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Item O5BOARD OF COUNTY COMMISSIONERS AGENDA ITEM SUMMARY Meeting Date: _September 16, 2009 Bulk Item: Yes X No Division: BOCC Department: DIST 3 Staff Contact Person/Phone #: C. Schreck x 3430 AGENDA ITEM WORDING: Approval of a resolution of the board of county commissioners for Monroe County, Florida urging for the immediate passage of the Water Protection and Reinvestment Act. ITEM BACKGROUND: U.S. Representative Earl Blumenauer (Oregon) has sponsored a bill establishing the "Water Protection and Reinvestment Trust Fund" within the U.S. Treasury to support investments in clean water and water infrastructure. The fund will be firewalled and structured like the Highway Trust fund. It is a bipartisan effort and is supported by the National Assoc. of Clean Water Agencies, American Rivers, Clean Water Action, American Society of Civil Engineers, Rural Community Assistance Partnership and the American Public Works Association. A Water Protection and Reinvestment Trust Fund, funded by those who contribute to water quality problems and those who use our water systems, will provide a deficit -neutral, consistent and protected source of revenue to help states replace, repair, and rehabilitate critical drinking water and wastewater treatment facilities. As part of the unique marine environment where drinking water supplies are becoming more threatened, such a Trust Fund could prove to benefit Monroe County. PREVIOUS RELEVANT BOCC ACTION: CONTRACT/AGREEMENT CHANGES: STAFF RECOMMENDATIONS: TOTAL COST: 0 INDIRECT COST: 0 BUDGETED: Yes No COST TO COUNTY: 0 SOURCE OF FUNDS: REVENUE PRODUCING: Yes No APPROVED BY: County Atty x DOCUMENTATION: Included AMOUNT PER MONTH Year OMB/Purchasing Not Required Risk Management DISPOSITION: AGENDA ITEM # Revised 1/09 RESOLUTION NO. -2009 A RESOLUTION OF THE BOARD OF COUNTY COMMISSIONERS FOR MONROE COUNTY, FLORIDA, URGING IMMEDIATE PASSAGE OF WATER PROTECTION AND REINVESTMENT ACT. WHEREAS, the spirit of the Clean Water Act is threatened by lack of funding for water infrastructure; and WHEREAS, Florida statutes designed to protect water quality are also threatened by lack of funding for water infrastructure; and WHEREAS, compliance with the federal and state statutes mandating improved water quality place a high cost burden on residents; and WHEREAS, H.R. 3202 provides for grants and other financing opportunities for wastewater infrastructure; and WHEREAS, the lack of wastewater infrastructure threatens the quality of the waters that support the complex and fragile ecosystem of the Florida Keys National Marine Sanctuary, which is critical to the region's commercial fisheries and marine -based tourism industry; and WHEREAS, the wastewater charges for residents of the Keys exceed the financial hardship standards established by the US Environmental Protection Agency; and WHEREAS, U.S. Representative Earl Blumenauer has sponsored a bill establishing a water protection and reinvestment fund to support investments in clean water and water infrastructure; and WHEREAS, the bill provides for grants and other financing opportunities for wastewater infrastructure; and WHEREAS, providing centralized sewerage and treatment systems throughout the Florida Keys and onsite sewage treatment and disposal systems in areas of the Keys too remote for centralization to be feasible is of grave importance to all of Monroe County; and WHEREAS, the imposition of greater treatment standards on the Florida Keys than anyplace in the state of Florida, coupled with the greater costs of construction in general in the Florida Keys due to enhanced building codes and the distance from the mainland has rendered the costs of sewering the Keys much higher than elsewhere in the United States; and NOW THEREFORE BE IT RESOLVED by the Board of County Commissioners of Monroe County that: Section 1. The Board of County Commissioners of Monroe County hereby endorses the Water Protection and Reinvestment Act, and urges the 1111h Congress of the United States to enact the bill introduced by Representative Blumenauer. Section 3. Upon adoption, the County Clerk is hereby directed to send a copy of this Resolution by United States mail to the co-sponsors of the bill, to wit: Representatives Norman Dick, Donna Edwards, Sam Farr, Raul Grijalva, Maurice Hinchey, Henry "Hank" Johnson, Jr., Carolyn Kilpatrick, Steven LaTourette, Grace Napolitano, Thomas Petri, Janice Schakowsky, Michael Simpson, Robert Wexler, and Ed Whitfield, as well as Congresswoman Ileana Ros-Lehtinen. Section 4. This Resolution shall be effective as of the date of its adoption. PASSED AND ADOPTED by the Board of County Commissioners of Monroe County, Florida, at a regular meeting of said Board held on the day of , 2009. Mayor George Neugent Mayor Pro Tern Sylvia Murphy Commissioner Heather Carruthers Commissioner Mario DiGennaro Commissioner Kim Wigington BOARD OF COUNTY COMMISSIONERS OF MONROE COUNTY, FLORIDA ATTEST: Danny L. Kohlage, Clerk By: By: Deputy Clerk Mayor George Neugent Summary of the Water Protection and Reinvestment Act TITLE I: REVENUE The title establishes a "Water Protection and Reinvestment Trust Fund" within the Treasury of the United States to support investments in clean water and drinking water infrastructure. The fund will be firewalled and structured like the Highway Trust Fund. Funding will be generated through the imposition of six new taxes/fees. Funding will be distributed mainly to the Clean Water and Drinking Water State Revolving Loan Funds. Section 101 The new taxes include: 1. Water Based Beverages What is Taxed: Glass, cans, plastic & other containers of water based beverages 5 gallons in size or less. Water based beverages are drinks that are water or are manufactured with water as a significant input. Alcoholic beverages are excluded. Milk and juice (not from concentrate) are also excluded by definition, since water is naturally in the product not added artificially. Tax Rate and Estimated Revenue: Tax rate of 4 cents per container sold by manufacturer. About 200 billion such containers are sold a year in the US, raising about $6 billion a year. Rationale: These products rely on drinking water as their major input (by weight) and result in increased flows to the wastewater stream. Drinking water systems are, in effect providing the major input to their competitors (bottled water companies). In addition, the containers end up in the wastewater stream. The beverage makers should help pay for the systems they rely on. Taxing each container provides an incentive for the use of larger containers which reduces the water and energy used to make and/or recycle containers as well as decreasing the number of containers that wind up in the waste water stream. 2. Product Disposal What is Taxed: Products that are normally flushed and disposed of in sewer systems. These products include soaps and detergents, toiletries, toilet tissue, water softeners, and cooking oils. Tax Rate and Estimated Revenue: Tax rate of 3% of the wholesale price of any product sold. Total sales are approximately $73.6 billion. Total revenue would be about $2.2 billion. Rationale: These products all wind up in the water stream and require cleanup by sewage treatment plants. They should bear some of the costs of that cleanup. In addition, some of these products introduce pollutants into the waste stream. For example, detergents contain phosphorus, household chemicals are found in streams that receive discharge from sewage treatment plants, and cooking oil causes pipe blockages. 3. Pharmaceuticals What is Taxed: Pharmaceuticals sold by manufacturers or importers Tax Rate and Estimated Revenue: Tax of 0.5% of the wholesale price of any product sold. Total sales are approximately $156 billion total. Total revenue $780 million. Rationale: Pharmaceutical residues found in our nation's water bodies are an increasing concern for clean and drinking water utilities and public health providers. Pharmaceuticals end up in water because our bodies don't absorb the entire dose and also because they are often not disposed of properly. In addition, high amounts of pharmaceuticals like antibiotics are used by the agriculture industry in industrial farming, much of which ends up in the water. The pharmaceutical industry should bear some of the burden of removing these pharmaceuticals from water. The trust fund will finance a "drug take back" program to reduce the amount of pharmaceuticals in our water systems and will fund research into remediation strategies. 6. Clean Water Restoration Tax What is Taxed: Corporate profits. Tax Rate and Estimated Revenue: Tax is .15% of the corporate profit over $4 million a year. Total revenue of approximately $1.7 billion. Rationale: All corporations use drinking and clean water infrastructure and depend on its functioning to support their businesses. High quality systems support local and national economic growth. A similar tax was used to fund the Superfund program until it expired in 1995. The tax rate is the equivalent of the cost of a large pizza ($15) for every $10,000 in corporate profits. Section 102: This section describes the funding allocations in the legislation. 1) Clean Water Programs: • 48% will be spent on the Clean Water State Revolving Funds (almost $5 billion). These funds are grants to capitalize state funds, which then provide loans to publicly owned treatment works for wastewater treatment construction to meet Clean Water Act requirements and provide sewage services. This bill makes a number of changes to the SRF program. • 1.5% for grants under Sec. 106 of the Clean Water Act (about $150 million): an existing program that provides grants to States and to interstate agencies to assist them in administering programs for the prevention, reduction, and elimination of pollution, including enforcement directly or through appropriate State law enforcement officers or agencies. • 2.5% for grants under Sec. 319 of the Clean Water Act (about $250 million): an existing grant program for states to implement nonpoint source management programs. • 0.5% for technical assistance for rural small treatment works (about $50 million): a new grant program to provide assistance to small communities. 2) Safe Drinking Water Funding: • 35% will be spent on the Safe Drinking Water Act (SDWA) State Revolving Funds (SRF) (over $3.5 billion). These funds are grants to capitalize state funds, which then provide loans to water systems serving the public (public water systems) for expenditures to facilitate compliance with drinking water regulations and to protect public health. This bill makes a number of changes to the SRF program. • 0.5% will be spent on an existing program to provide technical assistance to small public water systems. 3) Additional Grant Programs: • 0.5% will be available for making grants under the new Section 402, relating security enhancements. • 1% will be available for making grants under the new Section 403, relating to climate change and adaptation. • 0.2 % will be available to making grants to existing training programs and scholarships for personnel and operators of treatment works and water systems. • 5% will be available for making grants under Sec. 222 of the Clean Water Act, relating to sewer overflow control grants. • 5% will be available for carrying out new Sections 406, 407, and 408, relating to research and development, regional water research centers, and a cost of service study. 0 0.3% will be available for a new Sec. 410, relating to a drug take back grant. This section makes clear that funds made available for a program or activity under this section shall be in addition to any funds made available for the program or activity under any other provision of law. TITLE II: CLEAN WATER FUNDING Sec. 202: Technical Assistance for Rural Small Treatment Works and Medium Treatment Works This section allocates 0.5% of the trust fund revenue (about $50 million) to a Technical Assistance for Small Communities program, which will provide grants on competitive basis to qualified non-profit technical assistance providers for technical and financial assistance to the owners and operators of small and medium treatment works. These small systems often have difficulty providing services due to limited economies of scale and less technical expertise. This funding will provide technical assistance and training to these small and rural wastewater systems. It will also help them deal with the paperwork associated with new grants programs. This program was included in H.R. 1262, which passed the House of Representatives in March. Sec. 203-204: Clean Water SRF This section makes a number changes to the existing Clean Water State Revolving Loan Fund programs. The first two changes are also included in H.R. 1262. This Act does not change the formula for distribution of funding to the states. • Ensures that any engineering and design services awarded by the Act will be done in an open competition consistent with the Brooks Act. • Ensures that the trust fund is subject to Davis -Bacon prevailing wage laws. • Provides that no money will be used to subsidize new development. The funding in the trust fund is dedicated to rehabilitating and repairing existing infrastructure. Sec. 205: Revolving Loan Fund Eligibility (a) This section expands the type of projects that are eligible for funding under the Clean Water State Revolving Loan Funds. Expanding eligibility will update the SRF program to ensure that wastewater treatment facilities are able to meet current needs. Most of these changes were also included in H.R. 1262. • Construction of publicly owned treatment works • Measures to increase the security of publicly owned treatment works, including vulnerability assessment updates and safer alternatives for treatment chemicals • Implementation of nonpoint source management programs under Section 319 of the Clean Water Act • Development and implementation of conservation and management plans under Section 320 of the Clean Water Act • Implementation of measures to manage, reduce, treat, capture, or re -use municipal stormwater • Repair or replacement of decentralized wastewater treatment systems that treat domestic sewage • Measures to reduce the demand for publicly owned treatment works capacity through water conservation, efficiency, or reuse • Measures to integrate water resource management planning and implementation • Measures to increase energy efficiency or renewable energy at a publicly owned treatment facility • Projects to correct failing residential septic systems or cesspools • Implementation of technologies, management programs, or other measures to improve monitoring for and to alert the owner or operator of a publicly owned treatment works of the occurrence of a spill, overflow, or other discharge or release and to provide for public notification of spills, overflows, or other discharges or releases of pollution into waters of the US or from point sources into areas in which there is a potential risk of public exposure (b) This section provides for an extended repayment period for treatment plants to repay SRF loans. It was also included in H.R. 1262. (c) This section requires that any recipient of a loan under this Act for repair, replacement, or expansion of a wastewater treatment facility must develop and implement a fiscal sustainability plan that includes (1) an inventory of critical assets, (2) an evaluation of the condition and performance of inventoried assets, (3) a plan for maintaining, repairing, and, as necessary, replacing that portion of the treatment works and a plan for funding these activities, and (4) a certification that the recipient has evaluated and will be implementing water and conservation efforts as part of the plan. This language was included in H.R. 1262. (d) This section increases the amount of money that states can use for administrative expenses. Since the Act increases the amount of funding to states, the type of projects that can be funded and increases requirements on grant recipients, it makes sense to provide additional funding. This provision was also included in H.R. 1262. (e) This section allows the state to provide additional subsidization, in the form of forgiveness of principal and negative interest loans, to projects that benefit low income areas or that implement an innovative or alternative process, material, technique, or technology that may result in greater environmental benefits or equivalent environmental benefits at a reduced cost. It requires a state to establish affordability criteria to assist in identifying municipalities that should qualify for additional subsidization and provides that additional subsidization provided by a state may not exceed 30% of the total amount the state receives (not including high priority grants). Allowing for additional subsidization of these types of projects will provide an incentive for green infrastructure projects. A similar provision was included in H.R. 1262. (f) Under the current SRF program, states are required to develop a priority list for assistance they provide under the program. This section adds specific criteria that the states must use in developing that priority list. The criteria require the state to give greater weight to an application for assistance that includes (1) a review of options for restructuring, (2) non-traditional and innovative low -impact development approaches, (3) a demonstration of consistency with State, regional, and municipal watershed plans, water conservation and efficiency plans, or integrated water resource management plans, (4) other innovative approaches, or (5) a proposal providing for implementation of effective utility management principles as identified by the EPA. The criteria also prioritizes projects that take into consideration appropriate water quality data, provide for public notice and consent, and provides for biennial publication of the description of projects eligible for assistance, the priority assigned them, and the funding schedule for each project. These new criteria will provide incentives for environmentally friendly projects and will provide the public with additional information about how projects are chosen for funding. This section is similar to an approach taken by S. 1005, legislation to reauthorize the Clean Water SRF that recently passed the Senate Committee on Environment and Public Works. Sec. 206: High Priority Project Grants This section provides that a state must allocate 50 percent of the amount received from the Trust Fund in the form of grants (instead of loans). Some communities can take on debt and pay back loans for wastewater projects, but others may not have this capacity. Grants can help communities that cannot make loan repayments, such as those with declining or low-income populations. By continuing to distribute half of the SRF funding in the form of loans, states will ensure financial stability of the SRFs, which will continue to revolve. In addition to developing a priority list for traditional SRF loans, the state must also develop a prioritized list of projects for which it will provide grants. The priority for the use of grant funds will be given to projects that (A) address the most serious water pollution problems, (B) benefit communities with the greatest need, or (C) incorporate nonstructural or decentralized treatment practices. These criteria are very broad so that states will have maximum flexibility in determining the use of these grant funds. The section provides for public participation and review of projects provided with grant funding. The cost -share for proj ects receiving grant funding will be 50% (this means that the state will provide 50% of the funding and the treatment facility will provide 50%). This section also provides that Indian tribes shall be eligible for this funding. IYYYIIaIIAM1101a17Nlei 114I eAL%11lla:aDINO01lelfl Sec. 301: Use of State Revolving Loan Funds Under current law, Safe Drinking Water Act SRF funding can be used for only two purposes: to facilitate compliance with drinking water regulations and to further public health objectives of the Safe Drinking Water Act. This section, consistent with recent Senate legislation reauthorizing the SDWA SRF (S. 1005), amends the Safe Drinking Water Act to specifically authorize states to spend money on existing infrastructure for: (1) planning, design, and associated preconstruction activities; (2) replacement or rehabilitation of aging treatment, storage, or distribution facilities; (3) capital projects to upgrade or enhance the security of public water systems; (4) consolidation of management functions with other public water systems; (5) increasing the energy or water efficiency of the water system; or (6) onsite projects to generate renewable energy. (The Senate bill includes the first 3 items.) Sec. 302: Priority System Requirements This section provides that, notwithstanding the requirement of the Safe Drinking Water Act that funding shall only be spent on compliance with the Act and furthering public health objectives, one-third of the funding provided to states from the Trust Fund shall be used for infrastructure improvement projects in systems serving populations of 100,000 or more. While these larger systems represent about 35% of the needs nation-wide, they only receive about 23% of the funds. In some states, such as Oregon, these bigger systems receive no SRF money at all. This section also provides that in determining project priorities for spending SRF dollars, the states shall give greater weight to project applications that include (1) an inventory of assets; (2) a schedule for replacement of those assets; (3) a financing plan that factors in all life -cycle costs indicating sources of revenue from ratepayers, grants, bonds, other loans, and other sources to meet the costs; (4) in the case of small water systems, a review of options for consolidating management functions with other water systems; (5) reliance on environmentally friendly and non-structural methodologies and technologies; (6) a demonstration of consistence with state, regional, and municipal watershed pans; (7) a water conservation plan; and (8) other sustainability approaches such as water efficiency or conservation, use of reclaimed water, and energy efficiency. This language will help provide incentives for both fiscal and environmental sustainability. Similar language is included in S. 1005. Sec. 303: Affordability This section includes language from S. 1005 to expand which areas meet affordability criteria and are therefore eligible for additional assistance under the SDWA. It will include bigger systems with pockets of low income areas. Sec. 304: Needs Survey Current law requires the Administrator of the EPA to conduct a survey every four years of the capital needs of public water systems. This section provides that, in conducting the survey, the EPA shall consider the needs of eligible water systems of all sizes. It requires the Administrator to include no fewer than four sizes including one consisting of systems serving a population over 100,000 people. This will help ensure that the needs of all water systems are taken into account. Sec. 305: Negotiation of Contracts This section ensures that any engineering and design services awarded by the Act will conducted on the basis of demonstrated competence and qualification for the type of professional services required and at fair and reasonable prices. Similar language is included in S. 1005. Sec. 306: Drinking Water Technical Assistance for Communities This section provides that .5% of the Trust Fund revenues shall be spent on providing technical assistance to small public water systems in meeting drinking water regulations. TITLE IV: NEW GRANT PROGRAMS In general, this title creates a number of new grant programs to help upgrade drinking water and clean water infrastructure to meet 21" century challenges and funds a new research and development program to focus on new ways to meet these challenges. Sec. 401: Definitions Sec. 402: Treatment Works and Community Systems Security This section provides that .5% of the Trust Fund revenues are available for grants to states, municipalities, publicly owned treatment works, and community drinking water systems for capital projects to increase the security of the system or to complete or update a vulnerability assessment, emergency response plan, or site security plan required under the SDWA or any other applicable law. The Energy and Commerce and Homeland Security Committees are currently working on legislation that will put new requirements on treatment and drinking water facilities, so this will help offset those costs. Sec. 403: Climate Change Mitigation and Adaptation Grants This section provides that 1% of the Trust Fund revenues are available for the EPA to carry out a competitive grant program to support efforts by publicly owned treatment works and community water systems to take actions to increase energy and water efficiency, reduce greenhouse gas emissions, and increase resiliency to the impacts of climate change. It provides that the maximum grant shall not exceed $2 million a year. Sec. 404: Workforce Development Grants Existing grant programs under the Clean Water Act and Safe Drinking Water Act provide support for operator training, and undergraduate and graduate environmental engineering and natural sciences programs scholarships to ensure that a stable labor force exists to operate and manage water and wastewater treatment utilities. According to the Water Environment Federation, the water and wastewater profession is facing a potential crisis in its labor force during the coming decade as baby boomers retire and demands for qualified trained professionals increase. While there is general awareness that an enormous investment is needed to replace aging physical infrastructure to ensure Americans continue enjoying clean and safe water, just as critical, but less recognized, is the need to invest in the human infrastructure necessary to operate the physical systems. This section would dedicate .2% of the revenues from the Trust Fund for existing programs for training of wastewater and drinking water system operators. It makes minor changes to the existing programs to ensure that scholarship awards are also available at the graduate level. Sec. 405: Sewer Overflow Control Grants This section provides that 5% of Trust Fund revenues are available for sewer overflow control grants under existing law. Sewer overflows are a growing problem in which untreated sewage is released into the environment, contaminating our nation's waters, degrading water quality and exposing humans to viruses and other pathogens that can cause serious illness. EPA estimates that more than 850 billion gallons of untreated wastewater and storm water are released each year in the United States. The bill makes changes to the existing program to give priority to projects that use nonstructural or low -impact development, water conservation or reuse, or other decentralized stormwater or wastewater approaches to minimize flows into sewer systems. Sec. 406: Research, Development and Technology Demonstration Program (a) This section establishes a National Water Infrastructure Research, Development, and Demonstration Program within the EPA to develop, demonstrate, and transfer innovative or improved technologies and methods for the treatment, control, transport, and reuse of drinking water and wastewater. This will help the agency, as well as local treatment works and water systems, meet the needs of the 21" century. (b) Provides that in administering the program, the EPA Administrator shall annually hold a national meeting to bring together major stakeholders for consultation. (c) Provides that in carrying out this program, the Administrator is authorized to enter into cooperative agreements or provide grants to develop these improved technologies with nonprofit entities with expertise in this area. (d) Gives the Administrator authority to enter into cooperative agreements or provide grants to nonprofit or for profit entities for the purposes of demonstrating the viability and effectiveness of a new technology. (e) Requires the Administrator to give priority to cooperative agreements and grants that create multiple environmental, social, and economic benefits for communities and that consider (1) a variety of water resource opportunities and needs, (2) unique and diverse geology and geography, (3) the ability to provide the greatest technological diversity using limited financial resources, and (4) the commitment of each community or regional area to find and fund appropriate alternative technologies to resolve their water infrastructure needs. (f) Provides the Administrator with flexibility to determine the appropriate grantee match, if any. (g) Requires the Administrator to prepare and submit a biannual report to Congress on the results of this program. Sec. 407: University Water Research Centers This section creates a new system of 21 regional university research centers whose mission is to conduct strategic research, education, and outreach for sustainable management of water resources in every hydro - climatic region of the United States. The program will be administered through the Environmental Protection Agency, in coordination with the National Science Foundation, and the centers will be in hydro - regions established by the USGS. It also establishes a National Water Research Center to gather, archive, and publish data from the regional centers, and to integrate the regional findings into a national research strategy. This program is based on the successful National University Transportation Research Centers established under ISTEA. Sec. 408: Cost of Service Study This section provides for a National Academy of Sciences Study on the means by which public water systems and treatment works meet the costs associated with operations, maintenance, capital replacement, and regulatory requirements. This will help the EPA, Congress, and water facilities determine what new approaches might assist in meeting the needs of public water systems and treatment works. A similar study was included in S. 1005. Sec. 409: Funding for R&D, University Centers, and Study This section provides that 5% of the Trust Fund shall be available to carry out sections 406-408. Sec. 410: Drug Take Back Grants This section provides that 0.3% of the Trust Fund shall be available for a competitive grant program within the EPA to fund state, local, tribal, and non-profit drug take back programs. It ensures that these programs will dispose of the drugs in safe and environmentally sound manner. The section also requires that the Secretary of Health and Human Services, in approving an application for a drug, does not include a recommendation or direction to dispose of the drug by means of a public or private wastewater treatment system, such as flushing it down the toilet. Labels on drugs will also be precluded from similar recommendations. This section will help reduce the presence of pharmaceuticals in water. 0 Id 14yY Y•I t ti�Y��y. 1 A, �5 h 'L.4 FA L 'lle F''I, A . I. ;�, D e it joaawaierm I! About Food & water watch Food & Water Watch is a nonprofit consumer organization that works to ensure clean water and safe food in the United States and around the world. We challenge the corporate control and abuse of our food and water resources by empowering people to take action and by transforming the public consciousness about what we eat and drink. Food & Water Watch 1400 16th St. NW, Suite 225 Washington, DC 20036 foodawate tel: (202) 797-6550 fax: (202) 797-6560 foodandwater@f,vwatch.org www.foodandwaterwatch.org 0000 Copyright © October 2007 by Food & Water Watch. All rights reserved. This report can be viewed or downloaded at www.foodandwaterwatch.org. Clear Waters: Why America Needs a Clean Water Trust Fund Table of Contents iv Executive Summary • Key Findings 1 America's Water Infrastructure and the Need for Upgrades 2 Clean Water State Revolving Fund 4 In Their Own Words: States Speak Out 5 State Key Findings • California • New York • Minnesota • Texas • Oregon • Washington 5 Leveraging: Using Debt to Fund Water Infrastructure 6 States Wait for Funding while Public Health Crisis Looms 7 Bush Administration Offers Non -Solutions • Efficiency and Conservation: A Good Start • Private Financing: Expensive and Undesirable • Private Operation: No Real Benefit 9 A Clean Water Trust Fund: An Investment in the Future • Where Would the Money Come From? • Operating a Clean Water Trust Fund • Greener Infrastructure = Cleaner Water 12 Conclusion: Time for a Trust Fund 14 Appendix A: Inflation Adjusted Federal Funding By State 16 Appendix B: Federal Funding by State 18 Endnotes Executive Summary When a resource is as basic as clean water, it can be easy to take for granted. Flowing in and out of our homes and businesses through underground pipes, clean water for sanitation keeps our communities livable, our lifestyles possible, and our industries viable. But while steady access to clean water is a cornerstone of modern society, its future is far from secure. As recent tragedies have shown, the United States' national infrastructure is experiencing the consequences of decades of neglect. Our water systems, many of which are more than ioo years old, are no exception. The Environmental Protection Agency has estimated that we are falling short on water infrastructure spending by a whopping $22 billion per year. Aging pipes are breaking down, unable to square mounting capacity pressures with degrading materials. Beach closings caused by sewage overflows are occurring at the highest rates ever, and economically crucial lakes, rivers, and estuaries across the country are being crippled by pollution. While the federal government's Clean Water State Revolving Fund, which administers money to states for clean water projects, contributes needed help, annual political battles over funding levels mean its assistance may not amount to much more than a finger in the dike. Fiscal 2007 saw the Clean Water State Revolving Fund funded at some of the lowest levels in history, and for 2oo8 the president has requested states be given a mere $688 million — the lowest levels since the program's inception. These cuts go even deeper because of the manner in which the SRF is administered. Federal SRF contributions drive state funding, and for every federal dollar spent on clean water, approximately $1.28 is contributed by states and leveraged from bonds. However, without sufficient federal money driving the process, states must pick and choose from often hundreds of needed improvements. While not every state is facing such a shortfall, major gaps are the norm for most. The end result is that states, already providing the lion's share of funding, are unable to conduct needed maintenance and improvement projects. The burden often falls hardest on smaller municipalities, which receive the majority of clean water loans and depend on low interest rates to meet their needs. Compounding Fiscal 200saw the Clean Water State the problem, states lose potential jobs and increased tax revenues because they cannot Revolving Fund funded at some of the afford to fund the infrastructure necessary for continued growth. lowest levels in history, and for 2oo8 Thirty five years after the passage of the the president has requested states be Clean Water Act, degrading wastewater infrastructure threatens to turn back the given a mere $688 million — the lowest clock to the Dark Ages of American water levels since the ro ram's ince tlon. quality. For the sake of our nation and its p 9 p future, we cannot allow this to happen. Given the fickle year-to-year funding of the SRF and the urgency of our clean water troubles, we need a new solution. A federal clean water trust fund would provide a steady, reliable, and equitable source of funding for needed projects across the country. By sidestepping the contentious appropriations process, a trust fund would safeguard our clean water infrastructure, our environment, and our economy. This report will examine trends in clean water spending on a state -by -state level, pointing out the need for urgent action while explaining the benefits that could be achieved through the establishment of a clean water trust fund. iv VI America's Water Infrastructure and the Need for Upgrades The United States' water infrastructure spans an amazing distance — nearly 1.5 million miles of piping in all, including 640,000 miles of sewer lines., Those pipes, constructed of materials ranging from cast and ductile iron to polyvinyl chloride and polyethylene, deliver water to more than 300 million citizens as they work, play, and raise families. Our nation has the world's largest economy, helping to ensure a high standard of living and opportunity, but it also produces a lot of waste. More than 16,000 sanitation facilities across the country operate 24 hours a day, 365 days a year, processing wastewater to remove dangerous chemical and organic contaminants.2 The average sanitation facility processes 68 million gallons of water per day, preventing those contaminants from harming our communities and environment.3 Effective sanitation systems and ready access to clean water are inextricably linked to the health of our nation and its economy. "We recognize that you can't have strong cities, strong families, and a strong America unless you take care of your infrastructure," said Douglas Palmer, mayor of Trenton, New Jersey, and president of the U.S. Conference of Mayors.4 The Conference of Mayors recently identified water infrastructure needs as its number one concern.5 "Water is the new oil as a problem and how precious it is," Palmer explained. New Jersey uses 3 million gallons of water daily, he said, "and we need that water in reserve because we're almost at a crisis situation." The country's clean water infrastructure can be thought of almost as a circulatory system. Rather than the blood that keeps our bodies alive, our local utilities pump the water that keeps our society functional. Pipes act as arteries, carrying fresh water to be used by people and businesses, then as veins, carrying dirty water away. Wastewater treatment facilities serve as the kidneys and liver, cleansing impurities and waste. Like the circulatory system, water infrastructure is largely out of sight; like the circulatory system, it is largely out of mind until it breaks down. While easy enough to understand, that attitude is rapidly proving to be untenable when it comes to protecting our pipes. When we neglect our bodies' health, we get sick. When we neglect our national infrastructure, it breaks down. Both scenarios can result in serious and sometimes dangerous consequences. All it takes is a look at recent headlines to show that national infrastructure protection is worth taking seriously. "People understand bridges when they fall down," commented James McLaughlin of the Maine Department of Environmental Protection. "What they sometimes don't understand is that underground there's a whole other type of infrastructure that's falling apart and collapsing too:16 That collapse is coming on fast, as the pipes that keep America's water circulating and the treatment facilities that keep it clean are nearing, and sometimes passing, the end of their useful lives. Construction materials, soil composition, climate, and capacity pressures all affect the durability of wastewater piping, which typically lasts about 50 years. A 1998 survey determined the average American wastewater pipe was about 33 years old? Although a pipe's lifespan can range anywhere from 15 years to well over a century, even older, more durable materials are hitting their age limits. The cast iron pipes installed in the 19th century can last for about ioo years; many are already past that mark. Meanwhile, some eastern cities depend on pipes nearly as old as the U.S. Constitution, and some 72,000 miles of pipes are already more than 8o years old.8 As the National Research Council noted in a recent publication, "these different types of pipes, installed during different time periods, will all be reaching the end of their expected life spans in the next 30 years."9 The American Society of Civil Engineers, which recently evaluated the state of U.S. clean water systems, gave the nation's clean water infrastructure a D- rating. "There are a number of reasons for the quality of the nation's infrastructure," said ASCE president-elect David Mongan. "Probably the single most comprehensive reason is simply the age of our infrastructure."10 ASCE estimates that we have a current need for more than $185 billion in nationwide clean water improvements." Echoing ASCE's concerns, the House Transportation & Infrastructure Committee recently warned that "Without increased investment in wastewater infrastructure, in less than a generation, the U.S. could lose much of the gains it made thus far in improving water quality, and wind up with dirtier water than existed prior to the enactment of the 1972 Clean Water Act."12 The Clean Water State Revolving Fund Federal agencies, states, local municipalities, and water industry professionals are all concerned that our national spending on clean water infrastructure has fallen behind current and projected needs. EPA currently estimates this funding gap for total water spending amounts to as much as $22 billion per year.13 In 1987, recognizing both the importance of clean water and the need for more funding, Congress stepped in. The Clean Water State Revolving Fund, a program established through an amendment to the Clean Water Act, was created to help states address developing clean water needs. The revolving fund parcels out seed money to states, which contribute a mandated 20 percent in matching funds. States then use those funds to issue communities low - interest loans, allowing them to undertake clean water projects. The terms of these loans vary, but their rates are typically less than half the market average, facilitating substantial cost savings.14 Communities use revolving fund loans to improve wastewater treatment, safeguard estuaries, prevent or mitigate nonpoint source pollution, and improve surface water quality. Projects are funded according to a state's Intended Use Plan, which lists and prioritizes community requests. Today, thanks to state contributions, returning principal and interest from loans, and leveraged bonds, every federal K dollar provided under the program is met by an average Of $1.28 from non-federal sources: 5 Congress initially intended this returning capital from loans to permit a drawdown in federal spending, and federal contributions were to have ceased entirely in fiscal 1994• Things worked out differently. As the program's expiration date approached, it was obvious that states' clean water needs would continue to far exceed their funding capabilities. So the program was extended, and the federal government continues to fund the CWSRF on a year-to- year basis. These are large numbers, but the drop is even starker than it may first appear. When adjusted for inflation, federal funding fell 39 percent between 1989 and 2oo6 and 7o percent since 1991. At the same time, construction costs have increased by an average of three percent per year and grew six percent in 2004. While this arrangement has kept the program afloat, it has come at the cost of adequate funding. The appropriations process is an intensely politicized one even in the best of times. High -value, low -visibility programs such as the Clean Water State Revolving Fund are often mistakenly cast as fat to be trimmed from pork -stuffed federal budgets. Improvements in clean water infrastructure "remain a top priority if we are to reclaim our water resources," claims the president's Office of Management and Budget, charged with overseeing federal agencies and explaining the administration's fiscal policy.i6 Yet it is difficult to square the administration's rhetoric with its actions. "Well, it all comes down to politics," Maine's McLauglin said. "The president sets the spending priorities, and apparently the Clean Water SRF isn't one of them."17 Over the course of the previous decade, presidential budget requests have continually sought to shrink the federal government's role in addressing clean water needs. The most recent such requests have allotted the fund a mere $688 million. Members of Congress have often responded by funding the CWSRF above administration requests. Yet even with Congress appropriating additional resources, federal involvement in clean water spending has declined precipitously. Federal funding for the fund peaked in fiscal 1991, when Congress provided the program just over two billion dollars. In that year, the CWSRF went fully operational, completely replacing the construction grants previously used to fund clean water projects. Since then, federal financial support has atrophied. Appro- priations fell six percent between 1989, when money from the program was still accompanied by construction grants, and 2oo6. Since 1991, funding has fallen by more than $1.16 billion, or 57 percent.i8 These are large numbers, but the drop is even starker than it may first appear. When adjusted for inflation, federal funding fell 39 percent between 1989 and 2oo6 and 70 percent since 1991. At the same time, construction costs have increased by an average of three percent per year and grew six percent in 2004. The executive branch points out that the CWSRF has provided communities with assets far beyond those originally envisioned, noting that the program has 3 been capitalized at a level three times the authorizing legislation.20 True, but context is everything. The federal government has provided $24 billion since fiscal 1988 for clean water funds. States, meanwhile, spend more than two and a half times that sum — approximately $63 billion — every year.21 As a proportion of overall efforts, 78 percent of clean water spending in 1978 came from the federal government. Today, it is contributing only three percent. Federal spending on clean water lags behind its total infrastructure spending, where it contributes around 25 percent of funding for transportation, energy, and solid waste management.22 WARNING! sewaae E In Their Own Words: States Speak Out The growing funding gap has taken a serious toll on states, many of which face sizable and growing backlogs of clean water projects. "As infrastructure ages and the population grows, the demand for financial assistance increases," said Brian Howard, SRF coordinator with the Washington state Water Quality Program. "The demand for financial assistance over time far exceeds the funds available. For example, for [fiscal] 2oo8 we offered $70.6 million and funds requested for high priority water quality projects exceeded $141.7 million," he explained.23 "The first thing anyone from the [Clean Water] State Revolving Fund will tell you is that there are un-met needs," agreed Scott Jordan, director of Massachusetts' Water Pollution Abatement Trust .�4 Massachusetts' clean water SRF budget for 2007 is $398 million, a little less than $37 million of which came from the federal government.�5 Meanwhile, ASCE estimates Massachusetts requires $4.6 billion to keep water clean.z6 Geoff Andres, administrator of Illinois' SRF program, commented that despite SRF assistance, "Our forecasts show that demand will remain strong in the future ... If you look at our demand in terms of a three-year window for projects proceeding in the program (projects for which a facility plan has been submitted), we have a three-year `need' of $693.5 million, a number that would support an annual program in excess of $200 million, and that is significantly over our $140-$150 million annual average."27 "There are currently not enough funds to satisfy the needs of [our] wastewater communities," said James McGoff, director of Indiana's Finance Authority for Environmental Programs. "The backlog is growing. "z8 California, one of the nation's primary economic engines, also shows the largest clean water funding gap. The state expects enough funding to undertake 41 projects in fiscal 2oo8 at a cost of nearly $500 million. Its most recent Intended Use Plan, meanwhile, lists 691 needed improvements .Z9 They will cost an estimated $18.5 billion to complete, and EPA's most recent Clean Water Needs Survey suggests the state will require $2o billion in infrastructure spending over the next 20 years. "There is no way that we can fund all of those projects," said Liz Kanter, information officer with the California EPA State Water Board.30 Not all states are in such rough shape. States with newer infrastructure and smaller populations have fewer pressing concerns. "We're blessed in Wyoming that our program has always had enough funds," said Brian Mark, with the Department of Environmental Quality.31 Even so, Wyoming, the most sparsely populated state in the nation, supplements its CWSRF funds with money drawn from a statewide gas tax. 4 But even many states that can meet current needs express uncertainty over what will happen down the road. Although New Jersey has been able to keep up with demand so far, "The future looks bleak," said Maryclaire D'Andrea, CFO of the New Jersey Environmental Trust.32 That future could be particularly bleak for small communities. The vast majority of water distribution "There are currently not enough fu to satisfy the needs of [our] waste The state's annual list presents 148 projects costing nearly $3.9 billion — more than 50 times its expected federal allotment — while its long-term projections count 793 projects at a cost of nearly $11 billion. w systems in the United States serve populations of 3,300 people or fewer, with 58 percent serving communities of no more than 500.33 These smaller systems often need the most assistance. Sixty four percent of CWSRF loans since the program's inception have gone to communities with populations of io,000 or fewer.34 That number has jumped in recent years: 68 percent in 2005 and 72 percent in 2oo6. These small communities, without the resources to pay back private market loans, depend on federal money to keep their water safe. State Key Findings For a complete analysis of all 50 states, visit: http://Www.foodandwaterwatch.org/water/clearwaters California California's current wastewater needs are the greatest in the nation. The state's 2oo8 Intended Use Plan lists 691 pressing projects that will cost nearly $10.5 billion to complete, and EPA's most recent assessment says the state will require more than $2o billion in wastewater spending over the next 20 years. California expects to have $285 million available, including federal funding, for wastewater infrastructure projects in 2oo8. The state's needs are around 210 times the projected federal 20o8 investment. New York Under current budget projections, New York will have only 55 percent of 2007 resources available for 2oo8 spending. Texas In order to compensate for needs costing more than 23 times its expected federal grants and 59 percent more than its projected funding capabilities, Texas will be forced to take on more than $220 million in leveraged debts in 20o8. Oregon In 2oo8, Oregon expects to face an $86.6 million shortfall between its anticipated spending on wastewater infrastructure and its $133 million in needed improvements. The federal government's expected contributions will account for just 14 percent of the state's needs. Washington Washington's clean water infrastructure requires nearly $142 million in improvements and maintenance in 2oo8, yet the state will be able to fund only half that based on current budget projections. The state's needs amount to more than seven and a half times 2007 federal contributions. Leveraging: Using Debt to Fund Water Infrastructure With the up-and-down jumps in appropriations, "You really don't ever know if you're going to get funding this year," said Rod Geisler, Clean Water State Revolving Fund administrator with the Kansas Department of Health and Environment, leading many to turn to leveraging their clean water funds, taking on sizable debts to ensure adequate state matches.35 When a state opts to leverage, it borrows the money for its matching CWSRF contributions from the private market. The program requires states to match 20 cents on every federal grant dollar they receive. The process works like this: a state receives one dollar in federal grant funding. It then borrows its matching portion from the bond market at an average rate of 5 percent. 5 Combining the borrowed match and the federal grant dollar, the state loans a community $1.20 at a rate of two percent. One year later, the state has accrued .ol cents of interest on its debt, but it has earned .024 cents — nearly two and a half times as much — on the loan it issued. When the community repays that loan, the returning interest should give the state money to cover its own debt, with some left over to contribute to future projects. As noted above, CWSRF loans average an interest rate less than half that of those issued by the private sector. States pay much higher interest on their private debts than communities do on their state debts, but the larger overall size of the community's loan will ideally enable the state to pay back its creditors. "We leverage the bejeezus out of our program," Geisler said. Leveraging had allowed Kansas to meet what would otherwise be unmanageable needs at reduced costs, because Wall Street will lend the state money at even lower interest rates than the market average. Even so, he said, "We've pretty much hit our max capability on the program... we're very heavily in debt, but it's all covered." Without federal grants, the terms of Kansas' loans would likely be far less friendly. Leveraging is also far from a one -size -fits -all approach. Nevada's leveraging program ran into financial trouble as interest rates on its debts rose higher than the state's ability to collect on returning loans, forcing the state to withdraw from the bond market. Nevada is currently consulting a financial specialist to retool its program and "see how we want to structure leverage... if we want to leverage at all," said CWSRF manager Morris Kanowitz36 States Wait for Funding while Public Health Crisis Looms While states deal with growing backlogs, their sewers are backing up. Most of our current clean water systems were installed in a very different time, when populations were smaller and safety standards less rigorous. These systems have not kept pace with societal developments and are often inadequate to handle the demands of the modern world. Following passage of the landmark Clean Water and Safe Drinking Water Acts, the Environmental Protection Agency issued safety standards regulating the presence of a variety of hazards, including lead and copper, fecal coliform bacteria, protozoa, pesticides, disinfectant residues, and solid wastes. These regulations are largely to thank for the huge drop in annual waterborne illness outbreaks seen over the past century.37 But although regulations have prevented countless illnesses and saved lives, their presence does little good when the physical systems they police fail. Even the best regulations cannot prevent illnesses when pipes burst and sewers overflow, releasing contaminated water before it has been treated. Since the late 198os, degrading distribution systems have caused an increasingly high percentage of waterborne disease outbreaks, now accounting for well over half the yearly totals. The majority of these outbreaks occur in small communities 38 The gastrointestinal and respiratory symptoms resulting from infection by fecal coliform bacteria are extremely unpleasant for most adults, but in children, the elderly, and those with weakened immune systems, they can be deadly. Although direct outbreaks and illnesses are the most immediate consequences of faulty infrastructure, poorly performing clean water systems have a widespread negative impact. Sewage -contaminated water sickens swimmers, taints drinking water, and poisons seafood, which is then eaten by humans, leading to more illnesses — as many as two million per year. When systems break down, the resulting sewage overflows poison our environment, turning our beaches and waterways into toxic waste dumps. Sewage spills and overflows were confirmed as directly responsible for 1,3ol beach closures and advisories, 402 more than in 2005 and also the highest number on record. Overflows occur more frequently in systems that combine wastewater and runoff. These combined sewers frequently cannot handle the volume of dirty water introduced by heavy storms and end up discharging contaminated water directly into rivers, streams, lakes, and onto beaches. Combined sewer overflows — between 23,00o and 75,000 per year — spill a staggering 1.26 trillion gallons of untreated water and its attendant filth, bacteria, and toxic L chemicals every year, requiring $5o.6 billion in cleanup COStS 39,40 EPA has determined that 45 percent of waterways across the country do not meet water quality standards, and more than half of assessed river miles were designated impaired in 19 states.41 When sewage spills onto beaches, local communities must issue advisories and close them to swimmers, boaters, and fishermen. These closures do more than keep overstressed Americans from relaxing and having fun; they rob coastal and lakefront communities of the crucial tourism dollars that form the backbone of their local economies. Coastal areas are by far the United States' most lucrative tourist attractions. Tourism produced 1.67 million jobs and $13.8 billion in wages in 2000, and $117 billion was contributed to the national economy by ocean activities.42 Sadly, inadequate clean water systems are progressively unable to keep these areas pristine. According to the Natural Resources Defense Council, in 2oo6 there were more than 25,000 closing and health advisory days at beaches across the country - 28 percent more than in 2005 and the highest number seen in the 17 years NRDC has kept statistics.43 Sewage spills and overflows were confirmed as directly responsible for 1,3oi beach closures and advisories, 402 more than in 2005 and also the highest number on record. More than 15,000 closure or advisory days were caused by elevated bacteria counts of undetermined origin. According to NRDC, "Sewage or stormwater discharges usually cause elevated bacteria levels, but efforts to determine the causes of increased bacteria levels have not kept pace with new or more frequent monitoring practices:'44 NRDC's most recent beach closings report revealed: • Ohio had a total of 629 advisory days in 2oo6, reflecting an increase of more than 300 percent since 2005. Great Lakes beaches alone were the subjects Of 170 such advisories. Every single one of those advisories was sourced back to elevated bacterial counts due to stormwater overflows. • Illinois beaches were closed 591 times last year, up for the second consecutive year. Two of those closures were permanent. Ninety-eight percent of the closures were due to elevated bacterial counts introduced by stormwater. • Following a year of high rainfall, Rhode Island closed coastal beaches 78 times in 2oo6. Among a set of 28 beaches that had been sampled at least once a week in 2oo6, closings and advisories jumped from 57 days in 2005 to 24o days last year. All the issuances were due to elevated bacterial counts. • Indiana beaches experienced ill closure/advisory days in 2oo6, including 28 for the state's eight Tier 1 beaches. That number counteracts progress seen in 2005, when the number of issuances dropped from 21 to 17. Seventeen closures and advisories were issued after known sewage spills, 86 to elevated bacterial counts sourced to unknown causes, and one was issued in anticipation of a coming rainstorm. Beaches in Ohio, Indiana, Illinois, Rhode Island, and Minnesota sustained the most damage, but closures and advisories were issued in 29 states. These events can only be expected to grow more frequent — and more severe — if we do not invest in the systems intended to prevent them. Bush Administration Offers Non -Solutions The Bush administration's long range budget projections 7 call for ceasing federal contributions to the Clean Water State Revolving Fund early in the next decade, but the program may survive if political winds shift.45 However, even if the program makes it through, historical funding trends suggest that the CWSRF is unlikely to provide sufficient long-term cover for future needs. "Over the long haul, revolving funds will not be the panacea," said Chip Heckathorn, administrator of Missouri's State Revolving Fund program.46 The looming infrastructure crisis must be addressed now, because last minute emergency funding will not hold our systems together. "Infrastructure's not like Social Security," said Janet F. Kavinoky of the U.S. Chamber of Commerce. "If Congress found out tomorrow that Social Security was out of money, I bet you they'd get together, they'd find a way to write a check and everybody would get their check:'47 A sudden influx of cash, however, will not reinforce pipes or magically stop sewers from overflowing. Those efforts require significant planning and construction, and that takes time. Recognizing this, clean water analysts, activists, and local decision makers have all suggested solutions that would work around year-to-year funding scenarios. Among those to gain the most attention are better use of existing resources, private financing options, and a public trust fund. The Bush administration, through EPA, suggests a range of possibilities, including more efficient utility management, reduced water consumption, modified watershed approaches, and new financing tools — such as incentives for private sector involvement. Efficiency and Conservation: A Good Start Reduction of water consumption and watershed protection makes good environmental sense. Leaks should be repaired in our aging systems, and we must address our use of water nationally. Unfortunately, even the most meticulous use of currently available resources will only bridge a sliver — between io and 15 percent — of the funding gap.48 Moreover, this only frees funds that would otherwise be used for new water source development, not the funds needed for clean water infrastructure. Private Financing: Expensive and Undesirable Administration policy has recommended that states be allowed to offset reduced federal contributions by issuing more private activity bonds, tax-exempt bonds whose proceeds are used by private entities for public purposes, or by state governments for public -private purposes. The president's fiscal 2oo8 budget contains a proposal that would exempt PABs used for drinking and clean water purposes from regulations limiting public funds for private purposes. The Bush administration's Office of Management and Budget said that more private activity bonds "will help water systems become self-financing and minimize the need for future subsidies," warning that increasing federal funding "will distort market forces discouraging utilities and their consumers from moving toward full cost pricing," among other things.49 These OMB claims are hard to swallow at a time when consumers are being asked to bear more costs than ever before. In response to the mounting funding crisis, public utilities are left with little choice but to raise rates. Over the past 15 years, clean water service charges have skyrocketed and actually doubled the rate of inflation each year for the past six years. These increased costs are a burden for all, but fall disproportionately on the poor.50 Moreover, removing the cap on PABs is unlikely to lead to any meaningful improvement because there is simply no evidence showing current limits hamper financing. "While cities welcome a diversity of tools to finance their infrastructure needs, [the] proposal to raise the state cap on private activity bonds is incapable of narrowing the gap in any meaningful way," noted the National Association of Clean Water Agencies, adding that the current cap is not being met in 49 of 50 states 51 8 Local and state officials are "almost forced to choose between those undesirable ways [to finance projects] because of the federal government's inaction," said Trenton's Palmer. "We look at public -private partnerships, but we really need [a] better partner with the federal government," he commented.52 Private Operation: No Real Benefit Efficient public systems currently deliver water services to 86 percent of Americans, while incentives for more private involvement lead to higher costs for us all. Although some argue that private companies can deliver more efficient performance than public utilities, a recent analysis of 40 years of water and sewer privatization found no evidence for improved cost savings from privatization 53 "Cost reduction was the key benefit claimed by privatization," wrote the study's authors, Germa Bel and Mildred Warner. Despite that claim, the evidence tells a different story. "The empirical research clearly shows that no direct and systematic relationship can be established between private production and cost savings or productivity." "Public choice theory emphasizes the importance of competition but we see that even in markets for waste collection the only potential competition is for the market — for the initial contract," they continued (emphasis original). "Empirical results suggest that competition for the market is not sufficient to ensure cost savings." A Clean Water Trust Fund: An Investment in the Future We need to address the real needs instead of creating false solutions. A public trust fund utilizing money collected and apportioned by the federal government represents the best, and most realistic, solution to the challenges facing our clean water infrastructure. A national trust fund can address issues equitably, particularly the needs of small and rural communities. A trust fund will enable the country to reach water quality goals uniformly instead of focusing issue by issue. Clean water investments ensure that social and environmental objectives are met — and will create jobs across the country. One billion dollars in federal infrastructure investment creates 47,500 jobs, $1.3 billion in worker income, and prompts $6.1 billion in overall activity; fully addressing the funding gap would employ more than 1 million people, pay them $28.6 billion, and spur more than $134 billion of economic movement.54 Job creation would be a welcome benefit of adequate funding, but sufficient infrastructure investment will serve an even greater function by protecting current positions. "I think the public and the politicians in Washington really need to understand for us to be competitive in a global economy," our systems must be maintained, said Trenton's Palmer. "We have got to recognize that this is important to our future generations... if we want to continue to grow our economy, we have to do it or we are going to lose out to countries all across the planet."55 As other nations invest heavily in the future, complacency on infrastructure could weaken our economic clout, agreed the Chamber of Commerce's Kavinoky. "The countries that are really showing leadership and understand the connection between their economies and global competitiveness and infrastructure are countries like India and China," she said, as well as Mexico, which recently approved a national infrastructure investment plan. "Those countries make this a very, very high priority, they make it clear... we seem to only make infrastructure a priority every once in a while, when a bill comes up, as opposed to saying `This is something that requires ongoing, important investment: "56 Efficient public systems currently deliver water services to 86 percent of Americans, while incentives for more private involvement lead to higher costs for us all. Although some argue that private companies can deliver more efficient performance than public utilities, a recent analysis of 40 years of water and sewer privatization found savings from privatization. no evidence for improved cost P] Where clean water trusts have been established, they have been successful. At least one potential prototype for a federal trust fund can be found in North Carolina, where the Clean Water Management Trust Fund helps safeguard that state's infrastructure and environment. Established by the North Carolina General Assembly in 1996, the CWMTF has administered more than $700 million in grants to local governments, state agencies, and conservation groups to improve surface water quality. Funds are appropriated by the Assembly, and are used to restore polluted waters and river buffers, improve failing wastewater collection and treatment systems, and prevent, control, and treat stormwater pollution. A 21-member board of trustees oversees the fund's allocation. Among the fund's accomplishments are 171 wastewater improvement projects and 57 stormwater management projects conducted with local municipalities, many of which incorporate environmental protection measures. For example, a recent grant to the Fayetteville Public Works commission will protect the Cape Fear basin from sediment and phosphorus runoff, and funds provided to the town of Marion will safeguard Lake James, one of North Carolina's cleanest lakes.57 The program has garnered praise from the independent North Carolina Progress Board, which in a recent annual report confirmed the link between responsible stewardship and economic growth. "States can and do have strong economies and protect the environment. In fact, the states with the strongest environmental records also claim the distinction of having the best job opportunities and climate for long term economic development," it said.58 The same seems true on the federal level, where trust funds are widely used to address problems too big for states alone to handle. The Government Accountability Office has identified more than 120 federal trust funds currently in operation.59 Some of the key ones are identified here. Highway Trust Fund — This fund, created by the Highway Revenue Act of 1956, draws money from taxes on motor fuel, sales of trucks, trailers, and truck tires, and the use of heavy vehicles to help pay for maintenance of national roadways. Harbor Maintenance Trust Fund — This trust, set up in accordance with the Water Resources Development Act of 1986, draws on the harbor maintenance excise tax and fees paid by ship passengers. Funds are spent on keeping the nation's economically critical harbor system in good working order. Oil Spill Liability Trust Fund — Created in 1986, this fund obtains its capital from fees on barrels of oil produced domestically or imported. Funds are used to clean up catastrophic environmental consequences in the event of an oil Spill. In addition to support for pollution abatement, interstate highways, and harbors, trust funds also finance botanical gardens, maintain the U.S. Capitol grounds, and restore wildlife habitats. Clean water, a public resource utilized by all Americans, certainly deserves the same protection. While state programs can help, they are few and far between. More importantly, clean water issues cross state borders — discharges from one state's sewers may contaminate rivers, streams, and lakes in another. Current and future problems surrounding clean water infrastructure are serious and broad enough to warrant federal intervention. A clean water trust fund would represent a dedicated and steady source of funding to begin addressing the 10 nation's public water needs. It would be free from political interference, would not contribute to the national debt, and would ensure all Americans' continued access to an essential resource. Research shows that where clean water is concerned, the public is willing to pay more. Republican pollster Frank Luntz found that a majority of Americans believe access to clean water is a right, not a privilege, and an overwhelming 83 percent would support legislation to create a long-term, sustainable trust fund to keep it that way.60 Americans believe that clean water is a national issue warranting a national solution, no matter where funds may be spent. "For the most part, environmental issues are seen as local or state challenges. Not here," Luntz said. "On rare occasions, the public turns to Washington for help and solutions. This is one of them." His research also indicated that voters would be more likely to re-elect a member of Congress who had supported clean water. Where Would the Money Come From? The National Association of Clean Water Agencies recommends that the revenue for a clean water trust should be broad -based, equitable, and secure.61 That rules out residential sewer or water bills, because nearly all the funds for current infrastructure investments are already collected from those bills. Imposing yet more of a burden on households alone is hardly equitable. Funding sources for a clean water trust should follow the pattern established by most federal trusts and come from industries that profit off of, or damage the quality of, clean water. A natural solution would be a "polluter pays" approach — industries and companies that hamper water A clean water trustfund would represent a dedicated and steady source of funding to begin addressing public water needs. It would from politico contribute to the nation's S quality in the course of conducting their business would pay to maintain the systems they harm. Many industries put pressure on our clean water systems. Manufacturers of "flushable products" such as soaps and detergents, toiletries, toilet tissue, water softeners, and cooking oils depend on access to clean water to keep their businesses afloat. The same goes for the toxic chemical industry. Research indicates that most consumers would support fees on these types of industries to fund clean water projects. Maine's McLaughlin suggested raising the money from a broad base of water users. In that case, a "tax on something that will go for improving water infrastructure would be less likely to face political opposition."6z Operating a Clean Water Trust Fund Although the CWSRF has been inadequately funded, the program's administrative structure is sound. A federal clean water trust should preserve much of that structure. The current model, where the federal government distributes funds to states, which in turn portion out money to municipalities, should be maintained with a few modifications. The federal government is the appropriate actor to collect revenue, and states have superior awareness of their own infrastructure needs, as well as the relationships with municipalities necessary to ensure that those needs are met. Greener Infrastructure = Cleaner Water In addition to safeguarding the pipes and treatment plants we use today, addressing the clean water needs of the future will require new technologies to help us deal with water needs in a way that places less strain on the environment. A 2005 bill calling for the creation of a clean water trust fund noted "significant further progress also requires the development of new wastewater technologies, improved e management techniques, and intensified research:'63 1 interference, would not the national debt, and would ensure all Americans' continued access to an essential resource. Fortunately, there are already several developing technologies that serve to reduce demands on infrastructure, protect the environment, and in many cases even save money for cash - strapped municipalities. Rain barrels, porous construction materials, smaller parking lots, 11 constructed wetlands, re -vegetated urban areas, and "green roofs" on buildings all prevent runoff and rainwater from ever entering a sewer, which reduces overflows. Some progressive cities have begun implementing these techniques and are already discovering just how big a difference a little change can make. Chicago's City Hall makes use of a 20,300 square foot green roof capable of retaining 75 percent of the water from a one -inch rainfall. This benefits the city's clean water system while saving nearly $3,60o annually in reduced heating and cooling costs due to the roof's effects on the temperature inside the building 64 Meanwhile, Portland, Oregon, laid out $8 million in subsidies to encourage families to disconnect their downspouts from the combined sewer system. Some $250 million in savings and one billion gallons of diverted stormwater later, Portland's experiment is now hailed as a model for cities across the country.65 If more cities and municipalities had the funds to invest in implementing green technologies, less demand would be placed on overburdened systems. That would mean more funding could be directed towards anticipating future problems rather than reacting to current ones. Conclusion: Time for a Trust Fund Acting to prevent failures, rather than reacting after they have occurred, should be the goal of our national infrastructure efforts. "Just because your water comes out Americans believe that clean water is a national issue warranting a national solution, no matter where funds may be spent. 12 right now when you turn the tap and it's not green [doesn't mean there isn't] a problem with the infrastructure that must be addressed," said Trenton's Palmer." "Traditionally, there's been an, `If it breaks, fix it,' attitude towards wastewater systems," said Kansas' Geisler. "So we're constantly in emergency mode. Thirty years ago, nobody would think about fixing their sewers until they overflowed and you had a basement full of sewage. That was a problem." Over the past five years, he said, as awareness has grown, so has the idea of maintenance management. "Now, the concept is "Let's figure out what condition it's in and let's fix it before it breaks. What condition is our sewer in? How soon do we fear it's going to fall down and cause these problems? Let's fix it before that happens." Such an attitude, if adopted at the federal level, will protect the environment, assist communities of all shapes and sizes, and actually save money. Sufficient funding of clean water systems now will prevent much larger outlays in the future. "If we spend x hours per year keeping it clean, we can avoid spending the money to replace it," Geisler continued. "It's a good attitude, because it costs a lot less money to keep something from breaking down than it does to fix it once it breaks."67 States and communities are making tremendous efforts to handle their clean water needs, but the problem is too big for them alone. The public has overwhelmingly claimed clean water as a national issue, and Congress should offer a solution that will keep politics out of critical infrastructure financing. Our clean water infrastructure needs help now. Instead of irresponsible private investment schemes, we need to plan ahead for future generations and create a dedicated source of public funding so that communities across America can keep their water clean, safe, and affordable. Water is a vital resource, critical for all of us. It deserves no less than the trust funds that help finance our highways, harbors, and wildlife habitats. It is time for a trust fund for clean and safe water. 13 Appendix A Inflation Adjusted Federal Funding for the Clean Water State Revolving Fund By State in Millions of Dollars (1991-2007) STATE 1991 1992 1993 1994 1995 1996 1997 1998 Alaska 18.8 17.3 16.6 10 10 16 4.8 14.3 Arkansas 20.5 18.9 18.1 10.9 11 17.5 5.2 15.7 Colorado 25.1 23.1 22.2 13.4 13.5 21.4 6.4 19.1 Delaware 15.4 14.2 13.6 8.2 8.2 13.1 3.9 11.7 Georgia 53.1 48.8 46.8 28.3 28.5 45.3 13.7 40.5 Idaho 15.4 14.2 13.6 8.2 8.2 13.1 3.9 11.7 Indiana 75.6 69.5 66.8 40.4 40.6 64.6 19.5 57.7 Kansas 28.3 26 25 15.1 15.2 24.2 7.2 21.6 Louisiana 34.5 31.7 30.5 18.4 18.5 29.4 8.9 26.3 Maryland 75.9 69.8 67 40.5 40.7 64.8 19.6 57.9 Michigan 135 124 119.1 72.1 72.4 115.2 34.8 103 Mississippi 28.3 26 25 15.1 15.2 24.1 7.2 21.6 Montana 15.4 14.2 13.6 8.2 8.2 13.1 3.9 11.7 Nevada 15.4 14.2 13.6 8.2 8.2 13.1 3.9 11.7 New Jersey 128.3 117.9 113.2 68.5 68.8 109.5 33.1 97.9 New York 346.4 318.4 305.8 185 185.8 295.6 89.3 264.4 North Dakota 15.4 14.2 13.6 8.2 8.2 13.1 3.9 11.7 Oklahoma 25.4 23.3 22.4 13.5 13.6 21.6 6.5 19.4 Pennsylvania 124.3 114.3 109.8 66.4 66.7 106.2 32 94.9 South Carolina 32.2 29.6 28.4 17.2 17.2 27.4 8.2 24.5 Tennessee 45.6 41.9 40.2 24.4 24.5 38.9 11.7 34.8 Utah 16.5 15.2 14.6 8.8 8.8 14.1 4.2 12.6 Virginia 64.2 59 56.7 34.3 34.5 54.8 16.6 49 West Virginia 48.9 45 43.2 26.1 26.2 41.8 12.6 37.3 Wyoming 15.4 14.2 13.6 8.2 8.2 13.1 3.9 11.7 14 1999 2000 2001 2002 2003 2004 2005 2006 2007 10.1 9.7 9.3 9.2 9 8.7 6.8 5.4 6.4 11 10.6 10.2 10.1 9.8 9.5 7.5 5.9 7 13.5 13 12.5 12.3 12 11.7 9.2 7.2 8.5 8.2 7.9 7.6 7.5 7.3 7.1 5.6 4.4 5.2 28.5 27.4 26.5 26.1 25.4 24.7 19.4 15.3 18.1 8.2 7.9 7.6 7.5 7.3 7.1 5.6 4.4 5.2 40.6 39.1 37.7 37.2 36.1 35.2 27.7 21.8 25.8 15.2 14.7 14.1 13.9 13.5 13.2 10.4 8.1 9.7 18.5 17.8 17.2 17 16.5 16.1 12.6 9.9 11.8 40.7 39.3 37.8 37.3 36.3 35.3 27.8 21.9 25.9 72.4 69.8 67.3 66.4 64.5 62.8 49.4 38.9 46 15.2 14.6 14.1 13.9 13.5 13.2 10.4 8.1 9.6 8.2 7.9 7.6 7.5 7.3 7.1 5.6 4.4 5.2 8.2 7.9 7.6 7.5 7.3 7.1 5.6 4.4 5.2 68.8 66.3 63.9 63.1 61.3 59.7 47 37 43.7 185.8 179.2 172.7 170.3 165.5 161.3 126.9 99.9 118.1 8.2 7.9 7.6 7.5 7.3 7.4 5.6 4.4 5.2 13.6 13.1 12.6 12.5 12.1 11.8 9.3 7.3 8.6 66.7 64.3 62 61.1 59.4 57.9 45.5 35.8 42.4 17.2 16.6 16.1 15.8 15.4 15 11.8 9.3 11 24.5 23.6 22.7 22.4 21.8 21.2 16.7 13.1 15.5 8.8 8.5 8.2 8.1 7.9 7.7 6 4.7 5.6 34.5 33.2 32 31.6 30.7 29.9 23.5 18.5 21.9 26.2 25.3 24.4 24.1 23.4 22.8 17.9 14.1 16.7 8.2 7.9 7.6 7.5 7.3 7.1 5.6 4.4 5.2 15 Appendix B Federal Funding for the Clean Water State Revolving Fund By State in Millions of Dollars (1991-2007) STATE 1991 1992 1993 1994 1995 1996 1997 1998 Alaska 12.3 11.6 11.5 7.1 7.3 12.1 3.7 8 Arkansas 13.4 12.7 12.6 7.8 8 13.2 4 8.8 Colorado 16.4 15.5 15.4 9.6 9.9 16.1 4.9 10.8 Delaware 10.1 9.5 9.4 5.8 6 9.9 3 6.6 Georgia 34.7 32.9 32.5 20.2 20.8 34.1 10.5 22.8 Idaho 10.1 9.5 9.4 5.8 6 9.9 3 6.6 Indiana 49.4 46.8 46.3 28.7 29.7 48.6 15 32.5 Kansas 18.5 17.5 17.3 10.8 11.1 18.2 5.6 12.2 Louisiana 22.6 21.4 21.1 13.1 13.5 22.2 6.8 14.8 Maryland 49.6 47 46.5 28.8 29.8 48.8 15.1 32.6 Michigan 88.2 83.5 82.6 51.3 53 86.8 26.8 57.9 Mississippi 18.5 17.5 17.3 10.7 11.1 18.2 5.6 12.1 Montana 10.1 9.5 9.4 5.5 6 9.9 3 6.6 Nevada 10.1 9.5 9.4 5.8 6 9.9 3 6.6 New Jersey 83.9 79.4 78.5 48.7 50.3 82.4 25.5 55 New York 226.5 214.5 212.2 131.6 136 222.7 68.8 148.6 North Dakota 10.1 9.5 9.4 5.8 6 9.9 3 6.6 Oklahoma 16.6 15.7 15.5 9.6 10 16.3 5 10.9 Pennsylvania 81.3 77 76.1 47.2 48.8 80 24.7 53.3 South Carolina 21 19.9 19.7 12.2 12.6 20.7 6.3 13.8 Tennessee 29.8 28.2 27.9 17.3 17.9 29.3 9 19.6 Utah 10.8 10.2 10.1 6.2 6.5 10.6 3.2 7.1 Virginia 42 39.8 39.3 24.4 25.2 41.3 12.8 27.6 West Virginia 32 30.3 30 18.6 19.2 31.5 9.7 21 Wyoming 10.1 9.5 9.4 5.8 6 9.9 3 6.6 16 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 proj. 8 8 7.9 8 7.9 7.9 6.4 5.2 6.4 4.2 8.8 8.8 8.7 8.7 8.7 8.7 7 5.7 7 4.6 10.8 10.7 10.6 10.7 10.6 10.6 8.6 7 8.5 5.6 6.6 6.6 6.5 6.5 6.5 6.5 5.2 4.2 5.2 3.4 22.8 22.7 22.5 22.5 22.4 22.4 18.2 14.8 18.1 11.8 6.6 6.6 6.5 6.5 6.5 6.5 5.2 4.2 5.2 3.4 32.5 32.3 32.1 32.1 31.9 31.9 26 21.1 25.8 16.8 12.2 12.1 12 12 12 12 9.7 7.9 9.7 6.3 14.8 14.8 14.6 14.7 14.6 14.6 11.8 9.6 11.8 7.7 32.6 32.5 32.2 32.2 32 32.1 26.1 21.2 25.9 16.8 57.9 57.7 57.2 57.3 57 57 46.3 37.7 46 30 12.1 12.1 12 12 11.9 11.9 9.7 7.9 9.6 6.3 6.6 6.6 6.5 6.5 6.5 6.5 5.2 4.2 5.2 3.4 6.6 6.6 6.5 6.5 6.5 6.5 5.2 4.2 5.2 3.4 55 54.8 54.4 54.5 54.1 54.2 44 35.8 43.7 28.5 148.6 148.1 146.8 147.1 146.2 146.3 118.9 96.7 118.1 76.9 6.6 6.6 6.5 6.5 6.5 6.5 5.2 4.2 5.2 3.4 10.9 10.8 10.7 10.8 10.7 10.7 8.7 7 8.6 5.6 53.3 53.2 52.7 52.8 52.5 52.5 42.7 34.7 42.4 27.6 13.8 13.7 13.7 13.7 13.6 13.6 11 9 11 7.1 19.6 19.5 19.3 19.4 19.2 19.3 15.7 12.7 15.5 10.1 7.1 7 7 7 6.9 7 5.6 4.6 5.6 3.7 27.6 27.5 27.2 27.3 27.1 27.1 22.1 17.9 21.9 14.3 21 20.9 20.7 20.8 20.6 20.7 16.8 13.7 16.7 10.9 6.6 6.6 6.5 6.5 6.5 6.5 5.2 4.2 5.2 3.4 17 Endnotes z6 "Report Card for America's Infrastructure." ASCE, op. cit. ' "Future Investment in Drinking Water and Wastewater Infrastructure." "Andres, Geoff. Personal interview. Illinois Department of Congressional Budget Office, November 2002. Environmental Protection, July 17, 2007. 2 Ibid. 28 McGoff, James. Personal e-mail. Indiana Finance Authority, 3 "Clean Water: A Bargain at Any Cost." Water Environment Federation, Environmental Programs, July 17, 2007. Washington, D.C., 2007. �9 "State Fiscal Year 2007/2oo8 Program Priority List." California Water Resources Board, September 20o7. Available at www.waterboards.ca.gov/ 4 Palmer, Douglas. National Public Radio, "The Diane Rehm Show," July agendas/20o7/sept/o9O4_6_exhibit_a.pdf 26, 2007. 5 "National City Water Survey 2005." United States Conference of Mayors Urban Water Council, Washington, D.C. September 2005. 6 McLaughlin, John. Personal Interview. Maine Department of Environmental Protection, Aug. 7, 2007. 7 "Optimization of Collection System Maintenance Frequencies and System Performance." American Society of Civil Engineers, Washington, D.C. November 1998. 8 "Drinking Water Distribution Systems: Assessing and Reducing Risks." National Research Council of the National Academies, 2oo6. 9 Ibid. '° Morgan, David. NPR, op. cit. " "Report Card for America's Infrastructure." American Society of Civil Engineers, Reston, Virginia, 2005. Available at www.asee.org/files/pdf/ reportcard/20 05 reportcardpdf. pdf 12 "Progress Made, Progress Lost." U.S. House of Representatives Transportation and Infrastructure Committee, Minority Staff Report, October 2004. 13 "The Clean Water and Drinking Water Gap Analysis." Office of Water, U.S. Environmental Protection Agency, Sept. 30, 2002. Available at www. epa.gov/safewater/gapreport.pdf 14 "Clean Water State Revolving Fund," U.S. Environmental Protection Agency. Available at http://www.epa.gov/owm/cwfinance/cwsrf/index. htm �5 "Annual U.S. Clean Water SRF Investment." Office of Water, U.S. Environmental Protection Agency, Nov. 3, 2oo6. Available at www.epa. gov/owm/cwfinance/cwsrf/cwnims/pdf/invus.pdf 16 "Budget of the United States Government, Fiscal Year 20o8." Office of Management and Budget, Feb. 5, 20o7. Available at www.whitehouse. gov/omb/budget/fy20o8/epa.html �7 McLaughlin, James. Op. cit. " "Clean Water State Revolving Fund Allotments." Office of Water, U.S. Environmental Protection Agency, Apr. 4, 20o7. Available at www.epa. gov/owm/cwfinance/cwsrf/cwsrfallots.pdf �9 "Federal Funding Declines Substantially for Clean Water State Revolving Fund." Northeast -Midwest Institute, Washington, D.C., December 20o6. Available at www.nemw.org/NEMWAPPROPSFacts— EPAWaterRLFsl2o6.pdf 21 "Budget of the United States Government, Fiscal Year 20o8." Op. cit. 2' Kirk, Ken. Executive Director, National Association of Clean Water Agencies, presentation at EPA funding conference, "Paying for Sustainable Water Infrastructure," Atlanta, GA, March, 2007. 22 Morgan, David. NPR, op. cit. �3 Howard, Brian. Personal e-mail. Washington State Water Quality Program, Financial Management Section, July 12, 2007. �4 Jordan, Scott. Personal interview. Massachusetts Water Pollution Abatement Trust, July 11, 2007. 25 "State Revolving Fund Loan Program for Clean Water Projects: CY 2007 Intended Use Plan and Project Priority List." Massachusetts Department of Environmental Protection, Dec. 29, 20o6. Available at www.mass.gov/dep/water/wastewater/o7ewiup.pdf 31 Kanter, Liz. Personal e-mail. State Water Board. State Water Board, California Environmental Protection Agency, Aug 3, 2007. 3' Mark, Brian. Personal interview. Wyoming Department of Environmental Protection, July 19, 2007. 32 D°Andrea, Maryclaire. Personal e-mail, New Jersey Environmental Infrastructure Trust, July 27, 2007. 33 "Future Investment in Drinking Water and Wastewater Infrastructure." CBO, op.cit. 34 "Annual U.S. Clean Water SRF Assistance by Community Size Category." Office of Water, U.S. Environmental Protection Agency, Nov. 3, 2oo6. Available at www.epa.gov/owm/cwfinance/cwsrf/cwnims/pdf/ csizeus.pdf 35 Geisler, Rod. Personal interview. Kansas Department of Health and Environment, Aug. 8, 2007. 36 Kanowitz, Morris. Personal interview. Nevada Department of Conservation and Natural Resources, July 31, 2007. 37 "Drinking Water Distribution Systems: Assessing and Reducing Risks." Op. cit. 38 Ibid. 39 "Implementation and Enforcement of the Combined Sewer Overflow Control Policy." Office of Water, U.S. Environmental Protection Agency, December 2001. Available at: http://cfpub.epa.gov/npdes/eso/epolicy— report.cfm 40 "Clean Watershed Needs Survey 2000, Report to Congress." Office of Wastewater Management, U.S. Environmental Protection Agency, August 2003. Available at: www.epa.gov/owm/mtb/cwns/20oorte/toe.htm 41 Ibid. 42 "Preliminary Report of the U.S. Commission on Ocean Policy, Governor's Draft." Washington, D.C., April 2004. Available at: www. oceancommission.gov 43 "Testing the Waters: A Guide to Water Quality at Vacation Beaches." Natural Resources Defense Council, Washington, D.C., August 2007. 44 Ibid. 45 "EPA 2oo6-2011 Strategic Plan." U.S. Environmental Protection Agency, September 29, 2oo6. Available at: www.epa.gov/ocfo/plan/2oo6/ entire_report.pdf q6 Heckathorn, Chip. Personal interview. Missouri Department of Environmental Quality, July 11, 2007. 47 Kavinoky, Janet. NPR, op. cit. 48 Kirk, Ken. Op. cit. 49 "Statement of Administration Policy: H.R. 720 - Water Quality Financing Act of 2007." Office of Management and Budget, March 8, 20o7. Available at: www.whitehouse.gov/omb/legislative/sap/1io-1/ hr720sap-h.pdf " "20o6 NACWA Service Charge Index Survey." National Association of Clean Water Agencies, Washington, D.C., January 2007. 51 "NACWA to Shed Light on Limits of Market -Based Approaches To Closing Clean Water Funding Gap." National Association of Clean Water Agencies, Washington, D.C., March 20, 2007. 18 52 Palmer, Douglas. NPR, op. cit. 53 Warner, Mildred and Bel, Germa. "Local Privatization and Costs: Theoretical Expectations vs. Empirical Evidence." Working paper, Cornell University and University of Barcelona, 2007. 54 Peters, Mary. Administrator, Transportation Research Board, United States Department of Transportation. Statement on Transportation Reauthorization, Jan. 13, 2003. 55 Palmer, Douglas. NPR, op. cit. 56 Kavinoky, Janet. NPR, op. cit. 57 "20o6 Annual Report." North Carolina Clean Water Management Trust Fund, Raleigh, North Carolina, 2007. 58 "North Carolina 20/20 Update Report." North Carolina Progress Board, Raleigh, North Carolina, Jan. 31, 20o6. 59 "Federal Trust and Other Earmarked Funds: Answers to Frequently Asked Questions." U.S. Government Accountability Office, Jan. 1, 2001. Available at: www.gao.gov/new.items/doliggsp.pdf 61 "Clean Water Trust Fund Memo." Luntz Research Companies/ Association of Metropolitan Sewerage Agencies, February 2004. 61 Krantz, Adam. Personal Interview. National Association of Clean Water Agencies, Jun. 22, 2007. 62 McLaughlin, James. Op. cit. 63 "Clean Water Trust Act of 2005." Proposing legislation. 64 Dunn, Alexandra D. and Stoner, Nancy. "Green Light for Green Infrastructure." The Environmental Forum, May/June 2007. 65 Ibid. 66 Palmer, Douglas. NPR, op. cit. 67 Geisler, Rod. Op. cit. 19 Notes: 20 21 Food & Water Watch 1400 16th St. NW, Suite 225 Washington, DC 20036 food�wate tel: (202) 797-6550 fax: (202) 797-656o foodandwater@fwwatch.org www.foodandwaterwatch.org The Top Five Reasons to Keep Florida's Water in Public Hands The research shows five main ways that private control of water is a bad deal for Florida. 1. High Water Rates. The typical Florida house- hold pays 20 percent more for water and 15 percent more for sewer service from a private, for -profit utility than for service from a local government. That's an extra $126 a year for both (see figure 1).2 Aqua Utilities Florida (water and sewer). In 2oo8, Aqua Utilities Florida, a subsidiary of Aqua America, sought to impose a statewide uniform rate structure on its 82 water and sewer systems in 16 counties.3 In March 2009, regulators allowed the company to increase rates and consolidate them into four rate groups, with statewide rates as the long-term goal. As a result of the change, the typical household using 7,000 gallons a month saw its water bill jump 86 percent and its sewer bill jump 49 percent. That's an extra $50o a year for water and sewer service.4 2. Expensive Financing. Private financing is far more expensive than public financing (see figure 2). From 2000 to 2oo8, even the best -rated corporate bond was 24 percent more expensive than a typical municipal bond issued in the state, and 184 percent more expensive than loans from Florida's State Revolving Fund programs 5 Tampa Bay (water). In 2002, Tampa Bay Water bought out Poseidon Resources and took ownership over its desalination project in order to reduce fi- nancing costs. Tampa Bay Water was a well -regarded utility with a high bond rating, so it could sell bonds with low interest rates.6 3. Clean Water Act Violations. Privately op- erated major municipal sewage treatment plants were 35 percent more likely than their publicly operated counter- parts to have current alleged significant violations of their wastewater permits in May 2009 (see figure 3).7 4. High Operating and Construction Costs. Public control is a better deal for the ratepayer and the taxpayer. Citrus County (water and sewer). In 2009, in or- der to save money during the economic slump, Citrus County decided to have public employees take over the operation of eight water plants and four wastewa- ter plants that Severn Trent Services had managed.8 Tampa Bay (water). In 1999, Tampa Bay Water awarded a contract to an engineering firm and Posei- don Resources to build and begin operating a desali- nation plant by January 2003.9 At the end of 2007, after the public agency bought out the private owner, the plant finally began supplying water at capacity. It was nearly five years late and $40 million over budget, and water costs were 62 percent greater than originally projected.'° 5. Bad Service. Service problems have plagued many cities and towns whose water or sewer service is privately controlled. Chuluota (water). Since January 20o6, Aqua Utili- ties Florida's Chuluota water system contained tri- halomethanes, a suspected carcinogen, at levels that violated federal water quality standards. In January 2007, Florida's Division of Environmental Protection ordered the corporation to reduce the amount of the contaminant in the water, but at the end of 20o8, despite equipment upgrades, average levels remained too high." Lee County (water and sewer). In 2000, after five years of private control of their water and sewer systems, Lee County decided against renewing its contract with Severn Trent Environmental Services. The county's utilities director issued a memo with 21 pages of problems and estimated that it would take more than $8 million to restore the poorly main- tained systems to the condition that they were in prior to privatization.12 The Solution: Public Money for Public Utilities Local governments should keep their water and sewer ser- vices in public hands and reject privatization. Instead of al- lowing irresponsible private control of our water, we need to plan ahead for future generations and create a dedicated source of public funding so that communities across the country can keep their water clean, safe and affordable. A federal Clean Water Trust Fund for water and sewer systems would realize this goal and take the burden of re- juvenating our water infrastructure off state and munici- pal coffers. To maximize the public benefit and to protect taxpayers and ratepayers, this money should be available only to public entities and public projects. Florida needs a federal trust fund to ensure safe and sound water and wastewater systems now and for future generations. End Notes 1 Florida Statutes, §373.o16 (2oo8). 2 South Florida Water Management District. "2oo8 Monthly Water & Sewer Rates." July 2oo8 at 2 and 4; Florida Public Service Commission. "Com- parative Rate Statistics." December 31, 2oo8 at D-4 to D-16. 3 Florida Public Service Commission. "Special Report." September 2oo8 at 1. 4 Florida Public Service Commission. "Vote Sheet." (Docket No. 08o121-WS ). March 25, 2oo9 at 1 to 3; Florida Public Service Commission. Division of Economic Regulation and Office of the General Counsel. "3/25/09 — Spe- cial Agenda — Post -Hearing Decision." (Docket No. 080121-WS). March 18, 2009 at 23 to 104. 5 U.S. Environmental Protection Agency, Office of Water. "Weighted Average Interest Rate of Clean Water SRF Assistance, by State." October 10, 2008; U.S. Environmental Protection Agency, Office of Water. "Interest Rates for Drinking Water SRF Assistance, by State." October 10, 2008; The Federal Reserve Board. Data Download Program. Available at www.federalreserve. gov, accessed January 26, 2oo9. 6 Stockfisch, Jerome R. and Neil Johnson. "Obstacles swamp desalination plant." The Tampa Tribune. October 19, 2003. 7 U.S. Environmental Protection Agency. Enforcement and Compliance History Online. Available at www.epa-echo.gov, accessed May 4, 2009; contract operations may be incomplete, compiled from corporate press releases, on file with Food & Water Watch. 8 Douglas, Robby. "Four county utility workers laid off; economy blamed." Citrus Daily. February 2, 2009. 9 Heller, Jean. "Board agrees on builder for desal plant." St. Petersburg Times. July 20, 1999. 10 "Desalination: doing it right — Environmental, fiscal questions remain un- answered." Daytona Beach News -Journal. June 8, 2oo8; Salinero, Mike. "Desalination plant OIz'd to join system." The Tampa Tribune. December 18, 2007; Pittman, Craig. "5 years late, 4M gallons short." St. Petersburg Times. January 26, 2oo8. 11 U.S. Environmental Protection Agency, Envirofacts Warehouse. Safe Drinking Water Information System. Available at www.epa.gov/enviro/ html/sdwis/sdwis_query.html, accessed May 8, 2oo9; Dodson, Izimberly. Florida Department of Environmental Protection. Testimony on Ap- plication for increase in water and wastewater rates in Alachua, Brevard, Desoto, Highlands, Lake, Lee, Marion, Orange, Palm Beach, Pasco, Polk, Putnam, Seminole, Sumter, Volusia, and Washington Counties by Aqua Utilities Florida, Inc. Florida Public Service Commission. October 27, 2oo9; Jackson, Rachael. "Chuluota wins round in battle over water." Or- lando Sentinel. March 26, 2oo9. 12 Whitehead, Charlie. "Utilities' boss: $8M in work not done." Naples Daily News. May 5, 2001; Association of Metropolitan Sewerage Agencies and the association of Metropolitan Water Agencies. "Evaluating Privatization IL• An AMSA/AMWA Checklist." 2002 at 28.