WASHINGTON -- While some sources say that legislation to renew funding for the existing state revolving loan program that helps finance sewage treatment plants is all but dead for this year, others are not so quick to write it off.

A controversy between state and local governments and environmentalists over wetlands management has stopped the bill in its tracks for several weeks. The bill would authorize about $25 billion over five years for the revolving loan fund program that states use to leverage tax-exempt bonds to help build treatment plants.

The next three weeks are critical for the wastewater treatment bill that would renew and extend the law through fiscal 2000, said Kevin McCarty, assistant executive director of the U.S. Conference of Mayors.

If the House Public Works and Transportation Committee does not approve a bill before the mid-August recess, the bill is lost for the year because Congress will have only about one month when lawmakers return to finish up all pending legislation before recessing until January 1995, McCarty said.

The wastewater treatment bill "could go either way," he said.

But a source close to the committee said the bill is essentially dead. There has "not been much progress or a lot of encouraging signs" coming out of the committee, the source said.

But Eric Federing, communications director for the House Public Works and Transportation Committee, disagreed.

The bill "is not dead," Federing said. "It is moving along to the extent that we're still talking and trying to put together a bipartisan coalition. It's been a contentious issue and a difficult coalition to put together."

As of yesterday morning, the committee hadn't "thrown in the towel and is not likely to without a fight," Federing said.

"Some of the early calls [saying the bill is dead] are attributable to those who don't want to see it passed," he said.

The Senate Environment and Public Works Committee approved its version of the wastewater treatment bill in the spring and has been waiting for the House to act before taking the measure to the Senate floor.

Sen. Max Baucus, D-Mont., chairman of the Environment and Public Works Committee, "is not inclined to put much effort, time, or political chips" into moving the bill through the full Senate this year because he doesn't see the House bill going anywhere, a source said.

Diane VanDe Hei, executive director of the Association of Metropolitan Water Agencies, agreed that the wastewater bill is so bogged down in controversy that it seems unlikely it will make it out of the House this year.

But the legislation will not pass any easier next year, McCarty said.

The controversies will still be there, and may be a little more daunting because the Congress is expected to be more conservative, said James N. Smith, executive director of the Council of Infrastructure Financing Authorities.

Unless reauthorized, funding for the revolving loan program will expire at the end of the fiscal year on Sept. 30.

However, some states are already preparing for the loss of funding, Smith said. Several states that have not leveraged their revolving loan funds may begin to "take the financing they have available and nurture it," Smith said.

Funding for a proposed new state revolving loan program that would be used to finance drinking water facilities is also at risk, but not to the same extent as the sewage treatment loan funds, several sources said.

Creation of the new loan program is included in legislation to renew and extend the safe drinking water law that is slowly moving through Congress.

The House and Senate appropriations committees set aside $700 million in fiscal 1994 for the new program and have allocated $600 million in fiscal 1995. During this year's appropriations process the House attached an amendment to its fiscal 1995 Spending bill saying the money for the revolving loan funds would not be dispersed unless the reauthorizing legislation is passed.

The funding to create the new state revolving loan program "has not been the carrot" it was expected to be, VanDe Hei said. While "it would be a real shame if the money disappeared," state and local officials are more interested in seeing the legislation revamped, she said.

Many of the local water systems are overburdened with contaminant testing regulations and want those regulations corrected. They are less interested in a "loan program for pipes," VanDe Hei said.

Passage of the drinking water bill is less timely than the wastewater treatment bill because there are fewer controversial issues, and the full Senate approved its version in May, McCarty said. Again, as in the wastewater bill, some action needs to be taken before the August recess, Smith said.

VanDe Hei gave final approval for the drinking water bill a 50-50 chance this year. "If [Congress] doesn't reauthorize this year, we'll have our fingers crossed ... and wait until next year," she said.

Should the drinking water reauthorization fail to move out of the House Energy and Commerce Committee, the biggest issue is losing the funding for the new loan program, McCarty said. It is not that the program may lose its operating funds, because it is not operational yet, but advocates for the new program will lose their baseline for appropriations and will have to start over at zero next year, he said.

The committee is "still wrangling over regulatory provisions," but "it still has potential to pass," Smith said, "a 75% chance, diminishing by magnitudes each week" the House doesn't act.

A lot of the issues facing the drinking water bill are environmental issues, and with a more conservative Congress expected next year environmentalists will have even less political muscle to push the drinking water bill through Congress, Smith said.

"It either goes this year, or it is unlikely it will move in the next Congress," he said.

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