STATEMENT OF JOSEPH A. MOORE
ALDERMAN CHICAGO, ILLINOIS
THE NATIONAL LEAGUE OF CITIES before the
ENVIRONMENT AND PUBLIC WORKS COMMITTEE UNITED STATES SENATE on
Mr. Chairman, members of the Committee: I am Joseph Moore, Alderman from the city of Chicago, and chair of the National League of Cities' Energy, Environment and Natural Resources Committee. I am here today to testify on behalf of NLC and the 18,000 cities we represent across the United States on S. 1961, the Water Investment Act of 2002.
First and foremost, I would like to congratulate the four co-sponsors of S. 1961 for recognizing the need for a renewed federal partnership in helping finance the rehabilitation and replacement of the nation's aging water infrastructure. We deeply appreciate your willingness to commit $35 billion over the next five years to our wastewater and drinking water infrastructure needs. The introduction of S. 1961 demonstrates your understanding that the nation's cities and towns truly face an uphill struggle in assuring the continuation of the environmental progress made in the past thirty plus years and need your help in protecting the significant investments we have jointly made.
Accordingly, while we understand that the current statutes - the Clean Water Act and the Safe Drinking Water Act -- authorize the expenditure of SRF resources for infrastructure rehabilitation and replacement, NLC nevertheless believes water infrastructure should be one of the expressed priority purposes of S. 1961. As the committee well knows, infrastructure replacement costs are expected to approach $1 trillion over the coming two decades and should therefore be highlighted as a principal and primary purpose of this statute.
NLC also advocates including water security as an appropriate use of these funds. Our wastewater and drinking water facilities were constructed with little, if any, thought given to~ the potential for the unprecedented terrorist activities of the type witnessed on September 11th. The security mechanisms built into these systems were not designed for anything; of that magnitude. We believe federal assistance to enhance wastewater and drinking; water security needs - especially those involving vulnerability assessments and capital investments - is both necessary and a legitimate use of these funds.
While NLC applauds the bill's attempt to provide non-refundable assistance to communities that do not meet the definition of a “disadvantaged community” by providing subsidies that will benefit the poor populations in those cities, it is unclear how this provision would be implemented. The idea is laudable in concept; we are uncertain whether it will work in practice. We would like the opportunity to work with you on developing this provision so that it is acceptable to you and accomplishes the intended objectives for us.
Other provisions in S. 1961 affecting funding which NLC supports include:
• the extension of the transferability provisions allowing the use of a portion of the wastewater and/or drinking water funds to be used interchangeably;
• revisions to the ;allocation formula in the Clean Water SRF to reflect needs more closely;
• the extended repayment period for loans from the SRFs. We would recommend, however, that these provisions be applicable to all loans, not just those for small communities;
• the addition of source water protection as an eligible activity for funding; and,
• inclusion of demonstration projects to promote innovative technology and new approaches to water quality management and supply. For too long, the federal government has been inadequately involved in the development of new and more cost-effective ways to come into compliance with the requirements of the Clean Water and the Safe Drinking Water Acts. We would strongly urge you add stormwater as an appropriate category for demonstration programs as well. Given that most municipalities will begin implementation of the stormwater program next month, and given the likely application of TMDLs to stormwater at some point in the future, we are sorely in need of information and demonstration programs on how to accomplish such objectives.
In parts, S. 1961 seems rather overly prescriptive. While we understand the legitimate concerns of the federal government in protecting its investments, NLC believes that if the proposal imposes too many mandates as a condition for the receipt of funds, they may prove to be a disincentive to apply for them -- regardless of need.
Many water systems already have asset management programs in place. Likewise, many utilities have kept their rate structures up-to-date. It is important to recognize these achievements in the context of eligibility requirements. While there are utilities which have not implemented new management techniques and/or updated their rates, NILC believes there may be better alternatives to assure proper operations and adequate rate structures than new mandates with respect to such activities. Furthermore, NLC is concerned that utilities that already have asset management programs in place, and have imposed rate increases to maintain and operate their systems effectively, not be barred from, or have lesser status in, accessing these funds. We would like to work with you to assure that all water systems are well managed and that rate structures -- to the maximum extent feasible -- are adequate to meet the short- and long-term needs of local water utilities.
NLC is also concerned that states may not have adequate capacity, or the expertise to develop the required strategies. Congress is aware that the states are currently struggling with the TMDL program, and are expected to have significant resources involved in these activities for the foreseeable future. If, because of these or other priority responsibilities at the state level, asset management strategies are not developed, we also have concerns about the penalty. From the local government perspective, reducing federal assistance to the state by 20 percent penalizes the local governments in that state. We are aware that these types of penalties are supposed to insure that the affected local governments pressure the states to develop their strategies. But, such pressures don't always work - especially when the states are overloaded with their own responsibilities - responsibilities that are subject to lawsuits if not completed.
Other criteria of concern to NLC are those with respect to public/private partnerships and consolidation.
Public/Private Partnerships: NLC is newly arrived at discussions about the impact of international trade agreements on the privatization of local services and the relationship of such agreements to the maintenance of local control and autonomy. So while having little expertise, NLC considers it important to raise the issue for further review by the committee. As the committee undoubtedly knows, the majority of the large private water companies operating in the United States are foreign owned. At the local level, we have concerns that contracting with these foreign-owned companies may -- because of the terms and conditions of international agreements -- adversely affect the ability of a local government to make many critical determinations about the utility once it is under contract with such a private partner. We would be happy to provide expert resources and additional information to the committee on this issue and ask only that there is a full understanding of the ramifications of public/private partnerships in the water business before requiring or encouraging; such activities in federal law.
Consolidation: The provisions relating to consolidation of systems are also somewhat perplexing. As we read the proposal, systems are encouraged to consider consolidation to become more effective and efficient. Our first question is whether this is a requirement to be eligible for funding. If so, there are some systems that already serve millions of customers and further consolidation is neither feasible nor sensible. Our second question is whether the committee is willing to remove federal impediments to consolidation - for example, § 1926(b) of the Agriculture Act of 1961, which disallows absorption of any drinking system indebted to the Farmers Home Administration. Numerous cities have attempted to expand their service areas to unincorporated areas served by this small system, or to areas surrounding the small system service area. Federal law precludes their doing so. States that have attempted to deal with this issue find that even they may not override federal law. Many of these small systems are inefficient and marginally protective of public health. State and local efforts at consolidation in such areas have been barred - by federal law.
Mr. Chairman, members of the Committee, thank you for the opportunity to testify for the National League of Cities and for taking the initiative in developing, proposing and starting the legislative process on S. 1961, the Water Investment Act of 2002. NLC looks forward to continuing to work with you on making this one of the most important and effective pieces of legislation in the 108th Congress.