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April 14, 2014
Easter Recess Clears Halls Of Congress
The House and Senate are in recess for the next two weeks, returning the week of April 28. Monday Morning Briefing will not be published on April 21, and any breaking news in the interim will be communicated to members by Special Briefing.
Utility Leaders, Federal Agencies Collaborate On Climate Change Resilience
AMWA and the National Association of Clean Water Agencies (NACWA) co-hosted the Water Resilience Summit on April 9-10. The summit was a high-level discussion on ways to improve water and wastewater utilities' resilience to climate change, particularly where utility and federal efforts diverge and where federal policies and programs can be enhanced to better support utilities.
The Summit convened 23 utility directors and staff and officials from EPA, the Army Corps of Engineers, the Department of the Interior, the Department of Energy, the White House Council on Environmental Quality, the U.S. Geological Survey and the Federal Emergency Management Agency. Also participating were insurance and financial experts.
Over the day-and-a-half event, participants engaged in a facilitated dialogue expanding on three themes: resilience, risk tolerance and long-term planning; constraints to local utility resilience and collaborative ways to overcome barriers; and financing and funding for resilience.
“From historic droughts that threaten water supplies to super storms that overwhelm sewer systems, the impacts of climate change are felt at the local level where we treat and manage our water,” noted EPA Administrator Gina McCarthy, who addressed participants. “That’s why EPA supports AMWA and NACWA’s leadership on building and designing resilient water systems that take climate change into account.”
Participants brought up such issues as permitting challenges related to resource development and capital projects, access to usable and relevant data, best practices by utilities and by federal agencies, cross-federal cooperation, tax incentives and disincentives, access to capital, stormwater management, investment in innovative technologies, flexibility in regulatory enforcement and areas of potential collaboration between utilities and federal agencies.
AMWA and NACWA will prepare a synopsis of the summit and engage members on ways the associations can build upon the ideas offered by participants.
WIFIA, SRFs And Muni Bonds Win Support At Water Policy Conference
AMWA-backed proposals to enact a WIFIA (“Water Infrastructure Finance and Innovation Act”) program, boost funding for the Drinking Water State Revolving Fund (SRF) and protect tax-exempt municipal bond interest were all praised by lawmakers last week during AMWA’s Water Policy Conference in Washington, D.C.
WIFIA was a frequent topic, with several speakers raising expectations that a version of the proposal will win a place in larger water resources legislation Congress is expected to complete later this spring. Rep. Tim Bishop (D-N.Y.), who is part of a conference committee negotiating the larger water resource bill, told attendees WIFIA has a “fair shot” at finding a place in the legislation.
Lawmakers would not comment, however, on the extent to which any final WIFIA language would mirror a version approved by the U.S. Senate last year. That bill would offer low-cost loans for major drinking water and wastewater projects expected to cost more than $20 million, but would also restrict the use of tax-exempt debt to finance project costs not covered by WIFIA.
Congressional speakers at the conference also pushed back against the Obama Administration’s request to cut $581 million from the Drinking Water and Clean Water SRFs in the next fiscal year. Rep. Bob Gibbs (R-Ohio) explained that while reducing spending is important, “cutting the SRFs is not the way to go.”
Preserving tax-exempt municipal bond interest was a popular position among lawmakers including Rep. Randy Hultgren (R-Ill.), who said “protecting municipal bonds is a Main Street issue.” These comments were in reaction to various proposals to scale back the exemption for high-income earners – a policy that would likely raise borrowing costs for municipalities. Several speakers said the scale-back proposals would not move through Congress this year, but could return in the future. As a result, they recommended utilities start working now to raise awareness among other members of Congress of the value of muni bonds.
EPA Leadership Outlines 2014 Priorities
Speaking at AMWA’s 2014 Water Policy Conference, members of EPA’s leadership team addressed the agency’s priorities. EPA Deputy Administrator Bob Perciasepe, Acting Assistant Administrator for Water Nancy Stoner and Office of Ground Water and Drinking Water Director Peter Grevatt touched on similar themes in their talks with AMWA members. Each mentioned source water protection as an issue that was going to receive particular support as regulators look “upstream” to address pollution before it enters the environment and drinking water sources. Each also discussed the recently released proposal to clarify Clean Water Act jurisdiction over “Waters of the U.S.,” promising to work closely with stakeholders to further evaluate issues brought forth during the proposal’s public comment period.
Peter Grevatt reviewed the schedule for ongoing regulatory initiatives, including Lead and Copper Rule revisions, perchlorate and regulatory determinations. (Additional details on those and other efforts can be found in AMWA’s latest Regulatory Report.) One new area of focus he discussed in some detail is Legionella, which has been identified as a significant public health threat requiring further EPA action. Although Legionella is an issue primarily associated with premise plumbing and not under the control of public water systems, EPA will be looking to tap into utility expertise to develop guidance and other resources to help address the problem.
Senator Offers “Smart Water,” WaterSense Bills
New Mexico Democratic Senator Tom Udall last week introduced a suite of four bills intended to promote more efficient use of water supplies in response to the extreme drought conditions in the West.
One bill, “The Smart Water Resource Management Conservation and Efficiency Act” (S. 2225), mirrors a proposal AMWA supported last year when Udall offered it as an amendment to larger legislation. The bill would establish a Smart Water Resource Pilot Program to offer grant funding for water utility demonstration projects that increase water and energy efficiency, promote water and energy conservation, and support the development and use of “advanced automated systems that provide real-time data on energy and water.” Grant recipients would be selected after EPA and the Energy Department consider the novelty, cost effectiveness and potential energy and cost savings of each application.
Other bills introduced by Sen. Udall last week would permanently authorize EPA’s WaterSense program (S. 2226), create a 30 percent consumer tax credit for the purchase of WaterSense-certified products (S. 2227) and offer grants to rural communities for more efficient water systems and efforts to develop alternative supplies (S. 2228).
Senate Bill Would Restart Build America Bonds
Legislation introduced last week by Sen. Ed Markey (D-Mass.) would establish a permanent version of the temporary Build America Bonds (BAB) program that offered subsidies for water and other infrastructure projects.
Introduced as the “Bolstering Our Nation’s Deficient Structures (BONDS) Act” (S. 2203), the bill would initially offer municipal bond issuers a 31 percent subsidy on interest paid to bondholders for qualifying projects. The subsidy would decrease by one percent each year for new issues until 2017, when it would level off at 28 percent for all qualifying bonds issued after that date. The original BAB program, which was enacted through economic stimulus legislation in 2009, offered a 35 percent subsidy until the program expired at the end of 2010.
The BONDS Act includes a provision that would prevent any future rounds of federal sequestration cuts from reducing subsidies owed under the program. This responds to a major complaint of BAB issuers, who have seen their subsidies collectively reduced by hundreds of millions of dollars over the past few years.
EPA Releases Agency Strategic Plan And Water Technology Blueprint
Last week EPA released its agency-wide FY 2014-2018 Strategic Plan and version two of its Water Technology Innovation Blueprint. The Strategic Plan is released annually and is developed in accordance with the Government Performance and Results Modernization Act of 2010. In announcing the plan, EPA Administrator Gina McCarthy said her agency is heeding the President’s call for action on climate change and will address the “complex array of environmental challenges we face by advancing a rigorous research and development agenda that informs and supports our policy and decision making with timely and innovative technology and sustainable solutions.”
Accordingly, the agency’s water technology innovation blueprint, “Promoting Technology and Innovation for Clean and Safe Water,” aims to identify new management approaches and techniques to support water sustainability. The report lists actions EPA will take to “support our common quest for water sustainability” related to advocating for technology innovation, creating the regulatory space for technology innovation and supporting the delivery of proven technologies.
Sustainability Roadmap From EPA Provides Next Steps For Effective Utility Management
A new guide from EPA, Moving Toward Sustainability: Water Sector Utility Roadmap of Practices, has been released to help water systems address management challenges. The project is a “build-out” of the Effective Utility Management attributes and provides new ideas and directions for utilities that have already made substantial progress in implementing the attributes. Developed with input from a steering committee of water and wastewater utility managers, the guide discusses how water systems can move from a conventional management framework to an “emergent” model.
Synthesis Document Released On EPA’s Credit Risks And Resilience Stakeholder Process
On Friday, EPA sent participants in its Risks and Resilience Stakeholder Process a final synthesis document of the process discussions. The process was launched late last year as a discussion about “whether or how water sector utility climate readiness might be reflected in criteria or bond ratings and other financial analyses.” Participants in the group included personnel from water and wastewater utilities, water associations and the financial sector. Support staff to EPA included the sustainable investment advocacy organization Ceres. Discussions during a November 2013 meeting in Denver made it clear that climate readiness is not currently considered in financial institutions’ assessment of water and wastewater utilities, with economic and political risks far outweighing climate risks in financial analyses.
As a result, the final synthesis product, which is available on AMWA’s Sustainability Committee page, is the result of the discussions held at the November meeting. The document includes a summary of the findings, a synthesis of water sector perceptions and management of climate risk, financial sector perceptions and accounting of climate risk and four potential areas for future engagement between water utilities, utility associations and credit ratings agencies and their associations.
AMWA convened several conference calls with water utility workgroup representatives to coordinate comments and draft a summary of findings from the discussions. The association also contacted financial sector representatives from the workgroup to gather feedback on these summary points.
AMWA Debuts New Look
AMWA gave Water Policy Conference attendees a peek at the association's new look last week. The central element - the logo - was designed to capture the concept of AMWA's service to metropolitan areas. AMWA's new website will appear in May.