[Senate Hearing 108-904]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 108-904
 
  COST OF CLEAN WATER AND DRINKING WATER REGULATIONS TO MUNICIPALITIES

=======================================================================

                             FIELD HEARING

                               BEFORE THE

                              COMMITTEE ON
                      ENVIRONMENT AND PUBLIC WORKS
                          UNITED STATES SENATE

                      ONE HUNDRED EIGHTH CONGRESS

                             SECOND SESSION

                                   ON


                               __________

                        JULY 26, 2004--TULSA, OK

                               __________


  Printed for the use of the Committee on Environment and Public Works




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               COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

                      one hundred eighth congress
                             second session

                  JAMES M. INHOFE, Oklahoma, Chairman
JOHN W. WARNER, Virginia             JAMES M. JEFFORDS, Vermont
CHRISTOPHER S. BOND, Missouri        MAX BAUCUS, Montana
GEORGE V. VOINOVICH, Ohio            HARRY REID, Nevada
MICHAEL D. CRAPO, Idaho              BOB GRAHAM, Florida
LINCOLN CHAFEE, Rhode Island         JOSEPH I. LIEBERMAN, Connecticut
JOHN CORNYN, Texas                   BARBARA BOXER, California
LISA MURKOWSKI, Alaska               RON WYDEN, Oregon
CRAIG THOMAS, Wyoming                THOMAS R. CARPER, Delaware
WAYNE ALLARD, Colorado               HILLARY RODHAM CLINTON, New York
                Andrew Wheeler, Majority Staff Director
                 Ken Connolly, Minority Staff Director

                                  (ii)

  
                            C O N T E N T S

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                                                                   Page

                        JULY 26, 2004--TULSA, OK
                           OPENING STATEMENTS

Crapo, Hon. Michael D., U.S. Senator from the State of Idaho.....     4
Inhofe, Hon. James M., U.S. Senator from the State of Oklahoma...     1

                               WITNESSES

Bourque, Rick, city manager, city of Wewoka......................    12
    Prepared statement...........................................    38
Carr, Robert, on behalf of the city of Owasso and the city of 
  Collinsville...................................................     8
    Prepared statement...........................................    27
Hardt, Charles, public works director, city of Tulsa.............     6
    Prepared statement...........................................    24
    Responses to additional questions from Senator Inhofe........    26
Komiske, Ken, public works director, city of Norman..............    10
    Prepared statement...........................................    33
    Response to additional question from Senator Inhofe..........    38
McAlpine, Clay, director of engineering, city of Muskogee........    14
    Prepared statement...........................................    40
Morgan, Arvil, district manager, Wagoner Water District Number 5.     9
    Prepared statement...........................................    30
    Response to additional question from Senator Inhofe..........    30

                          ADDITIONAL MATERIAL

Charts:
    Arsenic Rule Solution, Arsenic Rule Impacts..................    36
    Average U.S. City Revenues, 2003.............................    28
    Existing System Assessment, Annual Average Water Demand 
      Projection.................................................    33
    Existing System Assessment, Peak Day Water Demand Projection.    34
    Oklahoma Municipal Expenditures, 2002........................    28
    Oklahoma Municipal Revenues, 2002............................    28
    Recommended Water Plan, Strategic Water Supply Plan 
      Recommendation.............................................    35
    Wastewater Solution, Wastewater Master Plan Recommendations..    37
Statement, Town Hall, city of Coweta, OK.........................    31


  COST OF CLEAN WATER AND DRINKING WATER REGULATIONS TO MUNICIPALITIES

                              ----------                              


                         MONDAY, JULY 26, 2004

                                       U.S. Senate,
                 Committee on Environment and Public Works,
                                                         Tulsa, OK.
    The committee met, pursuant to notice, at 1 p.m. in the 
Price-Turpen Courtroom, John Rogers Hall, University of Tulsa 
School of Law, Tulsa, OK, Hon. James M. Inhofe (chairman of the 
committee) presiding.
    Present: Senators Inhofe and Crapo.

 OPENING STATEMENT OF HON. JAMES M. INHOFE, U.S. SENATOR FROM 
                     THE STATE OF OKLAHOMA

    Senator Inhofe. The hearing will come to order. One of the 
few things that Mike and I do well is we always start on time. 
Since he'll be leaving from here--I guess you're going down to 
Fort Bliss, aren't you?
    Senator Crapo. That's right.
    Senator Inhofe. Then back to Idaho after that.
    Senator Crapo. We have about 2,300 Idahoans headed to Iraq 
here in a day or two, shortly. I'm going to go down and see 
them.
    Senator Inhofe. Well, let me, first of all, thank Mike 
Crapo for coming here. He came all the way from Idaho to be 
here with us today. I chair the Environment and Public Works 
Committee of the U.S. Senate, and probably our most important 
subcommittee is the subcommittee chair called Fisheries, 
Wildlife and Water Subcommittee. If you want, at an appropriate 
time, you can come; Kit Bond is--OK.
    Senator Crapo and I recently introduced legislation to 
provide you, the Nation's cities and towns, with some financial 
assistance as your water infrastructure poses the ends of its 
useful life and Federal regulations start kicking in. Our bill, 
S. 2550, passed our committee just a few weeks ago. It's a 
good, clean bill. It doesn't mandate anything on you guys. It 
doesn't give you any new obligations, but it seeks only to help 
you address the problems of aging infrastructure and new 
regulatory requirements.
    Senator Crapo, you know, like your State, our State is a 
fairly young State. We didn't really start feeling the problems 
and the pains of aging in this infrastructure until, oh, about 
the time I was mayor of Tulsa 25 years ago. So now it's getting 
to be just as serious as it is in some of the more mature parts 
of the country.
    Now this effort was inspired by a series of studies showing 
pending crisis with our Nation's water infrastructure. The gap 
between what we currently spend and what we need to spend as a 
Nation, ranges from a few billion dollars a year to some $24 
billion a year. Not only must the Federal Government fulfill 
its financial obligations, but it must become more aware of the 
actual costs being imposed by these regulations which are 
contributing to this gap. It's important to note that this 
hearing is not about rolling back protections. However, we do 
need to ensure that our limited resources are put where they 
are most critically needed to address real problems and real 
health threats.
    Today we're going to talk about costs, what the EPA says 
these rules cost and what the real life experiences of you the 
people who run these facilities, is. Several recent rules 
finalized by the Administration have costs that may not be 
justified by the benefits. Not only--so not only do we need to 
closely look at the science behind them, but how the EPA 
derived its cost estimates.
    You know, when I first became chairman of this committee 
about a year and a half ago, I made the announcement that we 
were going to do two things that had never been done in the 
history of the Environment and Public Works Committee. One, is 
we were to try to make sure to base our decisions on sound 
science, and the second thing is have a cost benefit analysis, 
so that people really will know what that cost is. And that's 
what we've been doing.
    In 1995, Congress passed the Unfunded Mandates Reform Act. 
I cosponsored this, and this Act--the idea of this Act was that 
if we pass regulation, we pass the rules, we pass the laws in 
Washington, that we realistically look and see what types of 
financial hardships that poses on smaller- and mid-size and 
large communities throughout the country. The Act required 
agencies, before finalizing the rule that would benefit 
resulting in more than $100 million annually to local and State 
governments, to identify Federal funding sources and the least 
expensive alternative or approach when it finalizes it 
regulations. However, despite passage of the Unfunded Mandates 
Acts, the Agency continues to promulgate rules that far exceed 
$100 million that place financial strains on the Nation's 
cities and towns.
    The Agency tends to assume full compliance with and success 
of existing regulations when calculating costs of new 
proposals, which I think is wrong. The Agency also fails to 
take into consideration the fact that all community water 
systems and all treatment works are not the same. They service 
various kinds of industrial and residential users which means 
that wastewater they receive can differ dramatically from plant 
to plant. This, in turn, affects not only the types and 
quantities of chemicals used to meet discharge limits, but also 
capital investments that may need to be made. All of which 
result in very different resource pressures for facilities 
across the country. They have different water resources, 
different chemical makeups and different resource pressures. 
Just as they cannot all be expected to use the same exact 
levels of chemicals to treat their water, they do not all 
experience the same level of cost. These differences must be 
reflected more strongly in the Agency's cost analysis.
    A critical issue related to the cost municipalities face is 
how the Agency defines affordability. I think we need to take a 
closer look at how affordability is defined and if there are 
variance technologies available. EPA can, but has not, approved 
a variance technology for drinking water rules if it finds the 
rules are unaffordable to small communities. This hasn't 
happened yet. The EPA defines affordability as 2.5 percent of 
the annual median household income, or $1,000. The median 
amount paid for water in 2001 was $31 a month. In order for the 
EPA to find that this rule is not affordable it must cause that 
rate to be increased to $83. That's an increase at $52, which 
they say is not very great, but it is great to a lot of the 
families that are so strained, and the communities that are 
strained by these problems.
    This speaks to one of the biggest problems we have with the 
bureaucrats running these programs. Congress clearly told EPA 
in the Safe Drinking Water Act to pay special attention to 
small, disadvantaged systems and yet its affordability standard 
reflects the median income, not that for the truly 
disadvantaged, causing it to find all of its rule affordable 
for systems of all sizes.
    When we began planning for this hearing, the first thing we 
did was look for existing reports and analysis of the 
cumulative financial impact. We are working on this now. This 
is what we are striving to find. You can say that you have a 
problem with one type of treatment, and this problem is passed 
on to the customers that you folks today are representing. But 
when you have three or four that are passing on at the same 
time, it's a much larger amount. What we're trying to do is 
take a little bit of this in a cumulative affect. For instance, 
the city of Coweta with a population of less than 10,000 people 
is paying for a new wastewater treatment plant. If someone is 
here, not on the panel, from Coweta, hold your hand up, please. 
Oh, you're--OK. We flew over Coweta this morning. That is a 
very famous place, that's the birthplace of Bill and Vonette 
Bright. He was not even aware of that, were you?
    Anyway, they're complying with both the disinfection 
byproduct rule and storm water phase II regulations. The city 
has also increased its rates every year for the past 5 years 
and anticipates more increases if help is not forthcoming.
    Unfortunately, in preparing for this hearing, we were 
unable to find recent, comprehensive studies of the overall 
cost of these regulations. Therefore, Senator Crapo and I are 
going to ask the General Accounting Office to conduct a 
thorough analysis of the cumulative cost to individual 
communities and ratepayers of both clean water and drinking 
water regulations. I think this study is critical to addressing 
the cost issues at the Federal level and beginning a productive 
discussion. A lot of the testimony that comes from you guys 
today is going to be looked at by this effort, this study, in 
order to try to determine what we can and cannot do.
    So with that, before I turn it over to the chairman of the 
subcommittee, I would like to mention that this morning we got 
in a little airplane, and I flew Senator Crapo over all the 
communities that are represented here today except for Norman. 
We didn't get quite that far down. Then we kind of look at this 
and see--so he has actually looked at your communities 
firsthand and has an opportunity to know a little bit about 
what the communities are.
    With that, I will just turn it over to any comments you 
might want to make.

 OPENING STATEMENT OF HON. MICHAEL D. CRAPO, U.S. SENATOR FROM 
                       THE STATE OF IDAHO

     Senator Crapo. All right. Thank you very much, Mr. 
Chairman. First of all, let me thank you for the invitation to 
come here to Tulsa. I have been treated very warmly and 
wonderfully by the people of Oklahoma. I certainly expected 
that, having known so many great Oklahomans in my experience in 
Washington, DC. But I just wanted to thank you for your 
tremendous hospitality and to tell everybody here that you have 
an outstanding Senator. I served in the House with my good 
friend, Jim Inhofe, before he ran for the Senate, and then was 
lucky enough to be able to join him in the Senate, and worked 
with him on issue after issue for virtually the entire time 
that I served in the U.S. Congress. It was an honor to be asked 
by Senator Inhofe to come and join him today for this hearing. 
He is an outstanding chairman. You're very fortunate to have 
someone of his caliber to fight for you on these issues and 
especially, to be the chairman. Now, he asked me--or told me it 
would be OK if I told you a little story about the committee. 
The committee as he indicated is the Fisheries, Wildlife and 
Water----
    Senator Inhofe. Subcommittee.
    Senator Crapo. My subcommittee, that I chair. When I first 
got to the Senate, it was actually called the Fisheries, 
Wildlife and Drinking Water Subcommittee because the then 
chairman, Senator Chafee, from Rhode Island, kept all the other 
water jurisdiction except for the drinking water statute to 
himself at the full committee level and didn't let the 
subcommittee have it. So this chairman is confident enough in 
himself that he's willing to let the subcommittee chairmen do 
their jobs. The subcommittee is now the Fisheries, Wildlife, 
and Water Subcommittee. But the story has to be told with the 
other name, it was Fisheries, Wildlife and Drinking Water 
Subcommittee. I had just gotten elected to the Senate. I served 
in the House. In the House, you have to be in the House a long 
time to be able to do a committee chairman. I wasn't thinking 
about being a committee chairman, but (inaudible) came in the 
first week I was in the Senate and said there are fewer 
Senators and so you're going to get to be a chairman of the 
Subcommittee for Fisheries, Wildlife and Drinking Water. I 
thought that was great. Then the next day my staff came back 
and said, ``well, there's a--maybe we spoke too soon, because 
another Senator is going to challenge you for that 
chairmanship. He wants it.'' It was Kit Bond from Missouri. He 
had been there 20 years or plus, and I had been there 2 days, 
and I figured that he had more friends in the caucus than I did 
at that point, so I thought, ``oh, my chances of being a 
chairman are kind of toast.'' But he already had a full 
committee chairmanship and another subcommittee chairmanship on 
the Appropriations Committee. So under the rules, you're 
supposed to let some of us junior guys have a shot at it.
    The caucus stuck with me and let me keep it. So the story 
now is he came to me afterwards and said, ``Mike, it's no--you 
know, nothing personal. I just think that that committee, that 
subcommittee, is the best committee in the entire Senate.'' I 
said, ``Well Kit, I'm really glad to know that it's not 
personal, but what do you mean it's the best subcommittee in 
the whole Senate?'' And he said, ``Well, just think about it. 
It's fisheries, wildlife and drinking water. That's fishing, 
hunting, and drinking.'' And I said, ``Well, that's true, Kit, 
you have given me a whole new perspective of the committee, but 
it is drinking water.''
    He said, ``Well, we have this thing--this substance we get 
out of Tennessee that we add to the water that helps kill the 
germs, and it makes it much better.'' Anyway, we had some fun 
with it. But the fact is that the committee has very, very 
broad jurisdiction. We have the subcommittee. We have the 
Endangered Species Act, the Clean Water Act, the Safe Drinking 
Water Act, and many other very critical issues for having 
resources. I will make this very brief because Senator Inhofe 
has very, adequately and accurately explained the issue. We've 
been working--that was 6 years ago. I'm in my 6th year as 
Senator. We've been working on this issue for that entire 6 
years trying to address a multiplicity of the issues that 
surround our aging infrastructure for our water systems in this 
country. We have big issues under both the Clean Water Act and 
the Safe Drinking Water Act. There are lots of different 
studies that try to guess and speculate as to how costly it 
will be for us to upgrade our infrastructure in this country so 
that we can maintain our clean water. It is the envy of the 
world. In my opinion, this issue is one of the most, if not the 
most important environmental issue that we have in the country. 
These studies, in terms of the amount of dollars that it will 
take nationwide, range from several hundred billion dollars to 
up to a trillion dollars of need depending on whose numbers you 
use. The point being that it is a massive issue of critical 
importance to Americans. So we have now just a few weeks ago 
put out legislation that, like I say, it's taken us 6 years to 
get to the point where we can get it to this point. This 
legislation will address the issues from multiple perspectives. 
We will look at the standards. We will look at efficiencies, if 
you will in the administration of the accounts. We will look at 
the questions of unfunded mandates and try to make sure that we 
reduce those to the maximum extent possible. We will strengthen 
and reform the revolving loan funds to try to get resources to 
the ground where they're needed as quickly and efficiently as 
possible. But we will need to do that with help from the people 
throughout the country. Because there are--as I said, there are 
tremendous battles in this country over how to do this and 
whether to add more bureaucracy, more requirements, more 
mandates or whether to streamline the process. It's one of 
those issues where I'm very interested today to see what these 
witnesses will tell us. I have seen your communities. I have 
not visited with you yet about that. I can tell you that Idaho 
has very similar communities and very similar circumstances. 
It's one of the most common problems that we face now with 
communities who don't have the ability to generate the 
economies of scale that larger population centers do, facing 
very, very expensive Federal mandates that don't come with the 
resources to accomplish them. I expect that we're going to get 
that kind of information to us today. But Mr. Chairman again, I 
thank you for your support and your interest in this issue. I 
also again thank you for the invitation to be here and look 
forward to the testimony.
    Senator Inhofe. Thank you very much. So that you know how 
we are going to do it, we have as witnesses today Mr. Charles 
Hardt, public works director of the city of Tulsa. I might add 
that 25 years ago when I was mayor--was it 25 years ago or 
longer?
    Mr. Hardt. A long time.
    Senator Inhofe. Yes, a lot longer than that. Charles Hardt 
was there. He hasn't changed any. So nice to have you back, 
sir. Robert Carr on behalf of the cities of Owasso and 
Collinsville. Mr. Arvil Morgan, Wagoner. We went over Wagoner 
this morning. Mr. Ken Komiske. Am I pronouncing that correct?
    Mr. Komiske. That's correct.
    Senator Inhofe. Komiske, from Norman. Rick Bourque, city 
manager of Wewoka, and Clay McAlpine, the director of 
engineering for this city of Muskogee. Clay, I have to say that 
when we were coming down over Muskogee, I pointed out the 
submarine, the USS Batfish, and that was my project in 1969, I 
think it was, when I was a State Senator showing tons of 
stories that we are navigable in Oklahoma. A picture does that 
better than a report. There it was on the cover of all these 
industrial publications coming across the State line of 
Arkansas into Oklahoma. So not many people would know that we 
can bring a 300-foot submarine all the way from Orange, TX to 
Muskogee. We are going to--in order to stay on schedule, we 
have some questions we want to ask you but your opening 
statements are going to be probably the most critical part. 
You've been instructed as to what types of problems we want you 
to talk about. The information you give us is going to be used 
in studies that we're talking about performing. You may well 
serve as a model in helping us serve as a model for the State 
of Oklahoma for getting some of these problems resolved. What 
we will do is take you in the order that I just read your 
names, instead of having two panels, I'm going to do you all as 
one panel. I'm to ask you to confine your opening statement to 
5 minutes, but the most you can go over is 2 minutes, all 
right? So if you try to do that, and then we--give us a chance 
to respond to some of your questions. We will start, Charles, 
with you.
    Charles Hardt, the city of Tulsa.

  STATEMENT OF CHARLES HARDT, PUBLIC WORKS DIRECTOR, CITY OF 
                             TULSA

    Mr. Hardt. Thank you very much. On behalf of this group, as 
well as the other communities in Oklahoma, we want to thank you 
Senators for taking your time to hold these hearings. We also 
want to express our appreciation for the State revolving fund 
program and the continuation of that as well as the expansion. 
Tulsa has participated in to the tune of $250 million so far, 
in the wastewater program and lending process. It's absolutely 
critical for us to be able to implement our infrastructure 
upgrades. We also want to thank you, Senator Inhofe, for your 
tremendous effort on the reauthorization of the Transportation 
bill and the significance it has to the city of Tulsa. It's 
absolutely vital to meet Tulsa's growing needs and continuing 
to keep up with our infrastructure capacity. Tulsa's water 
supplies are primarily surface water. We get our water, 
drinking water from two reservoirs. One coming out of the 
mountain areas over in Arkansas and the other to the north from 
Kansas. The greatest threat we've had today has been the 
challenge of nonpoint source pollutants. These are primarily 
agricultural water sheds with virtually no urban development, 
and therefore, we haven't had the point source issues that 
normally plague and cause the problems for our surface water 
supplies. Since the 1970's, the regulatory process has really 
focused on point source discharges. As a part of that, we have 
made major efforts in communities in the Nation in dealing with 
our discharges and our surface runoff protections through 
development processes and other treatment needs.
    But the city of Tulsa found itself in the early 1990's with 
an increasing problem that we were unable to deal with from the 
standpoint of having the capability of handling it ourselves. 
We actually had to discontinue the use of our water supply for 
over a month because of the taste and odor problems relating to 
new green algae from the high nutrient loading in our water 
shed. So as a result, we finally--we had considerable 
negotiations with poultry industries. As a result, we finally 
went to litigation. Are nearing the first year of a 4-year 
settlement agreement and in the process of trying to identify 
best management practices and through the use of Federal 
programs, as well as the 319 funds, to deal with erosion--I 
mean, the pollutant problems. But we find ourselves with the 
problem of trying to change behavioral practices in a very 
competing industry in a very short time period. Three years 
seems like quite some time, but really, whenever you consider 
that we really are trying to change, fundamentally, the 
behavioral practices of mom and pop farmers and the people who 
grow the chickens and dispose of the litter, we find that 
that's really a very tough situation dealing with two States, 
two different regulatory processes and the tremendous 
differences that we incur. So, therefore, we strongly encourage 
the development and implementation of regulatory enforcement 
mechanisms to control nonpoint source pollutants discharges of 
the Nation's water. We really need that overall umbrella that 
helps us all work to a common goal.
    For water quality standards, we think the great issue 
that's challenging, probably more to Oklahoma than any other 
one State, is the issue of tribal designation for setting 
standards. In Oklahoma, we have 38 tribes that could 
theoretically--that these are all recognized Federal tribes 
that could impact, then, our water quality standards, both for 
our drinking water standards as well as other projects such as 
transportation projects that go through multiple boundaries, 
both for clean water, as well as, then, the issues of air 
quality standards. So we would strongly encourage the 
legislative amendment of Section 401 of the Act, which 
authorizes certification of water quality standards developed 
by Native American tribes. We certainly want to meet all water 
quality standards that provide safe drinking water to all of 
our citizens, but we feel that there's a better way of doing it 
than each individual jurisdiction being able to set their own 
standards.
    In the process--well, the questions did ask for cost 
estimates. We have spent over $5 million on the nonpoint source 
pollutant discharge problems with everything from setting up 
our test, as well as ongoing, we are spending $250,000 a year 
annually just to deal with that issue. On the issue of the 
Water Quality Standards for Tribes, that could be very 
significant to someone involved in multiple jurisdictions. 
Water Quality Standards implementation of the issue of sound 
science, we are meeting--the staff is meeting in Oklahoma City 
this afternoon with the Water Resource Board to try to deal 
with establishing acceptable analytical methodologies, 
requiring strict adherence to industry-standard, quality 
assurance, and quality control protocols when monitoring water 
quality compliance with standards. Since my time says stop, and 
I'm into my 2 minutes, I won't get into the detail. But this 
issue, just for monitoring one factor that there was a 
parameter that it was identified by an invalid, erroneous third 
party testing--a field screening test, we wound up having to 
spend $20,000 just to deal with the fact that we had several 
streams that became invalidly, erroneously listed on the 
State's list. So these kind of things, if multiplied to a 
variety of other perimeters, could cost us a hundred times that 
kind of costs.
    Senator Inhofe. Thank you, Mr. Hardt.
    Mr. Carr, just because you represent two communities does 
not mean you get twice the time. We went over both communities 
this morning, to show where the home of the Rams was.

 STATEMENT OF ROBERT CARR, ON BEHALF OF THE CITY OF OWASSO AND 
                    THE CITY OF COLLINSVILLE

    Mr. Carr. Well, we want to thank you also for taking your 
time to come and be able to hold this hearing here in Tulsa. 
I'm representing also the Oklahoma Municipal Utility Providers 
as the chair of the Technical Advisory Committee, as well as 
the cities of Owasso and Collinsville. The Oklahoma Municipal 
Utility Providers was established in January 2003, by the 
Oklahoma Municipal League to represent the water and wastewater 
interests of municipalities. Since it's inception, 1\1/2\ years 
ago, 214 Oklahoma municipalities have become members of OMUP. 
This rapid organization growth is indicative of the collective 
magnitude of concerns, with respect to water related issues in 
the State of Oklahoma. Data collected by the OML indicate that 
rural and urban communities in Oklahoma have long-term 
financial concerns. The OML reports that 43 percent of the 
average year 2002, Oklahoma municipal revenues were the result 
of utility fees. Average expenditures for utilities were 
reported to be 39 percent. Therefore, the average revenues and 
expenditures for Oklahoma utilities are essentially equal. But 
the expenditures that were reported do not reflect depreciation 
or unbudgeted out-of-pocket expenses or unfunded mandates.
    Sales tax revenues largely in Oklahoma have been extremely 
volatile for the past few years. Municipalities have determined 
that they cannot count on sales tax revenue for stability.
    Many of the municipal budget short-falls experienced have 
had to be subsidized by utilities revenues. As a result, 
utilities operations have been stressed to achieve consistent 
results with limited or nonexistent additional funds to meet 
changing operational conditions and to meet new regulations.
    Data compiled from work done by various consulting 
engineers in Oklahoma, U.S. Environmental Protection Agency 
fact sheets, information from the Association of State Drinking 
Water Administrators and the Oklahoma Department of 
Environmental Quality staff, indicate all water customers can 
expect higher monthly bills as a result of recent regulations. 
The construction needed may increase water bills as much as 60 
percent per customer.
    Changing regulations have complicated the abilities of 
municipalities that they have to make long-term financial 
decisions to provide quality water to customers.
    We design our capital improvements to make investments in 
facilities that are based on the requirements and regulations 
that we know of today. When requirements become more 
restrictive, then alternatives are expected to become more 
costly.
    Few options are available to the small utility, however. To 
have control of their own operation, the small utility may be 
faced with locating new sources of supply. Economies of scale 
are more favorable to the larger utility that can absorb 
additional treatment costs among more customers. In addition to 
fiscal impacts, the Oklahoma Municipal Utility Providers 
questions whether cost versus benefit have been adequately 
addressed prior to implementation of regulations. For example, 
in a January 16, 2004, letter to the U.S. Environmental 
Protection Agency from the American Water Works Association 
commenting on the proposed Stage 2 Disinfectants and 
Disinfection Byproducts Rule, the following was stated: ``In 
reviewing the EPA cost benefit analysis, the AWWA found 
significant issues affecting the reasonableness and credibility 
of the final conclusion in nearly every step.''
    They went on to say that the EPA may have overstated total 
benefits considerably. Similarly in a January 9, 2004, letter 
commenting on the proposed Long-term 2 Enhanced Surface Water 
Treatment Rule, AWWA stated they were very concerned that the 
Agency's economic analysis documents have created an 
unrealistic expectation and implied a significantly greater 
benefit that will actually be realized through implementation. 
These comments are concerning to the Oklahoma Municipal Utility 
providers, as it is members municipalities that are faced with 
more restrictions and increased costs. Municipal water 
suppliers are charged with the fiscal responsibility of 
investing public funds in a manner that protects their 
investments, where there are no uncertainties pertaining to the 
need for additional improvements to meet future regulations.
    Senator Inhofe. Thank you, Mr. Carr. Thank you very much.
    Mr. Morgan, you are representing the Wagoner County 
district, so that incorporates several communities.

  STATEMENT OF ARVIL MORGAN, DISTRICT MANAGER, WAGONER WATER 
                         DISTRICT NO. 5

    Mr. Morgan. Yes. Again, I thank you for hearing what we 
have to say. I live in Coweta. You were talking about being a 
small town, I represent a rural water district that is a lot 
smaller than that, so everything that--you know, we get our 
water from the Verdigris River. We have about 2,550 tap 
holders. Back in 1989, 1990, we decided it's better for us to 
build a plant, operate our own deal. So we did. We built what 
was--what we were told was the latest and greatest thing on the 
market package plants. It worked real good until the 
disinfectant bylaw changed. Our plant will not produce water 
that will get us in compliance.
    Because of that, we're going to have to spend--I've visited 
with the engineer. It's going to cost us about $1.5 million. 
That don't sound to be--that's not a whole lot for these big 
cities, but when you talk about the rural and a lot of them are 
low income houses, you divide that up among 2,550, it's going 
to be very expensive. We have tried every way in the world to 
get what we've got to work, and it just won't. We've got to 
build on to our plant to make it work. There's probably about 
250 plants in the State that's going to be--that's just about 
like we are, small plants. So statewide, this is going to be 
very expensive. And that's our biggest concern, is where do we 
get the money and how can we afford to make these changes.
    The rural--the Water Resource Board has been real good 
about helping us out financially, Rural Development, but 
because Wagoner County, there is a consensus. They ran an 
economic study, I guess. Anyway, we don't qualify for any 
grants. So it's all going to have to be borrowed money. So 
we're kind of up against the wall. We need some help from 
somewhere, whether it be some time on our--bylaw, disinfectant 
bylaw change, or money, you know, we need some help from 
somewhere. That's what we're doing here.
    Senator Inhofe. Well, good. Before proceeding on to Mr. 
Komiske, let me just make a comment on something that Mr. Hardt 
said. I know this community was interested in this same thing. 
On the Transportation bill, what we did--the last thing we did 
before we left, was have a conference. I chair the conference 
between the House and the Senate. There are 72 members of the 
House and Senate on that conference.
    Our problem has been--and I have to be critical of our own 
Administration in this respect--that without any regards to how 
it's being paid for, they wanted to have a reauthorization of a 
Highway bill for the next 6 years to be under $256,000 billion. 
Now, if it doesn't--if it's done user fees and it's not--and 
the users are not complaining about it, it would seem to me 
that it would be unnecessary or unwise to veto a bill merely 
because the number, even though it doesn't add to the deficit, 
is higher. Quite frankly, the House went all the way down in 
their bill from $270-$375 billion down to $284 billion. We're 
trying to get that back up to about $289 billion, in which case 
we will be able to do something about such things as 
(inaudible) states and other problems. Right now Oklahoma is 
tied with Missouri, dead in last, in our condition of our 
bridges. So we have to do something about it. I just wanted to 
say that to you, Charles, I know you're interested. We fully 
intend to go back after this recess. The staff is working on 
coming up with the elements of the bill that we have left in 
their hands. We, hopefully, will be able to pass one when we 
get back in September.
    Mr. Hardt. Very good. Thank you.
    Senator Inhofe. Mr. Komiske, excuse me for the interruption 
there.

STATEMENT OF KEN KOMISKE, PUBLIC WORKS DIRECTOR, CITY OF NORMAN

    Mr. Komiske. That's fine. Thank you for the opportunity to 
be here. My name is Ken Komiske. I'm the director of the 
utilities for the city of Norman. With me in the audience is 
Bryan Mitchell. He's one of our lead engineers. He's been with 
Norman about 6, 8 years. I've been with the city of Norman 
about 10 months.
    Senator Inhofe. Hold your hand up, Bryan. There you are. 
OK.
    Mr. Komiske. So if there is any historical references or 
anything, Bryan can probably answer that. But I think he's here 
to make sure I don't say something stupid.
    Senator Inhofe. Well, let me interrupt you at that point 
and stop the clock and introduce Michele Nellenbach, who is 
behind me. Michele, she is the one who came here from 
Washington to keep me from looking stupid, so we all have that.
    Mr. Komiske. Fair enough.
    Senator Inhofe. Start the clock.
    Mr. Komiske. Well, Norman is well aware of the importance 
of wastewater and water issues, and as such, an important piece 
of finding more water, finding additional water, and treating 
water, is water conservation measures.
    We do have a lot of measures in place, and we're 
aggressively continuing that. We have, of course, the newspaper 
ads and the educational pieces, and we also provide 
conservation kits to homeowners, so the homeowner or residences 
can use less water. But the very important piece, is the 
residents and citizens voted for an inverted rate block, which 
means that the more water a residential customer uses the more 
expensive it gets per unit. So that helps keep conservation in 
check. By going over 20,000 gallons per month, the water rate 
per thousand gallons actually doubles. So with that in mind, 
Norman historically has enjoyed economic diversity, and as 
such, in this graph here, you can see that we have grown and 
our water usage has increased. We get our water from two 
sources. We have--the turquoise band on the bottom is from Lake 
Thunderbird. It's a manmade reservoir. Then the yellow band 
across the middle is from our well fields. So we have 31 wells, 
and you can imagine, the wells vary in age and size, and so at 
any one time, there's probably 27 of them that are working. So 
that's our average day demand. If you look at our peak day 
demand, which I think we have done a very good job in keeping 
in check or under control, is our peak day demand is about 
twice our average day demand. That's not really bad for a 
community our size, because a lot of communities in an area as 
this, such as, Idaho and the Boise area, I used to live there, 
or Oklahoma where it's very, very warm, you can have peake day 
demands of sometimes three, three and a half times your average 
day. So we have twice the average day demand, but if you look--
the point of this is we are looking at what are--where it was 
and what we will need in the future. If you go out to 2040 to 
meet the peak day demands, we will be needing about 60 million 
gallons a day. Our average day right now is 11. Our peak day is 
about 23. So we are going to need a considerable amount of 
water. As such, we did a water plan in 1999 to get our arms 
around this monster and, essentially, say where are we going to 
get this water from. We came up with a plan that is on Figure 
3. It looks like it would cost about $80 million to supply the 
growing needs of Norman. That would be with additional water 
treatment plant capacity and, perhaps, a buffer reservoir, 
essentially, attached to the Lake Thunderbird and definitely to 
increase the well supply that we have. So we're looking at 
that, and in Figure 4, along came the Arsenic Rule. This is the 
important figure.
    If you can look at that picture, that diagonal line across 
which is actually Route 77, has a whole bunch of little white 
dots. Those white dots are wells that have been working--some 
of them for quite some time, that will be put out of service 
because of the Arsenic Rule. So out of 31 operating wells, or 
at least 28 operating at any one time, we'll be losing half of 
our supply of well water due to the arsenic rule.
    If you have a colored picture you can see that some of the 
other wells are grouped in clusters. That's our way of getting 
around this monster, is that some of the wells can be combined, 
so we can put some wells with good water in with some of the 
wells with bad water and mix the water together and still end 
up below the arsenic level. So we'll use 15 wells. Seven wells 
will be combined and blended and seven wells will actually have 
to have all their water transported back to the water treatment 
plant, mixed with the surface water, and then released back 
into the system. So that's where we are on that. This expansion 
or this change that we really weren't expecting prior to 1999, 
I suppose, will cost about $9 million.
    So before I go into the wastewater thing, I'm running out 
of time. That's really what we wanted to talk about in terms of 
water supply and where we were. We have a $9 million elephant 
looking at us, and we have to get our arms around that.
    Senator Inhofe. All right, sir.
    Mr. Bourque.

           STATEMENT OF RICK BOURQUE, CITY MANAGER, 
                         CITY OF WEWOKA

    Mr. Bourque. I would first like to take this opportunity to 
thank Senator Inhofe and Senator Crapo for holding this hearing 
and for giving the city of Wewoka a chance to speak out about 
these important issues. Senator Inhofe, as you know, when you 
served as mayor of Tulsa, managing a city is never an easy 
task. Unlike the Federal Government, we do not have the 
capacity to run deficits. We should always balance our books. 
This is difficult enough in the best of times, but when these 
outside factors like unfunded mandates come into play, it is 
almost impossible.
    This is especially true in a small town like Wewoka. Wewoka 
is a very diverse town. It was founded by a former Indian slave 
in the Seminole Nation, has lived through the booms and busts 
of the oil industry, and has suffered many hardships along the 
way. Seminole County, where we reside, currently has one of the 
highest unemployment rates of the State, almost 20 percent. 
Population has been steadily declining for the last several 
years and so have sales tax revenues.
    This is true not just in Wewoka, but in small towns across 
the State. I tell you this not to be pessimistic. Actually, we 
are very optimistic about our future. I merely want to point 
out that small towns like ours have dwindling resources and 
cannot afford the cost of heavy-handed regulations and unfunded 
mandates. There are many examples of this that I can speak 
about. But in the interest of time, I have limited it to just a 
few.
    One example of how unfunded mandates complicate the 
business of city government is in the area of excessive and 
constantly changing regulations in our drinking water. Most 
cities have a sizable investment in their water treatment 
facilities. Wewoka is no exception. We take very seriously our 
duty to provide safe, clean, and affordable drinking water to 
our citizens. However, city management and budgeting requires 
not only making the books balance to date but budgeting for the 
future as well. This is extremely difficult when the EPA and 
DEQ constantly change the standards. Some of the changes are 
dubious, at best. Take for example, the issue of turbidity. 
Turbidity, as you no doubt have heard, relates to the 
cloudiness of water. Just as the lake that supplies our 
drinking water turns over every year, becomes cloudier or 
changes slightly in color or transparency, so too does our 
drinking water. This is turbidity. It does not indicate that 
there are any chemicals or trace elements that affect our water 
quality and public health in any way. Neither are these 
standards remaining static. They are constantly changing. The 
turdibity standard has changed recently. It will only change 
and reduce in the future. Those arbitrary standards are having 
a considerable impact on the ability of small towns to continue 
providing water to their citizens, without enormous capital 
expense. This is not the only example of such standards only 
one of the more recent.
    Another problem I would like to speak to you about today, 
concerns our city's sewer treatment plant. The city of Wewoka 
is currently under a consent order for water infiltration into 
our system. The consent order states that we will build another 
facility to replace the existing one and correct infiltration 
problems in the sewer distribution system. The current project 
price is around $4 million. In trying to comply with the 
consent order, there have been numerous problems that have only 
served to delay and complicate the issue and to add to the 
already excessive cost. For example, DEQ and EPA require that 
the city commission do a study to determine needs and costs 
involved in making the necessary changes. However, they 
required that we hire an outside engineer to do the study 
rather than use the city engineer. Rather than completing the 
study in-house and with minimal cost, the city had to hire a 
consultant and pay nearly $400,000 to complete the study.
    So, with the prospect of $4 million worth of repairs 
looming over our heads, which we cannot afford, the 
bureaucratic requirements are only adding to the problem.
    Another factor that adds to this problem is that in the 6 
years that I have been the city manager of Wewoka, I've worked 
with four different regulators from DEQ and EPA. Each time 
employment changes, delays occur, because the new employees are 
unfamiliar with our city or the consent order it operates 
under. Furthermore, regulations change so often that when 
preparing a final engineering report, we have to amend our 
plans several times. Furthermore, they have requested 
additional information on three separate occasions and they 
still have not approved our report. All of these factors have 
delayed the process and have made it more costly.
    We estimate that by the time we begin construction of the 
new treatment plant, we will already be looking at regulations 
that will put us out of compliance. Once we are under a consent 
order, we have no other avenues to pursue other than seeking 
funding to help pay for these improvements. Naturally, these 
costs will be passed on to our consumers. We estimate that a 
surcharge--a minimum surcharge of $20 could be accessed to 
every water meter in Wewoka. When one out of every five 
citizens is unemployed and the average income is near or below 
the poverty line that cost is excessive. I'll just stop with 
that.
    Senator Inhofe. All right. Mr. Bourque, thank you very 
much.

 STATEMENT OF CLAY McALPINE, DIRECTOR OF ENGINEERING, CITY OF 
                            MUSKOGEE

    Mr. McAlpine. As a member of the Oklahoma Municipal League 
Technical Advisory Committee on Water Issues and the director 
of engineering for the city of Muskogee, I would like to thank 
you and your committee for this opportunity to speak with you 
concerning growing costs associated with the new provisions of 
the Safe Water Drinking Act. The city of Muskogee operates a 
regional water treatment plant supplying water to approximately 
55,000 people. Although our water plant is quite old, the city 
has made numerous modifications and upgrades to meet the needs 
of the customer and maintain compliance with the treatment 
regulations. Our water system was in compliance with all of the 
provisions of the Act prior to 2002.
    January 2002, ushered in new regulations that include the 
Interim Enhanced Surface Water Treatment Rule and the Stage 1 
Disinfection Byproducts Rule. Compliance with these regulations 
have placed a significant burden on our plant and our budget. 
We began making modifications to our treatment process in 2000. 
We were looking for the best treatment method using existing 
equipment and different treatment chemicals to achieve 
compliance.
    Prior to the recent change in regulations, utilities and 
chemical costs represented about 50 percent of our overall 
treatment costs. Utility and chemical cost fluctuate the most 
and consequently are the hardest to control. Labor, upkeep of 
equipment and insurance represent the remaining costs. The cost 
of chemicals has changed as a result of the new regulations. 
Before the regulations went into effect, chemicals represented 
about 21 percent of the overall treatment cost. With the 
addition of the new treatment regulations, we have seen this 
cost go as high as 37 percent of our overall cost.
    In your handout, I've included a table that outlines our 
costs for the last 5 years. Just to briefly tell you that the--
prior to the regulations in 1999, our chemical costs were 
$259,000 per year.
    That represented a cost of about five cents per thousand 
gallons of water produced. Last year in 2002, 2003, those 
chemical costs have gone up to $537,000 and that drove the 
chemical cost per thousand up to 12 cents per thousand gallons, 
so you can see that the cost almost doubled.
    Unfortunately, changing chemicals and increasing their feed 
rate has not brought about compliance. We are in compliance 
with regards to Trihalomethane, Haloacetic Acids, and 
Turbidity, but we are still having problems with the Total 
Organic Carbon Removal Rule. Recent plant trials have shown 
positive results, and we are confident that within a short 
period of time we'll be able to achieve compliance even with 
this.
    When the treatment costs increase, other items are 
sacrificed. In this case, funds that could have gone to replace 
old and aging water system infrastructure have been diverted to 
treatment. I can't help but question if we are best serving the 
public's interest by reducing the level of Trihalomethane from 
100 parts per billion to 80 parts per billion, or should we be 
replacing the old, 2-inch water line in front of someone's 
house with a 6-inch water line that provides fire protection.
    I'm very concerned with the provision of the Stage 2 
Disinfection Byproducts Rule. These proposed regulations will 
eliminate the utility's ability to average the Trihalomethane 
and Haloacetic Acids across the system. The regulations will 
require the company to identify the hot spots with the highest 
readings and start monitoring these areas for compliance.
    The preamble for these regulations, with regard to the 
Disinfection Byproducts dated October 17, 2001, do not really 
make a compelling case for the risk associated with the long-
term exposure to byproducts. Page 45 of the report states ``As 
in the Disinfection Byproducts Rule, the assessment of the 
public health risk from disinfection byproducts currently 
relies on inherently difficult analyses of incomplete empirical 
data.'' The tone of the preamble ``it is appropriate and 
prudent to err on the side of public health protection.'' I 
really wonder if the question is, are we truly serving the 
public health's interest in the most cost effective manner. 
Especially, since the cost--the added cost is preventing the 
utility companies from doing more basic improvements than have 
proven their worth over time. Of course, our goal is to provide 
customers and citizens with an abundant, safe and dependable 
quality drinking water that meets all health and environmental 
guidelines at a cost that they can afford. Please keep this in 
mind when reviewing the need for these additional regulations. 
Thank you very much.
    Senator Inhofe. Thank you, Mr. McAlpine. I would like to 
see a show of hands of how many people are here representing a 
community that is not on the panel? All right. There are about 
five, six, seven, out there. We're going to leave a little time 
afterwards to visit with you individually, and then we'll have 
some instructions on how to get something into the record that 
might serve to be beneficial to you. Let me ask all of you the 
same question and then I have some specific questions. But I 
will turn it over to Senator Crapo for his questions first. As 
I mentioned in my opening statement, one of the requirements of 
the Mandates Reform Act is that the EPA identified Federal 
resources to assist the local government to pay for--that's the 
law. We passed that law. The legislation that Senator Crapo and 
I have introduced seeks to provide a Federal share of this 
cost. Now, I'd like to ask each one of you, so that we will 
have it on the record, how much financial assistance has each 
of you received from either the Federal or the State 
governments. If you don't have that figure, you can do it for 
the record, which means you can followup with a letter later on 
and give us that information, perhaps, you can give us an 
approximate amount.
    Mr. Hardt.
    Mr. Hardt. On the wastewater side, we have spent $250 
million to date in round numbers. We've had no loans on the 
water treatment side.
    Senator Inhofe. So the answer is nothing, then?
    Mr. Hardt. Zero on the water.
    Senator Inhofe. All right. Fine.
    Mr. Carr.
    Mr. Carr. The city of the Owasso has received $21,176,000 
from the Oklahoma Water Resources Board through loans for 
improvements on the wastewater treatment facilities and 
improvements within our wastewater collection system. We have 
received no funds for water. We do not have a water treatment 
facility in Owasso. We purchase our water wholesale from Tulsa. 
The city of Collinsville has received $915,000 for water 
treatment facility expansion and some improvements in the 
wastewater collection system.
    Senator Inhofe. Is that Federal?
    Mr. Carr. No. Again, that's through the Water Resources 
Board.
    Senator Inhofe. OK. That's a loan?
    Mr. Carr. Yes. There has been a $55,000 emergency grant 
received from the Oklahoma Water Resources Board for some 
repairs to raw water pipeline.
    Senator Inhofe. All right.
    Mr. Morgan.
    Mr. Morgan. We've got two loans with the Oklahoma Water 
Resources Board for just updating our system that we have in 
the regional plant that we built. It's $4.1 million.
    Senator Inhofe. Now, I assume that some of those loans you 
are getting from the State are--involve Federal moneys. If you 
have that backup on that, maybe we should know that too.
    Mr. Komiske.
    Mr. Komiske. Yeah. We have received two emergency grants 
for $200,000; $100,000 apiece. These were really particularly 
for subdivisions, essentially, where there would be a 
particular subdivision that their wells were all going bad, and 
so they needed emergency grant to be able to run the pipeline 
connection to our water system. That's what both of these 
issues were. As far as the State water revolving--the State 
revolving fund, we received about $12 million for wastewater 
projects. I think what's unique to Norman is Norman cannot 
change the rates for its utilities unless it's voter approved. 
So when we do receive a revolving fund like this, or a loan, it 
can only be for 40 percent of the project, because we can't 
have revenue bonds, because we can't guarantee the revenues, 
because the citizens may not vote for the increase in rates. So 
that's kind of a unique situation.
    Senator Inhofe. Do any of the rest of you have that same 
problem? That's one that I was not aware of so--where it has to 
be voted in order for the rates to go up? I know you don't in 
Tulsa. Is anyone--Mr. Komiske?
    Mr. Komiske. We do have some stag grants EPA for wastewater 
projects that total $3.9 million.
    Senator Inhofe. OK. Good.
    Mr. Bourque.
    Mr. Bourque. We have received about $18,000 for emergency--
through emergency funds for repairs to the water distribution 
system. We have incurred debt in the amount of about $200,000 
to bond indebtedness to do improvements on our water system. 
Currently, we're waiting on approval of our final engineering 
report, which we will be seeking a loan of about $4 million 
through rural development through the Oklahoma Water Resources 
Board.
    Senator Inhofe. All right.
    Mr. McAlpine.
    Mr. McAlpine. The city of Muskogee has received 11 loans on 
our wastewater side from the Oklahoma Water Resources Board, 
totaling $57 million. Most of these loans were backed through 
the Federal Government. That breaks down to six loans from the 
Clean Water State Revolving Fund for $35 million and five FAP 
bond loans. We haven't had any loans with regard to our water 
system.
    Senator Inhofe. All right. Thank you very much.
    Senator Crapo.
    Senator Crapo. Thank you very much, Mr. Chairman. I want to 
go over just a couple of questions. I was interested in a 
statement that you made, Mr. Bourque. Several of you have 
indicated--in fact, I suspect in one context or another, I can 
safely say all of you have said that new regulations have put 
previously existing--previously--the system that was previously 
in compliance, out of compliance.
    But Mr. Bourque, you said it in a way that was just 
striking actually. You said we estimate by the time we begin 
construction on the new treatment plant, we will already be 
looking at regulations that will put us out of compliance.
    Mr. Bourque. Yes, sir. They change so often. There's 
already been things that we've had to change within our 
engineering report that's changed since we submitted the 
engineering report. They keep asking for more information.
    Senator Crapo. I can understand the frustration of that. It 
frustrates me to hear you say that.
    Let me expand this question to the rest of the members of 
the panel. Is that a common experience? Anybody else?
    Mr. Hardt.
    Mr. Hardt. Well, we certainly try to project whenever we do 
an improvement to a plant, what's being discussed as 
anticipated requirements as well. So we probably go beyond the 
limit at that time just to insure that we don't become 
noncompliance.
    Senator Crapo. If you're just right, you're OK?
    Mr. Hardt. If we're just right, we're all right otherwise, 
we may have been--provide a little bit more treatment capacity 
than was needed.
    Senator Crapo. Does anybody else want to comment on that in 
general?
    Mr. Carr?
    Mr. Carr. Yes, Senator, the city of Owasso, city of 
Collinsville, and two of the surrounding rural water districts 
are presently looking at a regional water plant. I had 
neglected to also indicate that that was some funding through 
EPA of about $100,000 to fund this study. This study is going 
to potentially impact decisions that will be very long-range 
decisions that could be made. With the change of regulations, 
it's like shooting at a moving target trying to determine what 
your cost of operation and cost of construction may be. So I'm 
expecting that we're going to have some very difficult 
decisions to be making in the next few months.
    Senator Crapo. Anybody else on the panel want to weigh in 
on that particular issue?
     Mr. Komiske.
    Mr. Komiske. It's not exactly the same, but our issue in 
Norman, because the citizens do have to vote on rate increases, 
which affects all the utilities, it's a little bit difficult to 
address multiple funds. So we have--you have to educate the 
customers and the citizens that this is a wastewater issue and 
these are things that are needed.
    These are things that are mandated. They're good for the 
environment. You get them to vote for an increase in their own 
rates. You say, OK, that's over, but really that's not over 
because you have the same thing on the water side. So you have 
the wastewater side over here. We just got through with a 
sanitation rate increase. It's like you're constantly going 
back saying we need you to raise your own rates, and for 
different issues, but all the citizen says is my utility bill 
is going up.
    Senator Crapo. Let me ask you, that's maybe a good segue 
into the next issue I want to get into.
    Senator Inhofe. Before you go there, let me reflect those 
communities back here who have--you might have some testimony, 
we're going to ask for your testimony to become part of the 
record, but, specifically, that--I was going to ask the same 
thing that Senator Crapo asked. Changes, either the standards 
from EPA or from other groups, the particular hardships, that's 
very important for us to have a good background on this. So if 
you would take notes as we go along so we can get the 
information from your respective communities, that would be 
helpful. Excuse me.
    Senator Crapo. Certainly. Each of you testified and as I 
went through your written testimony, I tried to just do some 
math and calculate what it meant to the customer to each of 
these particular issues that you may have highlighted.
    I'm not going to go through all that with you. Anybody who 
is interested can go through the testimony and do that.
    But Mr. Komiske, let me followup with you. What happens in 
your community, if the voters don't approve the increase in 
their rates? I mean, you still have to upgrade your system.
    Where does the money come from?
    Mr. Komiske. Luckily, we have enough of an education 
process and enough lead time that you actually have to go 
through this with all of your customers. You have to let 
everybody understand the concept and reason why we're doing 
this. In some places we would have some options, like the 
sanitation rate increase. If that did not go through, we would 
just have to cut services, so the services they would have 
would go down. In wastewater issues, we wouldn't have the 
option of providing less water, but it would have to probably 
come out of the general fund. It's one--and those are one of 
the things we wrestle with on the city council side constantly, 
is some of the citizens think it should come out of the general 
fund, but we have enterprise funds that we think that the 
utilities should pay for itself. You use the water, you should 
pay for the water, you use the wastewater service, you should 
pay for it.
    Senator Crapo. I think that's a principle that we all agree 
with throughout the country, that the systems ought to pay for 
themselves, except as the systems continue to grow in expense. 
Whether it's the system--whether it's the procedure you have or 
the voters get to approve or whoever gets to approve it, at 
some point, the utility rates that we charge simply exceed what 
we see communities able to charge in their communities. I'm 
assuming that that creates pressure on the general fund?
    Mr. Bourque. Absolutely.
    Senator Crapo. Is that correct in each of the communities? 
Do you, in any of your communities, utilize general fund moneys 
to supplement these budgets?
    Mr. Hardt. Speaking of Tulsa, we do on the capital 
improvement side. We would go to the voter for capital and bond 
issues or sales tax for capital projects, but for operating the 
enterprise funds, no.
    Senator Crapo. Any others? Is anybody here at this point, 
utilizing general funds? I don't see any responses in the 
affirmative, although, I did see some head shakes that there 
was pressure on that as we move ahead with these increase 
costs. What this gets to, in my mind, is sort of two points. 
Mr. McAlpine, you identified one, that is, you said you weren't 
sure it wasn't better to be using these dollars to put in 6-
inch pipes instead of 2-inch pipes.
    It could not only address the water, but it could address 
fire protection and other safety and quality of life issues for 
your citizens, that's one thing. In other words, are we using 
the money in the best place in our water system. The other 
question is are we draining money out of other important 
services. I don't know that we are yet, although, there are 
pressures around the country, and there are communities around 
the country in which we are. That means it could be taken out 
of health care, out of police protection, roads, whatever it 
may be. We are starting to see a competition for the tax 
dollars and fee dollars that are available there. The cost of 
this is starting to get very high. I would just like to ask any 
of you if you would like to weigh in on this as to whether you, 
in the process by which you try to separate and figure out how 
to obtain necessary resources to deal with the mandates that 
you face, whether the questions of competing needs in the 
Government, competing services that are needed to be provided 
come up in those discussions? Is that--that is not an issue 
that--Mr. Carr, you look like you're about to say something?
    Mr. Carr. I don't think it necessarily is competing against 
these on other--on other areas. It's what--I think what I've 
experienced is that when we have a demand on the resources, 
financial resources, then we've had to find ways that we could 
cut back and still provide the basic services, but that doesn't 
necessarily mean that we're able to go beyond the basics. We 
may not be able to do everything as completely as we would like 
to, because we don't have all of the financial resources 
available to do the complete package. We do what we have to do, 
but we are not--I don't think in a lot of cases--providing the 
routine so that we protect our infrastructure investments the 
way that they need to be protected and do the maintenance that 
we need to do.
    Senator Crapo. Mr. Hardt.
    Mr. McAlpine. Senator, I would like to say, you know in 
that regard, one of our biggest concerns is keeping up our 
infrastructure. Our repair and replacement funds for doing that 
work is being cut almost to nothing. All that money went into 
treatment. That was the point I was trying to make. I have 
water lines in our system that are undersized. People don't 
have enough pressure, don't have fire protection. I'm 
sacrificing that so that they can have water that has 80 parts 
per billion Trihalomethanes or less. I really question, you 
know, are we really doing the customer, you know, a service in 
this area. It's very difficult to also explain to them why 
prior to 2002 it's OK to drink that water, it was OK, met all 
regulations. After 2002, now we've got a problem.
    Senator Crapo. Mr. Hardt.
    Mr. Hardt. On the water side, our rates structure does pay 
for our capital and operations, and really is relatively 
competitive with similar size cities in terms of fee 
structures. On the wastewater side, the system was a much more 
deteriorating state. We have had to, through consent orders and 
administrative orders, spend a considerable amount of money, 
and, therefore, the rate structure could not. Our rates more 
than doubled on the sewer side, we were not able to fund the 
capital program even at that pace. That's why we had to go to 
the State revolving loan fund for the borrowing of some $250 
million plus the ad valorem taxes and other means. Those do 
compete, either ad valorem community approved taxes or one cent 
sales tax for capital projects compete against fire stations, 
police facilities, roads, and all the other infrastructure, 
flood protection, so it is a very competing and difficult issue 
to fund on the wastewater side particularly.
    Senator Crapo. All right. Thank you.
    Senator Inhofe. Mr. Bourque, you were talking about the 
average income near poverty level in some 20 percent; is that 
correct?
    Mr. Bourque. Yes, sir.
    Senator Inhofe. I would just--in my opening statement, I 
will go back and reread it for you here. It's talking about 
drinking water. EPA defines affordable as 2.5 percent of the 
annual median household income, which is $1,000--that would be 
$1,000. The medium amount paid for water in 2001, was $31. Now, 
if you take what they consider to be affordable, that would be 
$83. Now, in your community with the strapped conditions that 
you just described, that would mean that each individual, if 
they were average and they're not, would have to come up with 
an additional $52 a month. What kind of a hardship would this 
impose on people in your area?
    Mr. Bourque. It's an extreme hardship. Right now they're 
having a hard enough time paying their bills as it is. When 
they're not paying their bills, we are having to find some 
other way to supplement paying for all these improvements. If 
we went to $83 a month just on our water utility bills, we 
would just about have to shut our doors. Our people couldn't 
afford to pay for it.
    Senator Inhofe. What I would like to do for each of you and 
those representing other communities that are not at the table, 
is to--granted, if we end up with clean drinking water we 
didn't have before, that might be different. I'm not sure 
that's always the case. I would like to have you give to us--
not right now, unless it comes to your mind--in your written 
testimony or something you will submit to us for the record, 
regulations that you feel honestly, in your own heart, in your 
own mind, are superfluous, don't really accomplish anything, 
and yet pose the hardship that I just described from the 
opening statement. Does anything come to mind right now as to 
what ridiculous types of requirements that might be there that 
is expensive and yet is not accomplishing its stated goal? 
Because we get--when I go around and have town meetings, I can 
tell you at every meeting they come up and say why are they 
requiring this. So I know you have some testimony in your mind 
and I would like to have you come forth. We need this. If you 
expect Senator Crapo and me to help resolve this problem, you 
have to help us too. So we need to know these things.
    Mr. Hardt, you--well, first of all, you mentioned the sales 
tax increase for capital improvements. I wasn't proud that we 
had to do it. But when I first was elected there, you were 
there, and you remember this. I had to do a one cent sales tax 
increase for the capital improvements. I'm conservative, and 
I've always been a conservative. Yet we sold that idea after 
losing it once and people understood that that's what the 
Government is supposed to be doing. When they are convinced 
that the--that you have water lines that are leaking into sewer 
lines, and we have obvious things that have to be done, they 
will come forward. We demonstrated that in the city of Tulsa. 
That program that set the stage for a way of measuring the 
results you got from that.
    But, something I think has been very successful. I would 
like to have you comment on that for the benefit of some of the 
others here.
    Mr. Hardt. We still use the same sales tax package--the 
concept that you developed in 1980. That is basically a list of 
projects criteria-based for 5 years worth of sales tax revenue, 
and then have a sales tax overview committee to provide regular 
reporting to the elected official's office of how that money is 
being spent.
    Senator Inhofe. After the sun sets, then people will know 
that it did what they said it would do 5 years before, is 
that----
    Mr. Hardt. That's correct. You are trying to fund a 
specific list of projects. Then to--if you wish to extend it 5 
years later, you provide an additional list of projects.
    Senator Inhofe. OK. Mr. Hardt, I think the problem is 
resolved now, but you brought it up, the tribal designation 
problem. Here a few months ago, we weren't sure how it was 
going to turn out. Now, Senator Crapo, we have a lot of tribes. 
I think I told you when we were flying around this morning, the 
largest--the capital base is the largest native American 
population in the country. We have a number of tribes. As I 
recall, I'm going from memory now, Mr. Hardt, wasn't it just 
one tribe that was applying for that treatment as a state or 
was it more than one tribe?
    Mr. Hardt. My understanding, there are several that have 
applied. I wasn't aware that the problem has been resolved.
    Senator Inhofe. Right. How would you handle that, I mean, 
as complicated as this is, if you had three tribes making that 
application, where would you draw the lines? Who would you 
apply with? What would that do to your current system as we 
know it now, that's a State system?
    Mr. Hardt. I think it would be unmanageable. We have a 
number of tribes that are in Tulsa that would fall in that 
distance in terms of their boundaries. We--if they were allowed 
to have different water quality standards, we would have to 
meet the most critical standard and apply it to probably our--
because we have two water plants that serve the entire region. 
So we would most likely have to meet the most compelling severe 
criteria and go with it.
    Senator Inhofe. Yeah, I don't know if you have that problem 
or not.
    Mr. Hardt. Sir, if you have a problem that's been mentioned 
with changing regulations on the Federal level with EPA our--
you really are going to have a changing moving target if you're 
looking at each tribe being able to adopt their own standards.
    Senator Inhofe. Mr. Morgan and Mr. Bourque, I think judging 
from your opening statements you probably represent the two 
lowest income areas that are on the panel today. Did you come 
with any specific figures that you could share with us, as to 
an individual family rate payer, as to what it was a period of 
time ago, maybe 5 years ago, and due to a lot of these things, 
or 10 years ago, and to date?
    Do you have any figures you can share with us?
    Mr. Morgan. I don't know--right now I'm going to imagine 
that our average water bill is $35 a month. What it was 5 years 
ago, I really don't know. The affect of having to have a 
million and a half dollar loans, plus engineers are telling us 
it's going to cost us about $3,000 per month in additional 
chemicals. It's going to go up a lot. We haven't run a study on 
that yet, so I don't know how bad it's going to affect us, but 
it will. We don't have any source of income like other cities. 
The only income we get is from sales water.
    Senator Crapo. I did a little math provided by the numbers 
in your testimony. One issue that you raised it's going to go 
up $590 a year, and it's $35 a month now, which is about $420 a 
year. So it's going to go up over 140 percent on just that one 
issue.
    Senator Inhofe. OK, but, see, that's drinking water alone, 
and that's also an average, and they're below average.
    Mr. Morgan. That's right.
    Senator Inhofe. How about you, Mr. Bourque?
    Mr. Bourque. In the year 2000, our minimum water bill which 
encompasses sanitation and sewer, was about $20. We just 
increased the rates this year. We're going to be at a minimum 
bill--this is a minimum standard, which is, I think, based on 
1,000 usage, which is what the most elderly deal with, is a 
minimum bill. We will go to $30.50, we just passed those 
increases. So we're $30.50. We don't know what we're going to 
have to go to until we seek our funding.
    Like I said, we're waiting on our final--we are looking at 
$4 million divvied up between 2,500 people.
    Senator Inhofe. Well, it sounds like we are intentionally 
here trying to paint scenarios that are very very difficult or 
impossible and, quite frankly, that is what we are doing, 
because we are responsible for trying to do something to lessen 
that burden and new ways of doing it.
    You are right, Norman made up--may be the fastest growing 
community or in the top three, anyway, right now. You are 
anticipating by 2040, what you would do and, of course, losing 
half of your wells. Now, what is your population today and what 
are you guessing it will be in 2040?
    Mr. Komiske. Our population today 102,000. But probably 
85,000 of them are served by our water system. The rest are out 
east toward the reservoir and are on private wells. I don't 
have that information as far as what our population will be in 
2040.
    Senator Inhofe. OK. But it is rapidly growing?
    Mr. Komiske. Yes.
    Senator Inhofe. In fact, Senator Crapo asked me as we were 
flying around this morning about the different sizes of 
communities. I said it was the largest one, other than Tulsa, 
that would be represented would probably be Norman. I was 
guessing at 80,000. That figure--it was pretty accurate just a 
few years ago.
    Let's see. Mr. Bourque, you said something kind of 
interesting. You said you had to hire a consultant in lieu of 
using your city engineer. Tell us why.
    Mr. Bourque. Well, dealing with the CDBG funding when we 
received the CDBG grant, you have to go out and take proposals, 
requests, for qualifications. Then based on that, then you go 
back in, you accept one of the qualifications, then you work on 
a contract with them, try to work out the contract, approve 
that, and then you go back to work on this. This is after 
you've already used an engineer to put this all together and 
submitted it.
    Senator Inhofe. But was yours the case where your engineer 
did not have the academic requirements or what was it?
    Mr. Bourque. Right. There was some things they didn't have, 
they weren't able to do, yes.
    Senator Inhofe. So you had to incur the expense of going 
after a consultant to do that when you had an engineer that, in 
your mind, would have been able to do, at least, an adequate 
job?
    Mr. Bourque. Yes, sir.
    Senator Inhofe. How about the rest of you? Have you had--
that's a cost that could be considerable. Any of the rest of 
you have that experience? (No response.) All right.
    Mr. Crapo, we're at an hour and a half right now. So we are 
drawing near to the time that you are going to have to be 
leaving. Did you have any further questions of this panel?
    Senator Crapo. I just have one quick one, if I might, Mr. 
Chairman.
    Senator Inhofe. Yes.
    Senator Crapo. Mr. Morgan, you indicated in your testimony 
that your city doesn't qualify for grants. Could you tell me 
why?
    Mr. Morgan. Just, we are below income. We asked for rural 
development.
    Senator Crapo. I see.
    Mr. Morgan. The whole county did, the Wagoner County.
    Senator Crapo. Just doesn't qualify.
    Mr. Morgan. Doesn't qualify.
    Senator Crapo. Well, let me just ask the whole panel very 
briefly for a few brief responses. One of the issues that's 
been raised here by several of you and that we face nationwide, 
is that a lot of the very small communities just don't have the 
economies at scale to be able to make the necessary investments 
and make the financing all work out on a long basis. So one of 
the proposals that we are heavily considering is for those 
kinds of communities providing grants as opposed to loans, so 
that we can help them comply with these mandates. My question 
is, simply, do you think that's a good idea as opposed to the 
loan? There is some--I am just curious as to what was----
    Mr. Bourque. That's excellent news to hear. I mean, any 
time you can receive free money to help with your problem yes, 
that is a big step forward. You know, everybody has incurred 
debt at one time or another or will continue to incur debt. But 
a lot of times these grants that we hear about, they're so hard 
to compete or they're so many people vying for them, you get on 
a waiting list, that I would--you know, anything that you send 
our way, we appreciate. As long as it doesn't have--as long as 
it doesn't say unfunded mandate.
    Senator Inhofe. Let me--you know, there is this concept in 
Washington, no decision is a good decision unless it's made in 
Washington. I--that's why I ask and remind you once again, not 
just you folks, but others represented here today, to give us 
ammunition. If you have regulations that have been imposed upon 
you, either by statute or rules that you look at logically and 
scratch your head and say that's not going to correct any 
situation, yet, we have to pay for it, I need your feel on my 
already growing and large list, so I expect you to do that for 
us. I thank you, the members of this panel, for your 
straightforward answers. I look forward--we are going to leave 
the record open for 1 week. How would they do that? My office? 
OK. Use my--one of my offices--I see Ryan is holding something 
up in the back. We have some forms back there so--and that goes 
for those of you who are not on this panel also. I would like 
to ask those of you that raised your hands and represent a 
community that's not on the panel today, to come up to the 
front row and Ellen and I would like to visit with you a little 
bit, hear any additional things you would like to add to what 
has already come from this panel. We thank you very much for 
that. Do you have anything further, Senator Crapo?
    Senator Crapo. I just want to apologize for having to leave 
so quickly. It's been a pleasure to be here with you and I will 
continue to work----
    Senator Inhofe. These are great people here with serious 
problems, not unlike those in Idaho.
    Senator Crapo. Right.
    Senator Inhofe. Thank you. We are adjourned.
    [Whereupon, at 2:55 p.m., the committee was adjourned, to 
reconvene at the call of the chair.]
    [Additional statements submitted for the record follow:]

    Statement of Charles Hardt, Public Works Director, City of Tulsa

                   NON-POINT SOURCE POLLUTION (NPSP)

    We strongly encourage development and implementation of regulatory 
enforcement mechanisms to control NPSP of the Nation's water. Since the 
early 1970's the regulatory emphasis has been aimed at controlling 
point source contribution of pollutants to protect and restore the 
waters of the United States. Whereas, NPSP controls have been 
implemented on a voluntary basis only, and predominately funded through 
Federal grant programs. EPA studies and reports identify NPSP as the 
major cause of water quality impairments nationwide. In the early-
1990's the city of Tulsa became cognizant of water quality impairments 
in one of our primary drinking water sources. The City commissioned 
numerous studies to identify causes and sources for this degradation in 
water quality. NPSP from agricultural activities was identified as the 
primary source. Absent any regulatory control mechanisms to address 
these NPSP, the City was required to seek litigious relief. To date the 
City has spent > $5 million identifying, monitoring and treating NPSP 
in this valuable drinking water source.

          WATER QUALITY STANDARDS--TRIBAL TREATMENT AS STATES

    We strongly encourage legislative amendment to Section 401 of the 
Act, which authorizes Certification of Water Quality Standards 
developed by Native American Tribes. Water Quality Standards serve a 
dual role: they establish water quality benchmarks and provide a basis 
for the development of water-quality based pollution control programs, 
including discharge permits, which dictate specific treatment levels 
required of municipal and industrial wastewater dischargers. The State 
of Oklahoma alone has 38 federally recognized tribes with noncontiguous 
tribal lands checker boarding the state. Regulatory permit writers and 
permittees will have to negotiate a labyrinth of differing water 
quality standards to establish appropriate pollutant limits to protect 
water quality. This potentiality appears laborious and onerous for both 
the regulators and the regulated community.

         WATER QUALITY STANDARDS IMPLEMENTATION--SOUND SCIENCE

    We strongly encourage the EPA to establish minimum acceptable 
analytical methodologies, requiring strict adherence to industry-
standard quality assurance and quality control protocols, when 
monitoring water quality for compliance with standards. States are 
faced with a daunting, and fiscally challenging, requirement to monitor 
and assess all waters within their jurisdictions to ascertain 
attainment of standards and designated uses. Due to EPA's ambiguous 
guidance too often analytical methodologies are selected based on costs 
instead of quality of data generated. This penny-wise pound-foolish 
approach to assessing compliance with standards has resulted in waters 
being erroneously listed as impaired. Water Quality standards and 
criteria are the regulatory and scientific foundation for a multitude 
of CWA Programs, such as, total maximum daily loads, national pollutant 
discharge elimination system, non-point source pollution and source 
water protection just to name a few. Designated use impairments and 
subsequent listing of waters has significant social and economic 
impacts for both the regulatory agencies and the regulated communities. 
Recently, the City expended $20,000 collecting and analyzing samples of 
our urban streams to invalidate erroneous listings due to use of data 
generated by a third party using a field screening kit. This concern 
was echoed in a GAO Report ``Watershed Management--Better Coordination 
of Data Collection to Support Key Decisions'' June 2004.

                            BLENDING POLICY

    We strongly support a national Blending Policy that would allow 
POTW to operate their systems as necessary to meet the effluent 
standards in their NPDES permits. Current restrictions in NPDES permit 
language prohibit bypassing secondary treatment processes. Forcing all 
flow through the secondary process during peak inflow events (storm 
related) can cause effluent water quality degradation due to solids 
washout of the secondary processes. Blending and disinfecting partially 
treated wastewater with high quality secondary wastewater often will 
improve the overall quality of the POTW effluent. Here again, the POTW 
should be given the discretion of when it is appropriate to blend as 
long as they comply with their NPDES effluent limits. The city of Tulsa 
has spent approximately $50,000,000 on basins to store excess flow and 
has an annual cost of approximately $200,000 for operation and 
maintenance of these facilities. Tulsa will have to continue to invest 
in additional excess flow storage unless a blending policy is adopted.

                    404 PERMITTING--WETLANDS TAKING

    We strongly encourage the U.S. Army Corps of Engineers to 
reconsider implementation policy in urban settings regarding this 
Section of the Act. Currently, the City is required to provide in-kind 
replacement of wetlands at a 3 to 1 ratio, or provide a pond when 
removing a riverine environment. We are required to design channels 
that have enough tree cover to protect aquatic habitat and provide 
enough pools to allow for mobility of biota. This is not very conducive 
to providing flood and erosion control in limited right of way 
situations. As we are moving into areas that have developed along side 
waterways it will become even more challenging to design flood control 
projects, to protect public health and property, while attempting to 
maintain rural aquatic habitats. Concurrently, our citizens expect us 
to protect public health from vectors and pathogenic organism that 
accumulate in and around these stagnant pools.

                        SAFE DRINKING WATER ACT
       DISINFECTION/DISINFECTION BY-PRODUCT RULE STAGE 1 (D/DBP1)

    We encourage the EPA to return to establishing health-based 
standards to ensure safe drinking water and abandon their new course of 
prescriptive regulations as ``treatment techniques''. The D/DBP1 has 
established a treatment technique requiring removal of a surrogate 
precursor, i.e., total organic carbon (TOC), which may produce DBPs, 
that has no health-based criterion. If a water system fails to meet 
this percent removal requirement, then they are required to notify the 
public within 30 days that there water may not be safe to drink, even 
though the water system may be in compliance with the health-based 
standards for the DBPs. This requirement could result in; loss of 
public confidence in the safety of their drinking water, when no 
health-based standard has been violated; and dilute the impact of 
public notification of violations that really are a public health 
concern.
 proposed long-term 2 enhanced surface water treatment rule (lt2eswtr)
    We encourage the EPA to reconsider the 2-year pathogen-monitoring 
requirement designed to categorize source water's potential risk and 
delineate specific levels of treatment required to protect safety of 
its drinking water. Many large water systems were required to monitor 
for these same pathogens in compliance with the Information Collection 
Rule, which was designed for the purpose of balancing microbial risks 
against disinfectants, and their resultant by-products, risks. This 
monitoring redundancy will cost the city of Tulsa  $40,000.
                                 ______
                                 
 Responses by Charles Hardt to Additional Questions from Senator Inhofe

    Question 1. Tulsa was required to complete a vulnerability 
assessment of its drinking waste facility by the Bioterrorism Act of 
2002. Tulsa, though not required to, also completed an assessment of 
its wastewater treatment facility. It is also my understanding that the 
City is coordinating the security of these two facilities with other 
critical infrastructure. Can you elaborate on the security activities 
the City has undertaken, including the cost of the assessments to water 
and sewer facilities and why the City addressed the wastewater plant 
without Federal mandate calling on it to do so?
    Response. The city of Tulsa has developed a coordinated, 
comprehensive plan and program for reducing vulnerability of city 
buildings and occupants to losses and disruption from natural, 
technological, or manmade disasters. Following the events of 9/11, the 
City initiated threat or risk assessments of city owned or operated 
facilities deemed critical to the continued operations of the City. 
This program was limited to buildings containing critical city 
services, large numbers of occupants, or hazardous chemicals. Emergency 
operations plans were updated or developed for all city functions. The 
water and wastewater systems, in whole, were included in these initial 
assessments. Hardening, or physical protection measures, at these 
facilities was implemented at all treatment facilities by placing 
concrete barriers at entrances, installing automatic gates, clearing 
vegetation from fence lines, and installing/upgrading electronic 
security and surveillance systems. Employees have received training in 
the areas of operational security (OPSEC) and vehicle inspections. 
Newly adopted guidelines were provided to vendors that routinely 
deliver to these facilities. Deliveries to plants must be preplanned. 
Employees are provided regular security briefings and updates of 
information received from ISAC or other intelligence sources. The City 
joined the Water ISAC to keep abreast and informed of threats to the 
water industry. The City received two grants, each $115,000, to conduct 
assessments of the Mohawk and A.B. Jewell Water Treatment Plants and 
ancillary systems. The cost of assessing both water systems was 
$230,000. Due to our concern of hazardous chemicals located onsite at 
the four City operated wastewater treatment facilities, the wastewater 
systems were assessed as well. Some of these facilities are located 
near densely populous areas. This additional work was funded locally at 
a cost of $118,000.

    Question 2. In you written testimony, you discuss the issue of 
blending. I have been following the issue because as Chairman of the 
Committee, as I mentioned, I am trying to find ways to fill this 
funding gap and am quite concerned about anything that will increase 
it. EPA has issued draft guidance to clarify that blending is not an 
illegal bypass as has been alleged. However, it is my understanding 
that the guidance wouldn't necessarily help Tulsa because the state of 
OK prohibits blending? Is that not the case?
    Response. Currently the Oklahoma Department of Environmental 
Quality (ODEQ) position is that blending is not in accordance with EPA 
policy. For this reason, and other concerns, they therefore prohibit 
blending. Lacking resources to conduct sound scientific investigations 
to determine the effects blending would have on public health, and the 
environment, ODEQ has taken the conservative position of prohibiting 
this practice. EPA's guidance accepting blending will strengthen 
Tulsa's position to allow blending in future OPDES discharge permits.

    Question 3. Also, you may recall that during the hearing, I asked 
each of you to provide the Committee with those regulations that you 
believe are not justified by their costs and not achieving its stated 
goal. I gave each of you the opportunity to respond in writing for the 
record. I believe it is our shared objective to ensue that our limited 
Federal resources are used to solve our biggest, most significant 
threats to human health and to ensure, to the maximum extent possible, 
that our actions will provide clean, safe water. It is imperative to 
hear from those of you on the ground, implementing these requirements, 
which of them are not consistent with this goal.
    Response. The Disinfection/Disinfection By-Product I Rule has 
established a treatment technique requiring removal of a surrogate 
precursor, i.e., total organic carbon (TOC), which may produce DBPs, 
that has no healthbased criterion. The goal of this treatment technique 
is to reduce the propensity of water disinfected with chlorine from 
forming disinfection by-products (DBP), i.e., trihalogenated methanes 
(THM) and haloacetic acids (HAA), both of which have health-based 
standards. However, there are treatment processes that can effectively 
disinfect drinking water, thereby providing protection from microbial 
threats, which do not produce the aforementioned DBP. As a result of 
this paradox a water system could be in violation of the treatment 
technique without posing any threat public health. The city of Tulsa 
spends--$100,000 annually to comply with this treatment technique.

                               __________

   Statement of F. Robert Carr, Jr., on behalf of Oklahoma Municipal 
       Utilities Providers and Cities of Owasso and Collinsville

                              INTRODUCTION

    The Oklahoma Municipal Utilities Providers (OMUP) is an 
organization established in January 2003 by the Oklahoma Municipal 
League (OML) to represent the water and wastewater interests of 
municipalities. Since inception one and one-half (1\1/2\) years ago, 
two hundred fourteen (214) Oklahoma municipalities have become members 
of OMUP. This rapid organization growth is indicative of the collective 
magnitude of concerns relating to water-related issues in the state. 
Both the city of Owasso (population 22,500) and the city of 
Collinsville (population 4,300) are members of OMUP.

                       PRESENT FINANCIAL CONCERNS

    Data collected by the OML indicate that rural and urban communities 
in Oklahoma have long-term financial concerns. As shown below, the 
Oklahoma Municipal League reports that average 2002 Oklahoma municipal 
revenues were less than 1 percent (1 percent) derived by property tax 
(comparatively the 2003 national average was 26 percent).

[GRAPHIC] [TIFF OMITTED] T6655.006


    In addition, thirty-two percent (32 percent) of municipal revenues 
were from sales tax (national average was 13 percent), and forty-three 
percent (43 percent) were the result of utility fees. No Oklahoma 
municipality had income tax as a revenue source (whereas the national 
average was 7 percent).
    Average expenditures for utilities were reported to be thirty-nine 
percent (39 percent) of municipal budgets and, most importantly, 
comparative revenues and expenditures for Oklahoma utilities are 
essentially equal. It is also significant to note, the expenditures 
indicated do not reflect depreciation or any unbudgeted out-of-pocket 
expenses.

[GRAPHIC] [TIFF OMITTED] T6655.007


    Sales tax revenues have been extremely volatile for the past few 
years. Municipalities have determined that they cannot count on sales 
tax revenue for stability.
    Many of the municipal budget short-falls experienced have had to be 
subsidized by utilities revenues. As a result, utilities operations 
have been stressed to achieve consistent results with limited or non-
existent additional funds to meet changing operating conditions. The 
city of Owasso fiscal year 04-05 Public Works Authority Fund ending 
balance is budgeted to decrease, as expenses will slightly exceed 
revenues by year end.

              PROJECTED INCREASED COSTS DUE TO REGULATIONS

    Data complied from work done by consulting engineers in Oklahoma, 
U.S. Environmental Protection Agency fact sheets, information from the 
Association of State Drinking Water Administrators and Oklahoma 
Department of Environmental Quality staff indicate the following costs 
can be anticipated based on new Federal regulations:

------------------------------------------------------------------------

------------------------------------------------------------------------
Arsenic rule..............................  $1.25/gallon (construction)
Surface water treatment...................  $2.25/month (per connection)
Stage 1 Disinfectant/Disinfection           $2.00/month (per connection)
 Byproducts.
Groundwater rule..........................  $0.10/month (per connection)
------------------------------------------------------------------------

    These data indicate the result is higher costs to each customer. 
The construction needed may increase water bills by as much as 60 
percent per customer.

                            LOSS OF SECURITY

    Municipalities have had the security of being able to make long-
term decisions to provide quality water to customers based on the 
stability of regulations. Changing regulations have complicated that 
ability. The security of capital investments may be severely impacted 
with changing regulations.
    We design treatment facilities based on the requirements/
regulations known today. When the requirements become more restrictive, 
the alternatives are expected to become more costly. Fewer options are 
available to the small utility. Economies of scale are more favorable 
to the larger utility that can absorb additional treatment costs among 
more customers. To have control of their own operations, the small 
utility is faced with locating new sources of supply.
    The city of Owasso presently is a wholesale customer of the city of 
Tulsa. Under this scenario, conformance with these new regulations 
largely rests with Tulsa and costs can be allocated to many users.
    The city of Collinsville, on the other hand, operates its own water 
treatment plant. Costs to achieve regulations conformance by 
Collinsville must be paid only by its customer based.
    A study of the feasibilities of constructing a regional water 
treatment plant to serve the cities of Owasso and Collinsville (along 
with two adjacent Rural Water Districts) is presently underway and 
funded by a $100,000 grant from the U.S. Environmental Protection 
Agency. The purpose of the study is to evaluate means for the 
communities to have fiscal control over the water provided to their 
customers. Changing regulations can severely impact the results of this 
study and the long-term decisions being made today.

                         COST-BENEFIT CONCERNS

    The OMUP questions whether costs versus benefit have been 
adequately addressed prior to implementation of the regulations. In a 
January 16, 2004 letter from the American Water Works Association 
(AWWA) to the U.S. Environmental Protection Agency commenting on the 
proposed rule for Stage 2 Disinfectants and Disinfection Byproducts 
Rule (Stage 2 DBPR), the following was stated:

          The Stage 1 FACA [Federal Advisory Committee] members 
        recognized the preliminary nature of much of the science 
        surrounding disinfection byproducts and jointly committed 
        themselves to pursuing a demanding research agenda to fill in 
        the significant gaps.
          AWWA, like EPA, looks forward to seeing scientifically 
        defensible health effects data to support formal risk 
        assessments that meet EPA's guidelines and that address 
        stakeholder concerns. With this information, we can help 
        advance an effective and timely research agenda.
          AWWA looks forward to the preparation of formal risk 
        assessments that meet agency guidelines for possible DBP-
        related health effects.

    In addition, the AWWA stated:

          The EPA cost/benefit analysis supporting the Stage 2 DBPR 
        entails an analytical process with 13 distinct steps. In 
        reviewing this analysis AWWA found significant issues affecting 
        the reasonableness and credibility of the final conclusion in 
        nearly every step.

    They went on to say that ``EPA may have overstated total benefits 
considerably.''
    Similarly, in a January 9, 2004 letter from the American Water 
Works Association (AWWA) to the U.S. Environmental Protection Agency 
commenting on the proposed rule for Long-Term 2 Enhanced Surface Water 
Treatment Rule (LT2ESWTR), the following was stated:

          AWWA is very concerned that the agency's Economic Analysis 
        documents and preamble text have created an unrealistic 
        expectation and implied a significantly greater benefit that 
        will actually be realized through implementation of the 
        LT2ESWTR.

    These comments are concerning to OMUP and its member municipalities 
that are faced with more restrictions and increased costs. OMUP water 
suppliers are charged with investing public funds in a manner that 
protects their investments--where there are no uncertainties pertaining 
to the need for additional improvements to meet future regulations.

                               __________

      Statement of Arvil Morgan, District Manager, Wagoner Water 
                             District No. 5

    Mr. Chairman and members of the Committee I am Arvil Morgan, 
manager of Wagoner County Rural Water District No. 5 at Coweta, 
Oklahoma. I appreciate the opportunity to appear before the Committee 
today to discuss the impact of increasingly stringent Federal Safe 
Drinking Water Act requirements on our water district.
    Our water district serves 2,550 rural households in southwestern 
portions of Wagoner County, through 230 miles of distribution line. We 
operate a 1.5 million gallon per day water treatment plant that was 
constructed in 1991. Water supply for the district comes from the 
Verdigris River. We also have emergency backup connections with the 
city of Broken Arrow, Wagoner County Rural Water District No. 4 and the 
Town of Coweta.
    We currently have an escalating water rate. Our customers pay an 
average of $3.20 for each 1000 gallons used and an average monthly 
water bill of $35.00.
    The Environmental Protection Agency's new Disinfection/Disinfection 
By-Products Rule went into effect on January 1, 2004. This rule reduced 
the allowable level for Trihalomethanes (THM's) from 100 parts per 
billion to 80 parts per billion and set a new level of 60 parts per 
billion for Haloacetic Acids. To comply with the new regulations, it 
will be necessary for Wagoner No 5 to upgrade its water treatment 
process. Improvements that will be required include installation of a 
pre-sedimentation basin and a clarifier that will treat up to 2 million 
gallons of water per day. Our engineer estimates that it will cost 
approximately $1.5 million to make the necessary improvements.
    Our district does not qualify for grants, therefore our project 
will be completed entirely with loan funds. We expect to apply for 
financing with USDA Rural Development. Repayment of a $1.5 million 
Rural Development loan at 5 percent interest over 40 years will cost 
approximately $87,000.00 per year. The district will not be able to 
absorb these costs and it will be necessary to increase rates to our 
customers by approximately 10 percent, which would equate to about 
$36.00 per user per year. Additionally, our operating costs have 
increased $1,500.00 per month. These costs include chemicals and 
additional labor for water treatment.
    In January 1, 2003 systems were required to meet the new Stage 1 
Filter Backwash Recycle Rule. Next year we will be required to comply 
with new turbidity requirements. The allowable level for turbidity will 
be lowered from .5 NTU's to .3 NTU's and continuous monitoring will be 
required on each filter. The Stage 2 Disinfection--Disinfection 
Byproducts Rule will also be implemented next year. This rule will 
require additional monitoring and reporting on THM's and Haloacetic 
Acids, increasing system operational and monitoring costs.
    There are approximately 250 water systems in Oklahoma that operate 
water treatment plants. Most of these systems serve less that 3,300 
people. For many of these small and very small systems the cost of 
compliance is an extreme hardship. We also have a shortage of qualified 
operators in the state. According to the Department of Environmental 
Quality, we have a 20 percent turnover in operators each year. There 
are 1,500 new operators annually that need training and assistance to 
assure proper system operation, maintenance and compliance.
    Each new EPA rule has a cost. Compounding of these costs make it 
more and more difficult for systems to maintain reasonable and 
affordable water rates. Wagoner County Rural Water District No. 5 is 
committed to providing safe, potable water to our members. We drink the 
water that we produce and the quality of our product is very important 
to us. We want to do what is necessary and reasonable to assure that 
our water is safe. However, we believe that regulations should be based 
on sound science and the ratio of cost to benefits should be an 
important consideration in setting drinking water standards. What we 
need are practical, reasonable and affordable regulations.
    Thank you again for the opportunity to address the Committee. I 
would be happy to answer any questions.
                                 ______
                                 
  Response by Arvil Morgan to Additional Question from Senator Inhofe

    Question. Provide the Committee with those regulations that you 
believe are not justified by their costs and are not achieving its 
stated goal.
    Response. Of immediate concern to our district is the Disinfection/
Disinfection By-Products Rule. We believe that the new Maximum 
Contaminant Level (MCL) established for Trihalomethanes (THM's) and 
Haloacetic Acids are excessive and unwarranted. A person drinking ten, 
eight (8) ounce glasses of water a day for 90 years would only 
accumulate 1.8 ounces of THM and 1.5 ounces of Haloacetic Acids. 
Compliance with these requirements is extremely costly and we question 
whether the benefits of the rule actually justify the high cost. In 
reality, people do not drink this much water from the same source every 
day. Other drinks, such as coffee, tea and coca cola contain much 
higher THM levels than drinking water.
    We suggest that EPA be required to justify the regulation by 
proving that THM's cause health problems.
    Another concern is the EPA requirement concerning Total Organic 
Carbons (TOC's). The rules require a 50 percent reduction in raw water 
TOC's. The rule does not take into account the difference in raw water 
quality from system to system. Our raw water TOC's range from 4 ppm to 
8 ppm. Other systems may have much higher levels. For example, a system 
with raw water TOC's of 20 ppm has to reduce its levels to 10 ppb. This 
is higher than our historic levels and easier to achieve. Our system is 
being treated unfairly, reduction of low levels of TOC's, like those on 
our system, requires a lot of chemicals and man hours and substantial 
expense. The rules need to be sensible and realistic, not a one size 
fits all approach. EPA also should consider impacts of its rules. The 
use of large amounts of alum for TOC removal creates excessive amounts 
of hazardous sludge that could have negative environmental impacts.
    The Disinfection/Disinfection By-Products Rule is just one of many 
EPA regulations that are in the process of implementation, or which 
will be implemented in the near future. If small water systems are 
going to meet the continuous stream of Federal mandates and remain 
financially viable, we must have access to grants and low interest 
financing to assist in compliance. If water rates get too high, some 
customers will be forced back to unsafe and unreliable individual water 
supplies and the public health will be undermined rather than enhanced 
by Federal regulation.
    We appreciate your efforts to ensure that our limited Federal 
resources are used to solve our biggest, most significant threats to 
human health. We are committed, as you are, to ensuring that all our 
members have clean, safe water at affordable rates.
                                 ______
                                 
               Statement of Town Hall, City of Coweta, OK

    The city of Coweta appreciates the opportunity to respond to the 
request, by Senator Inhofe, concerning the impact of the Safe Drinking 
Water Act, the Clean Water Act, Security and Bioterrorism Act, and the 
Stormwater Phase II requirements, which has a tremendous impact and 
costs on smaller communities.
    First, let us address the issues in a global view. It is the city 
of Coweta's responsibility to provide safe, dependable and cost 
effective services to the citizens we serve. To provide these services, 
user fees are traditionally employed to cover the costs associated with 
the service in question. In smaller communities, especially the bedroom 
cities, sales tax revenues generally do not generate sufficient revenue 
to properly fund non-revenue services, such as fire, EMS and police 
services, just to name a few. The funding gap, from the sales tax 
revenue to operational costs of these services, is made up through 
transfers from the water and wastewater revenue stream. Generating the 
proper operating revenue to support the public works programs has 
always been of concern, now with so many new programs, it is 
catastrophic.
    The number of unfunded Federal mandates that have recently been 
enacted are forcing cities into a series of very difficult funding 
decisions. The result of these decisions can affect the safety and 
security of its citizens. For example, the potential impact of the 
Security and Bioterrorism Act may force the city of Coweta to add 
additional staff just to man the water and wastewater plants, not to 
mention the additional capital cost associated with additional security 
measures. Where do these funds come from? For the city of Coweta, they 
come from other programs, such as public safety, library services, 
planning and zoning, streets, parks and recreation and the list goes 
on.

                        SAFE DRINKING WATER ACT

    No one is questioning the need to provide an adequate and safe 
drinking water supply to its citizens. Potable water, that is in 
compliance with the public health concerns, is a responsibility that we 
do not take lightly. However, the shear plethora of the recent 
regulations on the Safe Drinking Water Act is a classic example of the 
frustration felt by many communities. Coweta, a community under 10,000 
in population, has just recently been faced with compliance. Fact of 
the matter is that due to the complexity of these regulations, the 
Oklahoma Department of Environmental Quality could not clearly define 
to the city of Coweta what steps are required (until late 2003). This 
timeframe gave the city of Coweta less then 6 months to comply. Now the 
city of Coweta is faced with the reality that the existing water 
treatment facility was never designed for, nor can it meet, the new 
requirements spelled out in the recent revisions to the Safe Drinking 
Water Act. Even though the water treatment facility has not served out 
its design life and the city of Coweta still has bond debt to pay on 
the original loan.
    In addition, the city of Coweta is now faced with the real 
possibility of having to explain to the public that the water they 
consumed last year may now out of compliance and continued consumption 
of this water may lead to cancer or other dreadful diseases or 
illnesses. Couple this with the adverse publicity and you can only 
imagine the distrust citizens will now have in a local government that 
is supposed to be in place to protect them, not harm them with basis 
services. The end result is that not only is the community facing the 
need for a new treatment facility, one that will be more complex and 
costly to operate, but a finished water that will be tested more 
frequently with an additional sophisticated chemical and biological 
testing program that has not even been identified. We have not even 
spoken to the cost of the public notification program to the community, 
nor the impact of a Watershed Protection Program that is being milled 
about by EPA.
    The city of Coweta is faced with an upgrade and yet do not truly 
understand what the final requirements are. It is expected that over 
the next few years that the number of contaminates (MCL's) will 
increase. This increase will certainly result in additional monitoring, 
but could also impact the treatment process as well. How do we convey 
to the public that the new water treatment plant that was just 
completed may have to be modified again? And that you, the citizens, 
will be required to pay for the new plan, again.
    The only saving grace for the city of Coweta, is the fact that we 
are not alone. From what ODEQ states, over 60 percent of all surface 
water treatment plants in Oklahoma will fail to meet the new 
requirements of the Safe Drinking Water Act.

                            CLEAN WATER ACT

    It is the city of Coweta's duty to properly treat its wastewater 
before it is discharged back into the environment. Because of the 
discharge requirements promulgated by EPA, the community has already 
felt the impact on the Clean Water Act. Now we are paying off the debt 
from a new treatment plant and waiting for EPA to decide if additional 
regulations concerning the collection system, CMOM and Fats Oil and 
Grease will be implemented. The cost for treating wastewater will 
increase and, as such, will be passed unto the customer.

                               STORMWATER

    Add the above-mentioned to stormwater and you can determine how 
costly compliance will be on the city of Coweta. Compliance to these 
unfunded mandate has burdened the city of Coweta in such a detrimental 
way that recovery may never occur. And, as such, the citizens of this 
great community loose hope for additional services that will be far 
outside the funding ability of a community that they call home.
    In closing, I would direct your attention to the Unfunded Mandates 
Reform Act of 1995 (2 U.S.C. Sec. Sec. 658-658g and 1501-1571) which 
specifically addresses the very issues stated above. Under the Act, 
Congress and Federal agencies are required to consider the costs and 
benefits to state, local and tribal governments and to the private 
sector before imposing Federal requirements that necessitate spending 
by these governments or the private sector. The purposes of the Act are 
to: strengthen the partnership between the Federal Government and 
state, local and tribal governments; end the imposition, in the absence 
of full consideration by Congress, of Federal mandates on these 
governments without adequate Federal funding; provide for the 
development of information to assist Congress in considering 
legislation containing Federal mandates; promote informed and 
deliberate decisions by Congress on the appropriateness of mandates; 
require Congress to consider whether to provide funding to enact 
Federal mandates; establish a point-of-order vote on the consideration 
in Congress of legislation containing significant intergovernmental 
mandates without providing adequate funding; require Federal agencies 
to consider the budgetary impact of Federal regulations on state, local 
and tribal governments; and, begin consideration of the effects of 
previously imposed Federal mandates.
    Congress should be very concerned about shifting costs from Federal 
to state and local authorities and should be equally concerned about 
the growing tendency of states to shift costs to local governments; 
cost shifting from state to local governments has forced local 
governments to raise property taxes or curtail essential services. 
Accordingly, the sense of the Senate is that: the Federal Government 
should not shift certain costs to states, and states should end the 
practice of shifting costs to local governments; states should end 
imposition of mandates on local governments without adequate state 
funding; taxes and spending at all levels should be reduced and the 
practice of shifting costs from one level of government to another with 
little or no taxpayer benefit should end. Passage of the Safe Drinking 
Water Act, the Clean Water Act, Security and Bio-terrorism Act, and the 
Stormwater Phase II requirements, without funding, will bankrupt 
communities and that's a fact.

                               __________

  Statement of Kenneth Komiske, Public Works Director, City of Norman

    The citizens of Norman, Oklahoma, realize the importance of water 
and its role in the continuation of a successful community. The role of 
water, both potable and non-potable, amounts to our view of the future. 
The city of Norman continues to plan and address issues faced with 
adequate supplies of water. Planning for the future resulted in 
Norman's identification of extended water and wastewater needs that 
exemplify the situations faced by municipalities around this Nation.
    Following is a brief review of the water and wastewater planning 
occurring in Norman:

                      STRATEGIC WATER SUPPLY PLAN

    In 1999 the city of Norman initiated the development of our 
Strategic Water Supply Plan. This plan provided a comprehensive 
overview of Norman's water resources, projected water demands, and 
identified needed long term steps to meet resource projections. In 
Figure 1, it is observed that by 2040 Norman will need water supply 
resources capable of meeting an annual average demand totaling 30 
million gallons of treatable water per day. At this time, the citizens 
of Norman consume an annual average water demand totaling over 11 
million gallons per day. The Strategic Water Supply Plan identified 
steps necessary to achieve this long-term water supply shortfall.

[GRAPHIC] [TIFF OMITTED] T6655.001


    Establishing projections of long term resource needs allowed for 
the associated projection of peak day water demand capabilities. In 
Norman, the peak day demand may be as much as 2.0 times the annual 
average supply needs. This increase in consumption rates is moderately 
low when compared to other cities our size and larger. The reduced 
peaking rate is reflective of our community's desire to use water 
resources wisely. Although, even with conservation being planned in our 
future, projections show that by 2040 Norman will need the ability to 
treat and deliver as much as 60 million gallons of water per day. 
Figure 2 reflects the projection of peak day water needs.

[GRAPHIC] [TIFF OMITTED] T6655.002


    In the past, Norman has not been able to meet the experienced 
demands whereby requiring the implementation of water rationing 
measures. These actions did not fare well with the citizens in general.
    In 1999, the city of Norman constructed a waterline connecting our 
system to that owned and operated by the Oklahoma City Water Utility 
Trust Authority. This connection provides an emergency supply only and 
does not operate on a day to day basis. This line plays a vital role in 
the city of Norman's Strategic Water Supply Plan, but is not considered 
the solution to our water needs due to the high cost of the supply 
source.
    The recommended solution to Norman's water needs, as identified in 
the Strategic Water Supply Plan, includes an additional 30 water wells, 
construction of a terminal reservoir in east Norman, increasing water 
withdrawals from Lake Thunderbird and the purchase of raw water from 
the Oklahoma City Water Utility Trust Authority. Associated with this 
eventual expansion of Norman's water treatment plant from 14 to 44 
million gallons per day capacity. The capital cost of this option 
totals over $80.5 million. This does not include water distribution 
line improvements or the impact of the Arsenic Rule.

[GRAPHIC] [TIFF OMITTED] T6655.003


                          ARSENIC RULE IMPACTS

    Completion of the Strategic Water Supply plan occurred prior to the 
Arsenic Rule's enactment. Improvements identified in this report are 
absent of any impact associated with the Arsenic Rule. Upon the signing 
of the Arsenic Rule into law, the city of Norman initiated an Arsenic 
Study to determine the impacts expected from the new allowable limits.

[GRAPHIC] [TIFF OMITTED] T6655.004


    The additional cost to the citizens of Norman, in order to be 
compliant with the Arsenic Rule, was estimated to be $9 million.
    The waters from the wells now deemed unfit for drinking have been 
in service since prior to World War II. These wells have provided 
adequate drinking water supplies with no compliance issues until the 
ratification of the Arsenic Rule. The sudden shift from suitable to un-
suitable has solicited fear in many of our citizens. Since being placed 
on the nations ``Need to Know Danger Zone'' by Scientific America calls 
have been received ranging from ``Should I bathe my newborn daughter in 
bottled water?'' to ``Is the high Arsenic levels causing my 15-year old 
son to be so unresponsive to his father and I?''. Both of these quotes, 
from actual conversations, reflect the range of citizen concern over 
the announcement that our once safe water is no longer suitable. It is 
commonly asked why the water is now bad and all we have to say is the 
rule was changed after 50 plus years of operation.
    In Oklahoma there are 28 public water supplies that will be non-
compliant when the Arsenic Rule goes into effect on January 1, 2006. 
Norman is the largest water supplier in the state to be impacted by 
this rule, but we are not alone. As a result of the Arsenic Rule and 
other water regulations coming into effect, the Oklahoma Municipal 
League formed the Oklahoma Municipal Utility Providers group to focus 
on water issues and address technical issues through their Technical 
Advisory Committee. This group of cities represents both large and 
small water suppliers and together they are working for solutions to 
water problems faced throughout the state. With the inclusion of the 
Arsenic Rule, the Oklahoma Department of Environmental Quality has 
estimated that over 75 percent of Oklahoma's water suppliers will be 
out of compliance with one of the many rules coming into effect, all in 
the name of protecting the public. The Arsenic Rule impacts Norman the 
most, but other problems exist across the state.

                         WASTEWATER MASTER PLAN

    In 1999 the city of Norman initiated the development of a 
Wastewater Master Plan to identify the improvements necessary to 
accommodate the community direction established in the Norman 2020 Land 
Use and Transportation Plan. The Wastewater Master Plan looked at both 
sewer line and treatment needs expected as Norman advances into the 
planned future. These needs resulted in the recommendation that Norman 
build a new wastewater treatment plant to take advantage of the natural 
break in terrain existing in the northern region of town. This decision 
has been very contentious with certain community groups, but has been 
voted upon by the public twice and each time been supported by the 
majority.

[GRAPHIC] [TIFF OMITTED] T6655.005


    The Wastewater Master Plan identifies sewer line and treatment 
needs and a work plan has been developed to address the long-term 
needs. The total cost of these planned improvements equals $95,500,000. 
Funding for these needs originates from two sources: 5-year 1/2 percent 
Sales Tax and Excise Tax on all new construction using the sewer 
system. The Excise Tax, referred to some as an Impact Fee, was the 
first such established fee in the State of Oklahoma. Challenged in 
court, the Excise Tax has succeeded in providing a means for growth to 
pay its own way in Norman.
    One of the first steps associated with the new treatment plant in 
north Norman is to establish the levels by which the wastewater has to 
be treated. The process of completing a Total Maximum Daily Load (TMDL) 
study of the receiving stream has begun. Combined efforts of 
professional engineers from CH2M Hill and the University of Oklahoma 
are working together in establishing the level of treatment necessary 
prior to release into the South Canadian River. This effort will last 
approximately 18 months following a strenuous review to ensure that the 
stream's health is maintained for the benefit of the public.

                                SUMMARY

    Today, Norman's population is over 104,000 persons. Over 88,000 
persons of the total citizenry receive water and sewer service. The 
needs identified between water and wastewater total $185,000,000. 
Funding for wastewater needs are partially established through voter 
approved sources. No funding is available to meet water supply needs or 
to become compliant with the Arsenic Rule.

                               REFERENCES

    The complete Strategic Water Supply Plan document is available on 
the city of Norman web site at: http://www.ci.norman.ok.us/utilities/
water--treatment/2040WaterPlan/default.htm a printed copy of the 
executive summary is attached for the record.
    The complete Arsenic Report document is available on the city of 
Norman web site at: http://www.ci.norman.ok.us/utilities/water--
treatment/arsenic--study.htm a printed copy of the executive summary is 
attached for the record.
    The complete Wastewater Master Plan document is available on the 
city of Norman web site at: http://www.ci.norman.ok.us/utilities/
waste--water/masterplan/default.htm a printed copy of the executive 
summary is attached for the record.
                                 ______
                                 
 Response by Kenneth Komiske to Additional Question from Senator Inhofe

    Question. While our committee has generally dealt only with water 
quality issues and not quantity issues, we are seeing more and more how 
interrelated these issues are. The situation Norman is facing is an 
excellent example. With regard to the supply problem, one way to help 
but certainly not solve the problem that is often discussed is water 
rationing and incentives to keep water use down. Can you explain more 
about what Norman did and what exactly the citizen concerns were?
    Response. The city of Norman has a water conservation program in 
effect. All the normal means of communication are used to convince and 
encourage improved water conservation; such as flyers, hand out 
materials, media advertisements, educational programs and public 
discussions. However, when the cost of water is relatively inexpensive, 
the public perception is that there is not a strong necessity or reason 
to conserve.
    To change utility rates in Norman (water, wastewater or sanitation) 
it takes a majority vote of the public. Often, this requires a special 
election. In May 1999 the voters of Norman approved changes to the 
Water Utility rate structure. The new `inverted block' rate was 
established where the more water you use, the higher the commodity 
rate. The new rate structure accomplished three goals. 1. For low and 
moderate water users, the rates remained the same; 2. The new higher 
commodity rates for large residential users strongly encouraged 
conservation; and 3. The additional revenues help support water supply 
and distribution enhancements.


----------------------------------------------------------------------------------------------------------------
                           Gallons                                    Old Rate              New Rate in 1999
----------------------------------------------------------------------------------------------------------------
0-1,000.....................................................                    $2.01                     $2.01
1,001-2,000.................................................                    $1.73                     $1.73
2,001-15,000................................................                    $1.14                     $1.14
5,001-20,000................................................  ........................                    $2.00
Over 20,001                                                   ........................                    $4.00
----------------------------------------------------------------------------------------------------------------

    The new inverted rate structure accomplished the goal of 
encouraging conservation. In 1998, over 29 percent of residential 
customers used in excess of 15,000 gallons per month. There was no 
financial incentive to conserve. In 2003, with higher rates for large 
users, fewer than 11 percent of residential customers used in excess of 
15,000 gallons per month. Financial incentives help drive conservation.

                               __________

        Statement of Rick Bourque, City Manager, City of Wekoka

    I would first like to take this opportunity to thank Senator Inhofe 
and Senator Crapo for holding this hearing and for giving the city of 
Wewoka the chance to speak out on this very important issue. As Senator 
Inhofe knows from when he served as the Mayor of Tulsa, managing a city 
is never an easy task. Unlike the Federal Government, we do not have 
the capacity to run deficits. Our books must always balance. This is 
difficult enough in the best of times, but when outside factors like 
unfunded mandates come into play, it is almost impossible. This is 
especially true in a small town like Wewoka.
    Wewoka is a very diverse town: racially, economically and 
historically. It was founded by a former Indian slave in the Seminole 
Nation, has lived through the booms and busts of the oil industry, and 
has suffered many economic hardships along the way. Seminole County, 
where we reside, currently has one of the highest unemployment rates in 
the state, almost 20 percent. Population has been steadily declining 
for the last several years and so have sales tax revenues. This is 
true, not just in Wewoka, but in small towns all across the state. I 
tell you this not to be pessimistic. Actually, we are very optimistic 
about our future. I merely want to point out that small towns like ours 
have dwindling resources and cannot afford the cost of heavy-handed 
regulations and unfunded mandates.
    There are many examples of this that I could speak to you about. 
But in the interest of time, I have limited it to just a few. One 
example of how unfunded mandates complicate the business of City 
Government is in the area of excessive and constantly changing 
regulations in our drinking water. Most cities have a sizable 
investment in their water treatment facilities. Wewoka is no exception. 
We take very seriously our duty to provide safe, clean and affordable 
drinking water to our citizens. However, City management and budgeting 
requires, not only making the books balance today, but budgeting for 
the future, as well. This is extremely difficult when the EPA and the 
DEQ constantly change the standards. Some of the changes are dubious, 
at best. Take for example, the issue of turbidity. Turbidity, as you no 
doubt have heard, relates to the cloudiness of water. Just as the lake 
that supplies our drinking water turns over every year and becomes 
cloudy or changes slightly in color or transparency, so too does our 
drinking water. This is turbidity. It does not indicate that there are 
any new chemicals or trace elements that affect water quality and 
public health in any way. Neither are these standards remaining static. 
They are constantly changing. The turbidity standard was recently 
changed from a level of 1.0 to satisfy the standard to a level of 0.5. 
It is currently scheduled to be further reduced to a level of .3. These 
arbitrary standards are having a considerable impact on the ability of 
small towns to continue providing water to their citizens, without 
enormous capital expense. This is not the only example of such 
standards, only one of the more recent.
    Another problem I would like to speak to you today concerns our 
City's sewer treatment plant. The city of Wewoka is currently under a 
consent order for water infiltration into our system. The consent order 
states that we will build another facility to replace the existing one 
and correct infiltration problems in the sewer distribution system. The 
current project price is around $4 Million. In trying to comply with 
the consent order, there have been numerous problems that have only 
served to delay and complicate the issue and add to the already 
excessive cost. For example, DEQ and EPA require that the city 
commission a study to determine the needs and costs involved in making 
the necessary changes. However, they required that we hire an outside 
engineer to do the study rather than use the city engineer. Rather than 
completing the study in-house and with minimal expense, the City had to 
hire a consultant and pay nearly $400,000 to complete the study. So, 
with the prospect of $4 Million Worth of repairs looming over our 
heads, which we cannot afford, the bureaucratic requirements are only 
adding to the problem. Another factor that adds to this problem is that 
in the 6-years that I have been City Manager of Wewoka, I have worked 
with 4 different regulators from DEQ and EPA. Each time employment 
changes, delays occur because the new employee is unfamiliar with our 
City or the consent order it operates under. Furthermore, regulations 
change so often that when preparing a final engineering report, we have 
had to amend our plan several times. Furthermore, they have requested 
additional information on 3 separate occasions, and they still have not 
approved our report. All of these factors have delayed the process and 
have made it more costly.
    We estimate that by the time we begin construction on the new 
treatment plant, we will already be looking at regulations that will 
put us out of compliance. Once we are under a consent order, we have no 
other avenues to pursue, other than seeking funding to help pay for 
these improvements. Naturally, these costs will be passed on to our 
consumers. We estimate that a surcharge of $20 could be assessed to 
every water meter in Wewoka. When one out of every five citizens is 
unemployed, and the average income in near or below the poverty line, 
that cost is excessive.
    Another unfunded mandate that has caused us problems in the past is 
in the area of security. Wewoka was recently asked by DEQ to erect an 
eight-foot security fence around our water treatment facility. By 
itself, this would not be a crippling requirement. But, considered 
against the backdrop of so many other costly regulations and over $5 
million in needed upgrades in our water and sewer system, it certainly 
is. Furthermore, the directives that were issued concerning the fence 
were constantly changing. The representatives that I met with were 
certain that I needed a fence immediately. But, when asked, they could 
not tell me what kind or type of fence was required. They also couldn't 
point out the regulations that required us to put up a fence. After 
several conversations with the DEQ's staff, I was more confused than 
ever. Finally, I asked that they send someone to Wewoka to tour the 
site and explain exactly the fence I should build and where to put it. 
In the end, the security fence cost the city of Wewoka over $10,000. 
Because it was deemed an urgent need, it had to be done right away. So, 
this expense to the city was not budgeted. I wish I could say that this 
situation is unusual, but it isn't. All too often, government 
regulations are enacted without regard to how they will effect the 
people on the other end.
    That is why I am thankful to have the opportunity to speak with you 
today and share my concerns over these important issues. I am also 
grateful to Senators' Inhofe and Crapo for taking the time to meet with 
us today and giving us an opportunity to express our views. With your 
help, I know that we can get a handle on our problems. We sincerely 
hope that you can lessen the burden that is placed on our cities by 
excessive regulation and unfunded mandates.

 Statement of Clay McAlpine, Director of Engineering, City of Muskogee

    Senator Inhofe, as a member of the Oklahoma Municipal League 
Technical Advisory Committee on Water Issues and the Director of 
Engineering for the city of Muskogee, I would like to thank you and 
your committee for this opportunity to speak with you concerning the 
growing cost associated with the new provisions of the Safe Water 
Drinking Act. The city of Muskogee operates a regional water treatment 
plant supplying water to approximately 55,000 people. Although the 
water treatment plant is old, the City has made numerous modifications 
and upgrades to meet the needs of the customers and to maintain 
compliance with the treatment regulations. Our water system was in 
compliance with all of the provisions of the Act prior to 2002.
    January 2002 ushered in new regulations that include the Interim 
Enhanced Surface Water Treatment Rule and the Stage 1 Disinfection 
Byproducts Rule. Compliance with these regulations has placed a 
significant burden on our plant and our budget. We began making 
modifications to our treatment system in 2000. We were looking for the 
best treatment method using existing equipment and different treatment 
chemicals (coagulants) to achieve compliance with the new regulations.
    Prior to the recent change in regulations, utilities and chemical 
costs represented about 50 percent of our overall treatment cost. 
Utility and chemical costs fluctuate the most and consequently are the 
hardest to control. Labor, upkeep of equipment and insurance represent 
the remaining costs. The cost of chemicals has changed as a result of 
the new regulations. Before the new regulations, chemicals represented 
about 21 percent of the overall treatment cost. With the addition of 
the new treatment regulations, we have seen this cost go as high as 37 
percent of our overall cost.
    As shown in Table I, our cost of treatment chemicals has almost 
doubled in recent years.

                                                     Table I
                     Annual Cost of Utilities & Chemicals for Water Treatment, Muskogee, OK
----------------------------------------------------------------------------------------------------------------
                                                   FY 99-00     FY 00-01     FY 01-02     FY 02-03     FY 03-04
----------------------------------------------------------------------------------------------------------------
Chemicals......................................     $259,571     $410,260     $570,004     $537,558     $428,046
Electrical.....................................     $336,909     $508,331     $362,658     $351,296     $381,684
Total..........................................     $596,480     $918,591     $932,662     $888,854     $809,730
Million Gallons of Water Produced..............    5,227.588    5,680.448    5,005.641    4,378.118    4,296.087
Chemical Cost per 1000 gals....................        $0.05        $0.07        $0.11        $0.12        $0.10
Electrical Cost per 1000 gals..................        $0.06        $0.09        $0.07        $0.08        $0.09
----------------------------------------------------------------------------------------------------------------

    Unfortunately, changing chemicals and increasing their feed rate 
has not brought our treatment plant into total compliance. Although we 
are complying with the requirements for Trihalomethane, Haloacetic 
Acids, and Turbidity, we are still having problems with the Total 
Organic Carbon (TOC) Removal Rule. Recent plant trials have shown some 
positive results, and we are confident that we will be able to comply 
with all of the new regulations within a short period of time.
    When treatment cost increase, other items are sacrificed. In this 
case, funds that could have gone to replace old and aging water system 
infrastructure have been diverted to treatment. I can't help but 
question if we are best serving the public's interest by reducing the 
level of Trihalomethane from 100 part per billion (ppb) to 80 ppb, or 
should we replace their old 2'' water main with a new 6'' main that 
provides fire protection?
    I am very concerned with the provisions of the Stage 2 Disinfection 
Byproducts Rule. These proposed regulations will eliminate the 
utility's ability to average the Trihalomethane and Haloacetic Acid 
readings across the system's distribution system. The regulations will 
require the utility company to identify the areas of the system that 
have the highest readings and start monitoring these areas for 
compliance. Complying with these regulations will place an additional 
burden on the utility company, require changes in the treatment and 
disinfection process, and once again add additional cost to the 
treatment process.
    The preamble for these regulations, prepared by EPA dated October 
17, 2001 do not make a compelling case for the risk associated with the 
long term exposure to these byproducts. Page 45 of the report states 
``As in the Stage 1 DBPR, the assessment of public health risk from 
DBPs currently relies on inherently difficult analyses of incomplete 
empirical data.'' The tone of the preamble states ``it is appropriate 
and prudent to err on the side of public health protection.'' I 
therefore, question if these proposed regulations are truly serving the 
public's health interest in the most cost effective manner? Especially, 
since the added cost is preventing the utility companies from doing 
more basic improvements that have proven their worth over time.
    Our goal is to provide our customers and citizens with an abundant, 
safe and dependable quality drinking water that meets all health and 
environmental guidelines at a cost they can afford. Please keep this in 
mind when reviewing the need for these additional regulations.
    Thank you for the opportunity to share our concerns regarding these 
new and proposed provisions of the Safe Water Drinking Act.
  

                                  
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