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[Senate Hearing 106-618]
[From the U.S. Government Publishing Office]

                                                        S. Hrg. 106-618

 
                          WATER INFRASTRUCTURE

=======================================================================

                                HEARING

                               BEFORE THE

                              COMMITTEE ON
                      ENVIRONMENT AND PUBLIC WORKS
                          UNITED STATES SENATE

                       ONE HUNDRED SIXTH CONGRESS

                             FIRST SESSION

                                   ON

  S. 968, A BILL TO AUTHORIZE THE ADMINISTRATOR OF THE ENVIRONMENTAL 
PROTECTION AGENCY TO MAKE GRANTS TO STATE AGENCIES WITH RESPONSIBILITY 
  FOR WATER RESOURCE DEVELOPMENT, FOR THE PURPOSES OF MAXIMIZING THE 
   AVAILABLE WATER SUPPLY AND PROTECTING THE ENVIRONMENT THROUGH THE 
                DEVELOPMENT OF ALTERNATIVE WATER SOURCES

  S. 914, A BILL TO AMEND THE FEDERAL WATER POLLUTION CONTROL ACT TO 
REQUIRE THAT DISCHARGES FROM COMBINED STORM AND SANITARY SEWERS CONFORM 
  TO THE COMBINED SEWER OVERFLOW CONTROL POLICY OF THE ENVIRONMENTAL 
                           PROTECTION AGENCY

  S. 1699, A BILL TO AMEND THE FEDERAL WATER POLLUTION CONTROL ACT TO 
 AUTHORIZE APPROPRIATIONS FOR STATE WATER POLLUTION CONTROL REVOLVING 
                                 FUNDS

                               __________

                            OCTOBER 7, 1999

                               __________

  Printed for the use of the Committee on Environment and Public Works

                    U.S. GOVERNMENT PRINTING OFFICE
63-228 cc                   WASHINGTON : 2000
_______________________________________________________________________
            For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 
                                 20402

               COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

                       one hundred sixth congress
                 JOHN H. CHAFEE, Rhode Island, Chairman
JOHN W. WARNER, Virginia             MAX BAUCUS, Montana
ROBERT SMITH, New Hampshire          DANIEL PATRICK MOYNIHAN, New York
JAMES M. INHOFE, Oklahoma            FRANK R. LAUTENBERG, New Jersey
CRAIG THOMAS, Wyoming                HARRY REID, Nevada
CHRISTOPHER S. BOND, Missouri        BOB GRAHAM, Florida
GEORGE V. VOINOVICH, Ohio            JOSEPH I. LIEBERMAN, Connecticut
MICHAEL D. CRAPO, Idaho              BARBARA BOXER, California
ROBERT F. BENNETT, Utah              RON WYDEN, Oregon
KAY BAILEY HUTCHISON, Texas
                     Jimmie Powell, Staff Director
               J. Thomas Sliter, Minority Staff Director

                                  (ii)

                            C O N T E N T S

                              ----------                              
                                                                   Page

                            OCTOBER 7, 1999
                           OPENING STATEMENTS

Chafee, Hon. John H., U.S. Senator from the State of Rhode Island     1
Graham, Hon. Bob, U.S. Senator from the State of Florida.........     9
Lautenberg, Hon. Frank R., U.S. Senator from the State of New 
  Jersey.........................................................     6
Smith, Hon. Robert, U.S. Senator from the State of New Hampshire.     7
Voinovich, Hon. George V., U.S. Senator from the State of Ohio...     2
Warner, Hon. John W., U.S. Senator from the Commonwealth of 
  Virginia.......................................................    41

                               WITNESSES

Dorfman, Gerry, president, Dorfman Construction Company, Woodland 
  Hills, CA, on behalf of the National Utility Contractors 
  Association....................................................    24
    Prepared statement...........................................    56
Fox, Hon. J. Charles, Assistant Administrator, Environmental 
  Protection Agency..............................................    11
    Prepared statement...........................................    46
Kamppinen, Thomas, chief of the municipal facilities program, 
  Michigan Department of Environmental Protection, on behalf of 
  the Association of State and Interstate Water Pollution Control 
  Administrators.................................................    27
    Prepared statement...........................................    60
    Responses to additional questions from Senator Chafee........    63
Mason, Gregory, State revolving fund program manager, Georgia 
  Environmental Facilities Authority, on behalf of the Council of 
  Infrastructure Financing Authorities...........................    25
    Prepared statement...........................................    58
Vergara, E.D. ``Sonny'', executive director, Southwest Florida 
  Water Management District......................................    29
    Prepared statement...........................................    65
Wieczorek, Hon. Raymond J., Mayor, City of Manchester, NH, on 
  behalf of the CSO Partnership..................................    22
    Prepared statement...........................................    54
    Responses to additional questions from Senator Chafee........    55

                          ADDITIONAL MATERIAL

Letters:
    Associated Builders and Contractors, Rosslyn, VA.............    45
    Association of Metropolitan Sewerage Agencies................    78
    Bangor, ME...................................................    44
    Lincoln, ME, Sanitary District...............................    44
    Orono, ME....................................................    43
Statements:
    American Society of Civil Engineers..........................    70
    Hirsch, Dr. Robert, Chief Hydrologist, U.S. Geological Survey    76
    Mack, Hon. Connie, U.S. Senator from the State of Florida....    40
    Robb, Hon. Charles S., U.S. Senator from the Commonwealth of 
      Virginia...................................................    41
    Snowe, Hon. Olympia J., U.S. Senator from the State of Maine.    42
Texts of:
    S. 968, A bill to authorize the Administrator of the 
      Environmental Protection Agency to make grants to State 
      agencies with responsibility for water resource 
      development, for the purposes of maximizing the available 
      water supply and protecting the environment through the 
      development of alternative water sources...................    88
    S. 914, A bill to amend the Federal Water Pollution Control 
      Act to require that discharges from combined storm and 
      sanitary sewers conform to the Combined Sewer Overflow 
      Control Policy of the Environmental Protection Agency......    94
    S. 1699, A bill to amend the Federal Water Pollution Control 
      Act to authorize appropriations for State water pollution 
      control revolving funds....................................   100

                          WATER INFRASTRUCTURE

                              ----------                              

                       THURSDAY, OCTOBER 7, 1999

                                       U.S. Senate,
                              Environment And Public Works,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 9:30 a.m. in room 
406, Senate Dirksen Building, Hon John H. Chafee (chairman of 
the committee) presiding.
    Present: Senators Chafee, Voinovich, Thomas, Lautenberg, 
Smith and Graham.

           OPENING STATEMENT OF HON. JOHN H. CHAFEE, 
          U.S. SENATOR FROM THE STATE OF RHODE ISLAND

    Senator Chafee. Good morning, everyone.
    This is the hearing on water infrastructure by the Full 
Committee. I would like to welcome everyone to the committee 
and thank all the witnesses who are going to be testifying this 
morning.
    The purpose of today's hearing is to learn more about three 
bills before the committee that deal with water infrastructure. 
I have received statements from Senator Snow of Maine and 
several elected officials in Maine in support of S. 914, and I 
am asking that these statements be placed in the record.
    The primary funding mechanism for water infrastructure is 
the Clean Water State Revolving Loan Fund, otherwise known as 
the SRF. The Federal Government provides grants to States to 
capitalize their loan funds. The States use the money to make 
low interest loans to local governments for the construction of 
sewage treatment plants and other infrastructure projects.
    As the loans are repaid, the principal and interest return 
to the fund, creating a perpetual funding source for projects. 
Since the creation of the program in 1987, the SRF has done an 
amazing job of funding waste water infrastructure projects. 
Every State and nation has established a revolving fund, and 
the SRF has provided more than $27 billion in loans to local 
governments.
    While the SRFT program has been remarkably successful, the 
need for investment and infrastructure still remains very high. 
According to the latest Clean Water Need Survey, conducted by 
EPA, our nation faces $140 billion in waste water 
infrastructure needs over the next 20 years. The EPA is 
currently in the process of revising this estimate, and the 
revised number is expected to be roughly $200 billion. The EPA 
is in the process of conducting a gap analysis to determine the 
discrepancy between our annual needs for waste water 
infrastructure and our annual investment. Preliminary data 
indicates the gap between what we need and what we invest is 
around $6 billion a year. This data indicates that our nation 
is facing a very large bill, and Congress needs to do some 
careful thinking about how we're going to meet this burden.
    Now, the bills before us this morning seek to address this 
issue. Senator Smith has S. 914, which focuses on the problem 
of combined sewer overflows. During the wet season, hundreds of 
communities around our country, with combined sewer systems, 
are forced to discharge raw sewage into nearby water bodies.
    While there are ways to stop this problem, many of the 
solutions entail significant investment, and involve expanding 
treatment works or constructing storage facilities. Senator 
Smith's bill would codify the existing combined sewer overflow 
policy and create a grants program to help CSO projects. 
Senator Voinovich has introduced a bill, which would 
reauthorize the Clean Water SRF. It increases funding levels to 
$3 billion a year for the next 4 years. The bill contains 
sections, which expand the eligibility of the SRF and provide 
additional assistance to small and disadvantaged communities. 
The bill contains language relating to the cap on 
administrative fees, the State match contribution and other 
Federal requirements.
    Our third bill is S. 968, the Alternative Water Supply Act 
of 1999, introduced by Senator Graham of Florida. As our 
population grows and expands, increasing amounts of water are 
needed for urban development, agriculture, environmental needs. 
In many high-growth areas, traditional sources of water supply 
will no longer satisfy demand. The bill would create a 
competitive grants program within EPA for the purpose of 
helping States develop alternative water supply. Eligibility 
for the program would be limited to States that do not receive 
money from the Bureau of Reclamation for water supply projects.
    Senator Voinovich, do you have a statement you would like 
to make?
    Senator Voinovich. Yes, I do, Mr. Chairman.
    Senator Chafee. All right, why don't you proceed?

        OPENING STATEMENT OF HON. GEORGE V. VOINOVICH, 
              U.S. SENATOR FROM THE STATE OF OHIO

    Senator Voinovich. First of all, I'm pleased to be here 
today to discuss the water infrastructure needs across our 
nation.
    As the chairman has pointed out, S. 1699, which was 
introduced yesterday, will reauthorize the highly successful 
Clean Water Revolving Loan Fund for 5 years at a total level of 
$15 billion.
    As my colleagues know, the Clean Water State Revolving Loan 
Program is an effective and immensely popular source of funding 
for State and local governments to help finance waste water 
collection and treatment projects. Since the creation of the 
State Revolving Loan Fund in 1987, the total Federal 
capitalization grants have been nearly doubled by non-Federal 
funding sources--in other words, it's a good way to leverage 
additional money, including State contributions, levered bonds 
and principal and interest payments.
    Communities of all sizes are participating in the program, 
and approximately 7,000 projects nationwide have been approved 
to date. In my State, our needs for public water system 
improvements greatly exceed the current SRF appropriation 
levels. According to our latest State figures, more than $7 
billion of improvements have been identified as necessary.
    In recent years, Ohio cities and villages are spending more 
on maintaining and operating their systems, which is an 
indication that their systems are aging and will soon need to 
be replaced. For example, the City of Columbus recently 
requested SRF assistance amounting to $725 million over the 
next 5 years. Even though the SRF program has been a success, 
as the chairman has pointed out, the needs are terrific. 
Originally, the last estimate was $139 billion over 20 years; 
now, the revised figure is $200 billion, and independent 
analysis says that it may be more like $300 billion when you 
look at anticipated replacement costs that are needed.
    Unfortunately, this Act lapsed each passing year without 
authorization. Congress, I think, sends an implicit message 
that waste water collection and treatment is not a national 
priority.
    Now, I just want to point out, Mr. Chairman, that this 
whole program came about as a result of the Clean Water Act 
that I remember way back in the late 1960's, early 1970's. As a 
matter of fact, I'll never forget the first resolution that I 
introduced in 1966 or 1967 in the Ohio legislature was a $375 
million bond issued for waste treatment facilities in the State 
of Ohio. It was about that time that Bill Ruckleshaus and 
company recommended the Federal Government get involved, and we 
went to the 75-25--75 percent Federal, 25 percent local--and 
that program worked for a long time, but it was very expensive. 
And then in 1987 it was decided that we ought to go to a 
revolving loan program, which most people felt was a more 
modest way of dealing with the problem, and also, as I 
mentioned earlier, leveraged local funding.
    Currently, Mr. Chairman, I think on the present 
appropriations there's about $3.5 billion in the budget, and 
we're asking for $3 billion each year over 5 years. The point 
I'm making is that this is a mandate from the Federal 
Government, Mr. Chairman, and it's something that needs to be 
funded, and at this juncture, while we're debating the budget, 
one of my problems as a new member of this body is that there 
are so many areas where the Federal Government has mandated 
things to be done, but once we mandate them, we don't provide 
the resources to fund the mandate. We continue to get into more 
and more areas, and when we talk about this problem, we have 
education, we have all kinds of other things out there, and it 
seems to me that we're coming to a point, Mr. Chairman, where 
this U.S. Senate ought to look at our priorities in terms of 
what are our Federal responsibilities and what are our local 
responsibilities, and who has the responsibility to fulfill 
these things.
    It seems to me that this is something that we should be in. 
It's fundamental, our communities are stepping to the plate, 
and you can argue about how much money and what the 
responsibility is, and, for the local government officials 
here, you want more money from the Federal Government for your 
help. If you don't get it, it means what? It means you have to 
raise taxes at the local level or raise your rates, and the 
issue is what's the balance?
    When I was mayor, we increased water rates 300 percent 
during 10 years in order to replace our aging water supply 
system. So one of the things that we need from those of you who 
represent local government and so on is to figure out how much 
each of us are responsible for understanding that we have a 
Federal Government that's bankrupt, that's $5.7 trillion in 
debt, and that we've been using Social Security, our pension 
funds, during the last number of years to pay for things that 
we weren't willing to pay for or do without. This is the time 
when we really need to sit together and decide how do we work 
this out, and the reason I'm bringing it up is that everybody 
wants everything, and there's a limit on it. I'm telling the 
Governors that they're in much better shape, frankly, right now 
to fund some of these things than we are in the Federal 
Government because they're sitting on large surpluses, they're 
reducing taxes, at a time when we're in trouble on the Federal 
level.
    I don't know what the number is--$3 billion a year? Is it 
$1.5 billion? I know one thing, we have a responsibility in 
this area to help our State and local governments with the 
problem that they have, and I think this legislation is good 
because it's like the Safe Drinking Water Act while I was 
Governor of Ohio for the National Governors that provides a lot 
more help to local governments, small governments, that just 
don't have the capacity to get the job done.
    The other bill, Mr. Chairman, and I'll mention it briefly, 
is Senator Smith's bill, and that's combined sewer and water 
overflow. It's another major problem, and, again, the local 
governments do not have the capacity to come up with the 
dollars that are necessary to get the job done, and, again, 
what's our responsibility? To help them get the job done so 
that they can take care of this fundamental problem that we 
have.
    I can tell you this, Mr. Chairman--today, Lake Erie is a 
great fishery. When I came to the legislature in 1967 in Ohio, 
it was a dying lake. BBC was the river that burned, it was 
dying from eutrophication and so forth. Today, it's a great, 
great lake, and the reason is because of the money that we 
poured in over the years in cleaning up our waste treatment 
facility so we have tertiary treatment; it's the money that's 
been put in by our businesses to clean up the water that 
they're putting back in the lake; it's the effort that we made 
to separate sewer and water so that we don't take sewage when 
we have an overflow and dump it into the rivers and streams.
    These are fundamental problems that need to be dealt with 
in our country, and I think it should be given a high priority, 
and I'm hopeful that this legislation will be looked upon 
favorably by Congress, and that we can get the authorization 
committees to come up with a sum of money that will help move 
us along in this area.
    Thank you.
    Senator Chafee. Thank you, Senator. It is encouraging what 
has taken place in Lake Erie, and so the results are coming 
through, as you pointed out.
    Senator Thomas. Thank you, Mr. Chairman. I have no 
statement. I saw this little map in which the green is all in 
the East, so I thought I better come and protect ourselves a 
little bit here. Of course, I am interested in water quality 
and interested in improving it, interested also in how it's 
paid for, and, as President Nixon said when he was in China, 
``That's a great wall,'' and that is a great lake.
    I'm anxious to hear the witnesses, thank you.
    [A copy of the map follows:]

    
    
    Senator Chafee. Thank you.

        OPENING STATEMENT OF HON. FRANK R. LAUTENBERG, 
           U.S. SENATOR FROM THE STATE OF NEW JERSEY

    Senator Lautenberg. Well, I too am interested in hearing 
the testimony, but I do want to take a minute. First of all, I 
want to say to Senator Voinovich that I enjoyed hearing his 
commentary this morning and in other cases as well because, 
having been a major and a Governor, you have to understand what 
the needs are from the Federal Government, and I think that's 
an important insight that we have. The tables sometimes turn on 
what's in the eyes of the beholder, and I see things that I 
consider essential in addition to the environmental things 
because my tiny little State, ninth largest in population in 
the country, most densely populated, has all kinds of 
opportunities and problems. Our opportunities come out of the 
vibrancy and talent of our citizens, and we have to make up for 
what we lack in natural resources by husbanding those resources 
pretty carefully and making sure we treat things properly.
    So I commend the Senator from Ohio, and I want to say, Mr. 
Chairman, today, as the committee considers legislation aimed 
at growing problems for many of our older cities, the problem 
of water pollution caused by combined sewer overflows is really 
a very difficult problem. In my own State of New Jersey, CSOs 
are one of the most serious environmental threats to water 
quality.
    My State has a large number of combined sewer systems, 25 
in the New Jersey cities and combined, waste water, rain water, 
into our waterways at 281 discharge points, and my hometown, my 
birth place, Patterson, is one of the cities struggling to 
upgrade its sewage treatment system and prevent urban run-off 
into the Passaic River. It had a proud industrial past, and now 
we pay heavily for some of the designs and neglect that took 
place over the years. During heavy rain storms, sewage and rain 
water that cannot be handled by our Passaic Valley sewage 
plant, which is a combination of several communities, are 
diverted--the system of seven other cities along the Passaic 
River, including Patterson, Newark, Jersey City. And, as a 
result, much of this untreated waste is then discharged 
directly into the Passaic River.
     Now, the EPA deserves credit for working closely with the 
States and the municipalities to implement the combined sewer 
overflow control policy. However, as was clearly said by 
Senator Voinovich, many of the cities need more help. Many of 
the strategies that they'll need to adopt--the so-called best 
management practices required by EPA--are going to cost more 
than our cities or our States alone can bear. The cost of these 
controls, in fact, are staggering. Patterson, Jersey City, 
Elizabeth--each estimate that their CSO control plans will cost 
over $20 million, and New Jersey's of share the Clean Water Act 
State Revolving Fund program is scarcely more than $50 million.
    The cities applying for the funds for their CSO projects 
must compete with cities upgrading to accomplish secondary 
treatment costs, and, clearly, the Federal Government can and 
must do more.
    Once again, I commend Senator Voinovich for addressing the 
problem that increased the funding level for the State 
Revolving Fund. That's an important first step in assisting 
municipalities charged with one of the most critical 
environmental protection missions.
    I agree with Senator Smith that we need to fund additional 
resources to address the serious problem of combined sewage 
overflows, and it's interesting to see the variety of 
composition of States at this table. Those that are less 
populated, those that are not known primarily as industrial 
States, are reaching out for a similar need to those that we 
find in our industrialized States.
    So, Mr. Chairman, I thank you for holding this hearing, and 
look forward to the testimony from our witnesses.
    Senator Chafee. All right, thank you.
    Senator Smith?

            OPENING STATEMENT OF HON. ROBERT SMITH, 
          U.S. SENATOR FROM THE STATE OF NEW HAMPSHIRE

    Senator Smith. Thank you very much, Mr. Chairman, and thank 
you for holding this hearing today on S. 914.
    It's a bill that I'm pleased to say I authored, and we have 
14 cosponsors, along with a great deal of help from Senator 
Snowe of our neighboring State of Maine. I'm especially pleased 
this morning that Mayor Ray Wieczorek of Manchester is here to 
share his views on the challenges facing Manchester, which I 
think is a good microcosm of problems that we're facing 
nationwide wherever there are CSO communities across the 
country.
    I want to say, Mr. Chairman, that this bill has undergone 
significant revisions. We've worked on a bipartisan basis with 
many of my colleagues in an effort to come up with a 
substitute, which you have here this morning. We've also worked 
with the EPA extensively. I'm somewhat disappointed--very 
disappointed--that the EPA has not chosen to be more 
supportive. It's disappointing since we've spent a lot of time 
with them to try to work it out, but the issue of CSOs is not 
exactly the most glamorous subject that we talk about.
    As a matter of fact, I just left a hearing on the 
Comprehensive Test Ban Treaty where our colleague Senator 
Warner is right now. It might be a little bit more glamorous--I 
don't know if it's any more or less important, however--but for 
small and medium-sized cities in this country correcting the 
CSO problem is a big issue that comes with a big price tag. I 
guess when I was elected to the Senate, I'm not sure I knew 
what a CSO was--Mayor Wieczorek probably did--but it is amazing 
the number of issues we become involved in. When my friend, the 
Mayor of Manchester, came to me several years ago with his 
concerns, we were really both talking about rate payers, those 
who pay the water bills, because those are the ones who are 
going to be influenced the most. The mayor will go into further 
detail about Manchester's situation, but, suffice it to say, 
the city was potentially looking at about a tenfold increase in 
its sewer rates to comply with the EPA's original mandate.
    That simply was unacceptable, in my view, and I think in 
the mayor's. So after several years of negotiations with EPA 
they did agree to a phased-in approach so that the rate payers 
would not have to absorb this tremendous cost all at once, but 
it's still a significant burden on communities and the citizens 
of cities like Manchester.
    Even the City of Nashua, to the South of Manchester, will 
face an 80 percent increase in their sewer rates, but it was 
Mayor Wieczorek and the representatives from numerous other CSO 
communities who convinced me that we had to change the law, 
that this legislation became necessary.
    So this bill would authorize a critical funding partnership 
between our local State and Federal Governments to facilitate 
the implementation of CSO controls and clean up the 
environment, and we're talking about a $1.5 billion item over 4 
years involving competitive bidding, I might add.
    In addition to funding assistance, the bill would 
essentially codify EPA's 1994 CSO policy, a document that was 
formulated through a broad-based stakeholder process and gave 
communities the additional flexibility that they need to comply 
with CSO mandates.
    Unfortunately, though, it's just a policy, so we need the 
law so that cities--many cites have been sued over CSO problems 
because it's policy rather than law. So many of these systems, 
I might say, Mr. Chairman, go back to the turn of the century 
when some of the sewerage pipes that were put in were state-of-
the-art at the time, but if we look at them today, they're 
hardly state-of-the-art; in fact, some estimates run as high as 
$100 billion nationwide just to correct these problems. 
Unfortunately, these communities comprise much of America's 
declining urban core and often times areas least able to afford 
these enormous costs.
    It is my belief that these communities have made a 
compelling case for financial assistance. It's not a matter of 
trying to avoid environmental responsibilities. I can remember 
when I first came to Congress 15 years ago in the City of 
Manchester raw sewage was pumped into the Merrimack River, and, 
largely due to the leadership of the current mayor and some of 
his predecessors, that has stopped and we have made tremendous 
progress. But when you look at the cost, a very small 
percentage of pollution from CSOs--and, as we like to say 
jokingly, only when it rains--when you take the ratio between 
the cost and the amount of pollution, we had to be reasonable. 
This had to be phased in, and so I'm pleased to be in a 
position here to try to help these communities, to help out 
local taxpayers, and this legislation will go a long way to 
helping out the environment as well.
    So I think it's a win in every way, Mr. Chairman--it helps 
the environment, it's good law, it helps the rate payers, water 
payers, and it helps the communities. For these reasons, I'm 
proud to sponsor it, and I look forward to its passing this 
committee on a timely manner.
    [The prepared statement of Senator Smith follows:]
  Statement of Hon. Robert Smith, U.S. Senator from the State of New 
                               Hampshire
    Thank you, Mr. Chairman, for holding this hearing today on water 
infrastructure legislation, including S.914, the CSO Control and 
Partnership Act that I introduced with Senator Snowe and others earlier 
this spring. I'd like to report that the bill currently has 14 
cosponsors. And, I am especially pleased that Mayor Ray Wieczorek of 
Manchester, New Hampshire, is here to share his views on the challenges 
facing Manchester and other CSO communities across the country.
    Before I continue, I should note that the CSO bill has undergone 
significant revisions and that a complete substitute will be the 
subject of the testimony before the committee today. These revisions 
reflect my attempt at addressing some of the comments and concerns that 
I received on the bill. It is my understanding that copies of this 
revised version have been circulated in advance so that our witnesses 
could review it.
    The issue of Combined Sewer Overflows (or CSOs for short) is not 
exactly the most glamorous subject we discuss on Capitol Hill. Yet, for 
so many small and medium-size cities in this country, correcting their 
CSO problem is a big issue that comes with a big price tag! I became 
more aware of the CSO problem when my friend Mayor Wieczorek came to me 
several years ago with his concerns for Manchester's ratepayers. I'll 
let the mayor go into further detail about Manchester's situation, but 
suffice it to say, the City was potentially looking at a tenfold 
increase in its sewer rates to comply with EPA's original mandate. 
After several years of negotiations with EPA, they agreed to a phased-
in approach, but it still remains a significant financial burden on the 
citizens of Manchester. Likewise, Nashua residents will face a more 
than 80 percent increase in their sewer rates.
    It was Mayor Wieczorek and representatives from numerous other CSO 
communities who convinced me that this legislation is necessary. The 
bill would authorize a critical funding partnership between our local, 
state and Federal Governments to facilitate the implementation of CSO 
controls and clean up the environment.
    In addition to funding assistance, the bill would essentially 
codify EPA's 1994 CSO policy--a document that was formulated through a 
broad-based stakeholder process and gave communities the additional 
flexibility they need to comply with CSO mandates. Unfortunately, this 
policy is just that a policy. It's not the law, and several cities have 
already been sued over their CSO problems.
    Many CSO systems date back to the turn-of-the-century when they 
were ``state-of-the-art'' sewer technology. The cost to upgrade these 
systems is estimated to cost $50 to $100 billion nationwide. And, 
unfortunately, CSO communities comprise much of America's declining 
urban core, and often times, areas least able to afford the enormous 
costs. This bill will give CSO communities the tools and resources they 
need to develop affordable and cost-effective programs to finally 
address their CSO control obligations.
    Most of my colleagues on the committee have CSO communities in 
their states and I am confident that they've heard from local officials 
on this issue. Even the states without CSOs should be interested in 
this bill since their states are likely downstream of communities with 
CSO discharges.
    It is my belief that these communities have made a compelling case 
for regulatory and financial assistance. This is not a matter of trying 
to avoid their environmental responsibilities, but to the contrary, 
many of these communities have stepped up to the plate in implementing 
CSO controls. I need to look no further than my own state and the 
efforts of communities like Manchester and Nashua.
    The CSO Partnership, a national organization that supports S.914, 
has been at the forefront of CSO control for a decade now. These 
communities are not here to avoid necessary and appropriate remedies. 
Many have doubled or tripled their water rates and borrowed to the 
limit of their ability to repay the loans. So, it is clear to me and I 
hope it will become clear to this committee that CSO controls 
dramatically exceed our communities' local resources to implement, even 
with the Clean Water SRF loan program.
    In addition to helping out local ratepayers, the legislation would 
go a long way in helping out the environment. Not only would we see a 
substantial reduction in sewage discharges into our rivers and lakes, 
but there would also be less incentive for sprawl development outside 
of our urban areas.
    For these reasons, I was pleased to sponsor the CSO Partnership's 
proposal, and I look forward to working with you, Mr. Chairman, and 
other members of the committee with the goal of getting this 
legislation on the committee's markup agenda in the near future. Thank 
you.
    Senator Chafee. Thank you, Senator.
    Senator Graham?

             OPENING STATEMENT OF HON. BOB GRAHAM, 
             U.S. SENATOR FROM THE STATE OF FLORIDA

    Senator Graham. Thank you, Mr. Chairman.
    Mr. Chairman, first, I'm very pleased that we are having 
this hearing today. One of the oldest areas of Federal concern 
for America's natural resources has been water. From the 
beginnings of this constitutional republic, the Federal 
Government has served as a partner with State and local 
communities in the development, proper management and 
regulation of the use of water.
    The range of bills that are before us today represent the 
diversity of that Federal interest. The legislation that I am 
sponsoring with a number of my colleagues today is within that 
historical tradition with the Federal Government in partnership 
with the States, in this case, in looking at alternative water 
supplies for areas where the traditional water supplies are 
coming under increasing pressure.
    This legislation defines an alternative water source 
project as one which is an environmentally sustainable program 
of conserving, managing, treating, reclaiming or reusing water 
or waste water, as a means of assuring to the American people 
an adequate source of supply.
    I believe this bill sets up a rational planning process and 
priorities process for the Federal engagement in this 
initiative, and I look forward to the testimony that we are 
going to receive from both persons in these affected States who 
will talk about their experiences and the State initiatives 
that are already underway, as well as those who will present 
the Administration's position on this issue.
    I thank you, Mr. Chairman, for convening this hearing.
    [The prepared statement of Senator Graham follows:]
  Statement of Hon. Bob Graham, U.S. Senator from the State of Florida
    Thank you Mr. Chairman. I appreciate the committee holding a 
hearing on this important legislation. Earlier this year, I introduced 
S. 968 with Senators Mack, Cleland, Lincoln, and Robb. The Alternative 
Water Sources Act of 1999 seeks to establish a water resource 
development program for states not covered by the Reclamation Projects 
Authorization and Adjustment Act of 1992.
    I ask unanimous consent that a statement by my colleague Senator 
Mack be inserted immediately following my statement.
    Companion legislation to S. 968 was introduced on the House side by 
Congresswoman Karen Thurman of Florida. Twenty-five House members have 
joined her in co-sponsoring the bill, including most of the Florida 
delegation and members from Georgia, Arkansas, and New York.
    This legislation is critical to the environmentally-friendly 
development of water resources in the eastern United States.
Our Water Supply Needs Are Great
    Nationwide, an increasing amount of water is in demand to provide 
for increasing populations and environmental needs. Current water 
supplies are sufficient in some states, but in many high growth areas 
such as New York, Florida, Illinois and other states in the eastern 
half of our country, traditional sources are no longer adequate to meet 
demand. For example, Florida grew by 15 percent or almost 2 million 
people over the last 8 years. It is expected to grow by 6.7 million 
additional residents by 2025. Georgia is anticipated to grow by over 
2.5 million people, and North Carolina by 2.1 million.
    In these high growth states, public water supply use has doubled 
the rate of increase of the U.S. Average Use between 1980 and 1995.

      U.S. water supply use during that period increased by 
about 16 percent.
      In Florida, it increased by 43 percent.
      In Georgia, it increased by 37 percent.
      In New Hampshire, it increased by 32 percent.

    This increase has resulted in severe water conditions.

      Georgia: Surface water and groundwater supplies are not 
readily available around many of the largest population centers. In 
coastal areas, industrial, agricultural, and municipal usage have 
caused large cones of depression, some of which are merging and 
resulting in significant saltwater intrusion.
      New York: According to the U.S. Geological Survey, water 
levels in aquifers on Long Island may decline by as much as 18 feet, 
and low flows in streams may be decreased by 90 percent in parts of 
Long Island. Droughts occasionally cause inadequate water supply for 
New York City.
      New Jersey: According to U.S. Geological Survey, surface 
water supplies, which serve most of northern New Jersey, are only 
adequate when precipitation is greater than normal.

    We all experienced the extreme drought in the Washington, DC region 
over the summer:

      By the beginning of August in Maryland, over 60 community 
water systems had instituted mandatory or voluntary water restrictions.
      On September 22, the Virginia Weekly Crop and Weather 
Report stated that the state's topsoil is 67 percent short of moisture 
and that 55 percent of the state's corn crop was considered poor or 
very poor.

    These examples demonstrate the need for a water supply program in 
eastern states similar to the one that already exists in western 
states.
    Last year, we directed funding toward improvements in our highway 
infrastructure. However, our water supply needs have not received 
adequate attention. Inadequate, poorly planned water supply 
infrastructure can negatively impact both human heath and the 
environment.
The Alternative Water Sources Act of 1999 Offers a Solution
    My legislation is designed to provide states with the assistance 
they need to meet the needs of growing populations without harming the 
environment. It seeks to establish a grant program implemented by EPA 
that provides funds to development agencies in areas with critical 
water supply needs.
    States will only be eligible if they have undertaken a planning 
effort to assess availability of water resources and produced a 20-year 
water resource management plan, demonstrated that existing sources are 
inadequate, and provide 50 percent of the funds.
    The bill seeks to authorize $75 million per year for the first 5 
years after enactment.
    Only those states that do not already receive funds for water 
supply projects under the Bureau of Reclamation Projects Authorization 
and Adjustment Act of 1992 will be eligible for this program. The 1998 
appropriation level for this program was $740 million.
Conclusion
    S. 968, the Alternative Water Sources Act of 1999, seeks to improve 
the water supply situation in eastern states.
    It provides funds on a cost-share basis to states for development 
of non-traditional water resources that will both provide much needed 
water and prevent environmental damages.
    Thank you, Mr. Chairman.
    Senator Chafee. Thank you, Senator.
    Now, Mr. Fox, Assistant Administrator for Water.
    Mr. Fox, you have a rather lengthy statement here, and 
we're going to run the lights here, which will give you 5 
minutes. If you go a little bit over, we'll probably tolerate 
that, but if you could keep that in mind, the 5-minute rule, 
that would be helpful.
    Why don't you go to it?

STATEMENT OF HON. J. CHARLES FOX, ASSISTANT ADMINISTRATOR, U.S. 
                ENVIRONMENTAL PROTECTION AGENCY

    Mr. Fox. Thank you, Mr. Chairman. It is a pleasure to be 
here with you this morning.
    Looking over the past quarter century, I think we can all 
be very proud of the stewardship of our Federal water 
infrastructure resources and the environmental benefits that 
have resulted for the American people. If you turn to Chart 1 
in my attached testimony, you'll see that the number of people 
served by secondary or advanced waste water treatment has 
doubled between 1972 when the Clean Water Act was first 
authorized and 1996, rising from about 85 million to 173 
million Americans.
    Second, during that same time pollutant loads from 
municipal treatment facilities have fallen about 40 percent. 
This environmental improvement is significant, especially given 
the fact that we've had a 30 percent increase in population in 
this country, and some of the successes that Senator Voinovich 
mentioned are precisely the kind of benefits that we've seen 
around the country.
    I think it truly is no exaggeration to say that this 
committee and you, Mr. Chairman, in particular have been 
instrumental in this success over the past few decades.
    Over 10 years ago, Congress amended the Clean Water Act to 
create the Clean Water SRF Program to replace the pre-existing 
Waste Water Construction Grants Program. The SRF program was 
designed to provide Federal support for clean water 
infrastructure, to help implement the Clean Water Act that 
would be managed by the States and would provide funding in 
perpetuity, and these important goals have been met.
    Today, I believe we need to carefully consider how to build 
the SRF program to best fit the water pollution needs of the 
country into the 21st century. To address that question, we 
need to build a common understanding of the need for sewage 
treatment and related pollution control projects in the future.
    The EPA works with the States to develop a Need Survey to 
identify clean water infrastructure investments in each State. 
The 1996 survey estimated total needs of approximately $128 
billion, most of which is for projects to be built over the 
next 10 years. It is important to note that this estimate does 
not include adequate estimates for the cost of addressing 
sanitary sewage overflows, control of non-point source 
pollution and related work--costs that will likely increase our 
needs estimate by tens of billions of dollars.
    On the spending side of this equation, we estimate that 
around $11 billion is being invested annually in waste water 
capital infrastructure from all sources--Federal, State and 
local. There is some indication that the spending patterns for 
waste water have been, at best, flat and some information 
suggest that annual capital spending is in fact declining.
    Mr. Chairman, you asked that I comment on proposed 
legislation, and I would like to do that at this time.
    I am pleased to say that many of the provisions of the bill 
introduced by Senator Voinovich and its House companion are 
consistent with the recommendations that the Administration has 
made in the past, including President Clinton's 1994 Clean 
Water Initiative. EPA stands ready to provide technical 
assistance in addressing some minor issues in the drafting of 
the bill.
    We would encourage the committee to consider several 
additions to the bill. First, in reauthorizing the Safe 
Drinking Water Act, this committee provided Governors with the 
discretion to use specified amounts of the SRF to support key 
Safe Drinking Water Act programs and projects.
    Our experience with this provision of the Safe Drinking 
Water Act has been very positive, and a comparable provision 
should be considered for the Clean Water SRF Program. This 
would allow the States more flexibility to deal with some of 
their new challenges, such as the TMDL Program, increased 
monitoring costs and the like.
    Second, I would call your attention to the President's 
fiscal year 2000 budget, which included a proposal that would 
allow the Governors the discretion to use up to 20 percent of 
the SRF funds for grants to communities to help with estuary 
projects, as well as some of the non-point source program.
    Many States have identified top priority projects in both 
of these areas, and the ability to provide grants or principal 
forgiveness would be something that would really help move 
these projects along.
    I note that the proposed authorization level for the SRF is 
$3 billion. Funding at this level clearly would make a large 
contribution to the significant needs for pollution control. At 
the same time, it is not clear how these funds will actually be 
appropriated in light of the deficit reduction agreement and 
the constraints faced by the Appropriations Committee. We would 
continue to encourage constructive dialog between Congress and 
the Administration on an appropriate long-term funding level 
for the program.
    Turning briefly to the other proposed legislation, S. 968 
would authorize the EPA to make grants for projects to develop 
new sources of water for municipal, industrial and agricultural 
uses. The 1996 amendments to the Safe Drinking Water Act--
Congress and the President created the Drinking Water State 
Revolving Loan Fund to address a portion of this need.
    As I indicate in more detail in my written testimony, the 
EPA's primary drinking water mission is to protect public 
health. We believe that limited Federal resources to address 
drinking water needs are best met by the existing drinking 
water SRF program, which is focused on public health 
protection.
    Finally, in comments to the bill introduced by Senator 
Smith, the draft bill related to combined sewage overflows 
would amend the Clean Water Act to provide that the 
requirements of combined sewer overflows are consistent with 
the policy that we negotiated with a number of interest groups.
    I think that the CSO policy is working. It is a very good 
road map to solve this problem that the Senator articulated 
very clearly. We are not opposed to Congress amending the Clean 
Water Act to endorse the CSO policies and its principles. 
However, we do have some concerns with the draft bill, and I 
can specifically illustrate these if you would like, Senator. 
They most focus on the grant authorization part of the bill and 
some remaining questions about how it would affect existing 
orders that have been negotiated, but I did want to say that we 
really appreciate your movement on this bill. It is much more 
consistent with our thinking today.
    Thank you, Mr. Chairman, and I'll be available to answer 
any questions at this time.
    Senator Chafee. Thank you, Mr. Administrator.
    Why did the Administration select the $2 billion as a 
target revolving level? How did you come up with that?
    Mr. Fox. It was an attempt to come up with a level that 
seemed to be an adequate balance of Federal, State and local 
interest. I will at the outset that there's nothing magic to 
it. Congress and the Administration could have a very 
appropriate debate about what should be the future level. This 
was something that we developed as part of the President's 
Clean Water Initiative in 1994, and it gave us a target to 
shoot for in terms of how the long-term funds should be 
appropriated by Congress.
    Senator Chafee. Now, I note that in Senator Voinovich's 
bill he increased the funding levels for the next 4 years, and 
he also expands the eligibility of the SRF.
    What's the Administration's view on that?
    Mr. Fox. In general, we believe that providing more 
flexibility through the SRF for the States to solve what they 
believe is their highest priority projects is most definitely 
the way to go. The variety of water pollution problems vary 
incredibly around the country. In some places wetland 
restoration is going to be a high priority, in other areas it 
will be conventional point source treatment plants and so the 
Administration would support maximum flexibility to the States 
as to how they want to use their SRFs.
    Some of the bounds, though, that I would encourage the 
committee to consider would be focusing on water quality and 
environmental improvements as very important priorities.
    Senator Chafee. Now, it's my understanding that the 
Administration has proposed to a further grants program that 
you want to rely upon this SRF. Am I correct in that?
    Mr. Fox. That's correct.
    Senator Chafee. When and if we reauthorize the SRF, what 
changes would you like to see us do? You go into that greater 
flexibility provision.
    Mr. Fox. To give you more examples of this, I've spent a 
good deal of time most recently in the great State of Wyoming 
on Monday with State Commissioners, talking about some of their 
water pollution needs. Many of the Commissioners are very 
excited about the new TMDL program and the opportunity to 
really start tackling some of the non-point source pollution 
problems that this country is facing.
    This is clearly going to require the States to invest more 
programmatic dollars in trying to assess what is the most cost-
effective way of solving the water pollution problems of any 
one watershed. So, by adding flexibility in the SRF so that, if 
the States decide to do so, to take some money out of the SRF 
to do this kind of modeling work or monitoring work, I think 
would be very valuable to the States. That's an example of the 
kind of flexibility that we would like to see included in the 
SRF.
    Similarly, I think additional flexibility for principal 
forgiveness in some cases would be very valuable. I've looked 
at preliminary date from the State of Ohio that does suggest 
that there are very significant community challenges in meeting 
the increasing rates, and it very well might be that there are 
a number of disadvantaged communities that really can't take 
advantage of the SRF program because the interest rates while 
below market are still too high for them, and providing more 
flexibility in the SRF for the SRF managers to give principal 
forgiveness in some cases would be probably a very valuable 
thing for some communities.
    Senator Chafee. All right, now I'm going to ask each of the 
Senators what questions they would like to ask. I would hope 
that everybody make their questions brisk because we do have 
five other witnesses that we want to get to.
    Senator Voinovich. I just would like you to comment about 
how important you think that technical assistance is.
    Mr. Fox. In terms of managing our watersheds today, being 
able to do it as part of a solid game plan, is most important. 
When you do analysis, it often turns out that getting a pound 
of pollution reduction from non-point sources could be 10 times 
cheaper than getting it from point sources. If we can give the 
States that kind of support to do that kind of analysis and 
make these kinds of decisions, I think it will be a better use 
of our limited dollars in the long run.
    So I think it's very important to allow the SRF to provide 
these kinds of funds to the States so that they can make these 
kinds of decisions.
    Senator Voinovich. A lot of the smaller communities don't 
have the capacity, and you need to make it available to them to 
do the survey.
    Mr. Fox. That's right, and then our recent national data 
suggest that we have approximately 20,000 waters in this 
country, segments of water that are not meeting our goals for 
fishing and swimming. Each one of these water bodies is going 
to require some type of site specific analysis, and the more 
energy and thought we can put into that, the better off our 
answers are going to be.
    Senator Chafee. Thank you.
    Senator Thomas?
    Senator Thomas. I guess to react, Mr. Administrator, a 
little bit. You were talking about technical assistance. The 
most recent experience we had with that was in a small town 
called Torrington. They had been working with the EPA for some 
time, planned to have a meeting and they sent in the 
enforcement group instead.
    Now, that's not very helpful to a small town if they're 
looking for that kind of assistance. So I hope that we can do 
something, and TMDLs--I don't know who you were talking to 
that's excited about it, but I'm glad to hear that because 
we've had all kinds of trouble. People just nominating these 
streams without any evidence at all, and then who has to pay 
for it to figure it out? The State. It hasn't been a very 
workable situation.
    So you may wish to comment on that, but that's kind of 
where we are. Who was it that you were talking to?
    Mr. Fox. I would be happy to spend more time. I can tell 
you right off the top of my head that we had four States that 
were very much involved in developing the proposal----
    Senator Thomas. You said Commissioners--Commissioners for 
what?
    Mr. Fox. Commissioners for the environmental departments in 
the States. There were four Commissioners that were involved in 
developing the rule, including Maryland, Iowa--I'm sorry, 
Maryland, Wisconsin, Oregon and Louisiana. I know that three of 
those four Commissioners when we proposed the rule issued very 
positive press statements, and they're working very closely----
    Senator Thomas. Oh, the Commissioners were in Wyoming to 
meet but they were from other places?
    Mr. Fox. That's correct.
    Senator Thomas. OK.
    Mr. Fox. We had our Annual Meeting of the Commissioners in 
Wyoming.
    Senator Thomas. That explains it a little more, OK.
    Mr. Fox. OK, I'm sorry.
    Senator Thomas. Thank you.
    Senator Chafee. Senator Lautenberg.
    Senator Lautenberg. Mr. Fox, in implementing the Clean 
Water Act's requirements, New Jersey chose to adopt a 
watershed-based approach, rather than water body.
    What's the advantage of doing it that way when--doesn't a 
problem get to be overwhelming when you look at everything at 
one time? There are always incremental improvements. Whether we 
would like to do it another way or not, it's almost impossible 
to attack the whole problem.
    Mr. Fox. The question of scale is always the most important 
one to address in the context of watersheds. We are facing a 
dead zone in the Gulf of Mexico, as a result of the Mississippi 
watershed, and that is an incredibly large watershed. I think 
experience shows that the smaller focus of the watershed and 
the more intensive the effort is in working with the 
communities, and trying to define the problems, the more 
success we are going to have.
    That doesn't say, though, that there aren't large scale 
watershed benefits. The work that's going on today in Long 
Island Sound or in Chesapeake Bay where they've looked at the 
whole loadings of pollution to the whole watershed have in fact 
proved very valuable in guiding individual local decisions.
    So I think it's a question as to what level of appropriate 
action is appropriate to the different level of scale that 
you're looking at.
    Senator Lautenberg. But can you--if you look at the 
problem, can you get everything into place? You've got rivers, 
tributaries, different actions by different communities. Don't 
you kind of have to go one by one to measure the quantity of 
pollutants that they put into the watershed?
    I'm interested because I know that my State has taken this 
watershed approach, but I question you because I would like to 
get confirmation as to whether that's the best choice and why 
it might be.
    Mr. Fox. We will always need individual data sets and 
understandings of what's happening at a very sub-watershed 
level. We need to know which treatment plant is discharging and 
is it in compliance, so we need to have that kind of data. The 
value of the watershed approach allows us to look at the system 
as a whole, and typically you don't try to address all the 
problems simultaneously. You pick one or two problems that 
you're really trying to solve.
    In the case of Long Island and Chesapeake Bay, the single 
biggest problem that they're facing is nutrient enrichment, and 
so their watershed-based strategies are focused at all the 
different ways they can reduce nutrients to these water bodies. 
So they come up with a watershed-scale scheme that allows you 
to tradeoff sometimes the cost of one control versus another 
and gets you to look at the big picture, and, hopefully, come 
out with a better, cheaper answer.
    Senator Lautenberg. So it's the design of reaching or 
defining the objectives of the program on a kind of totality 
basis, and that doesn't necessarily mean you don't work on the 
individual points.
    Mr. Fox. Right, the Florida Everglades is a wonderful 
success story of looking at the totality of the system and 
trying to solve it entirely.
    Senator Lautenberg. Thank you.
    Thank you, Mr. Chairman.
    Senator Chafee. OK, Senator Smith.
    Senator Smith. Thank you, Mr. Chairman.
    Mr. Fox, this is just a sampling of the letters that I 
received from mayors and councilmen from Maine to California 
indicating their concerns for the process as it now exist, and 
support of the legislation before us on CSOs.
    Let me just give you an example that I would like you to 
respond to, and I don't think this is an extreme example. I 
think this is an example that's pretty common place, and it 
would be the City of Wheeling, West Virginia.
    The estimated cost for their CSO controls is $400 million. 
The estimated property value of the entire town is $393 
million, so it's $7 million less than what you're telling them 
they owe. That's 13,572 rate payers--not taxpayers, rate 
payers, water payers. This adds up to $29,472 per rate payer, 
so let's round that off $30,000.
    So you're saying that Wheeling, West Virginia, doesn't need 
grant assistance because we should stick to the loans. Well, 
let's use your loan example, and we'll say if you give them, 
from what I'm told, 15 years--if you can get that, you're lucky 
and you have to fight to get it. So if you give them 15 years, 
that's $2,000 per year, per rate payer, which I guarantee in 
Wheeling, West Virginia, in most homes is two or three times 
the property tax that they're paying.
    How in the world can you say that communities like 
Wheeling, West Virginia, could afford this under any loan 
program without grant assistance? How can you say that?
    Mr. Fox. First, I will look into this case in more detail. 
I'm not familiar with the cost numbers, but I know we've done a 
lot of work to bring the overall cost numbers down, like the 
experience you had in Manchester, which I think was a very good 
example of that.
    Your point is that we have a lot of water needs that aren't 
being met, and I don't disagree with that fundamental point. I 
think Senator Voinovich, though, raised the ultimate policy 
question for all of us, which is what is the appropriate 
Federal, State and local role in this, particularly in the 
climate of the budget deficits that we're facing, or the 
surplus management that we are facing.
    Senator Smith. I know, but what you will hear from the 
mayors and other town officials is that they go through a lot 
of hell in terms of the hassles, the arguments and discussions, 
I guess, if you want to put it a little more mildly, with the 
EPA officials--threats, intimidation--not knowing what the 
bottom line is going to be, and they have to budget. They have 
bonding they have to do, and they don't know the answers to 
these questions, and so they're forced, if you continue with 
the Wheeling example, I mean, they don't know if you're going 
to give them 15 years or what, and they're trying to bond and 
budget. They know that they can't pay those bills. It's 
absolutely impossible for some of those people to pay those 
bills, and so rather than put people through that, why not just 
go with the grant program?
    Now, you said in your opening statement that grant 
authorization was the area that you had the biggest problem or 
one of the problems with our legislation, my legislation. But 
under the current system you and I both know that earmarks are 
put in there all the time, which you're forced to comply with, 
and I know you don't like it. So why not go with a competitive 
bidding grant process and get rid of the earmarks, which, 
depending on who's the most powerful and influential, forces 
you to administer anyway? Why not be fair to everybody?
    Mr. Fox. If we could work together on a way of eliminating 
earmarks, you can trust that I would be right up there with 
you.
    Senator Smith. I've been trying to do it for 15 years and 
haven't worked it out yet.
    Mr. Fox. You know, I think the issue with your legislation 
and that of Senator Graham's is fairly similar, and that is 
what is the appropriate Federal role, should we be creating 
separate grant programs or should we really focus on an SRF 
program as the primary Federal vehicle, figure out what's the 
right level and then give it the flexibility to solve some of 
these problems.
    Senator Smith. Well, let me just say, as one who is fairly 
conservative on these matters, that I agree with that. I don't 
like grants anymore than anyone else, direct Federal grants, 
but these are problems that are not of the making of these 
communities essentially. You come in--and in CSOs in most cases 
the amount of pollution--if you took the Merrimack River as an 
example, and Mayor Wieczorek can comment on this--it's maybe 3 
percent, if that, of the pollution in the river. And for that 
you're going to put a huge burden. I don't think the ratio is 
proper here, that's No. 1, but even that aside, I mean, these 
people cannot pay this. It's just not possible.
    So I think rather than put them through all this pain and 
suffering, let's just accept a fair, competitive bidding 
process that gives these communities the opportunity to get the 
grants and do it right, rather than to cause these towns to 
have to through anger, town meetings and arguing because 
they're trying to bond. In the case of Wheeling, they're trying 
to bond $2,000 a rate payer over 15 years, per year. I mean, 
it's impossible. They can't pay that; it's just not possible.
    At least with a grant, there might be some way that it can 
be done--that's my view, and I wish that you would work with us 
on this so that we can have the Administration's support 
because these people need help. I, frankly, don't think that 
your objection--with all due respect, I don't think it's 
justified. I think we can work this out, so I wish you would 
work with me on it.
    Senator Chafee. Senator Graham?
    Senator Graham. Thank you, Mr. Chairman.
    At the conclusion of your statement on page 11 relative to 
the Alternative Water Source Grants, you state, ``Because 
enactment of the proposed legislation would likely divert 
scarce resources from public health-related projects, the 
Administration opposes this legislation.''
    I would like to understand, is that opposition because you 
believe it is inappropriate for the Federal Government to be a 
partner in developing water sources of supply, or because you 
believe that EPA is the wrong agency to have responsibility for 
the development of water sources of supply?
    Mr. Fox. I can really only speak at this point, Senator, 
for EPA and----
    Senator Graham. The statement says, ``The Administration 
opposes.'' It is beyond EPA?
    Mr. Fox. That is correct, and then I can tell you that the 
rationale that we came to this conclusion was that the Safe 
Drinking Water Act authorized a series of eligible projects 
that were based primarily on achieving compliance with the Safe 
Drinking Water Act requirements and protecting public health.
    There are circumstances where Alternative Water Supply is 
an eligible cost under the Safe Drinking Water Act. Our 
interpretation of your bill, however, was that it was a much 
broader authorization of new Federal dollars to provide 
potential water supplies for agricultural, industrial and urban 
uses, and that goes beyond the priority focus of the Safe 
Drinking Water Act.
    In making the conclusion, though, in the final analysis 
it's not unlike the dialog I was having with Senator Smith, 
which is this is simply a question of priorities, given limited 
Federal dollars as to where they should go and that's the 
conclusion that we came to.
    Senator Graham. Well, if you're not able to answer the 
question today, I would like to get an answer as to whether the 
Administration's opposition is to the principle of Federal 
involvement in water supply development, or if it is the 
objection as to which agency is being given that assignment 
because over the last 150 years, we've spent billions, maybe 
trillions, of dollars of developing water source supply all 
over the country, particularly in the Western States.
    No. 2, you indicate that you think the appropriate means of 
financing this is through the Safe Water Drinking Act Revolving 
Fund. As I read that Act, it states that priority is given to 
projects that, ``one, address the most serious risk to human 
health; two, are necessary to ensure compliance with the 
requirements of the Safe Drinking Water Act; three, assist 
systems most in need on a per household basis, according to 
State determined affordability criteria.''
    Where does the issue of water resource development and 
water resource availability fit into those three priorities?
    Mr. Fox. It doesn't directly; it does tangentially. If you 
are in a community that has, for example, a well that is 
contaminated for one reason or another, it would be an eligible 
cost under the Drinking Water Act for that community to drill a 
new well that would provide clean, reliable water to the 
people. So our eligibility is really focused on achieving 
precisely those criteria that you mentioned.
    Senator Graham. So it seems to me your suggestion that 
States are to look to the Safe Drinking Water Act is a vacuous 
proposal because none of the priorities that are listed under 
the Act are relevant to the issue of water supply availability 
and development?
    Mr. Fox. I agree, yes.
    Senator Graham. Maybe that answer the next question, which 
is what percentage of State Revolving Fund loans under the Safe 
Drinking Water Act are currently provided for infrastructure 
development for future community needs?
    Mr. Fox. Water supply needs?
    Senator Graham. Yes.
    Mr. Fox. I'll have to get that information for you. Again, 
the Safe Drinking Water Act is not fundamentally a law that's 
designed to provide water supply to communities, and your 
legislation is seeking to do something differently, and that's 
the tension here.
    Senator Graham. But we are--I mean, the reason we're 
suggesting a different approach is because we think the status 
quo is not germane to the issue of developing appropriate 
alternative water supply sources. Yet, your answer to our 
legislation is that we ought to do it through the Revolving 
Loan Fund.
    Mr. Fox. To the extent that it is a drinking water problem, 
yes, we can do it through the Revolving Loan Fund. To the 
extent that it's a----
    Senator Graham. But only if it's a public health issue, and 
not the quantity that's the issue.
    Mr. Fox. That's correct, and it would be the Army Corp of 
Engineers of the Bureau of Reclamation, if you're in the West.
    Senator Graham. It would seem that one of your suggestions 
is to require that States take action to reduce their water 
needs prior to receiving grants from the EPA.
    What type of actions would you suggest that communities 
take in order to reduce their drinking water needs?
    Mr. Fox. We have issued a number of technical guidance 
documents on water conservation techniques that seem to provide 
benefits to community water managers. I know water conservation 
is in fact eligible expenditures under the Waste Water SRF. I 
would have to look into whether or not, and how often it's 
used, under the Drinking Water SRF. I don't have that answer.
    Senator Graham. Thank you.
    Senator Voinovich. Mr. Chairman?
    Senator Chafee. Yes, I now--I am anxious. We have five 
other witnesses, and, as you know, what happens around here is 
the people who are in the latter part of the witness list are 
often given short shifts, so we want to make sure they all have 
a good opportunity.
    So if you've got a quick question----
    Senator Voinovich. You'll notice I didn't take a lot of 
time in my questioning, Mr. Chairman. I was very brief. I 
just----
    Senator Chafee. Well, we don't permit banking of time here, 
but you go ahead.
    Senator Voinovich. The interesting--I would you to comment 
on this.
    The bill that Senator Smith is suggesting is a grant 
program, correct?
    Mr. Fox. Yes.
    Senator Voinovich. If I am hearing right, if it's a grant 
program, what usually happens is that the grants are earmarked 
and don't go into a fund, and, as a result of that, those 
communities that are earmarked get it and the rest of them that 
are on the list don't.
    The question I raise is wouldn't it be better not to have a 
grant program and put that money into a revolving loan program 
where you don't earmark it, States can compete for it, and, in 
the long-run, leverages a lot more money that can be 
recirculated back out to deal with the problems that 
communities are having.
    Mr. Fox. That was a very eloquent presentation of our 
position on that. I would add one comment, and that is that 
there are communities today that are disadvantaged, that do not 
have the ability to meet that, and the current SRF 
authorization has a limit as to what kind of interest rate you 
can give. Basically, you've got to stop at zero--that's the 
best you can do, and, in some cases, communities might, in 
fact, benefit by going below zero and having some amount of 
principal forgiveness, and if we could find a way of crafting 
some ability for these SRFs to give these kinds of modest 
principal forgiveness, in some circumstances, that would 
probably help a number of communities.
    Senator Smith. I think we would be open to that, as part of 
the negotiating process, but, I might just say, Senator 
Voinovich, that in our legislation it is competitively bid; 
it's not earmarks. So we do change that so that it's more fair.
    Senator Voinovich. Mr. Chairman, one other comment, and I'm 
it's a policy issue.
    I can understand, Senator Graham, the point that you made, 
but the real issue is in terms of national priorities, what's 
the role of the Federal Government in terms of responding, in 
terms of problems of safe drinking water, and, in your State, 
obviously, they need to get some more water supply. But I would 
say that from a competitive position, being in that position to 
do that in effect deals with the whole environment of your 
State competing with other States, and I think that's one of 
the things that we need to look at in terms of if you get into 
that, then are we going to do that all over the United States?
    Senator Graham. Mr. Chairman, if I could just respond. We 
are doing this all over the country, but primarily in the 
Western States where we've had a long tradition of building 
major dam projects, water supply projects, etcetera, in order 
to meet their needs. That was done because the West was dry, 
the East was wet. Well, now, we're finding out that the East is 
also beginning to reach a point where its traditional sources 
of water are inadequate to meet the needs of the population.
    So this is not a new idea; it's just an application of an 
old idea to another part of the United States.
    Senator Lautenberg. Mr. Chairman----
    Senator Chafee. I must say I am sympathetic to Senator 
Graham's problem. I think you have--am I correct in believing 
that you have 700 additional people come to your State every 
day? Is that the figure?
    Senator Graham. That's on a slow day.
    [Laughter.]
    Senator Lautenberg. Mr. Chairman, I'm not quite as 
sympathetic because which so many of our residents are going 
there----
    [Laughter.]
    Senator Lautenberg. But I think what Senator Voinovich says 
provokes a whole different discussion, which will be held in 
your other committee, Mr. Chairman, and that's the Finance 
Committee, and that is what returns do the States get on the 
money they send down to Washington? Now, on that basis, New 
Jersey ought to get a lot more money for water projects.
    Senator Chafee. All right, fine.
    Thank you very much, Mr. Fox, and we appreciate your being 
here.
    Now, would the next panel come forward? That would be Mayor 
Wieczorek, Mr. Dorfman, Mr. Mason, Mr. Kamppinen and Mr. 
Vergara.
    Sit right up at the table, gentlemen, if you would, and 
don't be bashful. Just take any seat, and we'll get the signs 
straightened out for you. We'll start with Mayor Wieczorek.
    All right, Mayor Wieczorek, from the City of Manchester, on 
behalf of CSOs.
    Mayor, why don't you proceed?

    STATEMENT OF HON. RAYMOND J. WIECZOREK, MAYOR, CITY OF 
  MANCHESTER, NEW HAMPSHIRE, ON BEHALF OF THE CSO PARTNERSHIP

    Mayor Wieczorek. Thank you very much, Mr. Chairman, and 
members of the committee.
    For the record, my name is Raymond J. Wieczorek, and I am 
the Mayor of Manchester, the largest city in the State of New 
Hampshire.
    Senator Chafee. What's the population of Manchester?
    Mayor Wieczorek. I'm going to give it to you in the next 
sentence.
    Senator Chafee. All right, go to it.
    [Laughter.]
    Mayor Wieczorek. Along with me is Frank Thomas, our Public 
Works Director.
    I am here on behalf of the taxpayers of my city, and the 
CSO Partnership, to testify in support of S. 914, introduced by 
Senator Bob Smith. In addition to my comments today, the CSO 
Partnership has prepared written testimony that I would ask be 
included in the hearing record.
    Senator Chafee. That's fine.
    Mayor Wieczorek. I am here on behalf of the--Manchester is 
an older city with a population of approximately 1,005, which, 
like so many cities, was developed with a combined sewer 
system.
    The newer communities that surround Manchester are not 
burdened with a combined system and do not face the financial 
difficulties in correcting this problem.
    Between 1972 and 1994, we invested $126 million to 
construct a waste water treatment plant and related facilities 
to eliminate waste water discharges in the Merrimack River, 
which runs through the center of our city. This water pollution 
abatement work was financed through a partnership of Federal, 
State and local governments. We all recognize that the problem 
being addressed was a national problem, and the involvement of 
the national government was required and appropriate.
    That plan has been operational for 23 years and has 
significantly reduced the pollution of the Merrimack River. My 
city is extremely proud of that achievement, and views the 
river as one of the major assets that sustained the quality of 
life that we enjoy.
    We are now undertaking a major river walk park development 
program in the heart of our city that would enable us to 
improve access and use of the river. The Merrimack has always 
played a key role in the history of the city, and we anticipate 
this asset will play a key role in the revitalization of our 
downtown and our economic future.
    As mentioned, Manchester was built with combined sewers, 
the state-of-the art at the time. Our combined system 
discharges up to 40 times a year at 26 locations. Several years 
ago, Manchester was contacted by the EPA and told that it was 
now time to address the problems associated with a combined 
system. The Agency was seeking the total elimination of all 
discharges from our combined system. The early estimates were 
that these improvements would cost almost $300 million, a mind-
staggering amount.
    As Mayor, I am constantly challenged to find ways to meet 
the needs of schools, ensure the public's safety and maintain 
our infrastructure, while constantly trying to minimize taxes 
and maintaining support for the many responsibilities a city 
has.
    Asking the citizens to spend nearly $300 million in the 
face of many other demands upon them is difficult. Asking them 
to spend it to correct a problem that happens almost a few 
times per year, and is only transitory in nature, is absurd. My 
citizens rightly wanted to know where's the common sense in 
asking us to spend that amount of money so that we can swim in 
the Merrimack River four more rainy days per year, when there 
is presently no swimming now due to natural constraints.
    Fortunately, with the strong support of the entire New 
Hampshire delegation, and, especially Senator Bob Smith, who 
has introduced this, we are very pleased and proud, and 
Governor Shaheen, we were able to negotiate a more reasonable, 
innovative solution to address our CSOs with the EPA and the 
New Hampshire Department of Environmental Services.
    However, this plan will require more than $60 million in 
capital improvements in a 10-year first phase, with the 
ultimate CSO program costs potentially being double the cost of 
the first phase. Sixty million dollars is equivalent to the sum 
of three new schools, one new police station, two new fire 
stations and a 150-miles of street resurfacing.
    In the face of litigation and given our community's strong 
environmental awareness, we have agreed to that program knowing 
that the Federal and State Government's participation would be 
limited to slightly discounted loans we hope to receive through 
the State Revolving Loan Fund.
    As a result, sewer rates in my community will nearly double 
in 10 years to implement this program's first phase. The 
doubling of our sewer rates will slow Manchester's growth by 
driving industries into the surrounding communities that do not 
have the expense of the CSO issue.
    I am here in support of S. 914 and the efforts of the CSO 
Partnership because it seeks to restore the historic 
partnership that has been so critical to the clean water 
successes we have had to date. The program that Manchester is 
undertaking fits within the procedural provisions of the S. 914 
and terms of the implementation schedule. We need the Federal 
funding authorized by S. 914 to help meet this Federal mandate.
    Clean water is a national goal, one the citizens of 
Manchester fully support. However, with many other claims on 
our resources, my city and I believe that most cities cannot 
fulfill this Federal mandate without financial assistance. The 
grants provided through S. 914 will ensure that sewer rates in 
my community remain affordable and do not choke off economic 
development.
    I hope that the members of the committee will act quickly 
on this bill and help all CSO communities resolve this national 
problem.
    I would be happy to answer any questions that members of 
the committee may have.
    Thank you.
    Senator Chafee. Thank you very much, Mayor.
    And now, Mr. Dorfman, President of Dorfman Construction 
Company from Woodland Hills in California, on behalf of the 
National Utility Contractors Association.
    Mr. Dorfman?

  STATEMENT OF GERRY DORFMAN, PRESIDENT, DORFMAN CONSTRUCTION 
COMPANY, WOODLAND HILLS, CALIFORNIA, ON BEHALF OF THE NATIONAL 
                UTILITY CONTRACTORS ASSOCIATION

    Mr. Dorfman. Thank you, Mr. Chairman, members of the 
committee.
    For the record, my name is Gerry Dorfman, and I am 
President of Dorfman Construction. I am an underground 
contractor and have been for 47 years.
    Several years ago, as a contractor, I picked up a set of 
plans----
    Senator Chafee. Now, gentlemen, I guess I didn't say prior 
to the Mayor speaking, but I should have. Everybody is given 5 
minutes, so if you could kind of watch the lights and trim your 
sales as much as possible to the time we've allowed.
    Thank you.
    Mr. Dorfman. I will, Senator, thank you.
    The project in Northern California, a small community, and 
I was prospecting the job as a bidder, and it was to replace an 
existing septic tank system for a community that had failed. In 
order to do so, you had to go into the backyard, so I knocked 
on the door and the lady at the door said, ``I'm sorry, you 
can't go in my backyard,'' and I said, ``Well, I can't look at 
the job in order to bid on it unless I see what the 
improvements are.'' She said, ``Well, it's full of sewage, so 
be careful.''
    So I did--I went into the backyard and walked along the 
path and saw what was there, and I came out. We were the 
successful bidder and we did the job, but when I was back in 
the yard, you could see the children looking out the window, 
and I wondered, here is a situation of a yard that can't be 
used by a family.
    I relate that to you as what goes on and what you don't 
see. Similarly, in another community in Southern California, we 
were replacing an existing sewer line and we found a gaping 
hole the size of a football. There were some residents watching 
the construction, and because we were so close, 100 yards from 
the waterway, we had to work with the tide. So when the tide 
went out, we would work; when the tide came in, we didn't. 
There was a gentleman there, an elderly gentleman, obviously 
with his grand-children, and he said, ``What is that?'' I said, 
``That's the sewage pipe, it has a hole in it and we're fixing 
it,'' and he looked at me and he said, ``But I take my children 
swimming over there.''
    Now, I relate those stories because I try--and several 
years ago when I was President of NUCA--to bring across a point 
that it's difficult to involve you in understanding what is 
going on. I talked to my daughter 1 day and she said, ``How 
does it go when you testify?'' I said, ``Well, I was pretty 
nervous, but I'm not sure I got across what I was trying to 
say,'' and she said--she's a college student with a good mind--
and she said, ``Do you know why? Because it's out of sight out 
of mind, absent the crisis.''
    I coined that phrase, I kept it and I use it. It's, like, I 
would go to work and hit a pothole and ruin my tire, but I 
could get on the phone and call somebody because I could see 
it. Or if a signal is not working and you're late for an 
appointment, you can call someone because you can see it and 
you can do something. But you cannot see what contractors 
across the country see with our decaying pipeline system. It's 
antiquated, it's old, it's outdated and that is the crisis. 
Absent of crisis, nothing happens. If you see a sinkhole, it's 
reported, and they fix it. If the beach is closed, they find 
out what it is, but all across our country millions of miles of 
sewers overloaded, antiquated, outdated. Here is an opportunity 
to address that issue, and it's time. It's really time.
    Senator Chafee. All right, thank you very much, Mr. 
Dorfman.
    Now, Mr. Mason, State Revolving Fund Program Manager, from 
the Georgia Environmental Facilities Authority.
    Why don't you proceed, Mr. Mason?

   STATEMENT OF GREGORY MASON, STATE REVOLVING FUND PROGRAM 
MANAGER, GEORGIA ENVIRONMENTAL FACILITIES AUTHORITY, ON BEHALF 
     OF THE COUNCIL OF INFRASTRUCTURE FINANCING AUTHORITIES

    Mr. Mason. Good morning, Mr. Chairman, and members of the 
committee.
    I am Greg Mason, State Revolving Fund Program Manager for 
the Georgia Environmental Facilities Authority. I am pleased to 
appear before you today to testify both in the capacity of the 
State Program Manager managing the SRF for the State of 
Georgia, and as a representative on behalf of the Council of 
Infrastructure Financing Authority, CIFA.
    As you know, CIFA is a national organization of State and 
local authorities whose mission it is to facilitate financing 
of public infrastructure facilities. Like my own organization 
in Georgia, most of our State members manage at least the 
financial component of the State Revolving Loan Fund for waste 
water treatment, and are, as such, vitally interested in the 
subject of this hearing.
    My testimony today will mainly address Title VI of the 
Clean Water Act authorizing the SRF financing program. This has 
been, as already has been stated, a singularly successful 
program that has fulfilled the vision of this committee and of 
the Congress in creating the fund mechanism over a decade ago.
    The loans made by the SRF have provided substantial cost 
savings to the borrowers--the borrowers, of course, being local 
government officials, communities and water sewer authorities. 
With the SRF interest rates averaging below or right at 2.5 
percent to 3 percent below market, we estimate that over its 
duration the cumulative subsidy the program has borrowed is 
around $8 billion.
    As the committee looks at provisions to amend and 
reauthorize Title VI of the Clean Water Act, our advise is 
cautionary. Clearly, after years, roughly 12 years, of 
experience with the SRF, there are some small modifications 
that will make the program more efficient.
    We offer some suggestions for such modifications, but, 
again, overall we ask the committee to move cautiously toward 
adopting any provisions that would dramatically overhaul or 
alter the way water quality projects are financed. Like the 
ancient admonishment to physicians, first, do no harm.
    Proposals before this committee to set up a new program of 
grant funding for certain categories of projects could have 
major repercussions for the future operation of the SRF. To put 
it plainly, communities or borrowers that anticipate receiving 
Federal grants to build water pollution projects are not likely 
to be interested in loans, no matter how attractive the terms. 
Even though the proposals in S. 914 limits availability of 
these grants to certain categories politically maintaining that 
categorical limitation would be next to impossible.
    Soon every project would be eligible for grant assistance 
and communities would defer needed projects until grant dollars 
became available.
    CIFA recognizes that in order to address certain types of 
pollution problems, it may be necessary to provide deeper 
subsidies to the borrowers. We support provisions, comparable 
to those contained in Senator Voinovich's bill, allowing States 
the discretion to provide principal write-down subsidies and 
extended repayment periods for hardship borrowers. Any subsidy 
should be in the form of principal forgiveness and not limited 
in the amount available to any one community or one borrower. 
The criteria instead should be environmental and economic 
justification.
    There are a number of other provisions in Senator 
Voinovich's bill that CIFA supports:
    First, we support the decoupling of allowable 
administrative costs from the annual amount of the cap grant. 
The size of the fund, not the amount of the grant, should 
dictate the allowable administrative costs.
     We also support the level of authorization of $3 billion 
annually. The numbers have been kicked around today, and we 
believe that $3 billion annually would be a good start.
    CIFA also supports the elimination of all cross cutters and 
duplicate Federal requirements that increase the cost of the 
projects and slow down the loan process, especially since those 
requirements are particularly burdensome to small communities.
    CIFA defers to the will of the Congress with regard to 
reapplication of Davis-Bacon requirements to first round 
projects financed with Federal grant dollars. We strongly 
object to the application of those same requirements or other 
general grant conditions to second round loans of the money 
that's paid back and again reloaned.
    Further, we support the expansion of eligibilities for SRF 
lending to include land essential for treatment works.
    Last, we support at the State's discretion the extension of 
SRF to secure critical lands for other public purposes.
    Finally, in any amendments to the SRF it is absolutely 
essential that Congress extend the current provisions giving 
States the discretion to transfer portions of the capital grant 
from one SRF to another.
    In conclusion, the SRF has proven to be an effective means 
of providing Federal and State subsidies to finance 
environmental treatment needs. The Congress should be very 
circumspect about making major changes.
    Again, on behalf of CIFA and the State of Georgia, I thank 
you for the opportunity.
    Senator Chafee. Well, thank you very much, Mr. Mason.
    Now, Mr. Tom Kamppinen, Chief of the Municipal Facilities 
Program in Michigan.

     STATEMENT OF THOMAS KAMPPINEN, CHIEF OF THE MUNICIPAL 
   FACILITIES PROGRAM, MICHIGAN DEPARTMENT OF ENVIRONMENTAL 
     PROTECTION, ON BEHALF OF THE ASSOCIATION OF STATE AND 
       INTERSTATE WATER POLLUTION CONTROL ADMINISTRATORS

    Mr. Kamppinen. Thank you, Mr. Chairman.
    My name is Tom Kamppinen, and I am Vice-Chair of the 
Association of State and Interstate Water Pollution Control 
Administrators in their Financing Task Force and Chief of the 
Municipal Facilities Section for the Michigan Department of 
Environmental Quality.
    As you know, ASIWPCA is a national organization of State 
officials responsible for implementing the Clean Water Act and 
is committed to the environmental objectives set forth in the 
law.
    We have made tremendous strides in cleaning up and 
protecting our water quality in our nation, but much more needs 
to be done. There are several fundamental things we would like 
you to consider as you debate reauthorization:
    Functional equivalency--we would like to see the Clean 
Water Act's requirements be performance-based. We would like to 
have the States have integrated approaches, allowing the States 
to be flexible in their program, and, of course, States face an 
enormous resource demand. The Clean Water Act and the mandates 
imposed by the State is much greater than the financial support 
provided.
    Let me compliment Congress and this committee in the 
support that it has given States. I can give you an example in 
Michigan. We have since 1987-1988 provided over $1 billion in 
loans to municipalities of which over 60 percent have gone to 
combined sewer overflows.
    Our second largest city in the State of Michigan, the City 
of Grand Rapids, in the last 5 years has reduced its combined 
sewer overflows by over 90 percent. We have salmon fishing 
below the Grand Rapids now that is safe, and it is working. So 
thanks to you and Congress the program is working and is well.
    All 50 States and Puerto Rico do have SRF programs, and 
they're using them very effectively. One advantage of the SRF 
program is that it is much less expensive to construct a 
project under the SRF than prior to the SRF under the old 
construction grant program.
    We have cut in half the time it takes to get a project 
under construction because of the regulatory red tape in the 
grant program, and one point that I would like to make to this 
group is that while a low-interest loan at 2 percent over a 
market rate over a 20-year repayment period may result in a 40 
percent subsidy, there are other savings. Time is money, and if 
you can speed up the construction of these projects and reduce 
their cost, that's 100 percent grant in savings.
    So, really, the 40 percent SRF financial assistance versus 
a 55 percent grant really, I think, is closer and projects are 
working. Sixty percent of our projects in the State of Michigan 
are coming in at, or under, budget, and they working. Under the 
grant program we had trouble with projects meeting their 
performance standards. That was not the case, in the grant 
program.
    Congress has important decisions to make regarding the role 
of the SRF in the future. The Association believes that the SRF 
is the only viable long-term water quality financing mechanism 
that is appropriate. It should be viewed as a multi-purpose 
tool box under which there can be much flexibility.
    States also recognize the need to make reforms so that it 
is equipped to meet future challenges, and the committee is 
familiar with the Association's positions, as we have them.
    Over the past few years, the U.S. EPA has been using the 
target of $2 billion per year to make available to the SRF, but 
the rationale has never really been clear to us. We do feel 
that with the Need Survey at well over $200 billion, and, 
likely, because of TMDLs, and, as we implement non-point source 
and other watershed initiatives, it will be greater.
    To give you an example, in the State of Michigan, for 
fiscal year 2000 we have 35 communities that have come in 
asking for money to be funded next year, and that totals $350 
million. That need alone is greater than 25 percent of the 
Senate subcommittee's budget for the entire nation for 2000, 
and if we use the Administrator's recommended budget, it's 40 
percent.
    We have a dire need out there, and we have very large needs 
in combined sewer overflows in Michigan. The Association 
recommends that all infrastructure assistance should be done 
and incorporated under expanded Title VI programs. We recommend 
an authorization of a minimum of $5 billion per year for fiscal 
year 2000 through 20004, which is clearly well justified based 
on the needs.
    Congress should work with the stakeholders to look at this 
issue in further depth. The gap between the cost of complying 
with new mandates and available funding is widening.
    We also suggest that committee explore with States the 
possibility of creating ways to look at additional needs and 
addressing additional environmental needs, above and beyond 
those that are traditional in the SRF.
    The States oppose the creation of any separate SRFs or 
mandatory set-asides for particular clean water. Each State has 
different needs, and the States must have the flexibility to 
use those funds as appropriate.
     The Association believes that hardship and small community 
needs are best addressed in the SRF. Below market and zero 
percent interest rates can save up to 50 percent of the project 
costs; however, States need to be able to also go and after 
additional subsidies. So States, we believe, should be allowed 
to blend principal subsidies to the SRF loans to achieve a 
target State level of project affordability for hardship 
communities, and each State should be able to define small and 
hardship communities to fit its own circumstances.
    We also believe that where there are hardship communities 
up to 40-year loans should be provided. This will allow the 
monthly user rates to be reduced to affordable costs, for those 
projects not exceeding $10 million. We should be able to use 
administrative expenses to outreach and provide technical 
assistance to these small communities that need it.
    We do not support, and we urge Congress not to reimpose, 
the Title II requirements. Those add costs to the projects, and 
have very little environmental benefit, if any.
    We also feel that the States need additional funds and 
flexibility in meeting their administrative expenses. The 
current provision is not adequate.
    And, last, we recognize and support the efforts on 
addressing the CSO programs on needs in S. 914. We recommend 
that the CSO policy of EPA be codified in the Clean Water Act 
Reauthorization, and we feel that the CSOs can better be 
addressed through capitalization of the SRF to do the job. The 
Association does not support reinstitution of a grant program. 
The SRF is proven to be a much more effective approach in 
providing these needs. Projects are faster, they're better and 
they're coming in under budget.
    Thank you.
    Senator Chafee. Thank you very much, Mr. Kamppinen.
    Mr. Vergara, from the Southwest Florida Water Management 
District.

   STATEMENT OF E.D. ``SONNY'' VERGARA, EXECUTIVE DIRECTOR, 
          SOUTHWEST FLORIDA WATER MANAGEMENT DISTRICT

    Mr. Vergara. Good morning, Mr. Chairman, thank you very 
much.
    Senator Chafee. Do you want to make an introduction?
    Senator Graham. I could.
    Senator Chafee. Won't you please?
    Senator Graham. I have had a long association with Mr. 
Vergara. He has served in a number of important positions in 
our State. He is currently the Executive Director of the 
Southwest Florida Water Management District, one of five 
districts within our State, which have the primary 
responsibility, in his case, for most of the West Coast area of 
Florida for their water supply needs. In his previous position, 
he has an extensive background in water supply issues for our 
State, and also for the nation.
    I am very pleased that he is able to join us today in 
presenting his views, especially on the appropriate Federal 
role in water resource development.
    Senator Graham. All right, won't you proceed, Mr. Vergara?
    Mr. Vergara. Mr. Chairman, members of the committee--and 
thank you, Senator Graham. I appreciate those comments.
    We appreciate the opportunity to appear before you today 
and for giving me the opportunity to also recognize Mr. Ronny 
Duncan, who is in the audience today, who is a governing Board 
member from my water management district.
    We thank you for this opportunity to testify in strong 
support of S. 968, and for your continuing support and 
leadership on behalf of protecting our nation's water 
resources.
    Mr. Chairman, there is a shift occurring in our Eastern 
fast-growing States. It is becoming more apparent that 
traditional sources will not be enough to meet our future 
needs. Traditional ground water and surface water sources have 
reached, and exceed, in some cases, sustainability, having some 
very significant impacts on the ability of our regions to 
maintain viable economies, as well as our environmental and 
natural systems.
    The fast-growing Eastern States, such as Florida, New York, 
New Jersey, Virginia, New Hampshire, Tennessee, Arkansas and 
Georgia, are all having difficulty being able to ensure future 
needs will be met. A new Federal-State partnership, as Senator 
Graham has pointed out, is badly needed, much like that which 
has addressed the water needs of Western States over this past 
century.
    For example, growth in some Eastern States between 1980 and 
1995 equal twice the national average of 16 percent. Irrigated 
acreage in the Eastern United States has increased almost 50 
percent between the years 1980 and 1995, while out West it has 
actually decreased by some 8 percent. Withdrawals for public 
supply in the East has doubled between the years 1955 and 1995, 
and is expected to increase another 30 percent by the year 
2040.
    We have found in Florida we can no longer look to the 
traditional sources, and we must discard the present paradigm. 
We must find new ways to create water, to treat water, to store 
water, to recover water, to reuse water and to conserve water. 
In Florida, we were spending hundreds of millions of dollars on 
developing sustainable alternative sources through seawater 
desalination, aquifer for storage and recovery, storm water 
recovery and waste water reclamation. But we need help, as do 
all the fast growing Eastern States. We're not asking for a 
one-way Federal dole in our district. Since 1994 we established 
a new water source initiative--our governing Board did this--
committing $20 million for the next 10 years for sustainable 
alternative supplies.
    In our district, we can identify an immediate need for some 
$250 million for alternative water supplies. In the Tampa Bay 
region alone, where this district has committed $273 million 
and the regional utility there has committed $500 million, we 
are trying to serve over 2 million residents.
    The Tampa Bay area is on the verge of a nationally 
significant economic expansion, and, at the same time, we are 
suffering from some very significant impacts to our natural 
systems.
    Mr. Chairman, as you can see, the costs of these programs 
are staggering and a great deal is at risk. We are ready to 
join with Congress to secure the future of this great country's 
Eastern States, much as it is doing in the West.
    S. 968 will provide a badly needed partnership between the 
Federal and State Governments. It will authorize a rational and 
appropriate method by which grants to eligible States for 
alternative water source development can occur. And this will 
be for more than just public supplies. It will include 
agricultural, industry and other water users.
    I am given the understanding that a process already exist 
within EPA, but is sporadic and ad hoc. We need a stable, 
dependable process that will provide for developing advanced 
non-traditional technologies, resulting in new sources, if you 
will, to meet our public supply and agricultural needs. S. 968 
will provide that process and a means for both Congress and the 
States to leverage available funds to meet these critical 
needs.
    Mr. Chairman, thank you once again. I am very grateful for 
this opportunity to appear before you, and I would be glad to 
answer any questions.
    Senator Chafee. Well, I want to thank every member of the 
panel very much. Unfortunately, we have a vote on now. It's my 
understanding that Senator Voinovich will be back. I would ask 
him to--and he has some questions. I don't know if you have 
questions, Senator Smith, and Senator Graham. If you do, why 
don't we all go vote and then come back.
    I, personally, will not be able to be here when we come 
back.
    Senator Smith. How much time is left on the vote?
    Senator Chafee. I think they're still on the first round.
    Senator Smith. I'm not going to be able to come back.
    Senator Graham. Mr. Chairman, I think we've got about 12 
minutes left in this vote. Could we possibly ask a couple of 
questions because we may all be in the same situation?
    Senator Chafee. Sure, why don't you go ahead and ask a 
couple of questions.
    Now, I'm going to go over and proceed to vote. I want to 
thank everybody on the panel. It's very helpful and this 
testimony was good. You've all addressed the challenges we 
face. There are different views that have been expressed here. 
I would say you two gentlemen have somewhat different views.
    Let me ask you a quick question--does the State of Michigan 
help out? Does the State make some grants?
    Mr. Kamppinen. The State of Michigan does not have a grant 
program. We provide the 20 percent State match through our 
general fund. The State of Michigan has just passed a $600 
million bond issue for brownfields clean-up, as well as $50 
million grant program for non-point source above and beyond all 
Federal funds.
    Senator Chafee. How about, Mayor, does the State of New 
Hampshire help at all, the State?
    Mayor Wieczorek. Well, this is what I was just asking our 
Public Works Director, and he stated that they will pay 20 
percent. The grant program will repay 20 percent of our loan.
    Senator Chafee. I see.
    OK, now, Bob, are you all set?
    Senator Smith. Could I ask a couple of questions?
    Senator Chafee. You go ahead, and Senator Voinovich will 
pick it up when he gets back.
    Thank you all, gentlemen.
    Senator Smith. I would like to ask my questions of Mr. 
Vergara.
    Mr. Vergara, earlier we heard comments by the 
representatives of EPA in which they indicated that the State 
Safe Drinking Water Revolving Fund could be looked to as a 
means of funding these programs that are designed to develop 
alternative water resources.
    I wonder if you could comment as to why or why not you 
think that is appropriate?
    Mr. Vergara. Mr. Chairman, I was very interested in the 
response that Mr. Fox gave that indicated to me that in terms 
of priority, the SRF funding mechanism that's in place didn't 
really allow for the types of water resource development that 
we're looking at. We're looking at alternative sources, and the 
traditional use of the SRF program are, apparently, apart from 
what we're trying to accomplish under our program. And, also, 
Senator, there was a question of timing. The SRF program seems 
to take quite a while to get through your requests, as I 
understand it.
    Senator Smith. One of the aspects of this legislation is to 
try to incorporate early environmental planning in the 
development of alternative water resources in order to avoid 
downstream environmental adverse consequences.
    I wonder if you could elaborate on that point, and your 
view as to whether EPA is the appropriate Federal agency to 
have responsibility for such a program of developing 
alternative water sources?
    Mr. Vergara. Senator, as you know, my expertise lies mostly 
in how we have addressed water supply, water management issues, 
in the State of Florida and the Federal funding process has 
always been a maze to me. So would you restate that question 
again? Let me understand that clearly.
    Senator Smith. I guess, just to ask the second half of the 
question, the legislation that has been introduced would place 
the responsibility within the Environmental Protection Agency.
    The question is based on what the goals of this program 
are, and based on, apparently, the less than enthusiastic 
response of EPA to those goals, do you think that is the 
appropriate agency, or should we look elsewhere--for example, 
to the Corps of Engineers to manage this program?
    Mr. Vergara. Yes, I noticed he referenced the Corps of 
Engineers, and I have two responses to that. One is we had a 
very good relationship with our region of the EPA, and have, in 
fact, received some funding for which we are very, very 
grateful. But, as I mentioned, it's something on an ad hoc 
basis, on a sporadic basis, but, yes, we feel that EPA is the 
appropriate agency to receive the funding. The Corps of 
Engineers and their objectives seem to be somewhat disparate 
from what we're trying to accomplish. Again, they are builders 
and they do a great job at it, but we feel that under this 
program we remain responsible for that construction, we do the 
construction, we know what needs to happen and we are ready to 
do that, given the assistance that we're looking for.
    Senator Graham. Senator Smith, I apologize. I'm going to 
have to go vote and then meet another commitment that will 
preclude my returning. I want to express my appreciation to all 
of the members of the panel who provided us such insightful 
comments on this important set of issues.
    Senator Smith. Would my friend from Florida let my 
colleagues know that the Senator from New Hampshire is in route 
as well in a moment?
    Senator Graham. I'll do so.
    Senator Smith. We're down to about 4 minutes, so I 
apologize to the witnesses, but I think Senator Voinovich is 
coming back, so he may have another question or two. I may have 
to recess here briefly if he's not back so that I can make the 
vote, but I do apologize.
    I don't know how it works in cities and States but here we 
have three committee meetings at the same time, that's what 
I've had this morning--Judiciary, Armed Services and EPW. So I 
guess the case in point is don't be on three committees, I 
guess. I was just notified that I was needed for a quorum down 
at Judiciary and was supposed to ask questions in another 
committee, but, anyway, let me say thank you, Mayor Wieczorek, 
for coming down. I still haven't had a chance to talk to you 
privately, but maybe I'll get a chance to do that in Manchester 
when it's not so hectic.
    Mayor Wieczorek. Sure, Senator.
    Senator Smith. Mayor Wieczorek, does the designate use 
review that EPA conducted for Boston, how would that impact 
you, just briefly?
    Mayor Wieczorek. I am certainly aware of the use review 
that they did conduct in Boston, and a similar review in 
Manchester really would be critical.
    You know, when we're talking about getting to the 
affordable in point of our CSO program, this is going to be 
extremely important in having them determine how we're going to 
get through this. Currently, with the original program that we 
started, we took out 98 percent of the pollutants in the river 
with the first phase. With this phase of the CSO, $58 million 
that we're talking about, we're going to bring it up to 99 
percent.
    So we certainly need to have them do a review of what we 
have here so they're all going to be on the same page, and it 
will be very important, certainly, to the rate payers and to 
all of us that are impacted by the finances here if they don't 
do it. It will be a negative impact if we don't have a review.
    Senator Smith. I was particularly impressed with your 
comment in your statement, Mayor Wieczorek about the balancing 
that you have to do between the other issues that you face as a 
Mayor--schools, roads and all of the other things, and I think 
your point, at least the point that you've made to me over the 
years, is that when you put these into a priority, that 10 
percent that you're trying to achieve to make the river 
swimmable, which, you know if you jump in at Manchester, in 
about 5 minutes you'll be in Nashua with the currents. You 
don't swim there anyway. If you had your choice of priorities, 
you would rather do the schools, or, perhaps, some other 
environmental problem--maybe a Superfund site or whatever else 
might be in your city.
    I think that makes sense, and that's one of the reasons why 
I've crafted this.
    I would just say, Mr. Kamppinen, it's a little bit 
interesting to me that you strongly support receiving a Federal 
grant for a State SRF program but not for a community. In 30 
seconds, why is that?
    Mr. Kamppinen. The construction grant program, as in the 
past, that was in the 1970's and 1980's, was very over-managed 
and bureaucratic. It took sometimes 10 years to get the project 
through the planning, design and construction stage. We're now 
doing all three at once. The efficiencies are there, it's 
State-managed, State-oversight, the environmental reviews are 
done with design and financing and the communities are taking 
ownership into the projects as a loan, rather than a free gift.
    It helps and it's a subsidy, and seeing the costs are 
lower, you achieve 100 percent assistance in a cost that you 
don't incur, and, therefore, if you're building projects 
cheaper, that in itself is a subsidy. So you can't look at a 40 
percent subsidy on a 20-year loan at 2 percent and a 55 percent 
grant. You have to look at also the savings on the 
administration.
    Senator Smith. Thank you.
    I'm going to have to go. I think what we'll do is recess 
for a couple of minutes. I think Senator Voinovich is coming 
back. If the witnesses could just stay for a few moments and 
let him finish his questions, it should be within minutes.
    Thank you, and, Mayor, I'll get a chance to talk to you, 
hopefully--are you going back to the office?
    Mayor Wieczorek. Yes, we're going back to your office and 
then we're leaving early this afternoon.
    Senator Smith. All right, I'll try to catch up to you at 
some point before you leave.
    Mayor Wieczorek. Thank you very much.
    Senator Smith. I thank all of the witnesses for coming.
    [Recess.]
    Senator Voinovich [assuming Chair.] First of all, I want to 
say thank you for the testimony. The Chairman was kind of 
enough to leave it open so that I could ask a couple of 
questions.
    Mayor, I was really impressed with the fact that you had a 
$300 million problem, and you worked with someone and reduced 
it to a $60 million problem.
    How did that happen?
    Mayor Wieczorek. That's only phase I. There's no magic to 
this.
    That was really phase I, and after meeting with our 
Department of Environmental Services, and the EPA, we were able 
to work out an accommodation where we did some extra things 
that they wanted to have done, and we were able to reduce the 
amount of money that we really had to spend on that first 
phase.
    So the second phase is the one that really would give us a 
lot of concern because we could be talking more than twice the 
doubling of phase I, and we've only corrected 1 percent of the 
problem here with this first phase--the $58 million that we're 
talking about. We had taken 98 percent of the pollutants out of 
the river when we built the plant, and, with this first phase, 
we bring it up to 99 percent.
    The second, which would be to bring it up to 100 percent, 
could be extremely expensive.
    Senator Voinovich. The question is in terms of the standard 
you have to meet, is it a reasonable standard when you look at 
it in terms of being practical in terms of the use. I mean, you 
were saying, ``clean it up so that our folks can go swimming 4 
days when it's raining, which they never do.'' Are the 
standards that they're asking you to meet unreasonable, and 
should there be some flexibility there in terms of what the 
actual problem is and the use?
    Mayor Wieczorek. Well, I think that everybody, certainly, 
is interested in having clean water, clean air and making sure 
the environment is protected. Yes, I think it's a real test for 
us, especially in communities where you have all these other 
items that you have to address--education, public safety. Those 
are tremendously important items--the infrastructure that we 
have--and what we're doing is then beginning to compete. We're 
not able to take care of the problems that we have, and, yet, 
the Federal Government is going to be mandating things that are 
going to be a priority and we can't address our other needs.
    Senator Voinovich. And I understand it because I was a 
mayor for 10 years.
    Mayor Wieczorek. I know you were.
    Senator Voinovich. But the issue is, for example, the clean 
up of a brownfield site. What level do you clean up the site 
when there's various levels that you can reach, and the 
question I have is are they, the EPA, under the current 
standards requiring your community to go to something that's a 
really high level, which, frankly, if you look at it from a 
perspective that may be way beyond what is required? That's the 
issue because if you go out, how far do you go?
    Mayor Wieczorek. That really is the problem. When I talk 
about spending $58 million and improving it by 1 percent, that 
certainly isn't cost-effective. Do we want to make sure that 
it's clean? Sure, we do, but it's pretty expensive to take care 
of that minor part. So I would hope that there would be more 
sensitivity to allow us to deal with these problems.
    Senator Voinovich. I would be interested if the person 
who's doing this for the city could get back to me in terms of 
what standard are you being asked to reach, and does that 
individual that's responsible feel that that's a reasonable 
standard, or will there be a lower standard that would get the 
job done, and, at the same time, unburden you with these costs 
that you're going to have in the future to get to, say, zero 
percent?
    Would you do that for me?
    Mayor Wieczorek. I will have our Public Works Director get 
in contact with your office and let you know precisely what 
that is.
    Senator Voinovich. The question that I'm going to ask, and 
it's to Mr. Kamppinen.
    Mr. Kamppinen. Yes.
    Senator Voinovich. Forgive me for asking this question 
because it's heavy on my mind. We're in a situation now where 
we're trying to balance the budget without using Social 
Security and without raising taxes, and the issue is what 
responsibility do we have and what responsibilities do the 
locals have and what responsibilities do the State have?
    Now, I know your Governor quite well, and I know that you 
have a terrific rainy day fund--big, big surpluses in Michigan 
and he's reduced taxes, and so on. We're concerned about people 
paying rates and the point I'm making is that they're all the 
same taxpayers, and they either pay rates on the local level 
for their sewer and water or they pay for it by sending their 
money to Washington and then Washington sending it back to the 
local community. I would be interested to know just how much 
participation do you get from the State of Michigan in terms of 
dealing with your problems?
    Mr. Kamppinen. Our program is well-supported by the State. 
We are providing general fund appropriations for our required 
20 percent State match. The voters in the State of Michigan, as 
I said earlier, have passed a $600 million bond issue for the 
environment, of which $50 million is for grants for non-point 
source and for some other areas, such as brownfield 
developments and water quality improvements.
    So we have a lot of support in the State of Michigan for 
water quality, and, yet, the end result is the rate payer--how 
much is a water quality improvement project going to cost per 
month? The point I wanted to make earlier is in a loan program 
don't just look at a loan subsidy, say, over a 20-year period 
that's a 40 percent subsidy from market rates, but there's also 
efficiency in time. We've cut in half the time that it takes to 
get a project under construction. That time is money saved, and 
you don't lose it to inflation. Our projects are coming in, 
they're working and they're less expensive projects because 
we're looking at them very critically, and a dollar saved on a 
project that is not needed whether it gets a grant or not is a 
100 percent savings.
    Senator Voinovich. Right, and I understand----
    Mr. Kamppinen. But we are supporting the environmental 
program very extensively in Michigan.
    Senator Voinovich. I think from your testimony, though, you 
were saying that the $3 billion--my bill provides $3 billion 
per year over 5 years, and your suggestion was it ought to be 
$5 billion, and I can tell you that that's an enormous sum of 
money for us to be putting out when we have all of these other 
competing interests that we're getting into.
    I guess what I'm saying is that a lot of local government 
officials don't look at the big picture, and when the Federal 
Government gets off into school construction, 100,000 teachers 
and education is a big deal, but the issue is whose 
responsibility is it? If it's competing between the States' 
responsibility and education and the Federal Government getting 
involved in it, and, at the same time, then using that money 
that could be used to fund the issue you're talking about 
today, you can't do it all.
    We have a situation where we are $5.7 trillion in debt, 14 
cents out of every dollar that we spend in the Federal 
Government goes for interest payments. Actually, we've been 
borrowing money from our people and from the Social Security 
pension funds to pay for a lot of programs in this country for 
a long time, but we just aren't paying for them.
    So the point I'm making is there's a time when we need to 
really sit down and talk about what are our priorities and what 
are our respective responsibilities.
    One of the things that I would be very interested in would 
be--you gentlemen represent different organizations--I would 
really be interested in what's the number that we would have to 
put in for the next X number of years on a regular basis that 
would put us in a position where we could deal responsibly with 
the, quote, ``Federal share,'' of meeting the mandates from the 
various--let's say, the Clean Water Act that we have and where 
are we going on that. That's just like what we did with--I 
lobbied very hard to get all of the money that we pay in gas 
tax to be used for highway construction. There was a trust fund 
to be used for it, and the thing that was important about that 
legislation is that it guarantees that each year you're going 
to get the same amount of money. One thing that's very 
important is that there's some consistency there that you can 
rely upon. One year it's not up, and the next year it's down, 
and so on.
    So, the issue is how much should that be, and then also 
taking into consideration your--I really enjoyed your 
testimony, Mr. Dorfman--the capacity of the industry to handle 
it. Right now--and I'm amazed that your projects are coming in 
below costs. Almost all the projects I know in the public area 
today are coming in way above projected costs because there's 
so much competition for those dollars because there's so much 
construction going on today.
    These are long-term issues that I think need to be worked 
out, and, again, I would interested in any of your commenting 
on that.
     Mr. Kamppinen. I don't have a magic number in terms of--
you know, there's no formula or anything that comes out whether 
it should be $3 billion, $4 billion or $5 billion. I think the 
need in the Need Survey and the gap analysis and the additional 
information on non-point source, and watershed and storm water 
is going to show that the infrastructure needs are greater. I 
face the same situation as you, except yours is much more 
magnified and broader in that I have projects on our priority 
list for next year totaling $350 million, which could consume 
as much as 25 percent of the entire Senate Appropriation 
committee budget for the SRF nationwide.
    So we do have to set priorities--you're correct.
    Senator Voinovich. Well, again, we would like to have some 
of your thoughts on it.
    Yes, Mr. Dorfman?
    Mr. Dorfman. Thank you, Senator.
    First, to preface, to say that in my anxiety to beat the 
red light I forgot to even add that we support this bill, the 
Association does, and I wanted to be sure it was on the record.
    To address your question regarding capacity, there is no 
doubt in my mind from my years in construction that throughout 
the country NUCA--and I don't mean the capacity of NUCA 
contractors because we're a small organization, but there's 
tens of thousands of contractors throughout the country, and 
there are suppliers, equipment dealers and manufacturers that 
can address the issues, if the funds are available--no question 
in my mind for that. The new technology of doing this and 
making the pipe and digging the trenches and so forth is there.
    Senator Voinovich. Thank you.
    Would anyone else like to comment on anything before we rap 
it up?
    Mayor Wieczorek. Senator?
    Senator Voinovich. Yes?
    Mayor Wieczorek. Just one thing, I talked to the Public 
Works Director while other people were commenting, and he 
stated that the EPA has been difficult in the standards that 
have been established to deal with, and we did reach an 
impasse, and that's the reason we had to go to a second phase. 
They want zero discharges, and, for us to take out one-tenth of 
1 percent of the CSOs would cost another $39 million.
    Senator Voinovich. That may mean that we have to look at 
that and have some kind of discretion available to deal with 
it. When they come into see you, they don't know you have 
public buildings, and you're recreation, and you've got schools 
and all the rest of it to take care of. So they just say, 
``Well, you take care of this and they don't care about your 
other responsibilities.''
    Mayor Wieczorek. You're absolutely right, and this is what 
we deal with on a regular basis.
    Senator Voinovich. The other comment I would like to make 
is that Senator Smith's bill--the issue of grants or loans? 
Anybody want to comment on that?
    Mayor Wieczorek. Well, certainly, a grant is a welcomed 
thing. It certainly gives us a moral boost, if we were to get 
it. I'm concerned that with all the moneys that we have to pay 
back, what we're doing is mortgaging our children's children's 
future, and, instead of leaving them with something that is 
better than what we have, we're going to leave them with 
something that is worse.
    That's a major concern of mine, and I think that if the 
Federal Government is going to be mandating all of these things 
that communities have to do, as you stated, we have all these 
competing interests with schools, public safety, 
infrastructure, it's very hard to be dealing with all of those 
situations and still take care of the highest priorities in our 
communities. It makes it extremely difficult.
    Senator Voinovich. Any other comments?
    Mr. Dorfman. Well, I want to address the grants issue from 
the contractors standpoint, and in my years of constructing 
I've found that--and I don't know the reason for this because 
I'm almost the end-user of the money in bidding the project--
but it seemed like when the SRF came into effect in 1987, if 
that was the year, projects seem to move forward quickly. You 
would hear about a project that was coming out for a particular 
city, and it seemed like it was there to bid sooner. I don't 
know the reason for that, but I think the important thing is 
your bill, the SRF first, and then address the grants.
    Senator Voinovich. Mr. Vergara?
    Mr. Kamppinen. The Association does not object--in fact, we 
support additional assistance to hardship communities. In some 
cases, the SRF is not adequate, and in hardship cases we do 
feel some subsidy is necessary.
    Senator Voinovich. Mr. Vergara, were you here when I was 
commenting to your Senator about the proposed bill?
    Mr. Vergara. As it relates to the Western----
    Senator Voinovich. Yes, I thought he made a very good 
point, and I hadn't really thought about it, but one of the 
things about being a former Governor, there's enormous 
competition between States, and water is very important. Your 
State is being overrun with people coming in, and, if you can't 
provide the water, it will slow down the number of people 
coming into your State.
    The issue is what's the Federal Government's responsibility 
to deal with that problem, and, in all due respect to your 
State, you have no State income tax and I think that from the 
Federal Government's point of view, at least from a real 
preventional point of view, as a former Governor of Ohio, I'm 
not real anxious to have the people in my State pay Federal tax 
dollars so that we can build water facilities in Florida, which 
we don't need because we have Lake Erie. I mean, that's just 
real simple, and that means that if we didn't do it, then that 
means that development in Florida would slow down a little bit.
    It's an interesting thing when you look at all these 
issues. They do deal with competitiveness, and, also, I think 
from your own point of view, in terms of growth, has anybody 
really sat down and looked at--I haven't talked to but would 
love to talk to Jeb Bush about it--but has anybody looked at 
the growth of the State and just how much more can you do? Your 
water tails in some places are in jeopardy, and so on, and 
somebody ought to sit down and say, we want to have a great 
State and we don't want to get so overrun that our 
infrastructure problems just bog us down and we kind of come to 
a standstill.
    Mr. Vergara. Senator, if I might, thank you very much.
    That issue is a major public policy decision or discussion 
that's underway in the State today, and I'll give you an 
example of a situation that I promised the folks behind me that 
I wouldn't talk about, but there's a county in Florida that 
decided at one point that they didn't want this growth that was 
happening throughout the State. They decided that if they 
didn't build the infrastructure, if they didn't support the 
construction of it, then it wouldn't happen and they would 
enjoy this relatively comfortable state that they felt that 
they were in.
    They were incredibly wrong. Growth came anyway, and the 
State, I think, is going to be subjected to that continuing 
influx of people anyway. So we, I think, those of us in 
government and those of you who are in elected positions, it's 
so important to simply acknowledge that fact. We've got to be 
able to accommodate. There's not much we can do about it that 
I've been able to figure out.
    Senator Voinovich. What you could do is when people come, 
they know they're going to have to pay for it.
    Mr. Vergara. That's true.
    Senator Voinovich. I mean, it's the same thing with 
schools. You've got a real education challenge in your State, 
and part of the problem is you've got a lot of snow people, 
snow birds that are there, and they become residents and may 
not be as supportive of that kind of thing, as they ought to 
be.
    So I think they may be coming, but if the word goes out 
that if you come, you're going to have to pay for these things, 
some of them may not come.
    Mr. Vergara. Senator, perhaps we should go back to the 
earliest years when the funds were being made available by the 
Federal Government to the Western States in order to develop 
them, and try to explain to them out West that if you're going 
to go out there, we think you should pay for those programs out 
there.
    I don't think that those Western States would be where they 
are today without that Federal assistance, and what we're 
experiencing is the reality that the issues that were addressed 
out there, and surely were justified and continue to need to be 
addressed today. But there are new issues now that are just as 
legitimate, and, on some sort of equitable basis, we feel that 
it is justified that they be addressed in the Eastern part of 
the United States today.
    Senator Voinovich. Well, sorry to bring up all these bigger 
picture things, but, as I said, this whole budget thing is 
weighing upon me, and I know one thing, that we can't keep 
doing everything that we're doing today and not just end up in 
a hole. Maybe you're worried about the legacy, but I'm worried 
about my children's and grandchildren's legacy.
    We have a covenant in Social Security and Medicare that 
unless we get that under control we're not going to be able to 
provide for that in 10 to 15 years, and we're going to have a 
problem in this country that's unbelievable--a battle between 
the older people and the younger people.
    We've got lots of problems, and we're all partners in it. 
The real challenge is how do we shift out our perspective 
responsibilities, and, I agree that the Federal Government does 
have a role to play. The issue is what is the role to play, how 
much of it should we play and then how much should we ask our 
partners in State and local Government to play?
    Thanks very much for being here today. We appreciate it, I 
and look forward to, hopefully, when we're moving this along, I 
can call on you for some support in terms of sending some 
letters and phone calls and all the other stuff that we need.
    Thank you.
    [Whereupon, at 12:06 p.m., the committee was adjourned, to 
reconvene at the call of the Chair.]
    [Additional statements submitted for the record follow:]
 Statement of Hon. Connie Mack, U.S. Senator from the State of Florida
    Mr. Chairman, Ranking Member Baucus, and members of the committee, 
I appreciate the opportunity to submit a written statement regarding S. 
968, the Alternative Water Sources Act of 1999. Senator Graham and I, 
along with Senators Lincoln, Robb, and Cleland introduced this bill to 
assist in the development of alternative water source projects to meet 
projected residential, industrial, agricultural, and environmental 
water supply needs.
    During the last decade, many areas of the country have experienced 
unprecedented population growth. Future projections of population 
growth indicate additional strain on already diminishing supplies of 
water. My home State of Florida is facing a 40 percent increase in its 
population by the year 2025. At that time, it is estimated that over 20 
million people will live in Florida. Countless others will visit its 
beautiful beaches, play at its amusement parks, and experience its vast 
ecosystems, assuming, of course, that we have the water infrastructure 
to sustain this number of people.
    Currently, water level declines in some areas of the Florida 
Aquifer reach 150 feet due to municipal, industrial, and agriculture 
pumping. Aquifers in the southeast and southwest coastal areas have 
experienced saltwater intrusion, and wetlands and lake levels have been 
lowered due to increased urbanization resulting in increased water 
usage. In Florida, an orderly program of Federal assistance would 
enable local, regional and State planners to leverage their resources 
and speed the development of critically needed alternative water supply 
projects throughout the State.
    S. 968 would establish a Federal matching grants program to assist 
in the development of alternative water source projects to meet 
projected residential, industrial, agricultural, and environmental 
water supply needs. Assistance will be provided to States or regions 
that have identified a long-term water supply need as part of a 
comprehensive, long range water resource management plan.
    Seventy-five million dollars per year for 5 years would be 
authorized for alternative water source projects. While some may 
concerned about authorizing additional Federal money at a time when 
Congress is exercising fiscal restraint, I must point out that this 
authorization would validate the several grants the Congress has 
already made on an ad-hoc basis primarily through the VA-HUD 
appropriations bill. In addition, this program would help identify 
deserving projects for funding and would recognize States that have 
undertaken critical, long-range assessments of their water supply 
needs.
    This legislation is pro-environment and essential for continued 
economic growth in this country. Nothing is more important that having 
available and usable water. I appreciate the time and attention paid to 
this issue by this committee.
                               __________
Statement of Hon. John W. Warner, U.S. Senator from the Commonwealth of 
                                Virginia
    Mr. Chairman, as the only member of the Environment and Public 
Works Committee who can claim State interest in the Tennessee Valley 
Authority (TVA), I am pleased to support Ms. Skila Harris and Mayor 
Glenn McCullough to the TVA Board of Directors.
    TVA's importance to Virginia is unmistakable. Fifteen counties in 
Southwestern Virginia make up a large portion of the Tennessee River 
Watershed. Virginia is the home to the headwaters of five tributaries 
of the Tennessee River. These include the Powell River, Clinch River, 
North Folk Holston, South Fork Holston and Beaver Creek.
    The first dam that TVA ever built, Norris Dam, continues to provide 
flood control and recreation opportunities in Southwestern Virginia. 
Both the Clear Creek and Beaver Creek Dams are located in Washington 
County, Virginia. Although neither produces hydropower, they are vital 
to the community for both flood control and recreation.
    TVA continues to serve Powell Valley Electric Cooperative with 
wholesale power. Over 7000 consumers enjoy affordable rates throughout 
Lee and Scott counties.
    In short, TVA is an important and valued presence in Virginia, 
hence my interest in assuring quality men and women fill its Board of 
Directors.
    I am confident that Ms. Harris and Mayor McCullough will fight to 
assure that Virginians as well as the 8 million customers being 
serviced by TVA will continue to receive quality service at affordable 
rates. I am pleased to support their nominations.
    Thank you, Mr. Chairman.
                               __________
 Statement of Hon. Charles S. Robb, U.S. Senator from the Commonwealth 
                              of Virginia
    I want to thank the committee for conducting a hearing on these 
important issues today.
    For years problems of water development and water supply were 
largely limited to the western States. We in the east heard about water 
wars but didn't experience them. That situation is changing. As the 
Virginia's population continues to grow, we are beginning to see real 
opposition to the development of new water supplies that infringe on 
open space, or tap already stretched reserves.
    The Potomac River, the source of water for the Nation's Capitol and 
the surrounding area, came very close to reaching the limits of 
withdrawal during the summer's drought. New requests for drawing water 
from the River are likely to be met with resistance from current users 
as well as environmental and conservation groups. In Manassas, 
Virginia, we are already seeing the use of alternative water supplies. 
Over 1 million gallons per day of safe clean drinking water are 
developed from an unlikely source, wastewater.
    In Virginia's lower peninsula a 12 year effort to develop a new 
source of water has been delayed by questions concerning the 
environmental impacts of building a reservoir, as well as the impact 
that reservoir will have on tribal properties. In this case both sides 
have serious concerns, and reaching a solution has proven elusive. 
Pitting environmental and cultural concerns against a community that 
needs water is a no win situation. Unless we find alternative water 
supplies more and more communities will be faced with real water 
shortages as opposition to the traditional methods of supplying water 
increase.
    Of course communities have to conserve water; that goes without 
saying. And I believe a new ethic in water conservation is taking hold. 
But that is not enough. We need to encourage new methods, new ideas, 
and new technologies. I encourage you to act on S. 968 in the near 
future, many locations have not had to face shortages yet, so this is 
the time to start solving the problem. I encourage you to act on this 
legislation with deliberate speed, so that we gain the necessary 
knowledge and experience to develop alternatives as the need arises.
    I also want to express my support for S. 914. Combined sewers 
remain a serious environmental and financial problem for older 
communities. In Virginia, Richmond and Lynchburg will face bankruptcy 
without assistance on repairing, and rebuilding these systems. We need 
a systematic approach to the problem of replacing combined sewers, one 
that allows cities to plan for the lengthy construction schedules that 
these projects require, and be assured that funding will be available 
to complete them. S. 914 provides that structure, and I am pleased to 
be able to cosponsor and voice support for that bill.
    I want to thank the committee members for their leadership, offer 
my support, and say I look forward to working with you on moving this 
legislation forward.
                               __________
  Statement of Hon. Olympia J. Snowe, U.S. Senator from the State of 
                                 Maine
    Thank you, Senator Chafee, for holding a hearing today on a 
substitute amendment to S. 914, the Smith-Snowe Combined Sewer Overflow 
Control and Partnership Act of 1999. The bill's bipartisan sponsors 
believe that this substitute bill will benefit not only the environment 
but the ratepayers in CSO communities in your New England State and 
mine, and in other areas of the country. The problem of CSOs has been a 
long standing issue, for which I cosponsored similar legislation in the 
House back in the 102d Congress. We all must realize that the problem 
is obviously not going to go away, but is becoming an increasingly 
bigger financial burden for our communities every day. Combined sewer 
overflows are by far the single largest public works project in the 
history of almost every CSO community.
    Eleven States in the two geographic areas of New England and the 
Great Lakes account for 85 percent of the water-quality problems 
attributed to CSOs nationwide, where sewer lines and stormwater 
collection systems were first constructed in the 1800's and early 
1900's. Typically, sewer lines designed to carry raw sewage from urban 
residential areas and business were laid first. These were followed by 
stormwater drainage systems designed to collect rainwater during storms 
to reduce or eliminate urban flooding. In many cases, sewer lines and 
stormwater conduits were connected into a combined sewer, which served 
as a single collection system to transport both the sewage and 
stormwater.
    CSOs are the last remaining discharges from a point, or known, 
source of untreated or partially treated sewage into the nation's 
waters. Sewer overflow problems arise mainly during wet weather, 
causing an overload of the systems, and the untreated or partially 
treated waste water discharges through combined sewer overflow outfalls 
into receiving waters such as rivers, lakes, estuaries and bays. 
Recently, the torrential rains from Hurricane Floyd greatly compounded 
these overflow problems in CSO communities with devastating effects, 
especially in some of the Mid-Atlantic States, but impacting some of my 
communities and yours as well. If enacted, our bill will eliminate or 
appropriately control CSO discharges in this country by the year 2010.
    Presently, over 43 million people in the U.S. are incurring the 
high costs of trying to overcome the problem of combined sewer 
overflows because of the lack of Federal statute and funding to meet 
Federal sewage treatment mandates for these CSO communities. When the 
Maine Municipal Association members met with me this past spring, they 
informed me of communities where people are facing paying more in sewer 
rates than they will owe in property taxes. This, to me, is 
unacceptable, especially when considering our senior citizens who live 
on fixed incomes. This legislation will help ratepayers in at least 53 
communities throughout the State of Maine and in over 1,000 other 
communities around the country.
    The purpose of the Smith-Snowe Combined Sewer Overflow Control and 
Partnership Act, originally introduced on April 29, 1999, is to 
facilitate and accelerate implementation of CSO controls nationwide. 
For at least the past 3 years, CSO communities in Maine have told me 
that legislation is necessary to advance the implementation of CSO 
controls in the U.S. if we are to fulfill the promise of truly cleaning 
up bodies of waters for all Americans to make them ``fishable and 
swimmable'' under the Federal Pollution Control Act, better known as 
the Clean Water Act (CWA).
    This can only happen if the 1994 CSO Policy developed by the 
Environmental Protection Agency (EPA) is fully and properly implemented 
so that CSO communities are able to cost-effectively comply with the 
CWA and ensure that public moneys will be properly spent on appropriate 
CSO controls. Given the extreme burden that the Federal CSO control 
mandate imposes on CSO communities nationwide, Federal funding 
assistance is both necessary and appropriate. EPA has actually 
estimated that the control of CSOs in this country is at least a $50 
billion problem with municipal stakeholders estimating at least twice 
that amount.
    I would like to submit for the hearing record endorsements for the 
Smith-Snowe CSO legislation from the Maine communities of Lincoln, 
Bangor, and Orono, who join communities, such as Portland, Augusta, 
Auburn, Lewiston, and South Portland, in support for CSO legislation. 
Mr. Chairman, I urge the committee to mark up the CSO substitute to S. 
914 as soon as possible and to pass the bill out of committee so that 
it may be considered by the entire Senate. The bill being considered by 
the House is essentially the same. Passage will go a long way toward 
helping to alleviate the immense financial pressure and uncertainty 
amongst all ratepayers of our CSO communities, and to help us fulfill 
the promise of truly cleaning up our rivers, our lakes, our bays, and 
our estuaries all over the country. I thank the Chair.
                                 ______
                                 
                                         Town of Orono, ME,
                                                   October 4, 1999.

The Honorable Olympia J. Snowe,
U.S. Senate,
Russell Senate Office Building,
Washington, DC 20510

    Re: Co-Sponsorship of S. 914--The CSO Control Partnership Act of 
1999
Dear Senator Snowe: I am writing on behalf of the Town of Orono to 
request your continued support of S. 914, the CSO Control and 
Partnership Act of 1999. It addresses several critical regulators and 
financial issues associated with EPA's National Combined Sewer Overflow 
Control Policy. The bill was introduced on behalf of the CSO 
Partnership, a national association of CSO communities.
    As you know, Orono is a small community of 10,500 residents that 
swells to over 20,000 when the University of Maine is in session 
Orono's secondary wastewater treatment plant has a dry weather daily 
average flow of about 800,000 gallons per day. When it rains or during 
``ice out,'' the flow can increase to over 4 million gallons par day. 
During 1998 seven CSO events occurred: a total of 6,950,000 gallons of 
untreated wastewater flowed into the Penobscot River. To date in 1999, 
due partly to the recent hurricanes, 10 C!(1 events have occurred 
resulting in 5,230,000 gallons of overflow.
    The sewer system is funded exclusively by user fees. There are 1329 
rate payers which includes the University of Maine as the largest 
single user. Since 1997 Orono has spent over $1 million dollars on 
settler maintenance and CSO abatement projects with only $18,000 of 
State of Maine DEP assistance. Currently, principal and interest 
payments and sewer maintenance related work represent 04 percent of our 
annual budget. This figure will soon rise to over 35 percent when a 
$1.4 million 2-year project begins in the year 2000. We have additional 
CSO projects estimated to cost $1.7 million. Our total anticipated CSO 
abatement work therefore, is estimated to be $4.1 million. Our goal is 
to eliminate CSO events in the future. With such a small number of 
ratepayers, the burden of undertaking such an ambitious CSO abatement 
program will be heavy indeed for the individual user. It would seem 
that S. 914 would lesson this burden while addressing a problem which 
impacts the entire community of Orono. We believe the funding within S. 
914 can make a difference in Orono and hope for successful passage.
    Thank you for your co-sponsorship on this important issue. Please 
call on us for any future support.
            Yours sincerely,
                            Paul F. Wintle, Superintendent,
                            Orono Water Pollution Control Facility.
                                 ______
                                 
                                 Lincoln Sanitary District,
                     P.O. Box 66, Haynes Street, Lincoln, ME 04457,
                                                September 28, 1999.

Senator Olympia I. Snowe,
Russell Senate Office Building,
Washington, DC 20510.

Dear Senator Snowe: I am writing in support of H.R. 828/S. 914 
``Combined Sewer Overflow Control and Partnership Act of 1999''. We 
have worked diligently over the past 15 years to reduce our CSO events. 
We have separated storm drains; removed roof leaders and cedar drains 
from the sanitary sewer; replaced vented manhole covers win solid 
covers to reduce inflow; completed an inflow and infiltration study; 
implemented the nine minimum controls; developed and began implementing 
long-term CSO controls.
    The Lincoln Sanitary District has undertaken a $2.36535 million 
dollar project to convey and treat combined sewer overflows in order to 
comply with an EPA Administrative Order. The financial strain of this 
project together with the $173,691.46 recently spent for the inflow and 
infiltration study has and will limit our ability to address other 
infrastructure needs of the district for some time to come. (We service 
a small community of 5724 people with user base of about 1100 
accounts.) The cost to address the CSO issue is overwhelming. There is 
a critical need for Federal assistance given the high costs associated 
with CSO abatement and the fact that the wastewatcr treatment 
facilities constructed in the 1970's and 1980's are coming to the end 
of their design life. Communities will not have the financial means to 
upgrade these older wastewater treatment plants and deal with CSO 
abatement too. My greatest fear over the next 10 years is that the 
Lincoln Sanitary District will not have the funds to make major repairs 
to its 1981 wastewater treatment plant should they be needed because of 
CSO abatement costs we are incurring.
    I encourage the 106th Congress to support H.R. 828/S. 914. This 
legislation will move clean water efforts forward while providing some 
relief from the financial burden of CSO abatement.
            Sincerely,
                             Darold Wooley, Superintendent,
                                 ______
                                 
                                        City of Bangor, ME,
                                                   October 5, 1999.

The Honorable John Chafee,
U.S. Senate,
Committee on Environment and Public Works,
Washington, DC 20510-6175.

Dear Senator Chafee and committee members: I am writing on behalf of 
the City of Bangor, Mane to offer testimony in strong support of S. 
914, the Combined Sewer Overflow and Partnership Act of 1999.
    Bangor is a City of 33,000 located in East Central Maine which has 
been very actively involved in Combined Sewer Overflow Control since 
1987. Our Assistant City Engineer, John L. Murphy, PE represents the 
City in numerous CSO organizations and entities, including the State of 
Maine Wet Weather Water Quality Standards Committee, the CSO 
Partnership, the EPA Urban Wet Weather Flows Federal Advisory 
Committee, and EPA's Invited Experts Panel addressing issues related to 
the National Combined Server Overflow Control Policy.
    In 1996, Bangor's commitment and expertise relating to Combined 
Sewer Overflow Control was recognized by receipt of the United States 
Environmental Protection Agency's National First Place Award for 
Combined Sewer Overflow Program Excellence.
    Wbile we are strongly committed to Combined Sewer Overflow Control, 
the local burden has been tremendous.
    Over the past 12 years, Bangor has expended approximately $50 
million of mostly local dollars to upgrade its wastewater treatment 
plant to control combined sewer overflows An additional $25 million 
expenditure is projected over the next 10 years to complete the City's 
CSO control program. This $75 million expenditure is the largest public 
works expenditure in the Cities history by a large margin.
    Currently, Bangor is in debt $32,112,03S for wastewater collection 
and treatment projects that the City has undertaken since 1987.
    In addition to this huge capital expenditure, $25 million is 
estimated (OT interest costs Ad fees for money borrowed from the State 
Revolving Loan Fund (SRF). Interest costs do not directly provide 
environmental protection or improvement,
    The financial impact of CSO control falls squarely on the shoulders 
of Bangor's citizens. Our sewer rates have increased nearly 400 percent 
in a 10-year period, and our CSO program is only about two-thirds 
complete. Upon completion of the program, the average cost for each 
sewer ratepayer will be approximately $10,500. These impacts are 
typical of CSO communities. nationwide.
    S. 914 specifically addresses three CSO control issues that are 
extremely important to Bangor as well as to other CSO communities. 
These issues are Conformance, Cost-Effectiveness, and Cost.
    Conformance--S. 914 will require that all CSO Control Programs 
nationwide CONFORM to the National CSO Control Policy of 1994. Today, 
there is an inconsistency in application of the policy. Bangor is doing 
its part and would appreciate universal application of the policy by 
each EPA Regional Office and by each CSO Community. S. 914 will provide 
this CONFORMANCE.
    Cost-Effectiveness--Local CSO Control Programs must have a balance 
of being both Cost-Effective and environmentally effective. This 
balance is not possible unless there is a reasonable procedure to make 
the designated uses of the waterbody compatible with the uses that can 
actually be attained during wet weather. considering the site-specific 
wet weather impacts of CSOs.
    S. 914 will require development of a guidance document that will 
facilitate and promote water quality reviews. This will insure that CSO 
control is no more extensive or expensive that necessary to protect the 
current attainable uses of the receiving waters. S. 914 will assure 
that CSO control programs are COST-EFFECTIVE.
    Cost--CSO Control is enormously expensive. Approximately two-thirds 
of CSO Communities are small communities that do not have the resources 
to undertake even the planning required by the CSO Control Policy. For 
those communities, Federal Grant Assistance is required to fund most of 
their CSO control program. For other communities such as Bangor, 
Federal Grant Assistance is necessary to continue their CSO Control 
Program while keeping server rates within the range of reasonable 
affordability. S. 914 will provide Federal Grant Assistance to help 
local communities deal With the COST of Combined Sewer Overflow 
Control.
    Favorable consideration S. 914 is crucial if progress on Combined 
Severer Overflow control is to be maintained.
    On behalf of the City of Bangor and nearly 1000 other CSO 
Communities nationwide, we respectfully request your support of S. 914 
The Combined Sewer Overflow Control and Partnership Act of 1999.
            Respectfully Submitted,
    James D. Ring, PE City Engineer And Director of Public 
                                                  Services.
                                 ______
                                 
                        Associated Builders and Contractors
                                      Rosslyn, VA, October 6, 1999.

The Honorable John Chafee, Chairman,
Senate Environment and Public Works Committee
U.S. Senate
Washington, DC 20510

Dear Chairman Chafee: On behalf of Associated Builders and Contractors 
(ABC) and its more than 21,000 contractors, subcontractors, material 
suppliers, and related firms across the country I would like to express 
our support for reauthorization and adequate funding for the Clean 
Water State Revolving Fund (SRF) and respectfully submit the following 
comments for the hearing of the Clean Water Infrastructure and Wet 
Weather Flows hearing on October 7, for the record.
    The costs of insufficient attention to the clean water issues are 
indisputable. Non point source pollution, leaking toxins, stormwater 
runoff, and coastal pollution pose grave risks to water quality. Our 
nation's water quality and ``environmental'' infrastructure could not 
be more vital to our health, safety and overall quality of life. 
Congress passed the first Clean Water Act in 1972, which linked the 
Federal Government with States and cities to clean up the country's 
water by funding projects relating to water supply and wastewater 
treatment.
    Under the Clean Water SRF, EPA provides capitalization grants, or 
``seed'' money, for States to create infrastructure loan funds. States 
combine the capitalization grants with 20 percent matching grants, 
leveraging, and interest payments to offer low-interest loans to 
municipalities for wastewater infrastructure as well as non-point 
source and estuary projects. As loans are repaid, States ``revolve'' 
them and make new loans.
    A primary goal of the Clean Water SRF program is to provide States 
with increased flexibility in running their programs, including 
prioritizing and choosing the best projects to improve water quality. 
Expanding loan eligibility further enhances State flexibility beyond 
providing loans to the wastewater infrastructure, non-point source and 
estuary projects. Enhancing State flexibility would help States better 
address their changing infrastructure needs.
    However, ABC would like to note that the Federal Davis Bacon Act 
adds 5-39 percent to the costs of construction. We strongly urge 
Congress to refrain from imposing this burden on SRF construction 
projects. Nineteen States recognize the waste associated with Federal 
restrictions like Davis-Bacon and have chosen not to have similar State 
restrictions. Any new extensions of Davis-Bacon on SRF will act as an 
``unfunded mandate'' on those States, by forcing them to spend money 
toward complying with an outdated Federal labor law that results in 
inflated costs.
    Local residents should have the flexibility to work on local 
construction projects to meet neighborhood needs. Yet projects under a 
Federal mandate with Davis-Bacon cannot use local ``helpers'' to work 
on the infrastructure projects. These are valuable entry-level jobs for 
low-skilled workers who want job access and experience by working under 
the direct supervision of higher skilled journey-level workers. In 
today's changing welfare-to-work environment, and with the importance 
of revitalizing disadvantaged communities, it is critical that the 
Federal Government not hinder State and local efforts to provide entry-
level jobs. Inserting the Federal Government bureaucracy into the local 
construction process will limit job opportunities for many low-skilled 
minorities, at-risk youth, and displaced workers who would otherwise 
have a chance to gain experience as a helper on a project in their own 
neighborhood.
    ABC supports adequate funding for keeping America's water clean. 
However, any expansion of Davis-Bacon to revolving funds and/or grants 
is unnecessary and would be an unprecedented expansion of Davis-Bacon 
to the bill (Federal Davis-Bacon restrictions were never intended to 
apply to State funds). ABC is strongly opposed to this effort and any 
similar expansion of Davis-Bacon to local construction activity.
            Sincerely,
                   Shane Downey, Washington Representative.
                               __________
 Statement of J. Charles Fox, Assistant Administrator for Water, U.S. 
                    Environmental Protection Agency
Introductory Remarks
    Good morning, Mr. Chairman and members of the committee. I am Chuck 
Fox, Assistant Administrator for Water at the U.S. Environmental 
Protection Agency (EPA). I welcome this opportunity to discuss the 
Nation's investment in facilities to reduce water pollution and protect 
the environment and human health. I will also comment on several 
legislative proposals addressing clean water infrastructure.
    Looking back over the past quarter century, we can all be proud of 
our stewardship of Federal water infrastructure resources and of the 
environmental benefits that this investment has provided. Today, the 
Nation's sewage treatment facilities remove about 7.5 million metric 
tons--that is over 16 billion pounds--of oxygen-depleting chemicals 
from wastewater each year.
    We at EPA look forward to working with you and State and local 
governments in shepherding a range of important financial assistance 
programs and initiatives--including the Clean Water State Revolving 
Funds (SRFs)--into the twenty-first century.
                   clean water state revolving funds
A National Pollution Control Success Story
    For much of the last century the Nation's basic wastewater 
facilities were constructed primarily through local initiative, and at 
local expense. Federal financial assistance for the construction of 
wastewater infrastructure began during the 1950's and 1960's and 
increased dramatically with the enactment of the 1972 Clean Water Act 
(CWA). Since 1972, EPA has contributed almost $70 billion to wastewater 
infrastructure programs through the CWA construction grants program, 
the Clean Water SRF program, and other financial assistance programs.
    Two basic statistics document this success [see Chart 1]. First, 
the number of people served by secondary or advanced wastewater 
treatment doubled between 1972, when the CWA was first authorized, and 
1996, rising from about 85 million to 173 million. Second, during that 
same time, pollutant loads from municipal treatment facilities have 
fallen about 40 percent. This environmental improvement is significant, 
especially in view of the 30 percent increase in population over the 
same period.
    Our investment in the Nation's water quality infrastructure has a 
positive influence on society--economically, socially, and 
environmentally. The quality-of-life improvements made possible by our 
investment in wastewater infrastructure are enormous. Besides the 
obvious health benefits of eliminating the discharge of raw sewage into 
water bodies, Federal infrastructure programs contribute to the 
protection of ecosystems and watersheds, and improve habitats for 
wildlife, birds, and fish.
    The economic and social benefits of water infrastructure projects 
can be seen in cities such as Boston, Cleveland, St. Petersburg, and 
Baltimore. In each of these communities, cleaning up the water has 
resulted in more aesthetically pleasing waterfronts, as well as 
economically vibrant, water-focused urban environments. Improving a 
community's water infrastructure can lead to increased tourism, as well 
as greater attractiveness to industry and other potential investors.
    EPA estimates that at the national level every billion dollars 
invested in these waste water infrastructure projects generates between 
16,000 to 22,000 jobs in construction and related activities. The 1999 
investment from the Clean Water SRF of close to $3 billion in new loans 
will thus result in between 48,000 and 66,000 jobs nationally.
    In short, this dramatic improvement in sewage treatment over the 
past quarter century is a national success story and a compelling 
example of the environmental and economic good that can come from 
cooperative efforts of Federal, State, and local governments.
Clean Water State Revolving Loan Fund--A Sound Concept
    Over 10 years ago, Congress amended the Clean Water Act to create 
the Clean Water SRF program to replace the wastewater construction 
grants program. The SRF program was designed to provide a national 
financial resource for clean water infrastructure to help implement the 
Clean Water Act that would be managed by States and would provide 
funding in perpetuity. These important goals have been met.
    Under the SRF program, EPA makes grants to States to capitalize 
their Estate revolving loan funds.'' States provide a 20 percent match 
to the Federal capitalization payment. Local governments get loans for 
up to 100 percent of the project costs at below market rates. After 
completion of the project, the community repays the loan and these loan 
repayments are used to make new loans on a perpetual basis.
    Because of the revolving nature of the funds, funds invested in the 
SRFs provide about four times the purchasing power over 20 years 
compared to what would occur if the funds were distributed as grants 
[see Chart II/A].
    In addition, low interest SRF loans provide local communities with 
dramatic savings compared to loans with higher, market interest rates. 
An SRF loan at the interest rate of 3 percent has the same value to a 
community as a grant for 20 percent of project costs because of 
interest savings over 20 years (assuming an alternative market rate of 
5.6 percent). If the State chooses to offer a zero interest loan, the 
loan would be equivalent to a grant for 40 percent of project costs 
[see Chart II/B].
    More than $16 billion in Federal capitalization grant funds have 
been made available through fiscal year 1999. With the addition of the 
State match, bond proceeds, and loan repayments, the total assets of 
the: SRFs (i.e. funds in the Banks) were more than $30 billion as of 
June 30, 1999. We expect the States to make about $3 billion in loans 
in 1999, for a cumulative loan total of $26 billion (i.e. total loans 
made by the Bank) See Chart III. Since 1988, States have made over 
8,000 individual loans.
National Clean Water Infrastructure Needs
    EPA works with States to develop a Wean Water Needs Survey'' to 
identify needed clean water infrastructure investments in each State 
eligible for SRF funding. Besides providing a gauge of current and 
future needs, the Needs Surveys provide a common reference point for 
all parties in planning for capital spending and in making other 
management decisions. EPA's latest Needs Survey was completed in 1996 
and the next Needs Survey is scheduled to be released in February 2002.
    The 1996 survey estimated wastewater needs of $128 billion, 
including $26.5 billion for secondary treatment projects, $17.5 billion 
for advanced treatment, and $73.4 billion for various types of sewage 
conveyance projects, including collectors, interceptors, combined 
sewers, and storm water. Because some of these capital costs are 
documented by 10-year project plans and specifications, they generally 
reflect needs for facilities for 10 years into the future. Most 
facilities are designed for a 20-year useful life.
    The 1996 Needs Survey estimated $10.3 billion in the replacement / 
rehabilitation and inflow infiltration categories. EPA is working with 
States and others to frame a comprehensive program to address sanitary 
sewer overflows (SSOs) and we are undertaking an effort to model SSO 
costs. EPA's preliminary model considers costs incurred in addressing 
SSOs by 60 communities that have completed planning and design work.
    Our preliminary estimate for SSO costs is approximately $81.9 
billion. Although we believe that the Needs Survey substantially 
underestimates SSO costs, we are not sure of the magnitude of the 
overlap of the two estimates.
    Because the next Needs Survey is more than a year away and the 
program is evolving in areas such as SSOs, we have commenced effort to 
refine needs estimates and to approximate the Funding gap'' for 
wastewater infrastructure.
    We are aware of other estimates concerning the costs of wastewater. 
For example, the recent estimate for The Cost of Cleans issued by the 
Association of Metropolitan Sewerage Agencies and the Water Environment 
Federation is about $330 billion for wastewater costs. In basic terms, 
these cost assessments tend to differ primarily because the basis for 
costs differ. For example, EPA requires that costs included in the 
estimates be established by planning or design documentation. The Cost 
of Clean'' starts with the EPA needs estimates and then adds a model 
estimate to account for replacement investments that are not captured 
in the Needs Survey as a documented need.
    We estimate that spending for sewage treatment in general was 
around $11 billion annually as of 1994. This estimate includes 
wastewater capital infrastructure investment from all sources, 
including: local spending; State spending, including the SRF programs; 
and, other Federal investments (e.g. EPA assistance to needy 
communities, the Rural Utility Service, the Community Development Block 
Grant program). Although more recent data on total spending is not 
readily available, there is some indication ?that the spending patterns 
for wastewater have been, at best flat, and some information suggest 
that annual capital spending may even be declining. Finally, we know 
based on recent work by the Congressional Budget Office, that O&M 
spending has been increasing at a consistent level of more than 5 
percent annually. In 1994, O&M spending represented 63 percent of the 
total spending on wastewater. This is a significant change from the 
1970's and 1980's where the bulk of the sending was for capital 
investments.
Clean Water SRF Investments
    Although the authorization for SRF funding in the CWA expired in 
1994, the President's fiscal year 2000 budget proposes to maintain 
Federal capitalization of SRFs into the next century. Historically, the 
Administration's goal has been to capitalize the SRF programs so that 
they can provide at least $2 billion in financial assistance annually 
over the next several decades [see Chart IV]. To reach this 
capitalization goal, the Administration proposes Federal capitalization 
grants of $800 million in each of fiscal years 2000 to 2005. Because of 
the revolving nature of the SRFs, this annual capitalization amount 
will allow the Clean Water SRF programs to provide about $3 billion in 
total annual assistance available over the next few years.
    The proposed $800 million annual investment is consistent with the 
Administration's Deficit Reduction Plan. Additionally, the 
Administration's $2 billion goal is consistent with historical levels 
of Federal assistance for wastewater treatment. It will provide a 
substantial and sustained contribution to meeting the overall annual 
need. At the same time, our understanding of wastewater needs is 
evolving, and the Administration would like to encourage a constructive 
dialog on the appropriate and affordable long-term funding level for 
the SRF program.
        proposed legislation to reauthorize the clean water srfs
    Mr. Chairman, you asked that I comment on legislation introduced in 
the House of Representatives to reauthorize the Clean Water SRF program 
(H.R. 2720). I am pleased to say that many of the provisions of H. R. 
2720 are generally consistent with recommendations that the 
Administration has made in the past, including President Clinton's 1994 
Clean Water Initiative.
    For example, the Administration generally supports expanding the 
range of financial assistance mechanisms available to small and 
disadvantaged communities, and applying Davis Bacon requirements to the 
Clean Water SRFs. Furthermore, given the growing evidence that 
unplanned development or Sprawl'' can contribute to significant water 
quality and environmental problems and reduce the livability of 
communities, we support use of section 211 of the CWA to minimize the 
use of SRF loans for new sewer collection systems.
    EPA stands ready to provide technical assistance in addressing 
minor issues related to drafting of these provisions. For example, 
proposed language making a project eligible for SRF assistance when 
water quality is a Principal benefit'' of the project may be overly 
broad, and several newly created eligibilities should be more narrowly 
defined. Conversely, the language constraining loan eligibility to 
projects affecting Navigable waters could be limiting.
    In addition, we would be happy to work with the committee to 
address a number of other needed adjustments or clarifications to the 
SRF program. For example, in reauthorizing the Safe Drinking Water Act 
(SDWA), Congress provided Governors with discretion to use specified 
amounts of SRF funds to support key State drinking water programs and 
projects. Our experience with this provision of the SDWA has been 
positive, and a comparable provision should be considered for the Clean 
Water SRF program.
    The Administration also supports an extension of section 1452 of 
the Safe Drinking Water Act, which currently allows transfers of funds 
between Clean Water SRFs and Drinking Water SRFs through September 30, 
2001. This financial tool, coupled with the cross-collateralization 
provisions, has allowed the new Drinking Water SRFs to utilize the 
financial strength of the proven Clean Water SRFs and obtain the 
highest bond ratings with credit rating agencies.
    Furthermore, the President's fiscal year 2000 Budget included a 
proposal to amend the CWA to give Governors the discretion to use up to 
20 percent of their annual Clean Water SRF capitalization funds to make 
grants, rather than loans, for projects to implement plans developed 
under section 319 to reduce pollution from nonpoint sources of the CWA 
and to under CWA section 320 to protect and restore estuaries. Many 
States have a critical need for these nonpoint and estuary projects and 
have not been able to finance this work with loans alone.
    Finally, Mr. Chairman, I note that the proposed authorization level 
for the SRF in this proposed legislation is $3 billion in fiscal years 
2000-2004. As I indicated earlier, the Administration would like to 
encourage a constructive dialog on the appropriate and affordable long-
term funding level for the SRF program. Funding at the proposed level 
clearly would make a large contribution to the significant needs for 
wastewater treatment. I am sure that this proposed authorization 
represents the aspirations of the bill sponsors and will be applauded 
by witnesses later in the hearing. At the same time, it is not clear 
how these funds can be appropriated in the next several fiscal years in 
light of the deficit reduction agreement and the constraints faced by 
appropriations subcommittees.
                 other water infrastructure legislation
    The committee asked that I comment on two additional bills:

  S. 968, to authorize the Administrator of EPA to make grants 
    to State agencies and other entities for the development of 
    alternative water sources; and
  draft legislation providing that controls over discharges 
    from combined storm and sanitary sewers (i.e. CSOs) conform to the 
    CSO Control Policy and to authorize grants for CSO projects.
Alternative Water Source Grants
    S. 968 would authorize the EPA to make grants to State agencies and 
other water supply authorities for projects to develop new sources of 
water for municipal, industrial, and agricultural uses in areas with 
critical water supply needs.
    Current sources of drinking water are increasingly threatened by 
regional population growth, economic development, and urban sprawl, and 
the costs of assuring the quality of these existing sources is 
substantial. EPA's 1997 Drinking Water Needs Survey estimated that 
drinking water suppliers will need about $138 billion to install, 
upgrade, or replace infrastructure necessary to continue to ensure the 
provision of safe drinking water to their customers.
    In the 1996 amendments to the Safe Drinking Water Act, Congress and 
the President created the Drinking Water State Revolving Fund Program 
to address current public health threats and drinking water quality 
needs. Eligible projects include expenditures: to improve compliance 
with drinking water standards; to upgrade or replace existing drinking 
water distribution or storage facilities; for planning and design; and, 
for system consolidation. States are prohibited from providing loans to 
finance growth, dams, and most reservoirs and water rights. States 
determine which projects are funded by using a priority system that 
ranks projects primarily based on three criteria: risk to human health, 
the necessity of the project to ensure compliance with the SDWA, and 
the economic need of the system.
    EPA's primary drinking water mission is to protect public health. 
The limited Federal resources available through EPA to address drinking 
water infrastructure needs are best used by the existing State Drinking 
Water SRFs to protect and restore current sources of drinking water. 
Because enactment of the proposed legislation would likely divert 
scarce resources from public health related projects, the 
Administration opposes this legislation.
Combined Sewer Overflow Policy and Grants--Draft Bill
    The draft bill related to CSOs that the committee has asked me to 
comment on would amend the CWA to provide that requirements for control 
of CSOs be consistent with the CSO Policy and would authorize grants 
for CSO projects.
    Since the passage of the original CWA in 1972, EPA and States have 
worked effectively together to address the environmental challenge 
presented by large point source dischargers, such as sewage treatment 
plants and industrial facilities. More recently, attention has focused 
on discharges of polluted runoff in urban areas such as discharges of 
contaminated storm water, overflows from sanitary sewers (SSOs), and 
overflows from combined sewers (CSOs). Collectively, these wet weather 
sources pose serious threats to public health and the health of our 
Nation's waters.
    In 1994, EPA took a major step forward in efforts to address these 
wet weather problems by publishing the CSO Policy. This Policy was the 
result of a cooperative process that included Federal, State, and local 
governments, environmental organizations, and other interested parties. 
It represents a consensus among all interested parties on how to best 
address the CSO problem.
    The CSO Policy calls on communities to promptly implement nine 
minimum controls over CSOs, including activities such as: proper 
operation and maintenance; maximization of flow to the publicly owned 
treatment works for treatment; prohibition of CSOs during dry weather, 
and, public notification of CSO occurrences.
    Communities with CSOs are also to develop a long-term CSO control 
plan that provides for attainment of water quality standards. Long-term 
plans typically include characterization, monitoring, and modeling of 
the combined sewer system, as well as public participation and cost/
performance considerations.----
    The flexibility in the CSO Policy enables States and communities to 
manage their CSOs in the manner that best suits their unique 
circumstances. This flexibility is evident in the different approaches 
that States and communities are taking to control CSO discharges, 
including separating combined sewer systems' implementing the nine 
minimum measures and developing and implementing long-term CSO control 
plans in their regulatory framework, and/or reviewing the designated 
uses at the impacted water bodies.
    Communities are making good progress in implementing the CSO 
Policy. Today, 83 percent of all combined sewer systems are either 
implementing the nine minimum controls or are under an enforceable 
requirement to put the measures in place. In addition, 74 percent of 
combined sewer systems have their long-term controls in place, are 
required to put them in place, or are under an enforceable requirement 
to develop long-term CSO control plans.
    The CSO Policy is working--it is the best road map to achieve our 
goal of protecting public health and the environment in areas impacted 
by CSO discharges. The Administration is not opposed to Congress, in 
amendments to the CWA, endorsing the CSO Policy and its principles. 
However, there are some serious problems with the bill language, and 
the Administration stands ready to work with Congress on an appropriate 
legislative approach.
    The legislation also includes authority for a new Federal grant 
program for CSO project implementation with a total authorization of 
$1.5 billion. The Administration is opposed to creating a new grant 
program to fund implementation of CSO or other wet weather projects. As 
I noted earlier, the SRF program is a solid and proven financial tool 
that is operated by the States and available to address these wet 
weather needs. Should the Congress determine that additional Federal 
funds are needed for wet weather projects, these additional funds would 
be better used to provide additional capitalization for the SRFs in 
each State.
    Given these concerns, the Administration is opposed to the draft 
bill. Finally, I want to note, Mr. Chairman, that the Administration is 
strongly opposed to several of the provisions in the related 
legislation introduced in the House of Representatives. These bills 
would slow or undo the progress we now are making toward reducing wet 
weather pollution Should those provisions be added to the pending bill 
at a later stage in the legislative process, the Administration would 
strongly oppose enactment of the amended bill.
                               conclusion
    Thank you, Mr. Chairman and members of the subcommittee for this 
opportunity to testify on the Clean Water SRFs. EPA stands ready to 
provide additional technical assistance on issues related to these 
bills. And, we look forward to working with you to both improve the 
operations of the SRFs and to define the appropriate level of long-term 
capitalization of this valuable resource.
    I will be happy to answer any questions.

    
    
                               __________
 Statement of Raymond J. Wieczorek, Mayor of Manchester, New Hampshire
    Members of the committee: My name is Raymond Wieczorek and I am the 
Mayor of Manchester, the largest city in the State of New Hampshire. I 
am here on behalf of the taxpayers of my City and the CSO Partnership. 
Manchester is an older city with a population of approximately 105,000, 
which like so many cities, was developed with a combined sewer system. 
The newer communities that surround Manchester are not burdened with a 
combined system and do not face the financial difficulties in 
correcting this problem.
    Between 1972 and 1994 we invested $126 million to construct a 
wastewater treatment plant and related facilities to eliminate 
wastewater discharges to the Merrimack River which runs through the 
center of our City. This water pollution abatement work was financed 
through a partnership of Federal, State and local governments. We all 
recognized that the problem being addressed was a national problem and 
the involvement of the national government was required and 
appropriate.
    That plant has been operational for 23 years and has significantly 
reduced the pollution of the Merrimack River. My City is extremely 
proud of that achievement and views the River as one of the major 
assets that sustain the quality of life we have. We are now undertaking 
a major riverwalk park development program, in the heart of our City, 
that will enable us to improve access and use of the River. The 
Merrimack has always played a key role in the history of the City and 
we anticipate this asset will play a key role in the revitalization of 
our downtown and our economic future.
    As mentioned, Manchester was built with combined sewers, the state-
of-the-art at the time. Our combined system discharges up to 40 times a 
year at 26 locations. Several years ago, Manchester was contacted by 
the EPA and told that it was now the time to address the problems 
associated with a combined system. The Agency was seeking the total 
elimination of all discharges from our combined system. The early 
estimates were that these improvements would cost almost $300 million, 
a mind staggering amount. As Mayor, I am constantly challenged to find 
ways to meet the needs of schools, ensure the public safety, and 
maintain our infrastructure, while constantly trying to minimize taxes 
and maintaining support for the many responsibilities a City has. 
Asking the citizens to spend nearly $300 million in the face of the 
many other demands upon them is difficult. Asking them to spend it to 
correct a problem that happens only a few times per year and is only 
transitory in nature, is absurd. My citizens rightly wanted to know 
where is the common sense in asking us to spend that amount of money, 
so that we can swim in the Merrimack River four more rainy days per 
year when there is presently no swimming now due to natural 
constraints.
    Fortunately, with the strong support of the entire New Hampshire 
delegation and Governor Shaheen, we were able to negotiate a more 
reasonable innovative solution to address our CSOs with the EPA and NH 
Department of Environmental Services. However, this plan will require 
more than $60 million in capital improvements in a 10-year first phase, 
with the ultimate CSO Program cost potentially being double the cost of 
the first phase. Sixty million dollars is equivalent to the sum of 3 
new schools, 1 new police station, 2 new fire stations and 150 miles of 
street resurfacing. In the face of litigation and given our communities 
strong environmental awareness, we have agreed to that program knowing 
that the Federal and State government's participation would be limited 
to slightly discounted loans we hope to receive through the State 
Revolving Fund.
    As a result, sewer rates in my community will nearly double in 10 
years to implement this program's first phase. The doubling of our 
sewer rates will slow Manchester's growth by driving industries into 
the surrounding communities that do not have the expense of the CSO 
issue.
    I am here in support of S.914 and the efforts of the CSO 
Partnership because it seeks to restore the historic partnership that 
has been so critical to the clean water successes we have had to date. 
The program that Manchester is undertaking fits within the procedural 
provisions of the S.914 in terms of the implementation schedule. We 
need the Federal funding authorized by S.914 to help meet this Federal 
mandate. Clean water is a national goal, one the citizens of Manchester 
fully support. However, with many other claims on our resources, my 
City and I believe that most cities cannot fulfill this Federal mandate 
without financial assistance. The grants provided through S.914 will 
ensure that sewer rates in my community remain affordable and do not 
choke off economic development. I hope that the members of the 
committee will act quickly on this bill and help all CSO communities 
resolve this national problem.
    I am happy to answer any question that members of the committee may 
have. Thank you for giving me this opportunity to speak.
                                 ______
                                 
Responses by Raymond J. Wieczorek to Additional Questions from Senator 
                                 Chafee
    Question 1. What are the sewer rates now and what will they be in 
10 years?
    Response. The current sewer rate for the City of Manchester is 
$1.55 per 100 cubic feet of water used, plus an $11/quarter service 
charge. This translates to a typical annual household cost of about 
$230/year. The rate is similar for industrial and commercial users, 
with annual cost higher because of greater usage.
    In 10 years, it is expected that the rate will increase to $3.10 
per 100 cubic feet of water used. This would be about $416/year for a 
typical single family residence.

    Question 2. What are the various sources of funding available?
    Response. The sources of funding available to the City at this time 
are the State Revolving Loan Fund, the 20 percent State Grant Program 
and municipal bonds.
    The rates calculated in Question 1 above anticipate receipt of the 
20 percent grant and SRF funds. If these sources are not available, the 
rate increases would be higher.

    Question 3. How much money do you anticipate borrowing from the 
SRF?
    Response. We would like to borrow the entire project amount, about 
$60M over the 10 year period. However, we are not sure that the funds 
will be available.
    The $5.6 million allocated for the Supplemental Environmental 
Projects per our Consent Order is not eligible for grants or SRF loans. 
This will be paid through the Sewer Fund.

    Question 4. How much money have you received from the State in 
grants or other assistance?
    Response. To date, we have received about $7,450,000 in SRF loans, 
and $391,000 in grant funds for CSO related projects from NHDES.
                               __________
 Statement of Gerald E. Dorfman, Director and Past President, National 
                    Utility Contractors Association
    My name is Gerry Dorfman, and I am delighted to participate in this 
hearing on behalf of the National Utility Contractors Association 
(NUCA). NUCA is a family of 1,900 union and non-union companies from 
across the Nation that build, repair, and maintain water, wastewater, 
gas, electric, and communications systems, and that manufacture and 
supply the necessary materials and services.
                        a view from the trenches
    Before I address the Clean Water SRF reauthorization bill 
introduced by Senator George Voinovich, I will take a few minutes to 
describe the appalling State of clean water infrastructure as I see it 
from down in the trenches. I say the problem is appalling because we as 
a nation have knowingly failed to maintain vital wastewater 
infrastructure in a meaningful way. We have the capacity to fix the 
cruddy pipes and protect public health and the environment. It's time 
we do so before we contaminate our water supply, before sewer 
moratoriums shut down our communities, and before your constituents' 
sewer rates go through the roof.
    My company was hired to replace a septic tank system in a small, 
rural community of 20,000 people in northern California. As I 
prospected the job when preparing the bid, I was dumbfounded. Walking 
along the easement lines of the residential area to determine the 
location of the new system, I found myself sinking in saturated 
ground--ground saturated with raw sewage that had overflowed from 
failed leaching systems. I'd like to pretend that no one other than 
myself was exposed to the sewage, but I'm quite sure the neighborhood 
children played there on occasion. It was, after all, adjacent to their 
backyards.
    Failing infrastructure is not unique to rural communities. It is an 
urban phenomenon as well. On a project for a major city in southern 
California, we replaced a sewer pipeline that had failed earlier than 
expected due to unstable ground conditions. When we uncovered the pipe, 
we found gaping holes where raw sewage had been escaping into the 
surrounding ground for months if not years. To make matters worse, the 
sewer system was less than 100 yards from a fresh waterway. The 
problem, therefore, was compounded by tidal action. Twice every 24 
hours, the water level rose over the top of the sewer line, allowing 
fresh water to run into the broken pipe and travel to the treatment 
plant. When the tide went out, so did the sewage. We had uncovered a 
daily exchange of raw sewage and fresh water.
    These stories are from the western United States because that is 
where I work. Similar problems exist coast to coast, in every State.
    skyrocketing infrastructure needs, declining federal investment
    Over the last several months, a lot of dollar estimates for the 
cost to repair and replace the nation's failing infrastructure over the 
next 20 years have been tossed about. The EPA has preliminarily 
increased its 1996 estimate from $139 billion to more than $200 
billion. Private studies demonstrate that the needs will exceed $300 
billion. Does it really matter whether it's $200 billion or $300 
billion? The Federal contribution to the SRF last year was less than 1 
percent of either figure.
    What really matters today is that wastewater infrastructure needs 
are ever increasing, yet Federal capital investment has remained on a 
steady decline ever since the Clean Water SRF authorization expired 5 
years ago. The current lack of authorization unintentionally widens the 
investment gap because it sends an implicit message to congressional 
budget and appropriations committees that wastewater collection and 
treatment is not a national priority. Annual capitalization of the 
program suffers as a result. Also, the absence of authorization creates 
uncertainty about the program's future in the eyes of potential 
borrowers, which may delay and in some cases prevent vital project 
financing.
    If Congress does not invest in the nation's infrastructure, the 
21st century likely will be remembered for the preventable public 
health and environmental disaster the Nation failed to prevent. The 
Clean Water State Revolving Loan Fund (SRF) reauthorization bill, S. 
1699, crafted by Senator George Voinovich, is a concise, pragmatic, 
efficient, and bold preventive measure. Here's why.
                       the clean water srf works
    The 12-year performance of the SRF has been spectacular. The 
following highlights are taken from the U.S. EPA's National Information 
Management System. The information is current through June 30, 1999.

  Cumulative Federal capitalization grants of $ 15.4 billion 
    have been supplemented by State contributions of $3.2 billion, net 
    leveraged bonds of $11.6 billion, loan principal repayments of $3.8 
    billion, loan interest payments of $3.3 billion, and investment 
    earnings of $2.0 billion. After subtracting $1.7 billion for 
    leveraged bonds repaid, $188 million for State match bonds repaid, 
    $2.7 billion for interest paid on bonds, $431 million for 
    administrative expenses, and $3.8 billion for debt service 
    reserves, there has been $30.3 billion in SRF funds available for 
    projects. Now that's a program that puts tax dollars to work for 
    all Americans!
  Of the $30.3 billion available for projects, $26.1 billion 
    (or 86 percent) has been provided for 8,200 wastewater collection 
    and treatment, nonpoint source, and estuary projects. The number of 
    projects rose from just 3 in the year ending June 30, 1988, to 
    1,280 in the year ending June 30, 1999. And the program will 
    continue to grow to meet massive infrastructure needs!
  Of the 8,200 projects approved to date, 58 percent (23 
    percent of the dollars loaned) serve communities with populations 
    less than 10,000; 31 percent (36 percent of the dollars loaned) 
    serve communities with populations in the 10,000 to 99,999 range; 
    and 12 percent (40 percent of the dollars loaned) serve communities 
    with populations of 100,000 or more. The flexibility doesn't leave 
    any class of community to wade in its raw sewage!
        the voinovich bike makes the clean water srf even better
    Senator Voinovich's bill builds on the 12-year success of Clean 
Water SRF Program by authorizing new funding and adding important 
improvements.

  S. 1699 would provide critical new authorized funds for the 
    States to use in meeting their respective capital infrastructure 
    gaps. Capital investment is the most critical component of Federal 
    policy, and this is the most important provision in the bill.
  S. 1699 would provide technical and planning assistance for 
    small systems serving populations of fewer than 20,000. This 
    important initiative will inform and enable, without prescribing, 
    vital institutional reforms. For instance, comprehensive planning 
    assistance would provide better information to document needs and 
    inform the public about underlying problems and the range of 
    potential solutions. Technical assistance in financial management 
    would raise small system awareness and participation in the SRF 
    Program.
  S. 1699 also would expand the types of projects eligible for 
    loans, which enhances the Clean Water SRF's successful tradition of 
    State flexibility. New eligibilities would include water pollution 
    prevention initiatives, lake protection programs, projects to 
    improve public water use efficiency, and projects to restore 
    riparian areas.
  Finally, S. 1699 would provide qualifying disadvantaged 
    communities with additional assistance through extended loan 
    repayment periods and principal subsidies. These new tools would 
    boost SRF participation and make the program an even more effective 
    instrument for addressing the funding gap.
                  things change, things stay the same
    Seven years ago I appeared before the House Merchant Marine and 
Fisheries Committee to discuss the problem of the cruddy pipes falling 
apart. Since then, annual Federal investment in the Clean Water SRF 
Program has been cut in half, yet there remain thousands of miles of 
barely functioning sewer pipelines that are leaking gallons of raw 
sewage into underground aquifers daily.
    The State revolving funds have become increasingly efficient and 
effective, but not enough Federal seed money has been invested to 
ensure that human and environmental costs of the multi-billion dollar 
funding gap are prevented.
    People intuitively understand that their lives are directly linked 
to water quality and the collection and treatment of wastewater. And we 
all expect leadership from our lawmakers in addressing this threat to 
all Americans' qualify of life. Please take the lead by supporting 
Senator Voinovich's Clean Water SRF reauthorization bill.
    We appreciate the opportunity to testify before the subcommittee 
today, and we look forward to helping advance Sen. Voinovich's solution 
in the 106th Congress.
                               __________
 Statement of Greg Mason, for the Council of Infrastructure Financing 
                              Authorities
    Mr. Chairman and members of the committee, I am Greg Mason, State 
Revolving Fund Program Manager of the Georgia Environmental Facilities 
Authority (GEFA). I am pleased to appear before you today to testify 
both in that capacity and on behalf of the Council of Infrastructure 
Financing Authorities (CIFA). CIFA is a national organization of State 
and local authorities whose mission is to facilitate financing of 
public infrastructure facilities. Like my own organization in Georgia, 
most of our State members manage at least the financial component of 
the State Revolving Loan Funds (SRFs) for wastewater treatment and, as 
such, are vitally interested in the subject of this hearing.
    My testimony today will mainly address Title VI of the Clean Water 
Act, authorizing the State Revolving Loan financing program. This has 
been a singularly successful program that has fulfilled the vision of 
this committee and the Congress in creating the loan fund mechanism 
over a decade ago. In that time the SRF has created a loan pool of more 
than $30 billion providing low-cost lending to build municipal 
treatment and water pollution abatement projects throughout the nation. 
This year, as last year, it is expected the program will provide more 
than $3 billion in loans for these critical environmental projects. 
Moreover, the loans provide substantial cost-savings to the borrowers. 
With SRF interest rates averaging two and one half to 3 percent below 
market, we estimate, over its duration, the cumulative subsidy the 
program has provided borrowers is around $8 billion.
    In terms of Federal investment, the SRF program has proven to be a 
tremendous bargain. The Federal contribution, thus far, in funding for 
capital grants to the States has been around $15 billion, about one 
half of the total amount of the SRF. State contributions, loan 
repayments, other interest earnings and leveraged funds account for 
another $15 billion. A very good return on the initial Federal 
investment, and one that will continue to grow as the fund matures.
    As the committee looks at provisions to amend and reauthorize Title 
VI of the Clean Water Act our advice is cautionary. Clearly, after 
nearly 12 years of experience with the SRF there are small 
modifications that will make the program more efficient. A new SRF has 
been created to finance safe drinking water needs and the inter-
relationship of these two funds could be more successfully joined by 
some small changes in the statute. Also, growing recognition of new 
priorities for nonpoint source projects, as well as the economic 
hardship project costs can impose on some communities, suggest the need 
for some deeper subsidy for certain types of borrowers. Some changes 
are needed in the administrative provisions of the fund to match it to 
the realities of this thriving loan program. We will offer some 
suggestions for such modifications. But overall, we ask the committee 
to move cautiously toward adopting any provisions that would 
dramatically overhaul or alter the way water quality projects are 
financed. Like the ancient admonition to physicians, ``first do no 
harm.''
    Proposals before this committee to set up a new program of grant 
funding for certain categories of projects could have major 
repercussions for the future operation of the SRFs and the future 
quality of the nation's waters. Put plainly, communities that 
anticipate receiving Federal grants to build water pollution projects 
are not likely to be interested in loans, no matter how attractive the 
terms. And even though the proposal in S. 914 limits availability of 
these grants to certain categories of projects, I submit that 
politically maintaining that categorical limitation would be next to 
impossible. Soon every project would be grant eligible and communities 
would defer needed projects until grant dollars became available. 
Additionally, Congress should be careful not to set up financial 
assistance programs that create dual and overlapping administrative 
structures at either the State or Federal level. The re-initiation of a 
construction grant program would do just that.
    CIFA recognizes that in order to address certain types of pollution 
problems it may be necessary to provide deeper subsidies to the 
borrower. We support provisions comparable to those contained in 
Senator Voinovich's bill, allowing States the discretion to provide 
principal write-downs or extended repayment periods for hardship 
borrowers. Such loan subsides, similar to those allowable with the 
Drinking Water SRF, should be limited to no more than 20 percent of the 
capital grant in any 1 year, with the proviso that States may bank the 
set-aside for use in future years, as need may dictate. The subsidy 
should be in the form of principal forgiveness and not limited in the 
amount available to any one borrower. The criteria, instead, should be 
environmental and economic justification.
    There are a number of other provisions in Senator Voinovich's bill 
that CIFA supports. First, we support the de-coupling of allowable 
administrative costs from the annual amount of the capital grant. The 
amount of the capital grant to the State is no longer a measure of the 
administrative burden of the program. The large and increasingly 
sophisticated loan portfolios the States now manage require more 
administration. The size of the fund, not the amount of the grant, 
should dictate the allowable administrative cost. Moreover, new types 
of lending for nonpoint source and other borrowers can be very manpower 
intensive. We support the provision that would connect the 
administrative fee to the total value of the fund, allowing one half of 
1 percent of the fund or $400,000 annually, whichever is greater, as 
well as any fees collected in association with the lending, to be used 
by the States to administer the SRF.
    We also support the proposed level of authorization of $3 billion 
annually. CIFA believes that future demand for Clean Water SRF loan 
funding will exceed the $2 billion annualized goal EPA has identified 
as sufficient for Federal capitalization. This goal for sustained SRF 
financing, which was arrived at by EPA without consultation with the 
States, appears woefully deficient when compared to the level of 
funding, estimated as high as $300 billion, needed to meet public clean 
water requirements over the next 20 years.
    CIFA also supports elimination of all cross-cutters and duplicate 
Federal requirements that increase the cost of the projects and slow 
down the loan process, especially since these requirements are 
particularly burdensome to small communities and potential nonpoint 
source borrowers. While recognizing that the application of Davis Bacon 
wage standards may increase project costs in some States, CIFA defers 
to the will of the Congress with regard to reapplication of these 
requirements to first round projects financed with Federal grant 
dollars. CIFA, however, strongly objects to the application of those 
requirements, or other general grant conditions, to second round loans 
from the SRF.
    We support the expansion of eligibilities for SRF lending to 
include lands essential for the treatment works. We believe that 
protection of riparian areas, water supply areas and purposes of 
mitigating environmental damages or habitat loss are already eligible 
for SRF lending, but have no objection to their being made explicit in 
the law. We would also support the inclusion of conservation management 
and water conservation measures as eligible SRF purposes.
    Further, we support, at the States' discretion, the extension of 
the SRF to secure critical lands for other public purposes such as 
park, recreation and habitat protection. The SRF, with its capability 
of providing zero-interest lending, is capable of accomplishing the 
same purposes as the Administration's proposed Better America Tax 
Credit Bonds, which are so far untried in the municipal financing 
market and may not, in fact, provide the same level of no-cost 
financing that the SRFs can and often do provide the borrower.
    Finally, in any amendments to the SRF, it is absolutely essential 
the Congress extend the current provision giving States the discretion 
to transfer a portion of the capital grant from one SRF to the other. 
This authority, which was provided in the 1996 Amendments to the Safe 
Drinking Water Act, expires next year. Faced with this deadline, States 
are increasingly uneasy about executing such transfers, even though 
efficient management of the two funds should encourage such 
interdependency in order to shift funding toward current demands in 
either program area. In addition, statutory provisions making it clear 
that transfer of the proportionate share of the administrative fund 
allowance is also permissible would be helpful to a number of State SRF 
programs.
    In conclusion, the SRF has proven to be an effective and efficient 
means of providing Federal and State subsidies to finance municipal 
environmental treatment needs. The Congress should be very circumspect 
about making major changes that will affect or impact on the SRF 
program, or to impose provisions that will create rigidity in the 
operation of the individual State loan programs. The genius of the SRF 
program, in many ways, has been the flexibility that the Congress 
provided the States in the 1987 amendments. In reality, no two State 
programs are identical in their structure or their management, and this 
flexibility is what has allowed each State to fashion the program to 
meet their own set of needs and their own managerial and administrative 
structure.
    We appreciate the opportunity to testify before this committee and 
offer to work with the members and staff to make statutory adjustments 
that will improve the efficiency of the SRF program.
                               __________
   Statement of Tom Kamppinen, Vice Chair, Association of State and 
           Interstate Water Pollution Control Administrators
    Mr. Chairman, members of the committee and subcommittee, my name is 
Tom Kamppinen, Vice Chair of the Association of State and Interstate 
Water Pollution Control Administrators (ASIWPCA) Financing Task Force 
and Chief of the Municipal Facilities Program for the Michigan 
Department of Environmental Protection. As you know, Mr. Chairman, 
ASIWPCA is the national organization of State officials responsible for 
implementing the Clean Water Act and is committed to the environmental 
objectives set forth in the law.
    Tremendous strides have been made in cleaning up and protecting the 
nation's waters, but much more needs to be done. Several fundamental 
themes cut across water quality issues that we ask the committee to 
consider in reauthorizing the Clean Water Act programs.
    Functional Equivalency: Successful resolution of water quality 
problems will require the cooperation of many levels of government and 
approaches that go well beyond the Federal Clean Water Act tool box. 
Clean Water Act requirements should be performance-based.
    Integrated Approaches: Issues we face involve many program and 
funding authorities. The Clean Water Act needs to enable them to be 
integrated or harmonized at the State/local levels.
    Better Science: The Clean Water Act needs to increase USEPA's 
priority on the fundamentals, i.e., up-to-date effluent guidelines, 
improved best management practices (BMPs), enhanced monitoring and-
assessment techniques and improved water quality 304(a) criteria.
    Funding: Resolution of clean water issues places enormous resource 
demands on States. Clean Water Act programs need to be much better 
funded.
               the title vi state revolving loan program
    As this committee well knows, the State Revolving Loan Fund (SRF) 
was created under the 1987 Amendments to meet not only traditional 
municipal wastewater treatment needs, but also emerging issues, 
including nonpoint source pollution control and estuary protection. The 
50 States and Puerto Rico have all created SRF programs. They are using 
them very effectively to solve a diverse array of water quality 
problems. Projects have been built at less expense and 50 percent 
faster than through Federal grants. The SRF has 4 times the buying 
power than the Title II grant program.

    Future Role and Capitalization: Congress has important decisions to 
make regarding the future role of SRF. The Association believes the SRF 
is the only viable long-term water quality financing mechanism and 
should be viewed as a multi-purpose tool box. The SRF is unique in its 
ability to use limited Federal and State funds efficiently, 
effectively, and equitably to foster compliance and waterbody use 
attainment. At the same time, States recognize the need to make program 
reforms in the SRF so that it is equipped to meet future challenges.
    Over the past few years, USEPA has been using a ``target'' for 
capitalization that is sufficient to allow $2 billion per year to be 
available from the SRF nationally. The rationale for that number has 
never been clear or adequately justified. We agree with USEPA that it 
is important to have a capitalization goal, but we do not agree with 
the notion that the target of $2 billion is adequate.
    ASIWPCA believes that needs under the Act are well in excess of 
$200 Billion and are likely to grow as TMDLs are implemented, nonpoint 
source programs develop and more watershed initiatives are underway. 
The Clean Water Act Needs Survey is incomplete, because it captures 
primarily traditional publicly owned treatment works construction, 
rather than the expanded eligibilities or new policy initiatives for 
nonpoint sources, estuaries, watersheds, AFOs, TMDLs and SSOs. While, 
we expect USEPA's upcoming Funding Gap Analysis to better identify the 
SRF funding need, it is likely to be an incremental step.
    Recommendation: All infrastructure assistance should be 
incorporated under the Title VI umbrella.
    An authorization of $5 billion per year for Fiscal Years 2000 
through 2004 is justifiable. The Association urges the committee to 
work with the States and other stakeholders to explore viable ways to 
achieve the goal.
    States should be able to make SRF loans to privately owned confined 
animal feeding operations (CAFOS).
    We suggest that it is time for the committee to explore with States 
more creative ways they could use SRF funds to address the next 
generation of water quality problems. For example:
  States could have the flexibility to use funding above the 
    $2.4 Billion level for a watershed restoration matching grant/cost 
    share program for NPS control. These funds could be available to 
    both the public and private sector, including Federal agencies.
  Incentives could be considered as a means to challenge States 
    or watershed projects to overmatch, leverage or otherwise enhance 
    the program (e.g., to buy open space, restore habitat, remove dams, 
    and create a market for trading).
    Set-Asides: States oppose the creation of mandatory separate SRFs 
or set-asides for particular clean water needs. Each State has 
different needs. If Congress should chose to offer set-asides, they 
should be optional, as in the Safe Drinking Water Act SRF.
    Recommendation: Congress and the Administration should carefully 
consult with the States and ASIWPCA regarding the creation of any set-
asides for the SRF. In no event should set-asides occur without making 
additional funds available beyond the needed core SRF authorization 
level.
    Appropriations: Consistent and predictable levels of SRF 
appropriations are critical. Recent fluctuations have been damaging not 
only in terms of immediate funding, but also for strategic planning. 
This is especially critical for small and hardship communities and new 
or innovative approaches. States appreciate the support the committee 
has provided in the past.
    Recommendation: The committee should place a very high priority on 
bringing the appropriation level up to the level envisioned for a 
reauthorized Act. Other programs should not be funded at the expense of 
the Title VI SRF, and vice versa.
    Small and Hardship Communities: Existing funding eligibilities are 
broad and States, with USEPA's assistance, have worked hard to modify 
the SRF to meet those needs. A major outstanding issue relates to 
disadvantaged communities.
    The Association believes hardship and small community needs are 
best addressed in the SRF. With interest rates that can range from 
below market to zero percent, SRF loan recipients can save up to 50 
percent in project costs. In many cases, however, States need to be 
able to offer additional subsidies to make facility improvements 
affordable. SRFs are also uniquely positioned to provide an added 
benefit to disadvantaged communities--technical assistance.
    USEPA successfully harmonized the fiscal year 1997 $50 Million 
hardship program with the SRF and avoided the creation of a potentially 
conflicting program. With a few modest amendments, the SRF can 
accomplish these objectives on a much larger scale.
Recommendations:
  States should be able to blend principal subsidies with SRF 
    loans to achieve a target State level of project affordability. 
    Each State should be able to define ``small and hardship'' to fit 
    its circumstances.
  The SRF should provide ``one stop shopping'' by expanding 
    eligibility to include acquisition of land. easements and rights of 
    way.
  Loan recipients should be exempt from Title II/Federal 
    crosscutting laws, including the Davis-Bacon Act.
  Up to a 40 Year loan repayment period (or the facility's 
    useful life) should be allowed for projects not exceeding $10 
    Million.
  States should be able to use administrative funds for 
    outreach/technical assistance.
    Refinements in Eligibilities: While the current SRF eligibilities 
are broad, some refinements would be helpful to better serve those in 
need of such funds.
    Recommendations: Authorize the use of SRF assistance for the 
purchase of any necessary land easement. or right-of-way not already 
owned by the recipient, provided the assistance does not exceed the 
acquisition price determined in accordance with the Uniform Relocation 
and Real Property Acquisition Act of 1970. ``One stop shopping'' 
improves the effectiveness of the SRF and reduces total project costs.
    Regarding H.R. 2720's provision on innovative technology, the 
committee is urged to proceed with caution. Under the Title II grant 
program, projects had mixed success and communities are still paying 
high operations and maintenance costs.
    Regarding S. 968 authorizing source water development grants, this 
issue appears to be a drinking water issue and should not be funded at 
the expense of either the Clean Water or Drinking Water SRF.
    Application Of Title II Requirements: On September 30, 1994, Title 
II requirements and crosscutting Federal laws sunsetted under the Act. 
With the expiration of these requirements, States have streamlined and 
simplified program requirements to better allocate SRF funding to 
priority water quality concerns.
    Recommendation: Congress should not reimpose these requirements. 
States, on a case-by-case approach, should be allowed to adopt any or 
all of these former requirements on their own merit. And, many States 
currently address their intent. Any Federal laws and authorities that 
Congress decides to apply should be tied only to funds directly made 
available by Federal capitalization grants. Section 602(b)(6) should 
not be revised.
    Administrative Expenses: The majority of States have no 
independent, long-term ability to provide for the expenses of SRF 
administration. They need a predictable and secure source of 
administrative funding which is not dependent upon year-to-year 
appropriations.
    Recommendation: It is essential that Title VI be amended to 
recognize the needs of States for administrative funding. A State 
should be allowed to use up to 4 percent of its SRF capitalization 
grant amount, $400,000 per year, or one-half of 1 percent per year of 
the current valuation of its SRF's assets, whichever amount is greater, 
for administering its SRF. Technical assistance should be an eligible 
activity.
                    combined sewer overflows (csos)
    As S. 914, recognizes, much remains to be done to correct CSO 
problems that impair water quality and the Association appreciates the 
improvements that have been made in the bill in response to comments 
received. CSO correction is a high priority of State Water Quality 
programs and in States with CSOs, a very large potion of SRF funding is 
allotted for that purpose. The Association was a major stakeholder in 
the development of the USEPA CSO Control Policy and is committed to its 
implementation. Regarding S. 914:
Recommendations
  National CSO Policy: S.914 makes significant contributions to 
    facilitating the effort to carry out the national CSO policy. 
    Recognizing the policy in the Act would be appropriate. Getting 
    public input and issuing the polices to promote and facilitate wet 
    weather use reviews is also beneficial. It is also helpful for 
    USEPA to report periodically to Congress. The Association looks 
    forward to working with the USEPA and other stakeholders on 
    implementation.
  Funding: A better capitalized SRF is the most efficient and 
    effective way to meet CSO needs over time. Additional flexibility 
    is also needed so that States can meet the needs of CSO hardship 
    communities (e.g., principle subsidies).
    The Association does not support reinstitution of a grant program 
        and is concerned that any grant program authorized not be 
        funded at the expense of the SRF or serve as an incentive to 
        delay compliance.
        The grant percentage (``at least'' 55 percent) is 
            linked to no criteria upon which to decide what level would 
            be appropriate. In the alternative, if bill specified a 
            match and included provisions for hardship (principal 
            subsidy) there would be a better basis to make decisions. 
            Parameters should be articulated for ``in-kind services''.
        Any appropriated grant funds should be allocated to and 
            administered by the States. State priority systems should 
            determine which projects are in most need of funding.
                                 ______
                                 
 Responses by Tom Kamppinen to Additional Questions from Senator Chafee
    Question 1. In your testimony, you recommend the committee consider 
providing States with the flexibility to use funding for a watershed 
restoration matching grant/ cost share program for NPS control.
    Response. Congress was extremely visionary when it created the 
State Revolving Loan Fund (SRF) in 1987 to finance infrastructure for 
municipal, nonpoint source and estuary management. The approach is 
sound, but it will take many years for the SRF to fully realize its 
potential. State priorities change over time, customer needs evolve, 
water quality management programs mature and new challenges emerge. 
Watershed restoration and protection will be a major focal point under 
which many efforts need to be coordinated.
    ASIWPCA believes the SRF should continue to be the infrastructure 
financing mechanism for clean water programs. We recognize that future 
financing needs will be more diverse and the SRF, therefore, needs to 
be more flexible to address them. Principal subsidies for hardship 
communities is one example that should be allowable in a reauthorized 
Clean Water Act.
    The committee should also consider refining the SRF to better serve 
nonpoint source and watershed management needs. There is no question 
that the current SRF is useful, but for some customers, the committee 
should consider more flexibility for States to:

      Provide grant assistance or principal subsidies as an 
incentive to address priority problems.
      Package SRF assistance with other grant assistance (such 
as EQIP, 319 or Bureau of Land Management funding). Such a ``matching 
grant'' use of the SRF leverages other programs to solve priority water 
quality problems and improves project affordability. It is particularly 
useful when there are significant lands in Federal ownership or under 
agricultural production. Under 319, for example, Federal funds cannot 
be used as a match.
      Fund source control regardless of whether there is a 
permit under Section 402 (e.g., for animal feeding operations).

    Question 1A. Are you suggesting the creation of a nonpoint source 
grants program within the SRF?
    Response. There is no need to create (nor does ASIWPCA support) a 
NPS grant program within the SRF. The reauthorized Act simply needs to 
allow States more flexibility in the SRF to make it attractive and 
affordable to NPS projects. It needs to be sensitive to the fact that 
each State is unique in terms of water quality problems and appropriate 
financing strategies. And, these circumstances will evolve over time.

    Question 1B. Why should the committee create a separate grants 
program with the SRF for nonpoint sources instead of using the grants 
program established under Section 319?
    Response. ASIWPCA views Section 319 as a program/management/
technical assistance framework and the SRF as the infrastructure 
financing tool box. Creating (in 319) a separate infrastructure funding 
mechanism is unnecessary and counter-productive. Federal capitalization 
funds will be limited. In reauthorizing the Clean Water Act, the 
committee should seek to improve the SRF's ability to serve as a multi-
purpose, efficient and effective financing mechanism. It should avoid 
the pitfalls of grant programs, where anticipation of Federal grants 
promotes project delays.
    The issue is also broader than 319, since many future challenges 
will be watershed based, as current dialog on total maximum daily loads 
illustrates so well. Rather than starting down a road that leads to 
different funding pots for different purposes, the committee should 
maximize the SRF's flexibility to solve watershed problems--whatever 
their origin. This could go beyond the concept of loans, principal 
subsidies and grants to encompass more creative approaches. For 
example, SRFs could seek new ways of leveraging that:

      Enable States to create, within the SRF, challenge or 
incentive programs for watershed initiatives to solve local problems.
      Reward States that overmatch, leverage or otherwise 
enhance SRF financing with added flexibility, for example, to buy open 
space, fund pollution abatement efforts on private lands through loans, 
open up market incentives such as for pollution trading, financing 
habitat restoration such as dam removals, etc.

    Inherent in all of these concepts are the need to:

      Better capitalize the SRF. To the extent that the 
committee improves the SRF's ability to finance the kinds of projects 
needed in the future, we believe that there will be increased support 
for capitalization.
      Minimize Federal intrusion into what needs to be a State 
program for local problem solving. Federal requirements and micro 
management must be kept to an absolute minimum.

    Question 2. ASIWPCA has advocated increasing State Revolving Loan 
Fund (SRF) capitalization grant levels to $5 Billion annually to meet 
increased demand.
    A. Do certain States have money that is not being loaned out for 
projects?
    Response. In a program the SRF's size, there is always a certain 
amount of funds fitting that description. $15.4 Billion in Federal 
capitalization grants have generated $26.1 Billion in loans executed (a 
1.7:1 ratio) considering State matching funds, leveraging and interest. 
There are many factors at play. Since the program must respond to 
project readiness to proceed over a construction season, there is lag 
time between Federal funds availability and actual loan execution. For 
large projects, sufficient funds must accumulate before they can be 
obligated. To the extent that the outlook for SRF funding year to year 
is uncertain, there is also a tendency to carry forward some funds from 
one fiscal year to the next to tide the program over. Since 99 percent 
of Federal appropriations are obligated within the 1 year of 
availability, the program is performing well.
    Question 2B. Do most States have a backlog of loan applications for 
projects?
    Response. There are more projects on State intended use plans than 
there are likely funds available. In some States, the number of 
projects that could use SRF funds is huge in comparison to the funds 
available. One response to this backlog has been the decision of States 
to leverage from time to time. However, generally a loan application is 
not prepared until the likelihood of SRF funding appears certain.
    In discussing the SRF's role in the water quality program, it is 
important to keep in mind that grants are essentially 25 percent as 
effective as loans. Due to the revolving nature of loan programs, they 
can satisfy more needs over time than a grant program. Michigan, for 
example last year, awarded $245 million in loans. In a grant program, 
they could have funded only $57 million. Principles subsidies need to 
be used judiciously, e.g., for hardship communities.
                               __________
  Statement of E.D. ``Sonny'' Vergara, Executive Director, Southwest 
                   Florida Water Management District
                     water for the next millennium
    Mr. Chairman, members of the committee, I appreciate the 
opportunity to appear before you today in support of S. 968, the 
Alternative Water Sources Act of 1999.
    The Problem
    Nationwide, an increasing amount of water is in demand to provide 
for urban development, agriculture, and environmental needs. Although 
current water supplies are sufficient in some States, in many high 
growth areas such as Florida, New York, New Jersey, and Virginia, 
traditional sources of water supply are no longer adequate to meet 
increasing demands. Groundwater pumping has caused lowered aquifer 
levels and resulted in the degradation of water quality and the 
environment. Increased use of surface water has resulted in reduced 
flows in streams and rivers. In Florida, groundwater levels have 
declined as much as 150 feet and coastal areas have experienced salt 
water intrusion into the aquifer. New York has experienced declines in 
aquifer levels and low flows in streams. Droughts occasionally cause 
inadequate water supply for New York City. In New Jersey, water supply 
coming from surface water, which supplies most of northern New Jersey, 
is only adequate when precipitation is greater than average. And, in 
Virginia, water supplies in southern Virginia are not sufficient to 
meet projected future demands. Groundwater withdrawals have caused 
declines of up to 200 feet in some areas. If current trends continue, 
water demand can be expected to exceed supply throughout the midwest 
and along the eastern seaboard by the year 2020 causing severe economic 
and environmental impacts.
    The Solution
    Non-traditional or alternative water sources are needed to meet 
growing needs while ensuring environmental protection. An alternative 
sources project is defined as a project designed to provide municipal, 
industrial, or agricultural water supplies in an environmentally 
sustainable manner by conserving, managing , treating, reclaiming or 
reusing water or wastewater. Cost-share funding is needed in States not 
eligible for assistance through the Department of the Interior/Bureau 
of Reclamation to demonstrate methods for developing alternative water 
supplies which conserve, manage, reclaim, reuse, and de-salt water. The 
funding should be targeted to States with demonstrated needs, the 
ability to cost-share, and projects which alleviate current or 
projected economic and environmental impacts. S. 968 would not use 
existing funds from the Bureau of Reclamation. Rather, it would provide 
additional, much-needed money for alternative water supplies in those 
eastern States not presently eligible for grants under any Federal 
assistance program.
    Economic and Environmental Benefits
    Examples of the economic and environmental benefits of alternative 
water supply technology:

  Safeguards economic vitality and allows the opportunity to 
    compete nationally for business development;
  Ensures that water related industries such as tourism, 
    commercial fisheries, and recreational sports are not economically 
    impacted;
  Provides incentives for innovative and environmentally sound 
    water supply projects that can serve as national demonstration 
    projects;
  Continues affordable water supplies for all reasonable and 
    beneficial uses;
  Alleviates over-pumping of groundwater;
  Preserves minimum flows and levels of surface waters;
  Prevents further saltwater intrusion along our coastlines;
  Protects valuable ecosystems and avoids damage to wetlands;
  Promotes long-range, comprehensive planning for water 
    resource development.
    Recommended Congressional Action
    The Congress should authorize a program in the U. S. Environmental 
Protection Agency (S. 968) to make grants to all eligible agencies with 
responsibility for water resource development in States not eligible 
for assistance through the Bureau of Reclamation. The grants would be 
used for the purpose of maximizing available water supplies and 
protecting the environment through the development of alternative water 
sources.
    The Florida Water Story
    Water supply has emerged as a critical issue for Florida. Between 
1995 and 1996, Florida added 260,000 new residents--the equivalent of 
four cities the size of Daytona Beach. Population growth necessarily 
leads to increased water supply needs. Florida's challenge is to ensure 
adequate future water supplies for the growing population as well as 
industry and agriculture while providing for natural systems.
    Ecosystems in Florida have global significance. The Florida 
Everglades has been recognized internationally. The Florida Keys have 
been designated as one of the 12 ``Last Great Places'' in the world by 
the Nature Conservancy. Silver Springs is one of the largest first-
magnitude springs in the world. Florida is No. 1 in the Nation for 
number of lakes and a close second to Alaska in miles of coastline. 
Impacts from projected water supply withdrawals will significantly 
impact these vital resources. Visible impacts have already occurred in 
some areas.
    Needs are Growing
    From 1980 to 1995, Florida's public water supply increased 43 
percent, more than double the national average of 16 percent. Florida's 
water resources are managed by five regional Water Management Districts 
(WMDs) defined by major river basin hydrology. The WMDs have assessed 
water supply needs and sources through the year 2020. Based on 
scientific modeling, many of the high growth areas of the State have 
been designated as Water Resource Caution Areas, areas where current or 
projected withdrawals are likely to impact natural systems such as 
wetlands and surface waters, increase saltwater intrusion, reduce 
groundwater levels and spring flows, and create competition among 
existing users.
    Existing Sources are Limited
    Florida's aquifers provide most of the existing public supply and a 
large part of the agricultural supplies in the State through pumping of 
groundwater. This source is of good quality, economical, and highly 
reliable. However, other sources, are needed for the State to recover 
from existing problems and avoid projected problems identified by the 
WMDs. Water sources being considered and implemented include additional 
water conservation, increased reuse, reclaimed water (highly treated 
waste water), better managed existing sources, and new sources such as 
aquifer storage and recovery, surface water, desalinization of brackish 
ground water and sea water, and artificial recharge. Florida can be the 
national leader in developing innovative solutions to the nation's 
water supply needs.
    Efforts are Underway
    The State of Florida through its Department of Environmental 
Protection (DEP) and its five water management districts has 
implemented steps to address the State's water supply needs. Each 
district has completed a District-Wide Water Assessment which evaluates 
projected demands, makes water use projections to the year 2020 and 
compares these demands to the availability of water sources over the 
twenty-year planning period. In those areas where demand is expected to 
exceed available water supply before 2020, a Regional Water Supply Plan 
must be developed subsequently. This information is reflected in an 
annual report produced by the DEP and in the comprehensive Florida 
Water Plan.
    Water management districts are required by statute to allocate a 
portion of their yearly budget to the development of alternative water 
supply projects. Since 1994, the Southwest Florida Water Management 
District has committed $236 million to fund projects totaling $494 
million in overall cost. This is in partnership with local governments. 
Projects such as these will continue to need funding through Federal, 
State, regional and local partnerships so that new water sources can be 
developed that are financially, technically and environmentally 
feasible.
    Since 1995, the State of Florida has received approximately $50 
million from the Federal Government in earmarked grants to assist with 
the development of important projects statewide. We are very grateful 
for this assistance. The list of projects these funds have enabled us 
to begin developing is attached. There is a much longer list of 
projects we need to build if we are to keep pace with Florida's 
anticipated growth through the year 2020. The Alternative Water Sources 
Act recognizes the importance of these projects and others like them 
and provides a framework for their development in partnership with the 
Federal Government. It is a much-needed program and I hope you will 
support its passage.
    Thank you again for the opportunity to appear before you today. I 
would be pleased to answer any questions you might have.
                                 ______
                                 
                              attachments
    Map of High Growth Eastern States
    Chart of Projected Population (Eastern States)
         florida alternative water sources development program
Projects Under Development
            Southwest Florida Water Management District
    The Peace River Option (Sarasota, Manatee, Charlotte, DeSoto 
Counties): A major expansion of a surface water potable supply. The 
capacity of the Peace River facility to serve its Peace River/Manasota 
Regional Water Supply Authority member governments would be increased 
from 12 to 18 MGD by expanding the treatment facility, constructing 14 
aquifer storage and recover (ASR) wells to provide off-stream storage 
and an 80-mile transmission pipeline.
    Agricultural Reuse Supply (Manatee County): A combination storm 
water and reclaimed water supply project. UP to 29 MGD of groundwater 
will be offset by connecting a network of wastewater treatment and 
storm water storage facilities, then constructing a transmission 
pipeline to deliver water from these facilities to large self-supplied 
agricultural interests in the Eastern Tampa Bay Water Use Caution 
Area--Most Impacted Area.
    Manasota Basin Regional Reuse System (Manatee and Sarasota 
Counties): Interconnection and regionalization of city and county reuse 
systems to supply reclaimed water to large agricultural, industrial, 
and recreational water users. Initially, an additional 8.8 MGD of 
reclaimed water will be available to offset ground water withdrawals. 
Innovative technology such as aquifer storage and recovery (ASR) will 
provide water quality and flood control benefits.
    Seawater Desalination (Tampa Bay Area): Design and construction of 
a 35-50 MGD seawater desalination facility to provide water to the 
regional system of the West Coast Regional Water Supply Authority. 
Included in the overall project is the seawater desalination plant, as 
well as infrastructure for treatment, pumping, storage, and 
transmission of water.
    Enhanced Surface Water System (Hillsborough County): Will harvest 
and store excess surface water during times of high stream flow. 
Aquifer storage and recovery (ASR) technology will be explored as a 
method to economically store large volumes of seasonal flows to 
optimize the regional water supply system and avoid impacts of 
groundwater withdrawals. Reclaimed water will also be explored as an 
additional source of water.
    Note: The previous three projects are part of the Tampa Bay 
Partnership Plan, a cooperative project between the Southwest Florida 
Water Management District and Tampa Bay Water to develop new water 
supply for the Tampa Bay Area through the use of alternative sources 
such as reuse, ASR technology, demand management, desalination, and the 
harvest and storage of excess surface waters during times of high 
stream flow. Included in this project is construction of infrastructure 
for treatment, pumping, storage and transmission of water. The overall 
cost estimate is $183 million.
            St. Johns River Water Management District
    Alternative Water Supply Development in East and Central Florida 
(Brevard, Lake, Orange, Seminole, Volusia Counties): Surface and 
brackish groundwater development including treatment storage, 
artificial recharge, wetland mitigation and avoidance of impacts 
related to groundwater withdrawals, and potable and reclaimed water 
system interconnections for the purpose of assuring dependable public 
water supplies through cooperative development of a combination of 
alternative water supply sources. The initial phase of implementation 
will include several demonstration projects.
    East Palatka Water, Wastewater and Reuse Project (unincorporated 
Putnam County): Develop and treat a dependable source of potable water 
supply, prevent ground and surface water pollution, and provide reuse 
of reclaimed water.
    City of Gainesville Reclaimed Water System Development (Alachua 
County): Construction of improvements to two wastewater treatment 
facilities and infrastructure necessary to supply reclaimed water to 
several current major users of groundwater for irrigation directly 
replacing current groundwater withdrawals.
    Alternative Water Supply Development in Northeast Florida (Duval, 
Clay, St. Johns, Flagler Counties): Surface and brackish groundwater 
development including treatment and storage, wetland mitigation and 
avoidance of impacts related to groundwater withdrawals, and potable 
and reclaimed water system interconnections for the purpose of assuring 
dependable public water supplies through cooperative development of a 
combination of alternative water supply sources and reduction of point 
source discharges into the St. Johns River.
            Northwest Florida Water Management District
    Regional Alternative Water Supply (Santa Rosa County): Design and 
construction of a well field, which would utilize an alternative 
groundwater supply from the Sand-and-Gravel Aquifer, to provide water 
supply. This well field would form the basis of a regional system 
designed to meet the anticipated water needs of local governments.
            South Florida Water Management District
    Central and Northern Palm Beach Water Management Initiative (palm 
Beach County): Will capture and conserve excess surface water as an 
alternative source for meeting present and future urban water supply 
demands. The project will include construction of aquifer storage and 
recovery (ASR) wells, canal and levee improvements, pumping stations, 
treatment and other water control facilities. Implementation will 
recharge coastal aquifers and well fields, avoid degradation of 
estuarine systems and rehydrate environmentally sensitive wetlands.

          Statement of the American Society of Civil Engineers
    Mr. Chairman and Members of the committee: The American Society of 
Civil Engineers (ASCE) is pleased to offer for the record this 
statement on the importance of passing legislation that would 
reauthorize the State Revolving Loan Fund (SRF) program under Title VI 
of the Clean Water Act.
    ASCE represents more than 120,000 civil engineers in private 
practice, academia and government service. Its members are experienced 
in environmental and water resources engineering. ASCE was founded in 
1852 and is the oldest national engineering society in the United 
States.
A. Need for the Legislation
    Many thousands of Americans are exposed to raw sewage daily. 
Substantial new Federal investment in facilities to collect and treat 
this sewage is absolutely necessary, and the solution won't come 
cheaply. As the American Society of Civil Engineers reported last year, 
America's wastewater infrastructure is overdue for major improvements. 
In our ``Report Card for America's Infrastructure'' issued in early 
1998, we assessed the condition of the nation's wastewater treatment 
plants at D+ barely a passing grade and hardly one to be proud of. 
Earlier this year, we criticized the Clinton Administration's Fiscal 
Year 2000 budget proposal of $800 million for wastewater infrastructure 
under the SRF program, a reduction of $550 million from the Fiscal Year 
1999 appropriated level approved by Congress. We continue to believe 
that cuts of the magnitude contained in the President's short-sighted 
budget request will tie the states' hands in their efforts to come up 
with adequate capitalization for badly needed wastewater facilities. 
Fortunately, Congress heard that message and has proposed to increase 
the SRF level for Fiscal Year 2000 substantially above the 
Administration's request.
    As this committee well knows, the Clean Water Act's program of 
financial aid for municipal wastewater treatment plant construction is 
a central feature of the law. Since 1972 Congress has provided $69 
billion to assist cities in achieving requirements for secondary 
treatment of municipal sewage (equivalent to 85 percent reduction of 
wastes), or higher where required by local water quality conditions. 
State and local governments have spent more than $25 billion of their 
own funds, as well. All states have established the legal and 
procedural mechanisms to administer the new loan programs and are now 
eligible to receive SRF capitalization funds under Title VI. Some 
states with prior experience using similar financing programs moved 
quickly, while others had difficulty in making a transition from the 
previous grants program to one that requires greater financial 
management expertise for all concerned.
    Needs remain high nevertheless. In 1996, the Environmental 
Protection Agency (EPA) estimated that America needs to spend at least 
$139 billion over the next two decades to improve and preserve the 
nation's sewage treatment plants. That figure rose to nearly $200 
billion by March of this year, in large part because of the need to 
address anticipated sanitary sewer overflow needs. When replacement 
costs are added, 20-year needs soar to more than $300 billion. It's 
time for America to fix its decaying sewage pipes.
    The Clean Water SRF program created by Congress in 1987 provides 
Federal financing for wastewater collection and treatment facilities. 
The SRF is an investment program that operates much like a community 
bank. Unfortunately, the funding authorization for the SRF program 
expired in 1994, and Congress needs to take steps soon to recapitalize 
the fund, which has been subject to annual appropriations since Fiscal 
Year 1995. \1\
---------------------------------------------------------------------------
    \1\ The Clinton Administration requested $800 million for fiscal 
year 2000 for State Revolving Loan Fund--$500 million less than the 
appropriated amount for fiscal year 1999. The House (H.R. 2684) 
recommends $1.175 billion and the Senate (S. 1596) recommends $1.35 
billion in fiscal year 2000.
---------------------------------------------------------------------------
    The SRF program works. Since 1987, cumulative Federal 
capitalization grants of $14.2 billion have been supplemented by state 
contributions of $3 billion, net leveraged bonds of $10.9 billion, loan 
principal repayments of $3.4 billion, loan interest payments of $2.7 
billion, and investment earnings of $1.5 billion. Even after deducting 
payments for principal and interest, the SRF program has provided $27.4 
billion for wastewater treatment projects.
    Of that $27.4 billion, $23 billion (or 84 percent) has been 
provided for 6,816 wastewater collection and treatment, nonpoint 
source, and estuary projects in the past 11 years. Unfortunately, the 
funding authorization for the Clean Water SRF Program expired in 1994.
    That's why ASCE strongly supports the Clean Water Infrastructure 
Financing Act introduced by Senator Voinovich. We also endorse a 
similar bill, H.R. 2720, that has been introduced in the House by Rep. 
Sue Kelly of New York and Rep. Ellen Tauscher of California.
    This legislation is vitally needed. The Senate and House bills are 
a pragmatic, efficient and necessary remedy to the potential risks of 
disease and water pollution posed by America's aging wastewater 
treatment infrastructure.
    The Senate bill and its House companion make the Clean Water SRF 
program even better. They build on the success of the SRF program by 
authorizing $15 billion in new funding and adding important 
improvements.
    The Voinovich bill, like its House counterpart, retains the policy 
of zero tolerance for the structural degradation of the nation's 
wastewater treatment works. The current lack of authorization 
unintentionally contributes to the investment gap. It sends an implicit 
message to your colleagues on the Budget and Appropriations committees 
that wastewater collection and treatment is not a national priority, 
and annual capitalization of the program suffers as a result.
    With this bill, you have it in your power to close the funding gap 
and prevent further injury to critical infrastructure systems 
nationwide. We urge the committee to move expeditiously to reauthorize 
funding for this most important environmental program.
B. Use of Competitive Bidding and Qualifications Based Selection 
        Procedures
    ASCE strongly recommends that the Senate bill be strengthened by 
the addition of provisions requiring the states to engage in 
competitive bidding for the construction of wastewater treatment plants 
and requiring those states without a qualifications-based selection 
(QBS) procedure for architectural and engineering contracts to follow 
the Federal law on A/E contract procurement.
    We support full and open competition for the procurement of 
contracts by all levels of government, including the use of competitive 
sealed bidding for construction contracts and the QBS procedures for 
architectural and engineering contracts.
    Of course the awarding of architectural and engineering design 
contracts, which are highly technical in nature and require the mature 
professional judgment of licensed architects or engineers, is of 
special interest to ASCE. This type of contract requires a slightly 
different procurement method the QBS method.
    In this traditional ``design-bid-build'' method, the agency employs 
a design professional who develops plans and specifications for the 
project under an architectural and engineering (A/E) services contract. 
After the professional design firm completes its work (or nearly so), 
the agency awards a second contract to a contractor who is responsible 
for carrying out the construction project. The design and construction 
functions are entirely separate. This process is sometimes referred to 
as ``linear construction.''
    Under the traditional system, the awarding of A/E services 
contracts by Federal agencies is governed by the qualifications-based 
selection process under Title IX of the Federal Property and 
Administrative Services Act, which was enacted 27 years ago. \2\
---------------------------------------------------------------------------
    \2\ 40 U.S.C. Sec. Sec. 541-44. Title IX is commonly referred to as 
the Brooks Architect-Engineers Act.
---------------------------------------------------------------------------
    Title IX requires the government ``to negotiate contracts for 
architectural and engineering services on the basis of demonstrated 
competence and qualification for the type of services required at a 
fair and reasonable price.'' The agency client must evaluate current 
statements of qualifications from A/E firms and to conduct negotiations 
with at least three of them, beginning with the most qualified. The 
contract then must be awarded to the highest qualified firm ``at fair 
and reasonable prices.'' The Act defines A/E services as ``those 
professional services of an architectural or engineering nature as well 
as incidental services that members of those professions in their 
employ may logically or justifiably perform.''
    Under Title IX, the QBS process protects the client agency and the 
design professional by ensuring that the agency receives the services 
of the most highly qualified design professionals. The QBS procedure is 
unique because the procurement of professional services is difficult 
and complicated. There is little correlation between the procurement of 
these services and, for example, the purchase of durable goods and 
supplies. The heart of the design contract is the unique capability of 
the mind incapable of hard and fast measurement, as in the case of a 
physical item. When one seeks to acquire the services of a physician, 
surgeon, lawyer, architect or engineer, one is looking for competency 
and training, and also for originality, innovation and inspiration. The 
QBS procedures ensure that the agency receives that originality and 
innovation in the design of public works projects.
    The American Bar Association (ABA) recommends the use of the 
qualifications-based selection process for A/E contracts awarded by 
state or local governments.
    The principal reasons supporting this selection procedure for 
architect-engineer and land surveying services are the lack of a 
definitive scope of work for such services at the time the selection is 
made and the importance of selecting the best qualified firm. In 
general, the architect-engineer or land surveyor is engaged to 
represent the [State's] interests and is therefore, in a different 
relationship with the [State] from that normally existing in a buyer-
seller situation. For these reasons, the qualifications, competence, 
and availability of the three most qualified architect-engineer or land 
surveying firms are considered initially, and price negotiated later. 
\3\
---------------------------------------------------------------------------
    \3\ American Bar Association, The Model Procurement Code for State 
and Local Governments, Section 5 (1979).
---------------------------------------------------------------------------
    Thirty-seven states currently follow the Federal QBS procedure for 
the awarding of these contracts by state agencies under their ``Little 
Brooks'' acts. Of these, 17 states (Arizona, Colorado, Connecticut, 
Kansas, Louisiana, Maine, Maryland, Massachusetts, Minnesota, Missouri, 
Nebraska, New Hampshire, Ohio, Oklahoma, Oregon, South Dakota, and 
Utah) require the QBS process for the acquisition of A/E contracts by 
state agencies but not by local governments.
    Thirteen states Alabama, Georgia, Hawaii, Indiana, Iowa, Michigan, 
Mississippi, New Jersey, North Dakota, Rhode Island, South Dakota, 
Vermont and Wisconsin do not currently require the QBS process for A/E 
contracts at any level of state or local government.
    ASCE believes the QBS procedure, which offers the state and local 
governments the means of acquiring the best qualified architects and 
engineers for the design of publicly owned treatment works, should be 
standardized to avoid conflicting contracting procedures among various 
state and local agencies that receive Federal SRF loans to finance the 
construction of wastewater treatment facilities. We urge Congress to 
amend the Clean Water Act to require the use of this highly successful 
contracting process in those states that do not follow the Federal 
procedure.
    Mr. Chairman, that concludes our statement on the Clean Water 
Infrastructure Financing Act. If you have any questions, please do not 
hesitate to contact Michael Charles of our Washington Office at (202) 
789-2200 or by E-mail at [email protected].

  Statement of Dr. Robert Hirsch, Chief Hydrologist, U.S. Geological 
                                 Survey
    Historically, problems of water use and supply in the United States 
have been most closely associated with the arid and semi-arid West. 
Increasingly, however, eastern States are experiencing problems with 
inadequate supply of water due to increasing population, deteriorating 
water quality, and growing use of water for a variety of purposes, 
including agriculture, power generation, and public drinking water.

      The use of fresh water for all purposes in the East has 
doubled in the past 35 years.
      Irrigated acreage has increased nearly 50 percent in the 
East between 1980 and 1995, while in the West during this period, 
irrigated acreage has actually decreased by about 8 percent.
      Withdrawals of water for public water supply in the East 
nearly doubled from 1955 to 1995.
      The recent drought in the East has resulted in drought 
declarations or water restrictions in 15 States.
      If current trends continue, the use of water in the 
southeastern U.S. will increase an estimated 30 percent by 2040.

    In developing solutions to the growing problems of water use and 
supply, two factors must be clearly understood. First, water resources 
occur in a wide variety of environments throughout the eastern United 
States; the problems and solutions associated with these varying 
environments will differ. Second, surface water and ground water are in 
reality, a single resource; proposed solutions must recognize the 
important and often complex interactions of surface water and ground 
water. A few illustrations follow.
    Development of ground-water resources along the Atlantic and Gulf 
Coasts has caused saltwater to intrude into many highly productive 
freshwater aquifers as, for example, in the areas of Tampa, Miami, and 
Jacksonville, Florida. Farther north, saltwater intrusion is occurring 
near Brunswick and Savannah, Georgia, on Hilton Head Island, South 
Carolina, and in New Jersey from Cape May to northern parts of the 
State. The threat of saltwater intrusion is always present on Long 
Island, New York, and Cape Cod, because saltwater bodies surround both 
locations. Projected future growth in population along the coastal 
areas of the United States will likely increase stresses on coastal 
aquifers.
    Moving landward, the Appalachian Piedmont and Blue Ridge province 
of the eastern U.S. is an extensive and unique area that extends from 
Alabama to Pennsylvania. The region includes rapidly growing cities 
such as Atlanta, Charlotte, and the western suburbs of Washington, D.C. 
Ground water in this region, which primarily occurs as flow of water 
through fractures in rocks, is difficult to characterize and to develop 
for water supply. The ground water in this region is very vulnerable to 
contamination and is particularly susceptible to droughts as 
demonstrated by numerous private wells going dry this past summer. All 
of these factors lead to significant challenges in water-resource 
development.
    Nearly all surface-water features--streams, lakes, wetlands, and 
estuaries--interact with ground water and vice versa. As a result, 
actions taken with one part of the system often have unintended 
consequences with other parts of the system. The nature of the 
hydraulic connection between ground water and surface water varies 
considerably from place to place. For example, ground-water development 
occurs in many small glacial aquifers along streams in the northeastern 
U.S. and in the Great Lakes region, as well as along major 
watercourses, such as the Mississippi and Ohio Rivers. The connection 
of surface water and ground water has led to water supply concerns in 
some areas, particularly in the southeastern United States. In many 
areas, pumping ground water from wells located near streams can induce 
contaminated water to move from streams into wells. The stress of 
pumping ground water can have significant impacts on development of 
surface-water resources and the costs of treatment by municipalities.
    As a final example, ``karst'' areas characterized by limestone and 
other soluble rocks exist throughout much of the eastern United States, 
including large parts of Alabama, Florida, Tennessee, Kentucky, 
Missouri, and Indiana, among others. Aquifers in karst terrain are 
particularly susceptible to contamination where the aquifers are 
hydraulically connected by sinkholes or other conduits that can channel 
river water directly into an aquifer with little or no filtration. 
Likewise, the aquifers can provide rapid transport of contaminants to 
surface-water bodies.
    It is often difficult to predict the outcome of new water-
management projects on these complex and interrelated ground-water and 
surface-water systems. For this reason monitoring should be 
incorporated as a key component to allow periodic evaluation of system 
performance to provide the basis for appropriate adjustments toward 
more optimal water management and to minimize unanticipated adverse 
impacts.
    Solutions to the water management challenges of the eastern States 
need to be built using a variety of tools. They must, first of all, be 
based on facts regarding the true availability of the resource, 
including both ground water and surface water. They must use science to 
aid in predicting the consequences of planned water resource 
development, paying careful attention to the influence of ground water 
development on surface water supplies and the influence of surface 
water development on ground water. They must also consider the 
consequences of development on water quality and aquatic habitat. The 
use of innovative technologies needs to be a part of developing 
alternative supplies such as using brackish water and reclaimed 
wastewater, and artificially recharging aquifers with surface water in 
times of abundance for later use during dry periods. These technologies 
are all feasible but are also costly and may have unforeseen 
consequences. They need to be considered as a part of the long-term 
solution throughout the East as they are in the West. Finally, the 
whole water resource system must be managed in an optimal manner, with 
an eye to long-term and short-term goals, and another eye toward 
balancing legitimate competing needs of different communities and of 
the natural environment.
    The USGS welcomes a continuing role in helping all States by 
providing a scientific foundation of information about the resource and 
the consequences of new technologies and alternative management plans. 
We would look forward to working with EPA and the States in providing 
the scientific information needed for successful decisions about water 
management options. Thank you for this opportunity to provide a 
statement on this proposed legislation. Please do not hesitate to call 
on the USGS for further information.
                               __________
             Association of Metropolitan Sewerage Agencies,
                                   Washington, DC, October 6, 1999.

The Honorable John H. Chafee, Chairman,
Environment and Public Works Committee
Dirksen Senate Office Building
Washington, DC 20510-6175

Dear Senator Chafee: On behalf of the Association of Metropolitan 
Sewerage Agencies (AMSA), I applaud you and your colleagues on the 
Environment and Public Works Committee for addressing water 
infrastructure issues in tomorrow's hearing. AMSA respectfully submits 
this letter and its accompanying enclosure for the hearing record, and 
writes today to familiarize you with additional clean water 
infrastructure legislation that will be introduced in the Senate in the 
coming weeks. The bill, the Urban Wet Weather Priorities A ct of 1999, 
addresses the most critical clean water infrastructure issues for 
municipalities today--the control and financing of urban wet weather 
pollution.
    Over the course of the past year, AMSA has worked with the National 
League of Cities (NLC), National Association of Counties (NACo), 
National Association of Flood and Stormwater Management Agencies 
(NAFSMA), American Public Works Association (APWA), U.S. Conference of 
Mayors (USCM), and the Water Environment Federation (WEF) to develop 
broad-based legislation that would strengthen municipal wet weather 
remediation efforts. The resulting bill, the Urban Wet Weather 
Priorities Act of 1999 (see enclosed bill text and summary), 
strengthens the Clean Water Act and improves the way communities 
respond to all urban wet weather problems. Narrowly targeted, this bill 
is designed to do the most good by making important, but relatively 
minor, changes to the Act. It will provide consistent standards for 
controlling urban wet weather discharges and a direct infusion of 
desperately needed Federal funds to jump start community remediation 
programs.
    The Urban Wet Weather Priorities Act of 1999 speaks to the critical 
issue that will serve as the focus of tomorrow's hearing--the 
establishment of additional Federal funding mechanisms that support our 
Nation's clean water infrastructure. At every opportunity we urge you 
to pursue greater a Federal contribution to the costs of controlling 
wet weather flows. Municipalities alone cannot keep up with 
skyrocketing infrastructure costs for clean water, not to mention the 
price tag for controlling wet weather discharges. AMSA and WEF's joint 
report, The Cost of Clean, documents that municipal clean water 
infrastructure needs over the next 20 years are at $330 billion. 
Roughly half of the overall costs, a total of at least $150 billion, is 
attributed to the expenditures required to control combined sewer 
overflows (CSOs), sanitary sewer overflows (SSOs), and urban stormwater 
discharges. To make matters worse, EPA recently found that unmet 
capital needs have risen to an astonishing $6 billion per year. In 
response to this need, the Urban Wet Weather Priorities Act of 1999 
establishes a new grants program, $6 billion over the next 3 years, to 
help fund various municipal wet weather control efforts. While this 
money by itself will not cure the enormous funding shortfall, the 
greater availability of grant funds will help all communities.
    As we work to improve water quality in the watershed context, 
communities need to address wet weather discharges on a holistic basis 
that takes into account all wet weather flows within a single urban 
watershed. Municipalities are spending billions of dollars on wet 
weather controls without the ability to allocate scarce resources in 
accordance with cost-effectiveness and actual watershed impact. A 
comprehensive approach to the management of wet weather discharges on 
an urban watershed basis will result in a systematic, incremental and 
more cost-effective achievement of water quality objectives. Although 
we believe that eventually all wet weather flows should be controlled 
within a watershed framework, the Urban Wet Weather Priorities Act of 
1999 takes the first critical steps in making the transition to the 
watershed approach through the use of demonstration projects. The bill 
provides $45 million over the next 3 years to allow EPA to conduct 
municipal demonstration projects relating to the management of urban 
wet weather flows, and the determination of stormwater management 
controls that are cost-effective in reducing pollutants from urban 
stormwater runoff.
    The draft legislation I have enclosed also provides targeted 
reforms directed at the priority water quality issues of combined sewer 
overflow abatement, sanitary sewer overflow control and municipal 
stormwater standards. We encourage you to seriously consider the Urban 
Wet Weather Priorities Act of 1999 as part of a narrowly targeted 
effort to strengthen the Clean Water Act and look forward to the 
opportunity to describe the legislation in further detail at a future 
hearing of your committee.
    Please feel free to call me to discuss the bill or any related 
issues at 202/833-4653. Thank you for your dedication to the Nation's 
clean water program.
            Sincerely,
                              Ken Kirk, Executive Director.
                                 ______
                                 
                urban wet weather priorities act of 1999
A bill to amend the Federal Water Pollution Control Act to establish 
        nationally consistent requirements for controlling urban wet 
        weather flows and to provide sufficient funds to municipalities 
        to meet these requirements.
    SECTION 1. SHORT TITLE. This Act may be cited as the ``Urban Wet 
Weather Priorities Act of 1999''.
    SECTION 2. FINDINGS AND PURPOSE.
    (a) FINDINGS.--Congress finds the following: (1) Wet weather flows, 
including combined sewer overflows, sanitary sewer overflows, 
stormwater runoff, and nonpoint source discharges constitute the 
largest remaining challenge to achieving the goals of the Clean Water 
Act.
    (2) To effectively control wet weather flows, national regulatory 
requirements must be in place to provide municipalities with clear and 
achievable goals that allow them to prioritize the expenditure of 
limited local funds, and that are consistent within and among the 
Regions and States.
    (3) The Combined Sewer Overflow Policy signed by the Administrator 
on April 11, 1994, has not been fully recognized as binding authority, 
leaving those affected municipalities unsure of the appropriate control 
standards.
    (4) In the absence of a national policy clarifying the appropriate 
control standard for sanitary sewer overflows, municipalities are being 
subject to the inconsistent enforcement discretion of each individual 
Region or State without the benefit of a clearly defined control 
standard.
    (5) In recognition of the unique nature of municipal stormwater 
runoff, Congress established a distinct compliance standard for 
municipal separate storm sewer system control programs which is to be 
based on the implementation of best management practices and the 
reduction of pollutants to the maximum extent practicable.
    (6) An effective solution to the problems associated with wet 
weather flows can be attained through a coordinated urban watershed 
management approach to rules, policies, and guidelines for wet weather 
flows.
    (7) Current funding sources for the construction and modernization 
of publicly owned treatment works are insufficient to assist 
municipalities in meeting wet weather control mandates.
    (b) PURPOSE.--The purposes of this Act are: (1) To achieve national 
consistency in the regulatory oversight of urban wet weather flows;
    (2) To codify the National Combined Sewer Overflow Policy signed by 
the Administrator on April 11, 1994 to establish a clear and nationally 
consistent approach;
    (3) To direct the Agency to develop, through direct consultation 
with municipalities, a national sanitary sewer overflow program which 
is uniformly adopted in all Regions and States:
    (4) To clarify that the original intent of Congress with respect to 
the appropriate compliance standard for municipalities subject to the 
Act's municipal separate storm sewer system control requirements was to 
require the implementation of best management practices and not to 
impose numerical discharge standards.
    (5) To develop information to exhibit the effectiveness of managing 
urban wet weather flows using a watershed management framework and to 
evaluate the effectiveness of available best management practices to 
control stormwater runoff; and
    (6) To establish a wet weather grants program to assist 
municipalities in addressing the impacts of urban wet weather 
discharges.
    SECTION 3. COMBINED SEWER OVERFLOWS. Section 402 of the Federal 
Water Pollution Control Act (33 U.S. C. 1342) is amended by adding the 
following:
    (q) Combined Sewer Overflows.--
    (1) REQUIREMENT FOR PERMITS, ORDERS, AND DECREES.--Each permit, 
order, or decree issued pursuant to this section for a discharge from a 
combined storm and sanitary sewer shall conform to the Combined Sewer 
Overflow Control Policy signed by the Administrator on April 11, 1994, 
as amended by this Act. Any future revisions to the policy shall be 
developed in consultation with State and municipalities.
    (2) TERM OF PERMIT, ORDER, OR DECREE.--
    (A) AUTHORITY TO ISSUE.--Notwithstanding any schedule for 
compliance authorized by section 301(b) or any permit limitation 
authorized by subsection (b)(l)(B) of this section, the Administrator 
or the State (in the case of a State with a program approved under 
subsection (b)) may issue or execute a permit, order, or decree 
consistent with this section for a discharge from a combined storm and 
sanitary sewer.
    (B) SCHEDULE FOR COMPLIANCE.--A permit, order, or decree issued 
pursuant to subparagraph (A) shall include a schedule for compliance, 
within a period of not to exceed 15 years, with a long-term control 
plan under the control policy referred to in paragraph ( 1), except 
that a compliance schedule of longer than 15 years may be granted by 
either the Administrator or the State (as the case may be) if 
compliance within 15 years is not within the economic capability of the 
owner or operator.
    SECTION 4. SANITARY SEWER OVERFLOWS. Section 402 (33 U.S. C. 1342) 
is further amended by adding at the end the following:
    (r) SANITARY SEWER OVERFLOWS.--
    (1) DEVELOPMENT OF REGULATIONS.--One year after the date of 
enactment, but no later than May 29, 2001, the Administrator, in 
consultation with State, municipal, and wastewater authorities shall 
issue regulations which establish a comprehensive program to control 
municipal separate sanitary sewer overflows.
    (2) PROGRAM ELEMENTS.--The program shall provide for the following:
    (A) GENERAL PROHIBITION.--Sanitary sewer overflows are prohibited 
with the exception of those overflows which are determined to be 
unavoidable. Municipal separate sanitary sewer systems shall not be 
liable for those overflows which are determined to be unavoidable. For 
the purposes of this section, unavoidable overflows shall be as 
follows:
    (i) Discharges that are necessary to prevent loss of life, personal 
injury, or severe property damage; or
    (ii) Discharges that are temporary, exceptional incidents beyond 
the reasonable control of the operator, such as exceptional acts of 
nature, wet weather conditions beyond a system-specific control plan in 
an approved facility plan or other remediation plan that is currently 
approved by the Administrator, third party actions that could not be 
reasonably prevented, blockages that could not be avoided through 
reasonable measures, and unforeseen sudden structural, mechanical or 
electrical failure that are beyond the control of the permittee.
    (B) MINIMUM PROCEDURES.--In consultation with municipalities and 
wastewater authorities, minimum operational procedures will be 
developed as guidance for use by operators of municipal separate 
sanitary sewer systems for identification of sanitary sewer overflows, 
immediate overflow response, proper operation and maintenance, and new 
sewer and service lateral installation.
    (C) REMEDIATION.--
    (i) SYSTEM-SPECIFIC CONTROL PLANS.--If avoidable and repeated 
sanitary sewer overflows occur following implementation of the minimum 
operational procedures as defined pursuant to subparagraph (B), a 
system-specific control plan that establishes priorities for addressing 
these overflows will be developed by the permitted. The control plan 
will be submitted to the permitting authority for approval. The control 
plan shall provide:
    a. SHORT-TERM REMEDIATION.--For short-term remediation of those 
sanitary sewer overflows that pose immediate and significant health 
risks or environmental impacts or which can be addressed without 
conducting a complex analysis of the system, including procedures for 
dry weather operation and maintenance, dry weather capacity, wet 
weather operation and maintenance, wet weather preventative maintenance 
and minor capital improvement, and wet weather capacity and rapid 
solution.
    b. LONG-TERM REMEDIATION.--For any other chronic wet weather or 
avoidable and repeated dry weather sanitary sewer overflow, long-term 
remediation including a combination of activities to remove extraneous 
peak flow sources, improve conveyance capacity, improve treatment plant 
capacity, and provide additional storage.
    (ii) GUIDANCE.--The Administrator shall develop guidance for 
determining the type of short-term or long-term remediation necessary 
based on the relative impacts to public health and environment.
    (iii) WET WEATHER TREATMENT.--Discharges from the sanitary sewer 
collection system via wet weather facilities, at less than the 
equivalent of secondary treatment that meet technology-based standards 
of the Act, shall be authorized as follows:
    a. TEMPORARY MEASURES.--Temporary discharges (which are part of the 
interim measures prior to completion of the long-term control plan) 
from wet weather facilities shall be authorized where they reduce 
health risks by strategically locating discharges to lower risk areas 
in a way that reduces or eliminates the occurrence of overflows to 
sensitive receiving waters, and the occurrence of sewage spills and 
basement backups in other parts of the collection system until other 
steps to rehabilitate the collection system are taken. Where temporary 
discharges from a wet weather facility are approved, either a permit or 
an enforcement order must provide interim milestones for constructing, 
operating, and terminating the discharges.
    b. LONG-TERM FACILITIES.--Authorized discharges from long-term wet 
weather facilities shall be included in a comprehensive remediation 
plan that:
    1. Includes measures to manage peak flow (such as removal of 
sources of peak flows, improved conveyance and treatment plant 
capacity, management of future system deterioration, or additional 
storage). The municipality must also demonstrate that additional peak 
flow reduction measures are not feasible, which may be determined by 
considering the technical limitations of control techniques, financial 
capability of the municipality, and cost effectiveness of the measures;
    2. Demonstrates that wet weather discharges will not interfere with 
the attainment or maintenance of the water quality based requirements 
of the Act
    3. Provides the public with an opportunity to review alternatives 
prior to a decision being made; and
    4. Demonstrates that future system deterioration will be adequately 
addressed.
    (D) JURISDICTIONAL ISSUES.--Where collection systems are connected 
to a publicly owned treatment works but are not operated by the same 
municipal entity or local government that is responsible for treating 
the discharge, a description of acceptable mechanisms, other than NPDES 
permits, which assign responsibilities for proper operation and 
maintenance of those collection systems shall be developed. Such 
mechanisms could include inter-agency or intrajurisdictional 
agreements, permits, local ordinances, or similar enforceable 
instruments. Such an approved operation and maintenance instrument will 
be required to be obtained by the collection system within a specified 
time. If such instrument has not been obtained after sufficient time 
has elapsed, the Administrator shall be authorized to issue a separate 
NPDES permit to the collection system pursuant to Section 402 of the 
Act. In addition, a publicly owned treatment works may also at any time 
petition the Administrator for two separate permits, one for discharges 
from the treatment works and one for discharges from the collection 
system.
    (3) COMPLIANCE DEADLINE.--Notwithstanding any compliance schedule 
under section 301(b), or any permit limitation under subsection 
(b)(l)(B), the Administrator or a State with a program approved under 
subsection (b) may issue a permit pursuant to this section for a 
discharge from a municipal separate sanitary sewer due to stormwater 
inflows or infiltration. The permit shall include at a minimum a 
schedule for compliance with a system-specific control plan under the 
regulations developed under paragraph (1), for a term not to exceed 15 
years, with the exception that a compliance schedule of longer than 15 
years may be granted by either the Administrator or the State (as the 
case may be) if compliance within 15 years is not within the economic 
capability of the owner or operator.
    SECTION 5. MUNICIPAL STORMWATER DISCHARGES Section 402(p) (33 U.S. 
C. 1342(p)) is amended by adding at the following:
    (7) SPECIAL RULES.--
    (A) MAXIMUM EXTENT PRACTICABLE DEFINED.--For the purposes of 
subparagraph (B)(iii), the term maximum extent practicable' means the 
greatest degree of pollutant reduction achievable through the 
application of the best available, technically feasible, cost 
effective, and economically achievable storm water control practices, 
technologies, processes, siting criteria, operating methods, or other 
alternatives that do not require the construction of treatment works. 
This definition applies to any discharges covered under Section (2)(C), 
(2)(D), or (2)(E) of this section or as a result of regulations issued 
pursuant to subsection (6).
    (B) COMPLIANCE WITH CERTAIN REQUIREMENTS.--Implementation of 
stormwater best management practices shall determine compliance with 
the water quality and technology based requirements of the Act. If 
continuing water quality impairments directly associated with municipal 
wet weather discharges continue to occur after the implementation of 
best management practices, adjustments to the plans and practices may 
be required in future permits to further reduce the impacts of these 
discharges. Neither the Administrator nor the State, in the case of a 
State with authority to issue permits under this section, may require, 
in a permit issued for discharges from municipal separate storm sewers, 
compliance with numeric effluent limitations, or fixed numeric 
pollutant load reductions.
    SECTION 6. URBAN WET WEATHER GRANTS PROGRAM]. The Federal Water 
Pollution Control Act (33 U.S. C. 1251 et seq.) Is amended by adding at 
the end of the following new title:
              title vii--urban wet weather grant programs
    SECTION 701. URBAN WET WEATHER WATERSHED DEMONSTRATION PROJECTS.
    (a) IN GENERAL--.The Administrator shall conduct municipal 
demonstration projects relating to the following areas of wet weather 
discharge control:
    (1) WATERSHED MANAGEMENT OF WET WEATHER DISCHARGES.--The management 
of urban wet weather flows, such as combined sewer overflows, sanitary 
sewer overflows, and urban stormwater runoff, on a watershed or 
subwatershed basis.
    (2) STORMWATER BEST MANAGEMENT PRACTICES.--The control of 
pollutants from separate storm sewer systems for the purpose of 
demonstrating and determining controls that are cost-effective in 
reducing such pollutants from urban stormwater runoff.
    (b) ADMINISTRATION.--The Administrator shall afford those 
participating municipalities the maximum flexibility possible to engage 
in innovative practices, including the ability to unify separate wet 
weather control efforts under one coordinated approach. Projects should 
utilize a watershed approach to control the cumulative wet weather 
flows from an urban area.
    (c) FUNDING.--There is authorized to be appropriated to carry out 
this section $1O,000,000 for fiscal year 2000, $15,000,000 for fiscal 
year 2001, and $20,000,000 for fiscal year 2002.
    SECTION 702. WET WEATHER GRANTS. (a) IN GENERAL--.The Administrator 
may make grants to any municipality or local government entity for the 
following:
    (1) WET WEATHER FACILITIES--.Planning, design, construction of 
facilities to intercept, transport, or control flows from separate 
storm sewer systems, combined sewers, and sanitary sewers.
    (2) WET WEATHER MANAGEMENT PRACTICES.--Planning and implementation 
of urban wet weather control measures and management practices.
    (3) URBAN WATERSHED MANAGEMENT PLANS.--Development and 
implementation of urban watershed management plans.
    (b) RECIPIENTS.--The grants may only be awarded to a municipality 
or local government, intermunicipal agency, regional sewer district, or 
interstate agency.
    (c) FEDERAL SHARE.--The Federal share of the cost of activities 
carried out using amounts from a grant made under this section shall be 
at least 55 percent of the cost. The non-Federal share of the cost may 
include, in any amount, public and private funds and in-kind services.
    (d) AUTHORIZED FUNDING.--There is authorized to be appropriated to 
carry out this section $1,000,000,000 for fiscal year 2000, 
$2,000,000,000 for fiscal year 2001, and $3,000,000,000 for fiscal year 
2002. Such sums shall remain available until expended.
    (e) REPORT TO CONGRESS.--On or before January 1, 2002, and once 
every 2 years thereafter, the Administrator shall transmit to Congress 
a report containing recommended funding levels for the 2 fiscal years 
following the date of the report for activities relating to the wet 
weather activities under subsection (a).
                                 ______
                                 
       urban wet weather priorities act of 1999 companion summary
Introduction
    Urban wet weather pollution problems affect every community in the 
Nation. Discharges from urban areas and sewer systems during wet 
weather events which occur in one or a combination of forms including 
combined sewer overflows (CSOs), sanitary sewer overflows (SSOs) or 
urban stormwater runoff. These discharges constitute the most pervasive 
and most costly municipal challenge to achieving the goals of the Clean 
Water Act. The problems are extremely evasive and vary broadly due to 
the intermittent and temporary nature of the storm events that cause 
them.
    In order to respond effectively to these challenges, municipalities 
need and deserve nationally consistent requirements that define clear 
standards of compliance for all programs and the availability of 
sufficient funding sources to pay the enormous cost of remediation. 
Yet, among the different Environmental Protection Agency (EPA) Regions 
and States, the existing regulatory framework for approaching these 
problems is not consistent. And, the gaps between local funding needs 
for infrastructure, required control technology, and available Federal, 
State and local dollars continue to grow exponentially every year, 
jeopardizing hard-fought progress in water quality protection and 
slowing the overall municipal response.
    In the interest of strengthening the Clean Water Act to address the 
highest priority municipal water quality issues, a coalition of 
municipal organizations has developed the Urban Wet Weather Priorities 
Act of 1999, a set of targeted reforms to redirect EPA's wet weather 
programs to ensure greater success. The bill amends the Clean Water Act 
to establish nationally consistent wet weather control standards for 
each of the three major areas of concern--CSOs, SSOs and urban 
stormwater. The bill also calls on EPA to conduct demonstration 
projects on the use of watershed management for wet weather control in 
urban areas and to determine the most cost-effective management 
practices for wet weather flows. Finally, the bill addresses the clean 
water funding gap head on by establishing a new urban wet weather 
grants program. As such, the Urban' Wet Weather Priorities Act of 1999 
addresses the major remaining municipal problems in the Clean Water Act 
today.
    The Urban Wet Weather Priorities Act of 1999 was developed by the 
following coalition of municipal and technical organizations:
    Association of Metropolitan Sewerage Agencies (AMSA) National 
League of Cities (NLC) National Association of Counties (NACo) U.S. 
Conference of Mayors (USCM) American Public Works Association (APWA) 
National Association of Flood and Stormwater Management Agencies 
(NAFSMA) Water Environment Federation (WEE)
   summary of key sections--urban wet weather priorities act of 1999
    Codification of EPA's 1994 CSO Policy (Section 3) The success of 
the U.S. Environmental Protection Agency's (EPA) National Combined 
Sewer Overflow (CSO) Control Policy is threatened by differing 
interpretations among Federal and State regulatory authorities. The 
regulated wastewater community has increasingly experienced a 
reluctance by Federal and State regulatory authorities to acknowledge 
and apply key provisions of the National CSO Control Policy, which was 
negotiated by stakeholders in 1992-93, and signed by EPA in 1994. 
Municipalities have dedicated billions of dollars toward the 
implementation of CSO control projects consistent with the Policy as 
negotiated. The need to formally codify the Policy is paramount.
    The Urban Wet Weather Priorities Act of 1999 amends the Clean Water 
Act to hold all permits, orders and decrees to the control standards 
defined in the Policy. The bill also clarifies that municipalities 
shall be in compliance with the Policy within 15 years, with the 
possibility of applying for extensions based on economic capability.
    Development of National SSO Regulations (Section 4J The lack of a 
national policy to address discharges from sanitary sewer collection 
systems has caused widespread inconsistency in the implementation and 
enforcement of sanitary sewer overflow (SSO) control requirements by 
State water quality programs and the U.S. Environmental Protection 
Agency (EPA). EPA has made efforts to develop a national SSO policy 
through the Federal Advisory Committee Act (FACA) process, but the 
existing Clean Water Act framework severely restricts the Agency from 
crafting solutions with the requisite flexibility. While a 
comprehensive policy and regulatory framework for SSOs is under 
development, State and EPA officials have increasingly focused 
attention on SSO enforcement actions, and are forcing some cities to 
comply with discretionary goals and objectives in lieu of national 
guidance. The Nation's municipalities cannot afford to wait for an 
enforcement action to guide their control efforts--the Clean Water Act 
should be modified now to require EPA to develop a nationally 
consistent SSO control policy.
    The Urban Wet Weather Priorities Act of 1999 requires EPA to 
develop and issue, in consultation with State and local governments and 
wastewater authorities, national regulations which define control 
requirements for municipal SSOs. The national regulations must SSOs 
with the following components:
      establish a comprehensive program to control municipal
      Prohibition of SSOs generally with the exception of 
certain unavoidable overflows; Definition of minimum operational 
procedures for wastewater treatment system operators to identify and 
further minimize SSOs; Requirement to develop and implement system-
specific control plans for short-term and long-term remediation of 
SSOs; Permit certain discharges from approved wet weather facilities; 
Development of mechanisms to assign responsibility for proper operation 
and maintenance to collection systems which are owned and operated by 
jurisdictions outside the service area of the permitted discharge; and 
Establish a 15-year compliance deadline with the possibility to extend 
for economic or other approved reasons.
    The bill requires EPA to issue such regulations within 1 year of 
the date of enactment, but no later than May 29, 2001.
    Clarification of Requirements for Municipal Stormwater Discharges 
(Section 5) In 1987, Congress amended the Clean Water Act to specify a 
new control standard for municipal stormwater discharges. The 1987 
amendments clarified that municipal stormwater permitters are required 
to reduce the discharge of pollutants in urban runoff to the ``maximum 
extent practicable'' using best management practices and control 
technologies. Prior to 1987, all municipal stormwater permits were 
required to meet both the technology-based standards of the Act and any 
more stringent limitations necessary to achieve water quality 
standards, without regard to practicability.
    Congress intended to create a partial exemption from the Act's 
normal permit requirements for municipal stormwater discharges, both in 
terms of the deadlines for issuing permits and in the nature of the 
controls to be required. The use of best management practices and other 
control technologies to gauge compliance, as opposed to numerical 
effluent limits, was chosen because of the impracticalities involved in 
tying inexact pollution control methods and widely fluctuating weather 
variables, outside the municipality's control, to a precise set of 
limits. Because of the unique nature of urban stormwater runoff, which 
varies tremendously in terms of the frequency, magnitude, duration of 
flows and the amount and types of pollutants it contains, EPA has 
attempted to regulate such discharges differently from other point 
sources. Congress recognized that such discharges were ill-suited to 
the traditional end-of-pipe controls that are applied to industrial 
point sources and publicly owned treatment works. Due to the 
intermittent, variable and unpredictable nature of municipal stormwater 
flows, the Agency believed that the problems caused by such discharges 
were better managed through local controls such as the imposition of 
specific management practices to prevent pollutants from entering the 
runoff. The maximum extent practicable standard has been widely 
accepted by municipalities and EPA and State regulators alike as an 
attainable, yet stringent expectation.
    The Federal courts have upheld this interpretation that 
municipalities should be subject to a different standard for compliance 
with the Clean Water Act. Most recently, the Ninth Circuit Court of 
Appeals in Defenders of Wildlife v. Browner (98-71080) found that ``the 
Water Quality Act [of 1987] unambiguously demonstrates that Congress 
did not require municipal storm sewer discharges to comply strictly 
with [water quality standards].'' The court acknowledged that municipal 
stormwater programs are required to demonstrate compliance through the 
imposition of best management practices and other techniques that 
reduce pollutants in stormwater to the ``maximum extent practicable''. 
The significance of this court case cannot be overstated.
    The Urban Wet Weather Priorities Act of 1999 amends the Clean Water 
Act to clarify that the original intent of Congress was to use the 
implementation of best management practices based on the ``maximum 
extent practicable'' standard to determine compliance with the 
municipal stormwater discharge regulations, and not to impose numerical 
discharge standards. For consistency purposes, a new provision is added 
to define the term ``maximum extent practicable''. In addition, the 
bill indicates that if continuing water quality impairments continue to 
occur after the implementation of best management practices, 
adjustments to the plans and practices may be required in future 
permits to further reduce such impacts.
Urban Watershed Demonstration Grants (Section 6)
    Municipalities are spending billions of dollars on wet weather 
controls without the ability to allocate scarce resources in accordance 
with cost-effectiveness and actual watershed impact. A comprehensive 
approach to the management of wet weather discharges on an urban 
watershed basis will result in a systematic, incremental and more cost-
effective achievement of water quality objectives. The Urban Wet 
Weather Priorities Act of 1999 directs EPA to conduct municipal 
demonstration projects relating to:

      The management of urban wet weather flows, such as 
combined sewer overflows, sanitary sewer overflows and urban stormwater 
runoff, on a watershed or subwatershed basis; and
      The determination of stormwater management controls that 
are cost-effective in reducing pollutants from urban stormwater runoff

    The bill authorizes $45 million over the next 3 years for the 
purposes of implementing the demonstration projects. The bill also 
specifies that EPA should allow those municipalities participating in 
the projects to engage in innovative practices, including the ability 
to unify separate wet weather control efforts under one coordinated 
approach and to utilize a watershed approach to control the cumulative 
wet weather flows from an urban area.
    Urban Wet Weather Grants Program (Section 6J Municipalities alone 
cannot keep up with skyrocketing infrastructure costs for clean water, 
not to mention the price tag for controlling wet weather discharges. A 
recent report released by AMSA and WEF, The Cost of Clean, documents 
that municipal clean water infrastructure needs over the next 20 years 
are at $330 billion. EPA puts the figure at $332 billion. It is 
estimated that at least $150 billion of the overall need is attributed 
to the cost to control CSOs, SSOs and stormwater discharges. To make 
matters worse, EPA recently found that unmet capital needs have risen 
to an astonishing $6 billion per year. In addition, the only consistent 
Federal funding source for clean water projects, the Clean Water State 
Revolving Fund (SRF), has been targeted for reduction by the 
Administration--EPA proposes a 40 percent cut (i.e., $550 million) in 
the SRF for the fiscal year 2000 budget. Clearly, the capital needs 
associated with CSOs, SSOs, stormwater and nonpoint source control now 
command and deserve our attention. A wet weather watershed grants 
program should be made available to municipalities to fund planning, 
design and construction of facilities or implementation of management 
measures to control wet weather discharges.
    The Urban Wet Weather Priorities Act of 1999 establishes a new 
grants program to help fund various municipal wet weather control 
efforts, including:

      Planning, design, construction of facilities to 
intercept, transport, or control flows from separate storm sewer 
systems, combined sewers and sanitary sewers;
      Planning and implementation of urban wet weather control 
measures and management practices; and Development and implementation 
of urban watershed management plans.

    The bill authorizes grant funding in an amount equal to 
$1,000,000,000 for fiscal year 2000, $2,000,000,000 for fiscal year 
2001, and $3,000,000,000 for fiscal year 2002. Following the fiscal 
year 2002 allocation, EPA is required to report to Congress every 2 
years on the recommended funding levels for the following 2 years. The 
grants may only be awarded to a municipality or local government, 
intermunicipal agency, regional sewer district, or interstate agency. 
The Federal share shall be at least 55 percent of the cost.
    Please feel free to contact Ken Kirk, Executive Director of the 
Association of Metropolitan Sewerage Agencies (AMSA) at 202/833-4653 if 
you should have questions concerning this summary or any aspects of the 
Urban Wet Weather Priorities Act of 1999.
What Control? What Partnership? The Reality about the Combined Sewer 
        Overflow and Partnership Act of 1999
    In February 1999 Representative Barcia of Michigan introduced H.R. 
828, the Combined Sewer Overflow Control and Partnership Act of 1999 
(CSOCPA). The bill, which has 34 'co-sponsors was drafted by the CSO 
Partnership, a consortium of cities, with combined sewer systems A very 
similar bill, S. 914, was introduced in the Senate in April by Sen. 
Smith of New Hampshire, with eight co-sponsors (Sees. Snowe, Warner, 
Voinovich, Collins, Abraham, Robb, Hagel and Lugar). While the House 
bill tackles an important and difficult environmental issue. it has 
many highly objectionable provisions. The Senate bill, while somewhat 
less problematic, is similarly flawed. We urge members to oppose the 
legislation.
The Problem of Combined Sewer Overflows'(CSOs)
    Combined sewers carry both domestic 'sanitary' sewage and 
industrial wastes, as well as runoff from city streets. In dry weather, 
combined systems generally carry sewage wastes to wastewater treatment 
plants. But when it rains, these systems become overloaded and 
overflow, with no treatment, directly into nearby waterways. CSO 
discharges contain raw sewage, floatable garbage. industrial waste, oil 
and grease pollution from autos and trucks, and many other pollutants. 
They are a principal cause of shellfish bed closures, beach advisories, 
odor and other aesthetic problems in many cities with combined sewer 
systems.
    Combined sewers exist in approximately 1,000 communities, most in 
the Northeast, Midwest and Northwest (older cities), and many with 
populations under 10,000. EPA estimates the cost to address their 
pollution impacts is about $44.7 billion over 20 years. CSOs can be 
difficult to control because rainwater runoff introduces huge volumes 
of polluted water into combined sewer systems. Community solutions to 
the problem may include separation of storm and 'sanitary' sewers, 
construction of holding tarns, expansion of sewage treatment plant 
capacity, or other means to provide high rate treatment to the 
overflows. Solutions often also include repair of old, leaky sewer 
pipes and better maintenance of existing systems.
The CSO Policy of April 1994
    Because so little progress was made on CSO discharges in the 1970's 
and 1980's, a negotiated solution was sought by EPA. The result was the 
CSO Policy, signed in April 1994. The environmental community supports 
that policy. It provides that all systems should implement ``nine 
minimum controls (NMC),'' which are control steps that do not require 
extensive engineering (maximizing use of the existing sewer system's 
capacity, eliminating dry weather overflows, proper operation and 
maintenance, etc.) by January l, 1997. It also requires systems to 
develop long term control plans (to take not more than 15 years) to 
attain water quality standards (WQS). Meeting WQS assures that waters 
are safe for fishing and swimming. Where meeting WQS is simply 
impossible, the CSO policy leaves room for WQS to be adjusted at the 
same time that CSO cleanup plans are written.
    Despite the adoption of the CSO Policy, progress has still been 
slow. According to a recent memo issued by EPA, only 52 percent of CSO 
communities are implementing the NMC, despite the January 1997 
deadline. Only 33 percent are implementing long term control plans. The 
States have been slow to impose enforceable obligations on CSO 
communities: approximately 23 percent are under no enforceable 
obligation to implement the NMC and almost 50 percent lack enforceable 
obligations for a long term plan.
    In communities where progress has been made, often it is because 
enforcement action has been taken by either a State agency, a citizen 
organization or the Federal Government. Unfortunately, the CSOCPA would 
undermine the progress that these suits have spurred by overriding the 
deadlines contained in judicially approved consent decrees.
What the CSOCPA Bills Would Do
    The bills have the following provisions:

    1. Require all permits, orders and decrees to follow the CSO 
Policy;
    2. Authorize compliance schedules of virtually any length so long 
as the community is making ``reasonable further progress'' (which is 
undefined) and either compliance within 15 years '`is not within the 
economic capacity'' of the community or delay ``is otherwise 
appropriate'' (also not defined or limited);
    3. Allow any community unilaterally to extend the timeframes 
established in existing consent decrees or judicial decrees using the 
same vague standards as in section 2 (this is called a ``savings 
clause'' although it does the opposite) (note: this provision is not in 
the Senate bill);
    4. Prohibit States from requiring a city to comply with WQS or long 
term CSO plans unless the State has completed a WQS review and adopted 
``any refinements needed to reflect site-specific wet weather impacts'' 
of CSOs (note: this provision is not in the Senate bill); and
    5. Authorize Federal grants for CSO controls, with at most a 45 
percent non-Federal cost share, and authorizes $2.25 billion over the 
next 3 years.
Our Major Problems with the Bill
    1. This is a recipe for delay. While we agree that States need to 
be more active in reviewing their WQS, this bill takes a ``you-first'' 
approach that simply delays CSO planning and progress until the States 
have completed their WQS review. It provides no incentive or mandate 
for the States to revise WQS. This is an open invitation to delay WQS 
reviews and thus delay cleanup of CSOs. Even if the States were to 
start WQS review now, the process often takes years. In the meantime, 
little progress would be made on one of the most significant causes of 
water pollution.
    2. There are no deadlines. While the bill is phrased to look as if 
it supports the 15 year timeframe offered in the CSO Policy, it 
actually allows unlimited exceptions for almost any reason. It allows 
municipalities to re-open fully negotiated administrative or judicial 
decrees whether or not the additional time is really needed. (If the 
time really is needed, or if the original decree contained unrealistic 
schedules as many claim, a municipality can re-open its decree even 
without this provision.)
    3. It isolates WQS review from CSO planning. The CSO Policy, which 
the bill claims to support, encouraged WQS review and CSO planning at 
the same time. This makes sense because one cannot decide that certain 
uses (e.g., swimming during rain storms) are unattainable without the 
full review of available technologies, costs, and needs that is 
conducted during long term CSO planning.
    4. This is an invitation to litigation. The bill contains lots of 
vague terms and will almost certainly invite communities to litigate 
CSO obligations with the States. The result: more wasted money and 
time.
    5. Where will the money come from? If a CSO bill revives the 
Federal sewage treatment grants program by up to $1 billion/year, as 
the bills do--and does so separately from an overall Clean Water Act 
reauthorization package--there is a real danger that the money for such 
a grants program will come at the expense of adequate funding for the 
CWA's State Revolving Loan Fund from which the States finance their 
entire array of sewage and stormwater treatment needs (including CSOs). 
The net result would be to limit States' flexibility to fund their 
highest overall wastewater priorities.
Conclusion
    The heart of these bills for the CSO Partnership is delay and the 
undermining of existing CSO agreements. While we would welcome 
increased Federal grants and loans to address costly CSO problems, we 
cannot support legislation that will result in slower rather than 
faster cleanup of water pollution problems. 

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