FINANCING WATER INFRASTRUCTURE

In early September, 2014, a bill was introduced in the House of Representatives of Congress called the "Water Supply Cost Savings Act" (HR 5659) The title of the bill may remind one of the dog whose bark is worse that its bite. The bill makes findings of the need for financing new water infrastructure, especially for small water systems. For example, it states that, according to EPA, the shortfall in drinking water infrastructure funding for small utilities is $64 billion, and "small communities often cannot finance the construction and maintenance of drinking water systems because the cost per resident for this investment would be prohibitively expensive."

However, the bill offers no financing plans or programs to alleviate the acknowledged funding shortfall. Instead, it orders EPA and the Secretary of Agriculture "to provide drinking water technical assistance to include information on cost-effective, innovative, and alternative drinking water systems"; requires small systems applying for grants and loans to consider alternative sources of supply; and requires EPA and the Secretary to report to Congress on the use of innovative and alternative water systems.

Earlier in 2014, the federal "Water Resources Reform and Development Act" became law. (HR 3080) The Act includes the "Water Infrastructure Finance and Innovation Act" (WIFIA). This provision is a pilot federal loan program for large water and wastewater infrastructure projects. WIFIA loans, however, will not cover the entire cost of a project, and the borrower is prohibited from financing the balance of the cost by issuing tax-exempt municipal bonds. Therefore, this financing arrangement may have a tendency to encourage privatizations or public-private partnerships.

Perhaps' if Congress is seriously concerned about the infrastructure funding needs of small water and wastewater systems, it could consider creating a national "Water Infrastructure Financing Bank" for the benefit of small systems which may not have cost-effective access to credit markets. Initially funded by Congress, the Bank would make loan interest loans to qualified small utilities for needed infrastructure improvements. The loans would be repaid from system revenues much like the protocol for payment of municipal bond debt service. The Bank and its loans would be independent from USEPA and state environmental agencies, whose regulatory demands may have created the need for many of the infrastructure improvements in the first place. Thus, separation of financing functions from the regulatory functions may provide more effective opportunities for small systems.

A CHRISTMAS GIFT

The photograph above shows a small segment of the Rio Grande river just south of Taos, New Mexico. The river simply is one of the countless millions of waterbodies that cover the earth, ranging from oceans to creeks to puddles to huge underground aquifers.

All of this water, in one form or another, is a gift. But, obviously, not all share in this gift, for one reason or another. So, this Christmas season perhaps water can become a much needed gift for some.

Organizations such as Water For People* and many churches have programs which fund and construct water wells and systems in villages located in developing countries. These programs seek to make the gift of clean water possible, but depend upon the generous resources provided by those who already receive the gift of water.

But wait, there is more! Another gift may be possible. It is ironic that many who already share in the availability of clean water fail to actually drink sufficient amounts of water for good health. So, this Christmas perhaps each of us can also give to ourselves the gift of water.
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* see waterforpeople.org

OWNING WATER?

According to a recent report, a wastewater utility in Texas has asserted that it owns treated effluent from its facility and retains ownership even after the effluent is discharged into a river.* The ownership claim was made in an application for a "bed and banks" authorization to help support uses of the river.

Ownership of water, or the lack of ownership, can be a complicated and inconsistent issue across the United States. And, ownership of water does not necessarily mean control or permitted use of water.

For example, in Texas it appears that ownership and control of water depends upon the source of water. Groundwater below land is the property of the landowner, but withdrawal of the water is subject to controls by the state. Surface water is owned by the public and controlled by the state. Storm water is the property of the landowner until it enters a natural watercourse.

Another example is the use of Lake Michigan as a drinking water source. The water may be held in trust for the benefit of the public, but withdrawal of water is subject to control by a US Supreme Court decision in the case of Chicago area; state allocations; an international compact, and other law.

Still another example may be the ownership of a tract of land on which there is a wetland. Te landowner may own the wetland, but may be prohibited from draining or developing it by federal or state law.

If a water utility takes raw water from a source, whether groundwater or surface water, and treats the water to USEPA standards, does it "sell" the treated water delivered to a customer? A sale would imply ownership of the water first by the utility and then by the customer. Some oourts have held that a utility does not sell water. Rather, its charges are for providing a service--finding source water, treating it and delivering it to a customer. In turn, it would appear to follow that a customer has use of the water but not ownership.

Along the same lines, when a drinking water customer flushes wastewater delivered to a sewer, does the wastewater utility (often the same utility that delivered the drinking water) acquire ownership if the influent? Or, does the utility merely provide and charge for a service--receiving and treating wastewater to enable it to be delivered to a waterbody?

In many ways, issues of use or control of water may of greater importance than ownership. At best, the issue of ownership would seem quite fluid.

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*"Water Rights...Even After It Leaves The Pipe?",
WEF Magazine, Nov. 2014, p.19