Water Infrastructure Needs More Federal Investment. Here's What One Industry Association Is Doing About It.

NACWA makes the case for a greater federal government role in sharing the burden of costs for sustaining water quality

Water Infrastructure Needs More Federal Investment. Here's What One Industry Association Is Doing About It.

Nathan Gardner-Andrews

After passage of the original Clean Water Act in 1972, federal dollars flowed into the wastewater treatment sector.

With the goal of ensuring fishable, swimmable waters throughout the nation, grants became available for construction and upgrading of treatment facilities, the training of plant operators and a great deal more.

Those investments brought substantial progress, but in time, the federal investment in clean-water facilities faded so that at present it accounts for just a small fraction of the cost of water-quality protection. Meanwhile, massive investments are needed for municipal clean-water utilities to meet federally mandated water-quality goals.

The National Association of Clean Water Agencies is pushing for more federal support for treatment utilities, especially since regulatory compliance makes up a major share of clean-water costs. The association made a case for its position in the winter 2019 issue of its Clean Water Advocate publication.

Nathan Gardner-Andrews, NACWA’s chief advocacy officer, made the argument for more federal investment during an interview with Treatment Plant Operator.

TPO: How would you describe the federal government’s role just after passage of the Clean Water Act?

Gardner-Andrews: At its heart, when the Clean Water Act was passed, the intent was to have a partnership between federal, state and local governments to clean up the nation’s water. This year is the 50th anniversary of the Cuyahoga River fire in Cleveland, which was the big public impetus toward getting more aggressive on water pollution. The period from 1969-72 is where a lot of the heavy lifting was done. In essence, a bargain was struck that the EPA would set a baseline technology standard that every public clean-water utility had to meet. In return, the federal government would give out substantial grants to fund the upgrades.

TPO: How would you characterize the results of that arrangement?

Gardner-Andrews: The construction grants program, over 15 years starting in 1972, gave out many billions of dollars to communities to upgrade their treatment plants. Communities did that, significant investment happened and we saw significant improvement in how municipal wastewater was treated.

TPO: What was NACWA’s role in that process?

Gardner-Andrews: NACWA was created as the Association of Metropolitan Sewerage Agencies to work with EPA and Congress to help develop the grants program and ensure communities were getting the biggest bang for the buck when making their upgrades. Now, almost 50 years later, I would argue that the municipal clean-water sector is the greatest success story of the Clean Water Act in terms of the investments and the incredible reduction of pollutants achieved. A really large part of that was significant federal involvement to provide funds to make it happen.

TPO: When did federal investment really start to decline?

Gardner-Andrews: In the mid-1980s we saw a shift from grants to a loan-based program. The 1987  amendments to the Clean Water Act created the State Revolving Fund. The idea was that the federal government would give out loans to the states, and the states in turn would loan that money to local governments for the projects deemed the most worthy. It’s not uncommon for revolving fund loans to be at lower interest rates than if a utility went to the municipal bond market, but that fundamentally shifted the federal government’s role in funding water infrastructure.

TPO: What has been the effect of that change in approach?

Gardner-Andrews: From that point forward, we saw the percentage of federal funds going down. On an overall percentage basis, we saw the total federal investment drop to the point where 96% of water and wastewater funding comes from local governments and utilities and only 4% from the federal government. That percentage pales in comparison to the federal money we see allocated for purposes such as highways, mass transit and airports.

TPO: In the meantime, what level of investment is needed to sustain the nation’s clean-water infrastructure?

Gardner-Andrews: The EPA Clean Water Needs Survey reports that some $271 billion is needed for municipal clean-water utilities to meet mandated water-quality goals. That is the most widely cited number for what we call the infrastructure gap — what current funding will support versus what needs to be invested. But that number is probably on the low end. We think easily twice that amount could be needed for projects that right now don’t have a funding source. That’s a tremendous burden to put on local ratepayers at the same time utilities are dealing with increasing regulations and other factors driving up their rates.

TPO: What impact does all this have on local communities and utilities?

Gardner-Andrews: There are at least two pressure points for local utilities. There’s regular operations and maintenance, which goes up every year as systems age. Adding to that is the increasing regulatory pressure of tighter and tighter permit limits, dealing with nutrients, toxics and contaminants that were not envisioned when the Clean Water Act was written. The other pressure point is capital cost related to major improvements like combined sewer overflow remediation and adding capacity for growth. Related to that is the growing debt service burden.

TPO: Aren’t all these costs typically covered by the utilities’ user fees?

Gardner-Andrews: In many communities, during the 1970s and 1980s, utilities weren’t really increasing the rates the way they should have been. So now they have rates that are artificially low. They’re playing catch-up in getting the rates up to where they should be in order to maintain their systems. We see communities raising rates by 5%, 10%, 15% or more per year over a three- to five-year period. So now we have an affordability problem. 

TPO: How does that escalation in rates affect communities?

Gardner-Andrews: In many communities, the bottom 20% to 25% of the customer base is facing a crisis in being able to afford their water and sewer bills. I think there needs to be a reckoning in the utility sector and among state and federal regulators on how to deal with this. What is the federal government’s role in helping to fund these rate increases?

TPO: What kinds of solutions do you envision for this problem?

Gardner-Andrews: If you look at the federal government now, there’s the Low Income Home Energy Assistance Program, which helps cover heating and cooling costs for a segment of the population below a certain income level. Why not something similar on the water side? We also probably need to reevaluate the accretion of regulatory requirements. It’s not right for the federal government to add regulatory requirements on one hand and then give less and less money to utilities to help meet them. We’re at a point where all parties recognize the status quo is not sustainable. The question is what rebalancing is appropriate and what can be accomplished politically over the next few years.

TPO: How would you assess the political outlook for progress in this area?

Gardner-Andrews: I would argue that a federal low-income water assistance program is not an entitlement. It would be essentially a recommitment to the federal government’s original role in clean water. This is an issue that doesn’t have rural versus urban boundaries and that can cross partisan and geographic divides. It gets sticky when you talk about the money: How will it be paid for? Who is eligible? But the time is right to have the conversation.

TPO: Have you seen any positive signs of progress?

Gardner-Andrews: My prediction is that we will see the issue of water addressed directly in the next presidential election campaign. Although there was no comprehensive infrastructure package in the last Congress, we were pleased to see, in the proposal from the administration and in the counterproposal from the Senate Democrats, that water was front and center, on par with things like surface transportation, airports and mass transit. That is a victory. We’ve been able to elevate water as a national priority.

TPO: What measures will NACWA take to continue making the case?

Gardner-Andrews: We’re making a big push to get Congress to reauthorize the State Revolving Fund and at a higher appropriation level. We’re pushing to grow the pot so we can pump more money through that fund to the states. To date, that is the most effective way to get federal money to the local level to help support needed projects. We’re also working with Congress to further explore the idea of a low-income assistance program for water. 

TPO: What do you see as the role of public awareness and education in this issue?

Gardner-Andrews: Public awareness and public understanding of the value of water systems will be critical to summoning the political willpower to increase the share of federal funding. As a sector, we’ve almost been a victim of our own success. Ninety-nine percent of the time we deliver service without any problems so that the public takes it for granted. We need to help people realize, day in and day out, the importance of water. When that happens, you start to set the groundwork for a productive political debate about the role of the federal government in helping to fund this vital service.



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