congress approved, as part of an
appropriations measure, authority for the States to charge "loan origination
fees" to local governments borrowing money from this federal grant to the
These issues only exacerbate a far larger problem - and that is, very simply, that
loans are never going to be adequate to accomplish our pollution abatement or control
objectives under either the Clean Water Act or the Safe Drinking Water Act. Nor are they
adequate to meet the new infrastructure replacement demands now facing these municipal
drinking water and wastewater treatment facilities. There are communities facing costs
approaching $1 billion - Houston's sanitary sewer overflow control program; San
Francisco's combined sewer overflow remediation efforts. Other communities confront
equally daunting costs given their size and resources: Richmond, Virginia's $440 million
CSO program poses a significant burden on a community of 200,000 with a poverty rate in
excess of 25 percent; Atlanta, Georgia's projected expenditures are approaching $2 billion
over the next 20 years; Key Biscayne, Florida's has an $8 million loan half of which has
to be repaid by 706 homeowners with the balance borne by its 10,000 residents. In city
after city the anticipated costs over the next generation are staggering and
very clearly beyond the ability of local ratepayers.
CSO Program Costs
|San Francisco, CA
Safe Drinking Water Act
Federal financial assistance to municipalities to facilitate compliance with drinking
water mandates is more recent - authorized in the 1996 Amendments to the Safe Drinking
Water Act (SDWA). While this assistance too, is available primarily in the form of loans,
the 1996 amendments - developed based on the experiences with the CWSRF - authorized the
use of up to 30 percent of the funds (essentially the State contribution to the loan fund
plus 10%) in the drinking water state revolving fund (DWSRF) for grants to economically
disadvantaged communities. The law also requires that 15 percent of the funds be allocated
to systems serving fewer than 10,000 persons.
Recent experience indicates that the preponderance of the DWSRF has benefited small
communities almost exclusively. It is the smaller systems that have the preponderance of
compliance problems with few resources to address them and as a consequence have received
priority consideration for SRF funding. In some cases, these same communities are eligible
for assistance from the Department of Agriculture's assistance programs to rural water
systems. Larger systems - while better able to comply with federal requirements - have
needs too. Under the current arrangements, these systems will never qualify for assistance
regardless of their need, if they experience no violations of the law. While it is
entirely appropriate to target limited funds to the worst problems, it highlights the need
for additional funding.
The DWSRF also facilitates implementation of associated activities to assure protection
of public health - research, source water assessments, operator training and certification
- were, again, the result of our experience with the CWSRF. The '96 amendments earmark
funds from the DWSRF for these purposes. We regret that the health effects research set
aside has never been realized and remains subject to annual appropriations. NLC supported
- and continues to support - these set asides because we believe that it is essential to
fund health effects research, to properly finance state programs, to provide grants to
small communities that cannot neither afford compliance nor consolidate with other
systems, and to initiate source water protection.
To assess where we are now with respect to funding for drinking water:
- Until 1997 - a scant four years ago - our drinking water infrastructure was entirely
funded by local ratepayers. We now have a loan program to which the federal government
contributes slightly more than $800 million annually and to which the States add an
additional $160 million nationally. This program permits municipalities to borrow - and
repay - money for drinking water purposes specified in the Safe Drinking Water Act. In
other words, with some exceptions, our drinking water needs are still entirely funded by
- There are set-asides for State programs in the SRF to assure that concerns subsidiary
to, but nevertheless essential to assuring public health protection, are adequately
- For the most part, the larger drinking water systems in this country have had little
access to DWSRF funds since the funds are targeted to compliance with the drinking water
law's requirements, not to infrastructure needs.
As with the CWSRF, NLC supports the drinking water loan program as well - perhaps a
little less reluctantly than we did the original loan program. This support is largely
based on the more flexible funding arrangements in the law - the availability of grants
and the set asides for important State initiatives that are of benefit to local systems.
Research and Technical Assistance
Following Congressional approval of the 1972 Clean Water Act amendments, EPA made
significant investments in research and development to assure that wastewater treatment
plants built with a major federal financial contribution were on the cutting edge of
technology and as environmentally protective as feasible. The agency also invested heavily
in technical assistance to help municipalities with varying pollution problems meet the
law's requirements as effectively as possible. Over time, the agency's commitment to these
critical tools has substantially diminished - most especially in the wastewater area.
Drinking water research has always been a priority for the nation's larger municipal
drinking water systems and much of it is financed through a combination of their monetary
contributions and those of EPA.
Municipalities now face implementation of a wide variety of new, complex, and costly
requirements in both drinking water and wastewater. Disinfection by-products and new
microbial contaminant protections in drinking water systems are, or will soon go into
effect. Phase Two municipal separate storm sewer requirements will take effect next March
for all cities in urbanized areas; and we anticipate new, more stringent requirements with
respect to Total Maximum Daily Loads (TMDLs).
It is essential that EPA become more engaged in research and demonstration programs -
and in making the results of these initiatives widely available - to facilitate
cost-effective compliance with these requirements. If municipalities are expected to
comply with TMDLs for their stormwater discharges, someone has to figure out how that can
be accomplished and at what cost. If we are expected to invest in new technologies to
address contaminants of concern in our drinking water supplies, we need some assurances
that these technologies will work and that they will not cause new problems at some future
And, most certainly, cities would like to see EPA provide, or at least facilitate,
technical assistance to assure that cities are investing their resources wisely and
Nonpoint Source Requirements and Funding
As municipalities face new and costly requirements in both drinking water and
wastewater, the need to look to the remaining large contributors of pollution - nonpoint
sources - becomes increasingly clear. NLC supports an enhanced non-point source program
and strongly supports such efforts being focused on protection of sources of drinking
We are concerned that the anticipated more vigorous enforcement of TMDLs will result in
significant increases in the costs imposed on municipalities to reduce pollutants - either
directly at substantial cost, because we are dealing with the last and most expensive 3 to
5 percent of pollutant contributions from wastewater treatment plants; or indirectly, by
requiring local tax and ratepayers to finance the pollutant control initiatives of
nonpoint sources outside of our jurisdiction. While EPA has attempted to include nonpoint
sources in their efforts to address the nation's waterbodies that do not meet water
quality standards, their authority to do so is either minimal or nonexistent. We urge
Congress to look carefully at the TMDL program to assure that the entire burden for
restoring our waterways does not fall into the lap of municipal tax and ratepayers simply
because cities are regulated and many nonpoint source contributors to pollution are not.
Infrastructure Financing Funding Gap
The debate on critical infrastructure funding issues in which we are engaged is not
about small communities nor is it exclusively about "economically disadvantaged"
communities. "Size" and "need" are not synonymous. The funding gap is
an issue affecting all our older urbanized areas - large cities, suburban communities and
exurban jurisdictions. While cities around the country are raising rates, tightening and
strengthening their management practices, and operating their systems "smarter,"
to meet local needs, we cannot succeed without assistance.
It is clear to us at the local level that a deteriorating infrastructure - an
infrastructure that in many cities exceeds a century of use and in most others is past the
half-century mark - and the accompanying estimated need for $23 billion annually to assure
the continued functioning of systems vital to protect public health and the environment
cannot be financed solely by local tax and ratepayers.
No city - regardless of size, wealth or commitment to the environment - can find or
generate the resources to finance needs of this magnitude. Any expectation of major
investments in water infrastructure needs will require a commensurate - and new - national
financial commitment to assure that local governments can maintain and operate their
facilities to maintain protection of public health and to facilitate compliance with
We commend to you the Water Infrastructure NOW report, and look forward to
working with you and your staff on developing a new and revitalized federal financial
commitment to our nation's drinking water and wastewater infrastructure.
* NATIOINAL MUNICIPAL POLICY
December 9, 2001
ENERGY, ENVIRONMENT, & NATURAL RESOURCES
Water Quality And Supply
|C. Federal Support for Water
Federal participation in financing the requirements it
mandates is critical to the ultimate achievement of national water quality goals and the
availability of safe drinking water. Recognizing the gap between current expenditures and
anticipated needs to enhance and maintain critical water infrastructure, this
participation must be both substantial and a reliable long-term source of capital.
1. Grants and Loans
NLC calls on Congress to restore grant funding to assist municipalities in progressing
toward meeting the nations water goals and objectives. Cities should be eligible for
any combination of federal loans and grants to meet their water pollution control and
drinking water supply needs. The use of loans and/or grants should be tailored to specific
needs and capacity of each municipal applicant. Allocation of funds to municipalities
should take into consideration a communitys ability to pay and past local efforts to
address the problem.
2. State Revolving Loan Fund
NLC supports state revolving loan programs (SRF) as a supplement to, not a substitute
for, a grants program. The federal government should continue to authorize an annual
appropriation of funds, which are distributed to the states according to a specified
formula. The states should continue their revolving loan programs for the distribution of
loans, loan subsidies, or bond subsidies to local governments for meeting federal mandates
and municipal water infrastructure needs. Such a supplementary program helps leverage
federal funds, reduce annual local debt payments, and provide localities with added
flexibility in structuring their water infrastructure financing plans.
Congress should prohibit states from charging loan origination fees or from using the
interest on SRF loans to local governments to meet state matching requirements.
The federal government must support comprehensive research on all wastewater and
drinking water-related issues most especially those concerning protection of public health
and the development, attainment and/or maintenance of federal requirements. Such research
is essential to assure cost-effective use of state and local resources and to support the
development of innovative and alternative technologies
|E. Water Pollution Control
It is estimated that the nation's cities face over $320 billion in unfunded Clean Water
Act mandates to comply with secondary treatment requirements and separation of combined
sewer overflows. These cost estimates do not include implementation of sanitary sewer
overflow remediation, compliance with Total Maximum Daily Loads (TMDL) requirements,
separate storm sewer management or wetlands protection or mitigation programs.
Federal funding for Clean Water Act purposes must be made available to meet all Clean
Water Act mandates imposed on municipalities including construction of wastewater
treatment plants, interceptors and major appurtenances, infiltration/inflow correction,
major sewer overflow rehabilitation, repair, upgrading, collector sewers, combined and
sanitary sewer overflow remediation, separate storm sewer system management programs and
wetlands mitigation projects.
Under no circumstances should the federal government look to traditional local sources
of revenues (e.g., a federal tax on water and sewer user charges, a federal tax on
industrial dischargers to POTWs) to fund federal participation in financing Clean Water
Congress should remove current restrictions on the availability of federal tax
incentives for private financing of wastewater treatment facility needs, since such
financing arrangements may reduce capital costs and expedite project construction,
upgrading, repair, rehabilitation, etc.
2. Local Financing
Local governments should have the choice between the ad valorem property tax, metered
user charges, and any other mechanism for recouping construction and operating costs.
Federally mandated sewer user charges should be deductible from federal income taxes.