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Drinking Water Needs and Infrastructure
Subcommittee on Environment and Hazardous Materials
Mr. Jay Rutherford
SUMMARY
OF MAJOR POINTS RECOMMENDATIONS
Congress
should extend the authorization of the DWSRF and the PWSS state grant program
to 2010; increase funding levels to at least $3 billion and $250 million
annually for the DWSRF and PWSS programs respectively; extend the
transferability provisions between the DWSRF and the CWSRF; eliminate or
significantly reduce the one-to-one match that states must obtain to access
DWSRF funds to help run their drinking water programs; and add water system
security upgrades to the list of eligible projects. RATIONALE
Introduction
The Association of State
Drinking Water Administrators (ASDWA) is pleased to provide testimony before
the House Committee on Energy and Commerce Subcommittee on Environment and
Hazardous Materials regarding drinking water needs and infrastructure.
ASDWA represents the drinking water programs in each of the fifty
states, territories, and the District of Columbia in their efforts to ensure
the provision of safe, potable drinking water to over 250 million consumers
nationwide. ASDWA's primary
mission is the protection of public health through the effective management of
state drinking water programs that implement the Safe Drinking Water Act (SDWA).
Water
Infrastructure
Water Infrastructure Needs
Providing a supply of safe, potable drinking water is critical to protecting public health and ensuring current as well as long-term economic growth of this Nation. In February 2001 the United States Environmental Protection Agency (EPA) released a report entitled 1999 Drinking Water Infrastructure Needs Survey that indicated that drinking water systems infrastructure needs totaled $150.9 billion over the next 20 years and that $102.5 billion was needed immediately to ensure the provision of safe drinking water. The bulk of this need, $83.2 billion, is for transmission and distribution projects followed by treatment ($38.0 billion), storage ($18.4 billion), source ($9.6 billion), and other needs ($1.9 billion). These needs are documented for the 54,000 community water systems and 21,400 not-for-profit noncommunity water systems nationwide. These estimates, however, do not include funds needed for compliance with the new arsenic rule or security upgrades for water system protection. Why is there an Infrastructure Need? Water utilities must continue to upgrade and improve their infrastructure to meet new SDWA regulatory mandates and to replace aging and failing distribution system pipes and appurtenances. Much has been learned over the last decade about specific health problems associated with distribution system problems such as leaking pipes, cross connections, and backflow. Many of these concerns are likely to be addressed specifically in the future as EPA proposes developing a distribution system rule. Since September 11, this need has expanded to include security-related upgrades for treatment plants as well as distribution systems.
The 1996 Amendments to the SDWA require that EPA develop regulations to
address microbial contamination, disinfection by-products, radon,
radionuclides, arsenic, ground water protection, and filter backwash.
EPA must also continue to evaluate potential contaminants for
regulation well into the future. As a result, infrastructure funding needs will continue to
escalate as more contaminants are promulgated that address new contaminants in
drinking water, and as current regulatory levels are driven lower to meet
improved analytical methods to bring standards closer to the maximum
contaminant level goal. In
addition, new treatment technologies such as membranes, ozone, and UV
irradiation will become more commonplace in water treatment.
Some of these technologies are capital intensive to install and
operate, while others will require significant retrofitting of current
treatment plants and upgrades to distribution systems.
Many drinking water systems will also be required to comply with the
new arsenic standard over the next several years.
In many small systems, the installation of treatment for arsenic will
likely result in the need for additional system upgrades.
In addition to meeting infrastructure needs associated with compliance
with the SDWA, water systems also face the challenge of replacing miles of
distribution pipes as materials age and begin to fail.
The demographics of distribution pipe installation indicate that over
the course of the next 20 years, many of the miles of pipes that have been put
in the ground over the last 100 years will reach the end of their useful life
and need replacement. Additional
security upgrades will also be needed at water systems. Current Funding Availability
Funding of water system infrastructure needs involves a partnership
at the Federal, state, and local level. At
the Federal level, funding is available through the Drinking Water State
Revolving Loan Fund (DWSRF) that was established under the 1996 SDWA
Amendments. In the SDWA, Congress
authorized $9.6 billion between FY-94 and FY-03 for states to provide loans
and "grant equivalents" to water systems in need.
An important note is that although $8.6 billion was authorized through
FY-02, only $5.27 billion has been appropriated leaving a funding gap of $3.33
billion that the states and water systems were expecting to be available to
meet infrastructure needs and compliance requirements of the SDWA. States also must match the
DWSRF with 20 percent state funding as a way to further capitalize this
program. Through June 30, 2001
states had contributed over $773 million additional funds for the program. To the extent that the full Federal amount has
not been appropriated; however, revenue is also lost due to the loss of state
matching funds. A number of
states also leverage the funds to create additional dollars for infrastructure
improvements. Through June 30,
2001, states had leveraged almost $1.5 billion in bonds to provide additional
project funding. A number of
states have also established their own grant and loan programs that are used
to supplement DWSRF funding. The DWSRF has proven to be very successful. Through July 2001, states have provided over $3.7 billion in SRF assistance for 1,776 drinking water projects. Twenty percent of the funds have gone to systems serving over 100,000 people, 40 percent have gone to systems serving between 10,000 and 100,000 people, and 40 percent have gone to systems serving fewer than 10,000 people. Additional Federal funding
also comes through the Rural Utility Service Water and Waste Loan and Grant
Program under the U.S. Department of Agriculture's Rural Development office.
These funds assist eligible applicants in rural areas and cities and
towns serving up to 10,000 people. The
Federal Housing and Urban Development (HUD)
Agency also provides block grants to states under its Community Development
Block Grant (CDBG) program to provide assistance to small local governments
that generally serve less than 50,000 people and counties with a population of
less than 200,000 people. Water
and wastewater projects are eligible activities under the CDBG program. Many states use these funds along with USDA and DWSRF funding
to package the appropriate mix of grants and/or loans to meet a community's
specific financing needs. At the local level, a
primary source of funding for infrastructure improvements comes through rates
charged by utilities to consumers for water use.
In many cases, however, rates have been kept artificially low and
long-term maintenance costs deferred. This
has the potential to contribute to "rate shock" should customers have to
bear the full cost of projected infrastructure replacement needs.
Municipalities can also borrow money from the private sector such as
banks or go to the bond market although many smaller water systems and
non-municipal systems find it more difficult to access these types of funding. Is There a Funding Gap?
While it is possible, through instruments such as EPA's drinking
water needs survey, to project drinking water infrastructure needs over the
next 20 years, it is much more problematic to define how large an
infrastructure funding gap exits. To
calculate this accurately, one needs to have a solid understanding of the
current and long term funding needs and then have a fairly accurate assessment
of the total sources of revenue at the Federal, state, and local level that
can be brought together to meet these infrastructure funding needs.
The delta (or difference) between these two numbers represents the
funding gap or need but only at the gross national level. The "gap" can vary significantly on a water
system-by-water system basis depending on system size, contaminants of
concern, the system's current rate structure, access to available capital,
and the age of the system, among many factors.
Conclusion Drinking water system infrastructure needs will continue to increase due to new SDWA regulatory requirements as well as the need to replace aging and failing pipes in distribution systems, and implement new security upgrades. A continued partnership among Federal, state, and local funding sources will be essential to ensure the long-term provision of safe, potable drinking water to consumers nationwide. Numerous needs surveys, including EPA's recent analysis, have concluded that nationally, water systems face a daunting task in continuing to ensure safe drinking water. The highly successful DWSRF should be continued as a viable mechanism for meeting current and future water system funding needs.
Recommendations
State
Infrastructure State Implementation Responsibilities
State drinking water programs also need adequate funding to ensure
the effectiveness of their own "infrastructure" to carry out the myriad
responsibilities of the SDWA. Since
the SDWA Amendments of 1996, state program responsibilities have dramatically
expanded to move beyond compliance at the tap to delineating and assessing the
sources of all waters used for public water supplies, ensuring qualified
operators at all water systems, defining and implementing water system capacity
programs, creating a new DWSRF funding mechanism, and providing significantly
more information and outreach to the public.
These efforts are in addition to implementing Federal as well as
state-specific drinking water regulations addressing specific contaminants.
Since September 11th, significant new security
responsibilities have fallen to states for training, communication, and in some
instances conducting vulnerability assessments for water systems.
In addition, almost half the states are currently experiencing drought
conditions that are significantly taxing state staff and resources.
Forty-nine of the 50 states currently have "primacy" or enforcement
authority for the Federal SDWA. To
achieve and maintain primacy, states must adopt rules that are no less stringent
than the Federal requirements and have the ability to enforce these regulations.
Although some states have requirements that are more stringent; for the
most part, state drinking water programs are implementing and enforcing Federal
requirements. Collectively,
state programs provide oversight, implementation assistance, and enforcement for
approximately 169,000 public water systems nationwide.
These systems range from large metropolitan municipalities to mobile home
parks and schools. The vast
majority (over 95 percent) of these systems are small, serving less than 3,300
people. Many of these systems require extensive technical assistance,
training, and oversight.
Today, the regulatory landscape is significantly more complex than ever
before. Since FY-97, state Public
Water Supply Supervision (PWSS) dollars have had to stretch to cover
development, implementation, and enforcement of numerous new regulations and
programs such as those to address arsenic, radionuclides, the microbial/disinfection
byproducts rule cluster, unregulated contaminant monitoring, consumer confidence
reports, capacity development, expanded operator certification requirements,
source water assessment and delineation, and the DWSRF.
States anticipate new regulations to be put in place this year to address
radon and groundwater. States are also expected to implement revisions to the
surface water treatment and lead and copper rules, public notification, and
variance and exemption requirements. These
requirements are in addition to the state program responsibilities for core
activities such as compliance monitoring, data management, training, and
enforcement for 88 currently regulated contaminants. States also are responsible for ensuring that public health
is protected through preventive measures such as disease surveillance, risk
communication, sanitary surveys, laboratory certification, permitting, and
emergency response. States expect
that their responsibilities will continue to expand as EPA promulgates
additional regulations and reviews current regulations for modification.
This overwhelming new workload has added to the historical strain on
state program resources and staff.
State Funding The
SDWA authorizes EPA to fund up to 75 percent of the costs to states to implement
the drinking water program. Historically,
however, states have contributed 65 percent of the funding while EPA has only
contributed 35 percent. While this
gap has closed in recent years due to the advent of set-asides from the DWSRF,
many states still substantially over match the Federal contribution. Given current state fiscal constraints, it is questionable
whether states will be able to keep pace with these funding levels in the
future.
The current Federal PWSS grant provides $87.3 million for states to
implement their programs (the remainder of the $93 million currently
appropriated by Congress is directed to Indian Tribes).
This level has not increased for states over the last five years (since
FY-97), even though many of the new initiatives under the 1996 Amendments became
effective almost immediately. The
level funding of $87.3 million actually means that states have lost funding due
to inflation and rising personnel costs. A
recent state survey, conducted by ASDWA and EPA, indicates that the current
state funding gap is $220 million climbing to $300 million by FY-05.
Congress
recognized the need to fund state program activities and in the 1996 Amendments
allowed states to take up to a 10 percent set-aside from the drinking water SRF
for program implementation. EPA,
however, has never requested the full $1 billion per year authorization and
states have only been able to access 4 percent of the set-aside funds.
To the extent that SRF funds are also used to provide resources for new
programs such as operator certification training reimbursement and unregulated
contaminant monitoring the corpus of the
funds available for state use is further reduced.
Many states have also encountered significant barriers to fully accessing
these funds including:
To supplement insufficient Federal funding, many states have turned to
state general revenues and fees to maintain an adequate core program.
These additional funds; however, have not be adequate to fully meet state
program implementation costs.
ASDWA and EPA conducted a national resource gap analysis in 2001 to
estimate state resources needed to implement the drinking water program between
1999 and 2010. The analysis showed that in FY-02, the funding gap for states
to implement the SDWA equaled $220 million and staffing needs fell short by
2,478 full time equivalents (FTEs). By
FY-05, the gap will widen to $300 million and 3,533 FTEs. Even
the U.S. General Accounting Office (GAO) has raised state funding concerns.
In August 2000, GAO released a report to Congress entitled, Drinking
Water: Spending Constraints Could
Affect States' Ability to Implement Increasing Program Requirements.
An extrapolation of their findings indicate that even if all states had
been able to access the maximum 31 percent of DWSRF set-asides for program
implementation and related activities, there would still be a funding gap
beginning in FY-02. Since few
states are able to access the full set-aside amounts, the funding gap is much
greater than GAO's "optimum" estimate, and in fact, a gap already exists.
The Report further notes that even those states that felt they were
managing to keep up with the pace of implementing and enforcing the new
statutory program requirements, at least for the short term, were only able to
do so by ".scaling back their drinking water programs, doing the minimum
necessary to meet requirements, and setting formal or informal priorities among
their responsibilities." This
is a blueprint for a public health crisis. Conclusion
Adequate infrastructure
funding needs for state SDWA program implementation is just as critical as
adequate funding for water system infrastructure improvements.
States are responsible for ensuring water system security and compliance
and providing "infrastructure" for source water assessments, certified and
trained water system operators, water system financial, technical, and
managerial competency, public outreach and communication, and working directly
with water systems to obtain and maintain compliance.
As Congress moves forward to evaluate and find solutions for the water
infrastructure funding gap attention must also be directed to the state program
funding gap.
The goal of both of these efforts is protecting public health.
It is about knowing that whenever you brush your teeth, bathe your child,
or prepare your food, the water has been monitored and tested for contaminants;
that the responsible operator has been trained and certified; and that the
drinking water system has demonstrated that it is technically, financially, and
managerially capable of providing safe drinking water.
In order to meet Congressional expectations
and Federal regulations to successfully implement the SDWA, states and water
systems both need increased funding to ensure a safe and dependable supply of
drinking water today and for future generations.
Recommendations
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