Senate Environment and Public Works Committee
The Water Investment Act of 2002
Jim Barron, Ronkin Construction
The National Utility Contractors Association (NUCA) is a family of more than 2,000 companies from across the nation that build, repair, and maintain water, wastewater, gas, electric, and telecommunications systems, and manufacture and supply necessary materials and services.
Every day utility contractors witness the atrocious conditions of America’s failing wastewater infrastructure facilities that threaten our public health and the environment. These conditions grow worse as federal funding for clean water projects continues to be woefully inadequate. On the job, utility contractors see firsthand the benefits of the federal water programs like the Clean Water State Revolving Fund (SRF), an extremely effective financing program that provides the capital resources to build and rehabilitate this infrastructure.
NUCA supports the Water Investment Act of 2002 (S 1961), which would increase resources provided to the Clean Water SRF and Drinking Water SRF programs that would boost state’s efforts to address the looming crisis facing America’s water and wastewater infrastructure. We applaud the Senate Environment and Public Works Committee for holding today’s hearing, and we hope to see quick action on this important legislation.
Last year, the American Society of Civil Engineers awarded the nation’s wastewater and drinking water categories “D” grades in their annual Report Card on America’s Infrastructure. Aging wastewater systems are failing in every state. Each year, 400,000 homeowners find sewage backing up in their basements. Another 40,000 municipal sanitary sewers overflow into the nation’s streets, waterways, and beaches, dumping potentially deadly pathogens.
It is difficult to describe the appalling state of clean water infrastructure as utility contractors see it in the trenches, building and repairing America’s unglamorous but vital water infrastructure system. What is out of sight and out of mind to most people is clearly visible to utility contractors on a daily basis. In our work, it is not uncommon to find dilapidated pipes with gaping holes spilling raw sewage into the surrounding ground in residential neighborhoods. This leakage can go undetected for months, even years in some cases. To make matters worse, these conditions are often within yards of waterways where we fish, beaches where we swim, and playgrounds where our children play.
The U.S. Environmental Protection Agency’s 1996 Clean Water Needs Survey Report to Congress placed a $139.5 billion price tag for 20-year capital investment needs for publicly owned wastewater treatment facilities. By March of 1999, an EPA Needs Gap Study found that sanitary sewer overflow needs in the 1996 study were grossly underestimated. Originally estimated at a total $10.3 billion, sanitary sewer overflow needs are today estimated at $81.9 billion, bringing the total national wastewater infrastructure needs to more than $200 billion. Neither the $139.5 billion nor the $200 billion EPA estimate reflects replacement costs. EPA now indicates that the current needs for water and wastewater infrastructure could exceed $500 billion.
Independent studies report a $23 billion gap in federal investment, and there are groups that claim that the current water and wastewater needs are approaching $1 trillion over the next 20 years. However, NUCA believes that whether the needs are $200 billion or $1 trillion is not the key issue when recognizing the current federal contribution to remedy this situation is continually less than 1 percent of the lowest needs estimate. The priority should be to provide increased resources immediately to begin closing this spending gap.
The Clean Water State Revolving Fund (SRF) program is a pragmatic and cost-effective program that provides states with vital financial resources to address their wastewater infrastructure needs. It has been hailed as the most successful federally sponsored infrastructure financing program in history. The SRF program plays a key role in enhancing public health and safety, protecting the environment, and maintaining a strong economic base. It increases labor productivity, creates jobs, rehabilitates old neighborhoods, restores brownfields properties, and ensures the availability of recreational use of our waterways and shorelines.
Congress annually capitalizes each state’s revolving fund programs, and loans are made to local communities to be paid back over time, at a low interest rate. The money paid back to the fund “revolves,” and is available to loan out to other communities, thus sustaining the money for future projects.
Besides serving as the key mechanism to finance water infrastructure installation and rehabilitation projects, the SRF creates scores of jobs for American workers. Up to 55,000 jobs are created with every $1 billion of federal capitalization in the Clean Water SRF program. Recent research conducted by the Association of State and Interstate Water Pollution Control Administrators suggests that several billion dollars of federal resources for Clean Water projects could put hundreds of thousands of Americans to work in the near future. This work will have a ripple effect, multiplying project funding through the economy. Rehabilitation of key infrastructure brings revitalized communities and opportunities for future business and investment. Thus, increasing SRF funding will provide economic stimulus in the short term as well as the long term at a time when America needs all the jobs it can get.
For the past several years, NUCA has worked with Senator George Voinovich (R-Ohio) to gain support for the Clean Water Infrastructure Financing Act (S 252), which would reauthorize the Clean Water SRF at $3 billion per year for five years. Similar legislation in the House (HR 668) gained the bipartisan support of more than 100 cosponsors from over 30 states. NUCA is very pleased that the EPW Committee has incorporated all key components of the Voinovich bill into S 1961, which will authorize $20 billion to the Clean Water SRF program over five years and $15 billion to the Drinking Water SRF program over the same period for a total of $35 billion toward refurbishing our water and wastewater infrastructure. NUCA applauds the Senate EPW Committee for incorporating the fundamental elements of S 252 into the Water Investment Act of 2002.
In addition to the substantial funding increases authorized for water and wastewater infrastructure projects, S 1961 would modernize the Clean Water SRF to ensure that funds better address state needs, expand the eligibility for SRF projects, streamline state programs to maximize use of federal funds, and provide for additional assistance to disadvantaged communities.
The committee’s comprehensive legislation would increase the SRFs’ operational effectiveness by allowing states to operate their Drinking Water and Clean Water SRF programs in a more similar fashion. Water and wastewater infrastructure management is, and should continue to be, a state function. Federal resources should be allocated to assist the states without getting in the way of SRF program managers who know the best ways to operate their unique systems.
While NUCA fully supports the intent of this legislation, NUCA is concerned with certain parts of the “community development” provision in Sec. 103 of Title I. While coordination and consultation with land use officials is appropriate, we are concerned that requiring substantial coordination may obstruct and delay the progress of many necessary water and wastewater installation and rehabilitation projects.
NUCA is in full support of the concept of quality growth. NUCA is a member of the Quality Growth Coalition, and participated in the development of “Building Better Communities: Quality Growth Toolkit,” a document designed to help citizens, civic leaders, and elected officials identify effective, common-sense solutions to traffic congestion, overcrowding in schools, and management issues regarding future development. NUCA believes that maintaining communications with state and local land use officials is beneficial in any infrastructure rehabilitation program to ensure consideration of the concerns and perspectives of local communities. However, contrary to the opinions of certain environmental organizations, water and wastewater treatment work is not a catalyst for what is known as “sprawl.” These projects are fundamental to ensure the safety and viability of these communities. NUCA suggests the committee clarify the “community development” provision in Sec. 103 to require “coordination and consultation” and not approval of water projects by land use officials.
Another concern NUCA has pertains to the assumption that only five more years of federal investment will eliminate the need for future funding. The SRF originated as a way of moving away from costly and politicized construction grants. The objective was to build the SRF over time until it reached self-sustainability. The plan for this investment was to help service providers to gain solid financial footing, after which fees would be sufficient to cover costs. However, this has not come to pass, and current conditions indicate that the objective of financial self-sufficiency is far from a reality. This is especially true when recognizing that needs estimates nationwide are skyrocketing. NUCA commends the EPW Committee for it’s commitment to increasing funding to address this environmental problem, but we believe some form of federal financial support will be essential in the future to ensure the availability of safe and clean water.
For the past several years, the main issue that has prevented some members of Congress from co-sponsoring SRF reauthorization legislation was the application of prevailing wage requirements under the Davis-Bacon Act, which requires that local prevailing wages be paid on all federal construction projects valued over $2,000. While collective bargaining and wage determination are important aspects of the construction bidding process, the issue of Davis-Bacon coverage should not delay or block legislation that will increase the resources that fund clean water projects.
NUCA supported the Voinovich legislation (S 252), which would have restored Davis-Bacon coverage for the first round of Clean Water SRF funding, leaving coverage of subsequent rounds to the discretion of the states. This was the way Davis-Bacon applied to the SRF before authorization expired in 1994. S. 252 would have restored Davis-Bacon provisions, but would have limited them to the first round of funding. NUCA believes that this was a middle of the road solution that many members on both sides could agree on, and it seemed like the only compromise that could move the bill forward.
Opponents of the Davis-Bacon Act argue that the Depression-era law is no longer relevant in today’s construction market. They say Davis-Bacon requirements force employers to pay higher wages for specific crafts, regardless of the workers’ skill level in that craft, which can lead to reductions in productivity and inflated costs. Some say the requirements can also hurt small businesses that can’t keep up with the complex work rules on federal projects. Opponents generally believe the free market and competition should determine wages, not the federal government.
Advocates of Davis-Bacon believe the requirements provide a level playing field, and ensures fairness to workers on federal construction projects. They maintain that Davis-Bacon requirements provide for community standards for workers, and avoid pay discrimination based on religion, sex, race, etc.
Since Clean Water SRF authorization lapsed in 1994, federal Davis-Bacon requirements have not accompanied appropriations to the SRF program. In June of 2000, EPA issued a settlement agreement with the AFL-CIO’s Building and Construction Trades Division (Building Trades), agreeing to restore Davis-Bacon requirements in the same manner as they were applied to SRF projects before the program’s authorization expired in 1994. This would apply Davis-Bacon to the first round of federal funding, leaving subsequent rounds to states’ discretion. The Building Trades argued that Davis-Bacon requirements should have applied to SRF projects as federal money was appropriated to the SRF program. Although EPA previously ruled that Davis-Bacon requirements did not apply to SRF projects after reauthorization expired, EPA later announced that prevailing wage rate requirements should continue to apply regardless of reauthorization. The agreement was to begin in January 2001, but the Bush Administration has suspended the implementation of the settlement’s provisions, which have been under review ever since.
Thirty-one states have Davis-Bacon coverage at the state level. It seems to us that federal Davis-Bacon coverage should only be an issue for the 19 “right-to-work” states that do not cover Davis-Bacon at the state level. Many of NUCA’s construction company members, union and open shop, will tell you that the current construction industry labor shortage, across-the-board drug testing, and technical know-how warrant employers to pay higher wages regardless of Davis-Bacon requirements. If construction companies want the workers, they must pay prevailing wages, or more in some cases. This is dictated by the free-market, not by federal or state requirements. Others will tell you that Davis-Bacon stabilizes the construction market by making wage determination easier during the bidding process. Rather than haggle over wage rates for different job functions, employers simply pay the prevailing wage.
The bottom line is that only time and extensive debate will resolve the Davis-Bacon issue, and time is something that we cannot afford when it comes to the problem with our wastewater and drinking water infrastructure. While our nation’s elected officials argue about wage determination, our nations infrastructure deteriorates and the infrastructure crisis continues to grow.
Over the years, the 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 raw sewage into underground aquifers daily.
A few years ago, Congress passed the Transportation Equity Act for the 21st Century, or TEA-21. The legislation provided a blueprint for development and maintenance of America’s highways and roads. TEA-21 has paid off, and Congress is to be commended for its investment in the nation’s roadways. Now it’s time to focus on what is underneath the roads. The underground water infrastructure is literally falling apart as we speak.
The math is simple. The past several years have shown a decline in federal investment in ensuring the resources to maintain our wastewater and drinking water infrastructure. At the same time, while the existing infrastructure continues to age, failure rates continue to grow, as the declining investment is not able to keep up with the aging pipes. This has created a major financial gap that will only get worse if a firm commitment is not made and continual federal resources are not provided to needy communities.
People understand that their quality of life is linked to water quality and the collection and treatment of wastewater. The SRFs have become increasingly efficient and effective, but need more resources. Sufficient federal seed money must be invested to ensure that human and environmental costs of the multi-billion dollar funding gap are prevented. The provisions in S 1961 would be a huge step in that direction.