TESTIMONY OF J. CHARLES FOX
February 10, 1999

TESTIMONY OF
J. CHARLES FOX
ASSISTANT ADMINISTRATOR FOR WATER
U.S. ENVIRONMENTAL PROTECTION AGENCY
BEFORE THE
SUBCOMMITTEE ON WATER RESOURCES AND ENVIRONMENT
OF THE
COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE
U.S. HOUSE OF REPRESENTATIVES

February 10, 1999

Good afternoon Mr. Chairman and members of the Subcommittee. I am Chuck Fox, Assistant Administrator for Water at the United States Environmental Protection Agency (EPA). I am very pleased to have a chance to review the work we are doing at EPA to respond to the serious water pollution problems that persist throughout the country.
I want to make three basic points in my testimony today --

First, despite some very remarkable progress in reducing water pollution over the 25 years since the enactment of the Clean Water Act, we still have serious and widespread water pollution problems throughout the country.

Second, although we have serious water pollution problems, we and our State partners have effective programs and other tools to respond to these problems, including the core authorities of the Clean Water Act and the new initiatives included in the Clean Water Action Plan announced a year ago this month by President Clinton.

Third, the Administration's budget proposal for FY 2000, including both core water program funding and important related initiatives, such as the Better America Bonds proposal, will give us financial resources that will support continued progress toward clean water.

TODAY'S WATER POLLUTION CHALLENGES
I want to quickly review for you some of the data that describes the water pollution problem that we face today. As you will see, we have looked at the health of waters from several perspectives and using several data sets, but the consistent theme is that serious water pollution problems persist throughout the country.
Under the Clean Water Act, States provide EPA with lists of specific waters that are not meeting water quality goals and are not expected to improve soon. These are waters for which States plan to develop Total Maximum Daily Loads or "TMDLs" over the next 10-15 years. The lists submitted last year identify over 20,000 specific waters needing TMDLs. This is an increase of about 5,000 waters from the 1996 lists.
Section 305(b) of the Clean Water Act calls on States to develop biennial reports on the condition of waters. Using these State reports, EPA prepared a national report to Congress. The 1996 report to Congress indicates that --

of the rivers and streams surveyed (19% of all stream miles) 36% were impaired and water quality was threatened in 8% (see attachment 1 for more information);

of the surveyed lakes (40% of all lake acres) 39% were impaired and water quality was threatened in an additional 10%;

of the estuaries surveyed by States (72% of all estuary waters) 38% were impaired and an additional 4% are threatened; and

of the Great Lakes shore miles surveyed (94% of all shore miles) 97% were impaired and an additional 1% were threatened.

These assessments are based on conventional monitoring of individual segments of rivers or parts of lakes or coastal waters. We think it is also important to look at the health of aquatic systems on a larger, watershed scale. Just last Fall, States worked with the United States Department of Agriculture (USDA), EPA, and other agencies to develop "Unified Watershed Assessments." Of the over 2,000 watersheds assessed by the States, about 40% are identified as not meeting water quality goals and in need of attention in the FY 1999-2000 period (see attachment 2). About 15% of watershed are meeting clean water goals. The remaining watersheds have less serious water quality problems or lack sufficient information to make an assessment.
These watershed assessments are generally confirmed by work that EPA has done with States to develop an "Index of Watershed Indicators (IWI)." The IWI draws on 15 different data sets and indicates that, of the over 2,000 watersheds in the country--

16% have good water quality;

36% have moderate water quality problems;

21% have serious water quality problems; and

27% lack sufficient information to make an overall assessment.

These various data sets also provide insights into the causes and sources of the remaining water pollution problems. For example, State 305(b) reports indicate that the single most significant cause of today's water pollution problems is runoff from diffuse or nonpoint sources of pollution such as agricultural lands, urban areas, and forestry and mining activities.
I do not want to diminish the tremendous progress we have made in the past 25 years since enactment of the Clean Water Act. In 1972, most estimates were that 60-70% of assessed waters did not meet clean water quality goals. Although we still do not have perfect data, our best estimate, drawing from these multiple assessment approaches, is that between 30-40% of our waters are not now meeting clean water goals. This is clearly an outstanding accomplishment; but we clearly still have a long way to go to meet our clean water goals.
This assessment is consistent with the impression that most Americans have of the quality of the rivers, lakes, and coastal waters that they know first hand. A recent survey by the Rebuild America Coalition indicated that 30% of Americans felt the quality of rivers, lakes, and coastal areas had "gotten worse" (see attachment 3). Water pollution problems are visible to citizens in many ways. For example, beach closings are increasingly recognized as a concern in many areas, as are fish consumption advisories.
Much of our progress in reducing water pollution over the past 25 years can be traced to our success in building intergovernmental partnerships to help finance the costs of upgrading and expanding America's wastewater infrastructure. Twenty-five years ago, sewage treatment plants served 85 million people. Today, after an investment of tens of billions of dollars by federal, State, and local government, approximately 179 million people are served by secondary sewage treatment or better.
EPA's current estimate for clean water projects needed now and anticipated to be needed over the next 20 years is about $139 billion (in 1996 dollars). This estimate includes $26.5 billion for secondary treatment projects, $17.5 billion for advanced treatment, over $75 billion for sewage conveyance projects of various kinds, and over $11 billion for nonpoint source projects. We hope to be able to organize this cost information by watershed, as well as to improve estimates of needs for all categories, especially nonpoint pollution. In addition, the needs survey does not fully capture costs associated with needs such as contaminated sediments, implementing National Estuary Programs, and implementing other place-based water quality projects. These place-based projects are depicted on the attached map (see attachment 4). Finally, I want to note that we estimate that needs for drinking water infrastructure are about $138.4 billion.
ADDRESSING WATER POLLUTION PROBLEMS
The Clean Water Act authorizes an essential set of core programs that are our foundation for protecting and restoring water quality.

Effluent guidelines provide national, minimum discharge standards for over fifty major industries and result in the removal of billions of pounds of pollutants from effluent each year.

State water quality standards provide goals for water quality restoration and protection.

NPDES permits, most of which are issued by State agencies, control discharges from over 100,000 pollution sources.

State and local pretreatment programs assure that facilities that discharge to sewers provide appropriate levels of waste treatment.

State programs to reduce nonpoint pollution under Section 319 of the Clean Water Act are supported by EPA grants.

Revolving loan fund programs in States provide around $2 billion in financing for water pollution control projects each year and, to date, have an overall value of over $27 billion.

The national wetlands program under section 404 of the Act is the primary defense of the nation's critical wetland resources.

EPA relies heavily on States to implement key parts of the clean water programs. EPA is also committed to "reinventing" clean water programs in innovative ways, such as effluent trading. In the Fall of 1997, the Vice President asked EPA and other federal agencies to review clean water efforts and to develop a coordinated plan to build on core clean water programs with a new commitment to action. In February of 1998, President Clinton announced the result of this cooperative effort -- a "Clean Water Action Plan."
The Action Plan sets out clear goals for the National clean water program. But, it also has generated other benefits. It resulted in significantly expanded State program grants that should contribute to improvements in water quality. It provided a basis for new, cooperative relationships among diverse federal agencies. It provided a forum for federal, State, and Tribal governments to work together on clean water issues. And, it has helped encourage citizens to get involved in clean water programs.
The four key themes articulated in the Clean Water Action still provide sound guidance for the clean water program.

Watershed Approach -- We are well on our way to building the new, cooperative effort to restore and sustain the health of rivers, lakes, costal waters, and wetlands on a watershed basis envisioned in the Clean Water Action Plan.

Strong Federal, State and Tribal Standards -- The Action Plan called for improving State and Tribal standards as a key step toward protecting public health, preventing polluted runoff, and ensuring accountability.

Natural Resources Stewardship -- Clean water depends on the conservation and stewardship of the cropland, pasture, rangeland, and forests that are in private and public hands; federal natural resource agencies are essential to this effort.

Informed Citizens and Officials -- Accurate and timely information about the health of watersheds, beaches, fish and drinking water is the foundation of a sound and accountable clean water program.

Over the past year, federal, State, Tribal and local governments have made good progress implementing the ambitious agenda of over 100 action items described in the Clean Water Action Plan. Some key accomplishments include:

Unified Watershed Assessments -- All States responded to the Action Plan call for a unified and integrated assessment of the condition of their watersheds.

Draft Animal Feeding Operation Strategy -- EPA and USDA jointly developed a strategy for reducing water pollution from animal feeding operations (AFOs) and conducted a dozen listening sessions around the country.

Interim Approval of all Coastal States Non-point Source Programs -- EPA and NOAA conditionally approved all 29 of the State Coastal Nonpoint Pollution Control Plans that were submitted.

Nutrient Standards Strategy -- EPA has developed a strategy for developing nutrient criteria and standards that are tailored to specific needs of different kinds of water bodies and different natural conditions found around the country.

Drinking Water Source Protection -- Federal agencies developed an agreement to coordinate efforts to provide assistance to States, Tribes and local governments in developing comprehensive assessments and protection plans for source waters -- rivers, streams, lakes, and ground water -- that communities use for drinking.

Keeping the Nation's clean water program strong and effective over the next several years will require that we maintain momentum in implementing the Clean Water Action Plan and that we continue the effective implementation of the core programs that are the foundation of the Action Plan. Although all this work is important, I want to highlight several critical efforts:
(1) Watershed Restoration Action Strategies and TMDLs -- As States complete workplans for new clean water grant funds, they will use Unified Watershed Assessments to identify impaired watersheds where they will develop Watershed Restoration Action Strategies in FY 1999 and 2000. In many cases, Watershed Restoration Action Strategies will be coordinated with the development of TMDLs for impaired waters. Action Strategies are also an opportunity to integrate efforts to protect water quality with our work to protect sources of drinking water and wetlands. Federal agencies will support State efforts to restore watershed health in the identified watersheds.
(2) Animal Feeding Operation (AFO) Strategy -- This spring, EPA and USDA will release a final, joint strategy for reducing water pollution from animal feeding operations. About 5% of these facilities (i.e. the largest facilities and those causing water pollution problems) will be subject to Clean Water Act permits.
(3) Stormwater Phase II -- In the Fall of this year, EPA will publish final regulations for control of stormwater runoff from municipalities and construction sites. Permits for these facilities will complement the stormwater permits now in effect for large cities and industrial facilities.
(4) Sanitary Sewer Overflows -- About 40,000 times each year, sanitary sewers overflow and release raw sewage to streets and waterbodies. To address this problem, EPA plans to shortly propose regulations to provide a clearer regulatory framework, including standard permit conditions.
(5) Water Quality Standards Program Modernization -- Strong water quality standards that are based on sound science and reflect community involvement are critical to the clean water program.
(6) Upgrade State Nonpoint Pollution Control Programs -- The Clean Water Action Plan calls for State to upgrade statewide programs for controlling nonpoint pollution to include the nine key elements agreed to by EPA and States by the year 2000. As an incentive to States to upgrade their programs, beginning in 2000 EPA will award all section 319 funds exceeding $100 million to those States that have approved, upgraded nonpoint source programs. Strong programs for preventing nonpoint pollution are critical to the success of the clean water program.
(7) Strengthening Protection of Estuarine and Coastal Waters -- Coastal waters are an important recreational and economic resource. 50% of the population lives in coastal watersheds and coasts are the most common vacation destination. But many coastal waters -- from the Gulf of Mexico "dead zone", to Long Island Sound, to Puget Sound -- are impaired by water pollution and need prompt attention. The Clean Water Action Plan outlines important steps to protect coasts, but I am convinced that we need to redouble our efforts to protect these fragile natural resources.
(8) Smart Growth -- The adoption of "smart growth" policies and implementation of measures to preserve green space and other environmentally critical areas (e.g. riparian areas, wetlands) can have major benefits for water quality. Several national water program projects (e.g. TMDL regulations and stormwater regulations) have the potential to encourage "smart growth" policies.
CLEAN WATER FUNDING FOR FY 2000
The Administration's budget proposal for FY 2000 will provide the resources that EPA and the States need to continue effective implementation of clean water programs. I want to make four key points about the budget.

Clean Water Action Plan -- The budget provides the funds that EPA, States, and other Federal agencies need to continue implementing the Clean Water Action Plan. I want to thank members of this Subcommittee that supported the FY 1999 proposal to double the funds available to States under section 319 of the Act to reduce nonpoint pollution and implement Watershed Restoration Action Strategies called for in the Action Plan. This increased State grant funding is retained in the FY 2000 budget and is critical to maintaining momentum in our efforts to control nonpoint pollution on a watershed basis.

State Revolving Loan Funds -- The FY 2000 budget maintains the Administration's long-standing commitment to capitalizing State clean water revolving loan funds to assure States' ability to provide at least $2 billion in annual financial assistance to water pollution control projects for several decades into the future. To date, almost $16 billion in federal capitalization grants has been provided, or almost 90% more than the $8.4 billion originally authorized by Congress. The FY 2000 request is part of the Administration's overall capitalization plan for the clean water State revolving funds to ensure that the goal of providing at least $2 billion in annual financial assistance is met. Due to the amount of capitalization to date, and because the State loan funds are financially sound and well managed, we are able to request $800 million for FY 2000, which combined with our planned outyear funding stream, will allow us to successfully meet the $2 billion a year in loans goal (see attachment 5). I also want to note that we are continuing to provide grants to capitalize State drinking water revolving loan funds. Our goal for drinking water loan funds is for States to be able to provide about $500 million a year in loans to communities for drinking water projects.

New State Flexibility for Reducing Nonpoint Pollution -- The FY 2000 budget includes a proposal to allow States the discretion to use an amount of the clean water State revolving loan fund equal to as much as 20% of the annual capitalization grant to make grants for nonpoint pollution control projects or projects to implement plans approved under the National Estuary Program. This proposal will allow Governors flexibility in tailoring financial packages to fit the conditions and needs in that State and to more effectively address nonpoint and related water pollution problems. Note that even if all Governors make maximum use of this authority, we project that we will still be able to sustain the commitment to $2 billion in conventional loans from the clean water SRFs.

Better America Bonds -- The Administration's FY 2000 budget includes an exciting and innovative new proposal to fund "Better America Bonds." We believe that many local governments want to foster more livable communities and want to make investments in open space, farmland preservation, clean-up of abandoned contaminated industrial sites, reforestation, and protection of riparian areas, drinking water sources, and wetlands. Many of these "smart growth" investments will have significant water quality benefits that complement traditional investments in more conventional water quality projects like sewage treatment plants. The Administration is proposing federal tax credits in lieu of interest payments for investors that purchase Better America Bonds issued by State, local, and Tribal governments. This proposal will provide $9.5 billion in State, local, and Tribal bonds over 5 years, and dramatic increases in investments in more livable communities.

CONCLUSION
Time and again, when the American people are asked what makes their community valuable, or "livable" they cite water resources -- their beach, their lake, or their river. In the recent Rebuild America survey, 74% of Americans indicated they were willing to pay 1% more in taxes for improved sewage and water treatment systems. Clean and safe water infrastructure had the broadest public support among all other kinds of infrastructure (e.g. 69% for smooth streets without potholes, 66% for safe and modern schools, 56% improve public transit, 40% improve airports).
Why do Americans feel so strongly about clean water? They understand the tremendous public health, economic, recreational, and ecological value of water resources. And, they can see what our monitoring data tells us -- too many waters have pollution problems. But most important, Americans trust the Clean Water Act. They have seen the result of 25 years of hard work by federal, State and local governments and the private sector and they know that these programs work. They know that money invested in clean water will get results.
The budget the Administration has proposed will maintain our long-standing commitment to steady support for conventional sewage treatment projects. It will provide States with new resources to create innovative financial packages to reduce pollution from nonpoint sources. And, it will provide municipalities with a significant financial incentive to make major investments to protect open space, riparian areas, and wetlands that will be making important contributions to cleaner water for years to come. Thank you Mr. Chairman. I will be happy to answer any questions.

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TESTIMONY OF J. CHARLES FOX
February 10, 1999