    [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 mcharles@asce.org.

      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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