Will Congress restore deep cuts to the federal wastewater loan program? Where will the $200 billion to repair local infrastructure come from? Should stormwater "blending" be permitted to ease the burden on aging wastewater systems? Ken Kirk, executive director of the National Association of Clean Water Agencies, and Nancy Stoner, clean water director for the Natural Resources Defense Council, join OnPoint to discuss these and other clean water budget and environmental questions.
Darren Samuelsohn: Hello and welcome to OnPoint. I'm Darren Samuelsohn. Joining us today in the E&ETV studios in Washington is Ken Kirk, the head of the National Association of Clean Water Agencies, and Nancy Stoner, the head of the Natural Resources Defense Council's Clean Water Project. Thank you both for being here.
Nancy Stoner: Thank you.
Ken Kirk: Thank you.
Darren Samuelsohn: Right now water is a very hot topic on the Hill. Right now we have the EPA spending bill going to the House floor this week. One of the biggest pieces to the EPA spending bill is the Clean Water State Revolving Loan Fund. Can you to just start off explaining what is the Clean Water State Revolving Loan Fund? Nancy?
Nancy Stoner: Yes, it's America's clean water fund. It's the principle source of funding from the federal government to local communities to deal with their water quality needs, whether it's sewage treatment, storm water or agriculture runoff. It's a very popular program and unfortunately it's taken a very significant hit in the president's budget and that has not yet been restored by the House.
Darren Samuelsohn: Let's slowdown and kind of work through this. Ken when did it start and what's the original, I guess, intent from your perspective?
Ken Kirk: Well I think to answer that question you have to go back to the beginning of the passage of PL 92500 in 1972 the original --
Darren Samuelsohn: Clean Water Act?
Ken Kirk: Clean Water Act, which committed the federal government to a massive funding effort to clean up the nation's waters. Over that period of time from 1972 to 1997, the government committed over $60 billion in grant funds to help communities meet the ambitious requirements of the Clean Water Law. It was only in 1987 that they moved from grants to this State Revolving Loan Program, which has been in existence since 1987 and which is the only remnant that we have of, for funding for local community projects, a very important one at that.
Darren Samuelsohn: How does this revolving process work? The Congress appropriates money, the EPA spends money, but then how does it actually turn into funding infrastructure-wise on the ground?
Ken Kirk: Congress appropriates funds for the program. Those funds are allocated to the states based on a formula and those states then invest those funds in the program. They make loans to communities and those communities, over a period of 20 years, are required to repay those loans at a lower interest rate than what they would normally have to repay, you know, at a bank or through the bond market.
Darren Samuelsohn: Bigger states, more population gets more money than smaller states?
Ken Kirk: Right and there's always an incentive to invest those funds and ensure that there are more funds available than were appropriated by Congress.
Darren Samuelsohn: OK and coming to where we are today, and Nancy you started off by mentioning this, the Bush administration proposed a cut to the Clean Water State Revolving Loan Fund this year from what Congress proposed last year. Can you give us a sense, how dramatic of a cut are we talking about? It's about $250, $300 million is what the administration proposed?
Nancy Stoner: Well, to go back two years, it was $1.35 billion. Last year Congress appropriated $1.1 billion. The president's budget had $730 million. The House has restored that to $850 million, but this is a very serious cut, about 40 percent over the past two years and this is to a very popular program. If you talk to people on the Hill, they say, "This is a great program and we would like to have more money in it." They need to get more money in it, but it's very hard to figure out where it's going to come from this year.
Darren Samuelsohn: Can you actually then just take it a next step and say, you know, this city is going to get less money because of this $250 million cut?
Nancy Stoner: Absolutely. Last year a coalition of groups put together a report called "All Dried Up." Ken's group and my group both worked on it with a number of state counterparts, labor unions and so forth. We have got some information to do an update on that. We can actually identify how much money every state is losing and what types of projects are waiting to be funded and let me tell you there are some very important projects that are waiting to get money there and they're going to be short if Congress doesn't restore that money this year.
Darren Samuelsohn: This is the thing that, I guess, most is talked about when we're talking about the EPA budget because it's such a light piece of the EPA budget, but the action or the response from the Republicans who wrote the bill and the budget writers is these are tight fiscal times and this is something that the administration has been saying as they proposed cutting this. Do you believe that they have a good point to make in terms of the whole federal budget is squeezed right now and so maybe we can't be spending these 200, $300 million here and there for a project like this, for programs like this? Ken?
Ken Kirk: This has been makings of a clean water disaster.
Darren Samuelsohn: Yeah.
Ken Kirk: What it does is send a signal to our communities, our taxpayers, the American public that clean water is no longer a national issue. It has always been a national issue. It has always been given the highest priority. This administration has decided to basically zero this program out in the face of the fact that all the evidence suggests that unless we commit more funding for these programs over the next 20 years we are going to revert to a level of water quality that we haven't experienced since 1972.
Darren Samuelsohn: OK. Let's --
Ken Kirk: It's a simple as that.
Darren Samuelsohn: Let's look at where we are with this particular cycle in the appropriations process. I think in past years the Senate has increased funding over what the House had originally written in their bill. What do you think the chances are this year, Ken, that the Senate is actually going to probably increase this level back up to what it was last year or what it was two or three years ago?
Ken Kirk: I don't know the answer to that, but I don't think the prospects are very good.
Darren Samuelsohn: Yeah.
Nancy Stoner: I agree. It looks very tough this year and I just want to add to what Ken said is that the needs are growing. You know the population is growing. The sewer lines are growing. The plants are aging. The collection systems are aging. We've got huge storm water problems that are growing across the country. You know, it's not just that we have less money, we have less money and more needs. So I agree with him completely that if we continue on the path we're on it's going to be a very serious problem for the nation and the projections from EPA that he's referring to are the ones that tell us we're going to be back to 1968 levels of pollution if we don't do something about it.
Darren Samuelsohn: One of the explanations or one of the things that's been talked about recently, in terms of how the EPA spending bill this year is moving along. It's different, because now EPA's spending bill is part of a different spending bill. It's part of the environmental spending bill and it has the Forest Service and the Department of Interior folded together. And people had concerns, I think you might have raised these concerns before that EPA now would be competing for funds with other government, you know other environmental programs. Do you want to see an increase in the Clean Water State Revolving Loan Fund if it meant a cut to something else in the environmental world where one of your colleagues might get very upset?
Nancy Stoner: Well, it depends on what it's a cut to. I mean there are some programs in the Interior bill, in particular, like subsidizing of road building to cut trees in the Tongass, that we'd love to see --
Darren Samuelsohn: You'd love to see the offset there.
Nancy Stoner: Offset, yes, and so putting together enough of those programs is hard, but it might be possible to do that and we certainly would like to see people try to find the money from programs that are not achieving the environmental or natural resources gains and putting them in this program which is proving to provide results.
Darren Samuelsohn: Ken, do you have any thoughts on this new budget paradigm-free EPA where you are competing for funds with other --
Ken Kirk: I think we've all been placed in uncharted waters and we're trying to work our way through. It creates different challenges than we've had in the past, but I don't think they're going to get any easier.
Darren Samuelsohn: OK. Let's look a little bit at long term as you guys are alluding to with the water infrastructure needs of the country and there's been a well documented gap in terms of how much money is needed over the course of time. Can you give us a sense, what is this gap there we're hearing so much about and we've heard so much about for a number of years? Ken?
Ken Kirk: I think the gap refers to the difference between the amount of money that local government and local ratepayers currently spend on capital projects for water and wastewater and what they need to spend. And that gap has been estimated anywhere from 300, 400, $500 billion over 20 years. So we're talking a significant amount of money that needs to be committed to keep pace and to make further progress in our clean water objectives.
Darren Samuelsohn: I've seen that number go all the way up to like $1 trillion. Why the disparity from $300 billion to $1 trillion? That's a huge gap. Do you have any sense why is it so wide right now?
Ken Kirk: I think it depends on who's doing the study and analysis and the criteria that they're using. I think the $1 trillion figure that you allude to refers to the WIN report which, that $1 trillion included both capital costs and operations and maintenance costs.
Darren Samuelsohn: The WIN report --
Ken Kirk: Those costs typically are borne by local governments anyway, 100 percent and nobody is saying or suggesting that they should be borne by the federal government. So we're really talking about a difference in the level of the gap between say $300 billion and $500 billion. Whatever it is, that's a lot of money.
Darren Samuelsohn: It is quite a bit of money. You mentioned the WIN report, that's short for the Water Infrastructure Network. Explain what that is and then that was formed what, like five years ago, four years ago, and where are they now as a coalition?
Ken Kirk: WIN was formed about five years ago to bring attention to the need for additional federal funding. It's a group of about 45, 50 organizations representing the wide range of stakeholder groups involved in clean water. All of them are committed to clean water. We focused attention first on the need, we then focused attention on how best to address that need and pretty much we've come up with a proposal that would establish a trust fund for water as there are trust funds for the highway program and airports.
Darren Samuelsohn: Nancy, this has always fascinated me that the environmental community was associated with the sewage industry or the wastewater municipalities around the country and are working together on trying to get funding over the course of time. Can you give me some sense why are environmentalists teamed up with such a broad array of people on this issue?
Nancy Stoner: Well, because we have common ground. We have common interests and I think our challenge is actually to get everyone who's interested in clean water to be working together toward this priority. I don't have any difficult working with the sewer operators on it. We have public health officials, labor working with us. We need to have a very robust coalition, including business interests that depend on clean water, state entities, local entities. That's the way we're going to succeed, is by working together and building the political support. This is a heavy lift. I mean we do have a highway trust fund, but there are not a lot of trust funds out there and to get away from having to do this annual appropriations battle, which as we were saying, is very tough, we need to have a dedicated source of funding that communities can rely on and know that they can count on having that money for their clean water needs.
Darren Samuelsohn: In another trust fund that's out there, the leaking underground storage trust fund, you have money that's been going in, I think, for about six years from gasoline taxes, but there's a constant appropriations fight though about getting that money freed up and out to communities. I know the appropriators try and, some of the appropriators want to make more money available. I mean, isn't there a concern though if you can establish a trust fund that you can actually then get the funds appropriated out of it?
Nancy Stoner: Well, we certainly would want to make sure that we don't have to go through the appropriations battle every year. We want to have a dedicated trust fund where it's clear where that money is going and that it's not being appropriated for some other use.
Darren Samuelsohn: OK. Ken?
Ken Kirk: I agree wholeheartedly. I can sit here and tell you, Darren, all the reasons that people have raised to oppose a trust fund, but I will tell you this, unless we move forward, unless we address those issues, unless we work with Congress to develop a piece of legislation and start moving it forward, we are indeed going to go backwards, there's no question about it.
Darren Samuelsohn: Congress showed some interest in this about three years ago and they tried to move a bill through the House and it got hung up over labor issues. Davis-Bacon, whether or not the funding would be going to labor, would labor laws be applied. Is that still an issue in this debate or is that kind of three years old and we're far beyond that today?
Ken Kirk: Davis-Bacon is always going to be an issue when you're talking about the allocation of federal resources, but I would note, you know, when it comes to something like the highway program, the Davis-Bacon issue goes away.
Darren Samuelsohn: OK.
Nancy Stoner: I think we can work it out. This issue came up in the Clean Water SRF reauthorization, a reauthorization for the state revolving fund, and they've been able to work it out in other contexts and I think we can work it out here.
Darren Samuelsohn: OK. Is legislation something that you think is going to move in the 109th Congress? I mean I haven't really seen any momentum or action or move for markups really since, I guess it was like 2003. Any sense that there's momentum now?
Ken Kirk: We're in the process of developing a piece of legislation. We're putting the final touches on what we believe might be appropriate funding sources, a range of sources, and we are planning to bring that forward within the next few weeks and start pushing for this legislation to move through Congress. Is it going to go through in the 109th Congress? No. Is it going to go through the 110th? No, but we have to start somewhere and we're planning on keeping the fire lit under this issue until the job gets done.
Darren Samuelsohn: I'm going to keep hounding on the funding big picture issue for a second. The administration, at this point, continues to say that we just don't have the funds available for something this large. I mean that was an initiative that the administration made back two or three years ago when authorization legislation was moving through. I mean do you think that we need a new administration probably in a different sort of time period in terms of budgets when we're away from these big federal deficits to really embark on what you're calling for?
Ken Kirk: I'm not going to comment on whether we need a new administration, but I will comment on the fact and I will reiterate the fact that we do need to identify a funding source that is long term and sustainable. And we're not talking about robbing Peter to pay Paul. We're talking about identifying a funding source that's fair, that's equitable and that can be applied across the board to reach as many Americans as possible.
Darren Samuelsohn: OK.
Ken Kirk: Everybody has a stake in this issue, and everybody ought to pay for it.
Nancy Stoner: I actually think that what we need is to have this moved up in the priority. The public is very supportive of this. There have been several polls that have taken the pulse of public on this. Not only do they support clean water generally, they support a trust fund overwhelmingly and they say that they're willing to pay for it. And I think what we need to do is just to move the issue forward by building a coalition, by getting a bill that is introduced that we can all support and work for and educating the public and the policymakers about what this bill will accomplish for American public and why it's politically popular for them to move it forward. If we succeed in that it will move.
Darren Samuelsohn: Let's quickly just turn to another subject it's going to be coming up during the House appropriations debate on the floor for the U.S. EPA spending bill. We're hearing rumors and Congressman Bart Stupak has confirmed that he wants to bring an amendment up dealing with EPA's blending policy from 2003, the proposal. Nancy, can you give us a quick sense, what EPA's blending policy and why does Congressman Stupak want to intervene?
Nancy Stoner: First of all I believe it's Congressman Stupak and Congressman Shaw who are working together on this, considering offering an amendment next week on the topic. The reason that they're engaged is because EPA has a very bad proposed policy that would backtrack from existing requirements that require full sewage treatment under routine operating conditions. Essentially it's a presumption for full treatment to protect the public, to protect the environment, to protect coastal economies from the adverse effects of sewage pollution which include beach closures, contaminated shellfish beds, contaminated drinking water sources. Those kinds of problems are caused by the contaminants in sewage and if sewage is not effectively treated we can expect to see some very adverse consequences. So they are moving forward to say EPA cannot spend money to finalize this proposed policy. That's what I understand that they have in mind.
Darren Samuelsohn: And they have Congressman Stupak on their side, I'm sorry, Congressman Shaw as you mentioned before, on their side and some other Republicans. I'm noticing Katherine Harris' name on the list. There was like 150, 160 members. Do they have enough to actually get, to pass their amendment do you think?
Nancy Stoner: Well, I think time will tell on that. We'll find out next week, but there has been strong bipartisan support from a broad political spectrum of representatives who are very interested in clean water and protecting their communities. And I think it's a popular, it's going to be a popular amendment. I think it stands a very good chance and it's because it's such a misguided policy. Even EPA's water chief was recently quoted saying that sewage needed to be treated, dilution was not sufficient and that this policy, which they referred to as blending, is not the solution. Well, I agree with them. It's not the solution, and we need to keep the incentives where they have been for the past several decades to ensure that communities invest in effective sewage treatment.
Darren Samuelsohn: Ken, I know that there is more than one perspective on this. Really quick, just to sum up, I mean, you're on EPA's side on this issue? Is that right?
Ken Kirk: We are on our side.
Darren Samuelsohn: OK.
Ken Kirk: On this issue. This issue goes back to the '70s and '80s. A lot of facilities were funded with federal dollars to blend in the '70s and '80s and this was in the face of the secondary treatment regulations, which do not prohibit blending, the bypass rule which does not prohibit blending and on and on. So we've gone 30 years with this practice which is designed to enhance the treatment of wastewater going through the system without impacting the environment. The policy is intended to provide clarity and consistency across the country because now we have a situation where there are states, many states, and many regions that allow the practice of blending and some that don't. The whole purpose is to try to ensure that there is clarity, to ensure that they're in permits, to ensure that storage is maximized, to ensure that there is monitoring and we're very much in favor of that. So it lists six or seven criteria that need to be followed. Now, I think Nancy's absolutely right the EPA has indicated very clearly that they're not going to move forward with this policy for whatever reason. Why then do we need an amendment on the floor of the Congress is the question. I mean this is a policy that Mr. Grumbles has indicated he's not happy with. We have reached out to Nancy's organizations and others in an effort to work with EPA and the Congress to try to resolve this issue because it's not going to go away.
Darren Samuelsohn: Yeah.
Ken Kirk: One of the potential ramifications without blending is that you are going to have raw sewage going into the waters, contaminating water quality.
Darren Samuelsohn: We're going to have to leave it at that. I'm sorry we've run out of time, but thank you both very much for being here. Until next time I'm Darren Samuelsohn for OnPoint.
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