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Clean Water Report
Copyright 2002 Gale Group Inc. All rights reserved. COPYRIGHT 2002 Business
Publishers, Inc.

Monday, February 25, 2002

ISSN 0009-8620; Volume 40; Issue 4

Associations Withholding Comments On Senators' Water Infrastructure Bill.

The senators who introduced a bill Feb. 15 that authorizes $35 billion
over the next five years for water infrastructure projects believe the
measure will provide states with more flexibility in administering their
water programs, help reduce municipalities' costs and help increase
water supply.

The bill -- the Water Investment Act of 2002 (S. 1961) -- introduced
by Sens. Jim Jeffords (I-Vt.), Bob Smith (R-N.H.), Bob Graham (D-Fla.)
and Michael Crapo (R-Idaho) would modernize the operations of state
water pollution control revolving funds and their allocation to ensure
money reflects water quality needs.

Funding in Bill Falls Short of Request

Water associations, which have been part of a coalition calling for
$57 billion over five years, did not have much immediate comment on the
legislation, opting instead to save remarks for their testimony when the
Environment and Public Works Committee holds a hearing on the bill Feb. 26.

"We think it's great Congress is looking at this issue real
seriously," Adam Krantz, a spokesperson for the Association of
Metropolitan Sewerage Agencies (AMSA), told CWR. But officials within
the organization wanted time to review the bill before making specific
comments at the hearing.

The coalition, the Water Infrastructure Network, consisting of local
officials, wastewater and drinking water service providers,
environmental groups and engineers, believe increased funding is needed
to close a $23 billion annual gap between infrastructure needs and
current spending.

The bill is working towards that goal. "The Water Investment Act of
2002 will provide communities throughout the nation with essential
resources to defray the costs of federal mandates and meet their sewage
and drinking water needs," Sen. Smith said.

Title I, which deals with changes to the Clean Water Act, would
authorize $3.2 billion in 2003 and 2004, $3.6 billion in 2005, $4
billion in 2006 and $6 billion in 2007.

Title II, which makes changes to the Safe Drinking Water Act, would
authorize $1.5 billion for 2003, $2 billion in 2004 and 2005, $3.5
billion in 2006 and $6 billion in 2007.

The bill would make the following changes to Clean Water State
Revolving Fund (CWSRF) and the Safe Drinking Water State Revolving Fund
(SDWSRF) provisions:

Requirements for receipt of funds -- The bill clarifies that costs for
planning, design, preconstruction and water reuse are available for
funding as stand-alone items. Non-traditional approaches to
water-quality problems are also eligible for funding under the CWSRF.

Private utilities -- Privately owned systems, such as those for very
small systems like those in trailer parks, would be authorized for
funding under the CWSRF.

Flexibility -- To provide better flexibility for disadvantaged
communities, the bill allows the extension of CWSRF loan terms from 20
years to a maximum of 30 years, as long as the loan does not exceed the
life of the project. Loan terms can be made more favorable or principal
payments can be forgiven for disadvantaged communities. The same could
apply to richer areas if they demonstrate the financial benefit they
would receive would be passed through the rate structure to
disadvantaged individuals. The latter provision already is authorized
under the Safe Drinking Water Act.

Program administration -- The percentage of funds used by states to
administer the program would be increased from 4 percent to 5 percent.

Capacity development -- Like the Safe Drinking Water State Revolving
Fund, the bill provides that systems demonstrate basic ability to manage

before they receive funds. States would need to develop a strategy
within three years of the date of enactment to assist treatment works in
developing this capacity. If a state fails to develop the strategy, it
receives a one-year grace period. If not strategy is developed then, EPA
will withhold 20 percent of its annual capitalization grant. Within
three years, treatment works would need to demonstrate adequate
technical, managerial, financial capacity, including an asset management
plan, in order to receive SRF assistance.

As a condition of the receipt of funds, projects would need to
consider restructuring options, such as consolidation of management or
ownership with another facility, forming public-private partnerships or
using non-structural alternatives or technologies.

Drinking water systems would be required, as a condition of receipt of
funds, to have in place or have a plan to achieve in a reasonable amount
of time a rate structure that reflects the actual cost of service and an
asset management plan.

Small systems -- The bill authorizes for CWSRF technical assistance to
systems serving fewer than 3,300 people in a rural area. For SDWSRF, the
measure also reauthorizes two programs, the small public water systems
technology assistance center and the environmental finance center to
provide assistance to small systems.

Competition -- The bill would require communities accepting either SRF
to take steps to ensure that multiple bids will be sought so that
overall project costs could be reduced.

Transfer of funds -- The bill reauthorizes states ability to transfer
funds from one SRF to the other and back again.

Demonstration projects -- The measure authorizes a grant program from
EPA for 10 pilot projects per year to promote innovations and
alternatives for technologies in water quality management or water
supply and to reduce costs.

Rate study -- The bill would require the National Academy of Sciences
to conduct a study to analyze how much rates are governed by local
politics, rather than best management practices.

Water resources planning -- The measure would require the Department of Interior secretary to assess the state of water resources in the country, develop and execute federal water research priorities, and share and distribute information.



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