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Concrete Products
Copyright 2002 by Primedia Business Magazines & Media Inc. All rights reserved.

Tuesday, October 1, 2002

Volume 105; Number 10; ISSN Number 00105368

Watered down?
By Steven Prokopy

As a construction catalyst, the 30-year-old Clean Water Act
(CWA) shows many signs of distress. Funding has remained flat for a
decade, and in FY2002 Congress appropriated $1.35 billion for
wastewater infrastructure. This is the same amount appropriated in
FY2001 and equal to only about 11 percent of the actual need.
Perhaps more troubling for the environmental community is that the
Bush administration is actually proposing to shrink the FY2003
appropriation to $1.12 billion while requirements for communities
to maintain their clean water needs remain extremely high.
Approximately $270 billion nationwide will be required through 2021
for new wastewater facilities, repairs to existing facilities, and
operation and maintenance, according to a Needs Survey estimate by
the U.S. Environmental Protection Agency (EPA).

The largest need * $142 billion * is for projects to
control sanitary sewer and combined sewer overflows. The
second-largest category of needs at about $25 billion is for new or
improved secondary treatment (the basic statutory requirement of
CWA). In addition to the costs documented by EPA, states estimate
an additional $34 billion in wastewater treatment needs for
projects that do not meet EPA documentation criteria but,
nevertheless, represent a potential demand on state resources.

To end the annual battle for dollars, members of a group called
the Water Infrastructure Network (WIN) have sought legislation
since early 2001 that capitalizes water supply and resource and
wastewater conveyance and treatment construction in the same manner
that the $215 billion Transportation Equity Act for the 21st
Century (TEA-21) and the $40 billion Aviation Investment Reform Act
for the 21st Century (AIR-21) cover roads (1998-2003) and runways
(2001-2003). On behalf of groups such as American Concrete Pipe
Association, American Concrete Pressure Pipe Association,
Associated General Contractors of America and Portland
Cement Association, WIN continues to promote the House version
of the water infrastructure program, known as H.R.3930, or
WATER-21. In two studies, the group calls for a total of $57
billion in federal funding from FY2003 to FY2007, but since there
are both House and Senate (S.1961) versions of the legislation, a
final word on a federal water infrastructure program is up in the
air until at least 2003.

But one year, one month, and one week before the 30th
anniversary of CWA, things were looking much better for WATER-21
legislation. Prior to September 11, there was actually a budget
surplus in the United States and organizations were pitching
Congress on how to spend it. But with issues like the 13
appropriations bills, homeland security and corporate ethics taking
up much time and money on Capitol Hill, water infrastructure was
put on the back burner.

This scenario can't last much longer, government and industry
officials agree. According to EPA, sanitary sewer overflows are a
chronic and growing problem. Many of the nation's urban sewage
collection systems are aging, with some sewers being 100 years old.
Pending federal regulations to manage sanitary sewer overflows
(SSO) would impose an additional total cost for all municipalities
of $93.5 million to $126.5 million each year.

Most recently, the administration is also proposing changes that
would give states greater leeway in deciding which waterways need
to be cleaned and how rapidly to do the job. The proposal asks each
state to assess the health of every body of water within its
borders, assign maximum allowable levels of pollution for each one
and then regulate individual polluters. There has even been talk of
"voluntary efforts" and raising the scientific
threshold for what constitutes polluted waters.

Funding issues

On Oct. 18, 1972, Congress enacted the first comprehensive
national clean water legislation * the Federal Water
Pollution Control Act Amendments * in response to growing
public concern for serious and widespread water pollution with $5
billion in funding per fiscal year. Just three years earlier,
Ohio's Cuyahoga River caught fire after years of indiscriminate
chemical and wastewater dumping and the release of millions of
gallons of untreated oil and sewage. In fact, the lake was declared
dead. Much closer to the White House and Capitol Hill, the Potomac
River was clogged with blue-green algae blooms that were a nuisance
and public health threat. CWA provided a framework of standards,
technical tools and financial assistance to address the many causes
of pollution and poor water quality, including municipal and
industrial wastewater discharges, polluted runoff from urban and
rural areas and habitat destruction.

During the 1970s and 1980s, the Construction Grants program was
a major source of funding, providing more than $60 billion for the
construction of publicly owned wastewater treatment facilities (55
percent federally funded; 45 percent state and local match). EPA's
effective management of this program led to the improvement of
water quality in thousands of municipalities nationwide. With the
1987 amendments to CWA, Congress set 1990 as the last year that
dollars would be appropriated for the Construction Grants program.
By phasing out the grant program, EPA shifted the method of
municipal financial assistance from grants to loans provided by the
Clean Water State Revolving Fund (CWSRF), which signaled a new
national approach to providing funding assistance to water
pollution abatement projects (with an 80 percent federal to 20
percent state and local match) and, to date, stands as the nation's
most successful environmental infrastructure financing program. The
CWSRF Program embarked on a mission to create permanent,
state-operated financial assistance. Today, all 50 states and
Puerto Rico have CWSRF programs that have been in operation for
more than 10 years, and the SRF has provided more than $27 billion
in loans to local governments, not the amounts generated by the
revolving loan process and leveraging when possible.

The federal government provides grants to states to capitalize
their loan funds. The states use the money to make low-interest
loans to local governments for the construction of sewage treatment
plants and other infrastructure projects. As the loans are repaid,
the principal and interest return to the fund, creating a perpetual
funding source for projects.

Federal contributions exceed $17 billion, with states putting in
$3.57 billion. Further, using funds assets as collateral, states
have issued bonds to leverage their SRF programs, adding $8.8
billion to funds available for critical projects.

But challenges still remain. Although the federal government has
spent more than $77 billion on wastewater treatment programs since
1972, the nation's 16,000 wastewater conveyance and treatment
systems still face enormous infrastructure funding needs in the
next 20 years to replace pipes and other constructed facilities
that have exceeded their design life. The systems face a shortfall
of at least $12 billion annually to replace aging facilities and
comply with existing and future federal water regulations.

The concrete factor

In the years immediately following the 1972 passage of CWA, the
EPA's Construction Index estimated that 42 cents of every dollar
spent on installed treatment construction went toward some type of
water treatment project, with much of that money going toward
precast reinforced concrete storm and sanitary pipe. According to
the EPA's educated guess, today that figure is closer to 20 cents
per dollar spent.

"There was so much large-diameter sewer pipe work being
done for the 10 years or so after the Act was passed," says
John Duffy, president, American Concrete Pipe Association.
"Think about it: 5 to 10 miles of 84-, 96-, 120-in.-diameter
pipe around an urban area is a lot of pipe."

When the EPA was more involved in the funding process, cities
and states were allowed to do some forward thinking in terms of
water infrastructure needs, Duffy explains. "When you were
designing sewer systems, you were allowed to predict growth over 10
to 20 years, so lines were being built in areas where few people
actually lived because the expectation was that more people would
live there eventually, he says. "About 20 years ago, EPA put
a stop to that and smaller-diameter lines were built in those
areas. In some cases, those lines are too small and need replacing
today."

And if the WATER-21 legislation passes, would that see a return
to the Golden Years of water infrastructure construction?
"Obviously, we would like to see those bills get through
Congress as soon as possible," Duffy says. "If they do
pass, most of the money will initially go toward replacing old
lines. There is such a huge need to update and replace sewer works
in urban area, and cities won't be able to do it without federal
help."

Concrete Products' Government Affairs columnist Cy Malloy
contributed to this article.

NIXON FOUND CWA TOO RICH

Shortly after Congress passed the Clean Water Act on Oct. 18,
1972, President Richard Nixon vetoed the bill * which he
generally supported * because its "laudable intent is
outweighed by its unconscionable $24 billion price tag."
Nixon insisted that all environmental proposals meet the
cost-benefit standards of the Office of Management and Budget.

After the National Utilities Contractors Association and the
Associated General Contractors of America put pressure on Congress,
the veto was overridden by a huge margin on Oct. 22. But Nixon had
the last word when he used his presidential powers to impound half
of the approved funding.

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