[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]


 
  OPPORTUNITIES AND CHALLENGES IN THE CREATION OF A CLEAN WATER TRUST 
                                  FUND

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

                                (111-49)

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                    WATER RESOURCES AND ENVIRONMENT

                                 OF THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                             JULY 15, 2009

                               __________


                       Printed for the use of the
             Committee on Transportation and Infrastructure


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             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

                 JAMES L. OBERSTAR, Minnesota, Chairman

NICK J. RAHALL, II, West Virginia,   JOHN L. MICA, Florida
Vice Chair                           DON YOUNG, Alaska
PETER A. DeFAZIO, Oregon             THOMAS E. PETRI, Wisconsin
JERRY F. COSTELLO, Illinois          HOWARD COBLE, North Carolina
ELEANOR HOLMES NORTON, District of   JOHN J. DUNCAN, Jr., Tennessee
Columbia                             VERNON J. EHLERS, Michigan
JERROLD NADLER, New York             FRANK A. LoBIONDO, New Jersey
CORRINE BROWN, Florida               JERRY MORAN, Kansas
BOB FILNER, California               GARY G. MILLER, California
EDDIE BERNICE JOHNSON, Texas         HENRY E. BROWN, Jr., South 
GENE TAYLOR, Mississippi             Carolina
ELIJAH E. CUMMINGS, Maryland         TIMOTHY V. JOHNSON, Illinois
LEONARD L. BOSWELL, Iowa             TODD RUSSELL PLATTS, Pennsylvania
TIM HOLDEN, Pennsylvania             SAM GRAVES, Missouri
BRIAN BAIRD, Washington              BILL SHUSTER, Pennsylvania
RICK LARSEN, Washington              JOHN BOOZMAN, Arkansas
MICHAEL E. CAPUANO, Massachusetts    SHELLEY MOORE CAPITO, West 
TIMOTHY H. BISHOP, New York          Virginia
MICHAEL H. MICHAUD, Maine            JIM GERLACH, Pennsylvania
RUSS CARNAHAN, Missouri              MARIO DIAZ-BALART, Florida
GRACE F. NAPOLITANO, California      CHARLES W. DENT, Pennsylvania
DANIEL LIPINSKI, Illinois            CONNIE MACK, Florida
MAZIE K. HIRONO, Hawaii              LYNN A WESTMORELAND, Georgia
JASON ALTMIRE, Pennsylvania          JEAN SCHMIDT, Ohio
TIMOTHY J. WALZ, Minnesota           CANDICE S. MILLER, Michigan
HEATH SHULER, North Carolina         MARY FALLIN, Oklahoma
MICHAEL A. ARCURI, New York          VERN BUCHANAN, Florida
HARRY E. MITCHELL, Arizona           ROBERT E. LATTA, Ohio
CHRISTOPHER P. CARNEY, Pennsylvania  BRETT GUTHRIE, Kentucky
JOHN J. HALL, New York               ANH ``JOSEPH'' CAO, Louisiana
STEVE KAGEN, Wisconsin               AARON SCHOCK, Illinois
STEVE COHEN, Tennessee               PETE OLSON, Texas
LAURA A. RICHARDSON, California
ALBIO SIRES, New Jersey
DONNA F. EDWARDS, Maryland
SOLOMON P. ORTIZ, Texas
PHIL HARE, Illinois
JOHN A. BOCCIERI, Ohio
MARK H. SCHAUER, Michigan
BETSY MARKEY, Colorado
PARKER GRIFFITH, Alabama
MICHAEL E. McMAHON, New York
THOMAS S. P. PERRIELLO, Virginia
DINA TITUS, Nevada
HARRY TEAGUE, New Mexico
VACANCY

                                  (ii)

  
?

            Subcommittee on Water Resources and Environment

                EDDIE BERNICE JOHNSON, Texas, Chairwoman

THOMAS S. P. PERRIELLO, Virginia     JOHN BOOZMAN, Arkansas
JERRY F. COSTELLO, Illinois          DON YOUNG, Alaska
GENE TAYLOR, Mississippi             JOHN J. DUNCAN, Jr., Tennessee
BRIAN BAIRD, Washington              VERNON J. EHLERS, Michigan
TIMOTHY H. BISHOP, New York          FRANK A. LoBIONDO, New Jersey
RUSS CARNAHAN, Missouri              GARY G. MILLER, California
STEVE KAGEN, Wisconsin               HENRY E. BROWN, Jr., South 
DONNA F. EDWARDS, Maryland           Carolina
SOLOMON P. ORTIZ, Texas              TODD RUSSELL PLATTS, Pennsylvania
PHIL HARE, Illinois                  BILL SHUSTER, Pennsylvania
DINA TITUS, Nevada                   MARIO DIAZ-BALART, Florida
HARRY TEAGUE, New Mexico             CONNIE MACK, Florida
ELEANOR HOLMES NORTON, District of   LYNN A WESTMORELAND, Georgia
Columbia                             CANDICE S. MILLER, Michigan
MICHAEL E. CAPUANO, Massachusetts    ROBERT E. LATTA, Ohio
GRACE F. NAPOLITANO, California      ANH ``JOSEPH'' CAO, Louisiana
MAZIE K. HIRONO, Hawaii              PETE OLSON, Texas
HARRY E. MITCHELL, Arizaon
JOHN J. HALL, New York
PARKER GRIFFITH, Alabama
BOB FILNER, California
CORRINE BROWN, Florida
VACANCY
JAMES L. OBERSTAR, Minnesota
  (Ex Officio)

                                 (iii)

                                CONTENTS

                                                                   Page

Summary of Subject Matter........................................   vii

                               TESTIMONY

Barry, Hamlet J. "Chips", Manager, Denver Water, Denver, 
  Colorado, testifying on behalf of the American Water Works 
  Association....................................................     9
Blumenauer, Hon. Earl, a Representative in Congress from the 
  State of Oregon................................................     5
Glance, Dereth, Executive Program Director, Citizens Campaign for 
  the Environment, Syracuse, New York............................     9
Hillman, Bill, Chief Executive Officer, National Utility 
  Contractors Association, Arlington, Virginia...................     9
Jacobson, P.E., Dale, Jacobson Satchell Consultants, Inc., Omaha, 
  Nebraska, testifying on behalf of the American Society of Civil 
  Engineers......................................................     9
Mittal, Anu, Director, Natural Resources and Environment, U.S. 
  Government Accountability Office, Washington, D.C..............     9
Summers, Robert M., Deputy Secretary, Maryland Department of the 
  Environment, Baltimore, Maryland...............................     9
Walsh, Thomas, Engineer-Director/Treasurer, Upper Blackstone 
  Water Pollution, Millbury, Massachusetts, Testifying on Behalf 
  of the National Association for Clean Water Agencies...........     9
Young, Kristine L., President and Chief Executive Officer, Miller 
  the Driller, Des Moines, Iowa, testifying on behalf of the 
  Associated General Contractors of America......................     9

          PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS

Bishop, Hon. Timothy H., of New York.............................    34
Carnahan, Hon. Russ, of Missouri.................................    35
Hare, Hon. Phil, of Illinois.....................................    36
Mitchell, Hon. Harry E., of Arizona..............................    40

               PREPARED STATEMENTS SUBMITTED BY WITNESSES

Barry, Hamlet J. "Chips".........................................    41
Blumenauer, Hon. Earl, of Oregon.................................    57
Glance, Dereth...................................................    61
Hillman, Bill....................................................    68
Jacobson, P.E., Dale.............................................   111
Mittal, Anu......................................................   116
Summers, Robert M................................................   128
Walsh, Thomas....................................................   132
Young, Kristine L................................................   139

                       SUBMISSION FOR THE RECORD

Barry, Hamlet J. "Chips", Manager, Denver Water, Denver, 
  Colorado, testifying on behalf of the American Water Works 
  Association, brochure..........................................    51
Hillman, Bill, Chief Executive Officer, National Utility 
  Contractors Association, Arlington, Virginia, ``Sudden Impact, 
  an Assessment of Short-Term Economic Impacts of Water and 
  Wastewater Construction Projects in the United States''........
        5........................................................

                        ADDITIONS TO THE RECORD

American Beverage Association, Susan Neely, President and Cheif 
  Executive Officer, written testimony...........................   151
Aurora Water, City of Aurora, Colorado, Gregory Baird, Chief 
  Financial Officer, written testimony...........................   157
Clean Water Construction Coalition, Robert A. Briant, Chairman, 
  written testimony..............................................   163
Crop Life America, Jay Vroom, President and CEO, written 
  testimony......................................................   168
Institute of Shortening and Edible Oils, Inc., Robert L. 
  Collette, President, written testimony.........................   173
National Association of Water Companies, written testimony.......   181
Water and Wastewater Equipment Manufacturers Association, Inc., 
  Dawn Kristof Champney, written testimony.......................   186

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  OPPORTUNITIES AND CHALLENGES IN THE CREATION OF A CLEAN WATER TRUST 
                                  FUND

                              ----------                              


                        Wednesday, July 15, 2009

                  House of Representatives,
   Subcommittee on Water Resources and Environment,
            Committee on Transportation and Infrastructure,
                                                    Washington, DC.
    The Subcommittee met, pursuant to call, at 2:17 p.m., in 
Room 2167, Rayburn House Office Building, Hon. Eddie Bernice 
Johnson [Chairwoman of the Subcommittee] presiding.
    Mrs. Napolitano. [Presiding.] Good afternoon, ladies and 
gentlemen.
    Today, the Subcommittee on Water Resources and Environment 
will consider the opportunities and challenges in the creation 
of a Clean Water Trust Fund.
    This Subcommittee has long understood the importance of the 
Nation's wastewater infrastructure in achieving the goals of 
fishable and swimmable waters under the Clean Water Act. Over 
the years, this Subcommittee has held numerous hearings on the 
condition of our wastewater infrastructure and on the adverse 
impacts of deteriorating infrastructure to the Nation's economy 
and environment.
    In addition, the Subcommittee has documented the growing 
gap between the need for water infrastructure improvements and 
the annual expenditures for this purpose. For example, current 
estimates show an annual investment shortfall of between $3.2 
billion and $11.1 billion for water-related infrastructure.
    This Subcommittee also understands the importance of 
increased infrastructure investment on jobs creation. While 
this is not the primary focus of the Clean Water Act, we must 
recognize the added benefit of the infrastructure investment on 
job creation and the secondary beneficial impacts on the 
Nation's economy.
    With a national jobless rate of 9.5 percent, the highest 
it's been for 26 years, including roughly 1.6 million 
unemployed construction workers, it is clear that an increase 
in infrastructure investment will have multiple benefits to the 
Nation at large.
    Earlier this year, this Committee approved H.R. 1262, the 
Water Quality Investment Act of 2009, to reauthorize the Clean 
Water State Revolving Fund at increased amounts over the next 5 
years. This bill, which is awaiting action in the full Senate, 
would restore the Federal commitment to meeting our wastewater 
needs in the future. However, assuming that actual Federal 
appropriations are made to match levels authorized in that 
bill, there would still be an annual gap between Federal 
expenditures and the needs for clean water infrastructure. That 
is why we are here today to take the first step in a large 
debate about how best to fund our Nation's water-related 
infrastructure needs in the future.
    Today's conversation focuses on one potential option, other 
than general revenues, that may be necessary to address the 
growing water-related infrastructure gaps, the potential 
creation of a Clean Water Trust Fund. The creation of a 
national trust fund would provide a deficit-neutral, long-term 
Federal contribution to protecting the Nation's water. A Clean 
Water Trust Fund should also provide greater certainly to State 
and local governments on the availability of sufficient 
revenues to meet existing and future water needs, both through 
capital expenditures for wastewater infrastructure repairs and 
replacements, as well as potentially addressing other Clean 
Water Act authorities, such as nonpoint source control programs 
and grants to State water pollution control programs.
    This long-term predictability on wastewater infrastructure 
funding will allow State and local governments to develop long-
range planning for wastewater infrastructure projects similar 
to the planning efforts for the Nation's infrastructure 
transportation projects funded through the Highway Trust Fund.
    Unfortunately, before the debate even started on the 
benefits of a Clean Water Trust Fund, we heard from interest 
groups who do not believe they should contribute to the 
creation of a trust fund. This finger-pointing is reminiscent 
of the quote attributed to the late Senator Russell Long, who 
said, "Don't tax you, don't tax me, tax that fellow behind the 
tree."
    I recognize that any debate on identifying potential 
revenue sources for infrastructure investment will be 
challenging. This Committee is already engaged in a similar 
debate to address the current shortfall in the Highway Trust 
Fund. However, in the opinion of the Chair, we must recognize 
that the end goal of this debate is an increase in 
infrastructure spending that will benefit the entire Nation.
    It is clear that the need for wastewater infrastructure 
investment is well documented. It is clear that clean water 
benefits both the human and ecological health as well as the 
health of the United States economy. It is clear that we are 
all beneficiaries of reliable drinking and wastewater 
infrastructure. Finally, it is clear that the creation of a 
Clean Water Trust Fund should help close the gap between 
infrastructure needs and annual investment.
    It is the opinion of the Chair if we are going to be 
successful in creating a long-term, sustainable, and dedicated 
source of revenue to address our wastewater infrastructure 
needs, all of the potential revenue sources for a trust fund 
must be put before Congress and debated. That means all of the 
potential revenue sources identified by the May, 2009, report 
of the Government Accountability Office need to be put on the 
table and debated.
    It seems unlikely that interest groups will come to 
Congress and say, tax me. However, at the same time, we must be 
able to articulate a logical connection between the source of 
revenue and the benefit that comes from clean water.
    I applaud the gentleman from Oregon, Mr. Blumenauer, for 
taking the first step in this larger debate by introducing the 
Water Protection and Reinvestment Act. I would hope my 
colleagues agree that a Clean Water Trust Fund would be a 
useful addition to address the Nation's wastewater 
infrastructure needs.
    I look forward to hearing the witnesses this afternoon and 
continuing the debate on the opportunities and challenges to 
the creation of the Clean Water Trust Fund.
    I just want to say that we are going to waive any Member 
minutes to move forward with the hearing.
    Mr. Boozman.
    Mr. Boozman. Thank you, Madam Chair.
    We need to ensure that sound Federal policies are in place 
that promote responsible management of our Nation's 
infrastructure, careful usage of our valuable water sources, 
and protection of the environment.
    Today's hearing will be about the first of these 
priorities, making sure that our Nation has adequate water 
infrastructure. This has long been an important issue to this 
Subcommittee.
    Today's hearing is the latest in a series of hearings our 
Subcommittee has held on this important issue over the past 
several Congresses. It is also our understanding that this 
hearing will be the first of multiple hearings that the 
Subcommittee intends to hold on how to finance wastewater 
infrastructure. Our Nation's health, quality of life, and 
economic well-being rely on adequate wastewater treatment. 
Industries that rely on clean water, like farmers, fishermen 
and manufacturers, contribute over $300 billion a year to our 
gross domestic product.
    To provide clean water, our Nation already has invested 
over $250 billion in wastewater infrastructure, but this 
infrastructure is now aging, and our population is continuing 
to grow, increasing the burden on our existing infrastructure. 
If communities do not repair, replace, and upgrade their 
infrastructure, we could lose the environmental health and 
economic benefits of this investment.
    Various organizations have quantified wastewater 
infrastructure needs. The Congressional Budget Office, the EPA, 
and the Water Infrastructure Network have estimated that it 
could take between $300 and $400 billion to address our 
Nation's clean water infrastructure needs over the next 20 
years to keep our drinking water and wastewaters clean and 
safe. This is twice the current level of investment by all 
levels of government. These needs have been well documented in 
our Subcommittee's prior hearings.
    We can reduce the overall cost of wastewater infrastructure 
with good asset management, innovative technologies, water 
conservation and reuse, and regional approaches to water 
pollution problems. But these things alone will not close the 
large funding gap that now exists between wastewater 
infrastructure needs and current levels of spending. Increased 
investment must still take place.
    That leads to the question, where is the money going to 
come from?
    There is no single answer to that question. Municipal 
wastewater services are a State and local responsibility, but 
there is clearly a strong Federal interest in keeping our 
waters clean. So what we need is an effective partnership 
between all of us--Federal, State, and local. That means all 
partners need to contribute. If we do not start investing in 
our wastewater infrastructure now, it is going to cost our 
Nation billions more in the future.
    Recently, the House of Representatives passed legislation 
that will authorize increased funding for wastewater 
infrastructure through reauthorization of the Clean Water State 
Revolving Loan Fund program administered by EPA. This bill is 
designed to help communities Nationwide meet their growing 
demand for wastewater infrastructure needs and improved water 
quality.
    When we do invest Federal funds in infrastructure, we need 
to do it in ways that would give us the best clean water value 
for the dollar. There are a number of potential ways for the 
Federal Government to invest. For example, we might provide 
more loan money to the SRF program or might provide assistance 
grants. Additionally, we might increase our investment in 
research and development of new technologies to improve the 
efficiency of wastewater treatment facilities, or perhaps there 
are innovative financing options that would make more funds 
available.
    In any event, the Federal Government is not going to be 
able to solve this problem alone. At the local level, 
communities need to evaluate their assets, make capital 
improvement plans, identify sources of capital to implement the 
plans, and ask for the rate increases that will apply that 
capital over a period of time. That last part is very 
difficult. No one likes to spend more. But if citizens 
understand the relationship between clean water and wastewater 
infrastructure, they should be willing to make the investment.
    Recent surveys show most Americans want a sustainable, 
dedicated source of funding for water infrastructure projects 
and would support the creation of a sustainable trust fund for 
wastewater infrastructure. One of the most complex aspects of 
moving from the trust fund concept to reality, however, is 
determining the funding sources for such a trust fund. The 
water and wastewater community has not supported a user fee for 
a trust fund, and so far no other water user has stepped 
forward in support of a fee or tax in their activities either. 
As a result, it remains unclear how a trust fund would get 
funded.
    A recent GAO report found that stakeholders identified 
three main issues that would need to be addressed in designing 
and establishing a Clean Water Trust Fund: how a trust fund 
should be administered and used, what type of financial 
assistance should be provided, and what activity should be 
eligible to receive funding from a trust fund.
    While a majority of stakeholders have said that a trust 
fund should be administered through an EPA partnership with the 
States, they differed in their views on how a trust fund should 
be used. Stakeholders vigorously stated that a trust fund 
should be used only to fund the existing Clean Wastewater 
Revolving Fund, that it should support only a new and separate 
wastewater program, or that it should support both the State 
Revolving Fund and a separate program. Some did not support the 
establishment of a trust fund at all.
    GAO estimated that the revenue could potentially be raised 
by various taxes on a range of previously proposed products and 
activities and found that it may be difficult to generate $10 
billion annually from any one option by itself. Rather, it 
would probably require a combination of taxes on more than one 
of the evaluated options to reach the $10 million target level.
    We have requested that GAO conduct an additional study to 
analyze funding and investment mechanisms and revenue sources 
from potential alternative public or private sources that could 
be used to fund investments in wastewater infrastructure and 
other water pollution control activities under the Federal 
Water Pollution Control Act. We look forward to those results 
in a few months.
    I hope our witnesses will bring forward ideas on how we can 
increase funding for wastewater infrastructure, identify 
potential willing revenue sources, and ensure equitable means 
for generating revenues. While the trust fund may have the 
advantage of providing a dedicated source of funds for 
wastewater treatment, how to structure the tax to feed the fund 
remains a challenging task.
    There is no doubt that the Nation's water infrastructure 
needs are significant and growing. We need at our disposal a 
wide range of funding mechanisms and funding sources to meet 
our considerable clean water needs.
    With that, I yield back.
    Ms. Johnson. [Presiding.] Thank you very much, Congressman.
    First, let me apologize for being late. I was really truly 
detained at the White House by the President, and that is why I 
was late. It is really the truth.
    I am going to bypass all of the opening statements and ask 
that you just file them for the record and go right to our 
colleague, Mr. Blumenauer, for his testimony.

  STATEMENT OF THE HON. EARL BLUMENAUER, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF OREGON

    Mr. Blumenauer. Thank you very much, Madam Chairman, 
Ranking Member Boozman, Members of the Subcommittee. It is a 
pleasure for me to return to the hearing room in which I spent 
so many pleasurable, challenging hours. And I am reminded, 
Madam Chairwoman, that for 10 years I was a Member of your 
Subcommittee; and it was fascinating to scroll back, thinking 
about all the groundwork that has been laid over the course of 
a decade with you and former Chairman Jim Duncan, trying to put 
the spotlight on an urgent national priority.
    I am pleased to be testifying today; and behind me are some 
of the people with whom I have been working on issues dealing 
with wastewater and drinking water, and how we are going to 
finance it. I can't thing of a better panel to help you frame 
the issue going forward and people who will be vital partners 
answering the questions that the Ranking Member just outlined.
    I am thinking back to one of our hearings in March of 2003, 
a hearing entitled, ``Meeting the Nation's Wastewater 
Infrastructure Needs,'' that detailed in excruciating, fine, 
granular efforts looking at the gap between wastewater needs 
and current spending.
    In April of 2004 we had another hearing, ``Our Aging Water 
Supply Infrastructure'' looking at the needs of drinking water; 
and it painted a similar picture. The American Water Works 
discussed a report it had released, The Dawn of the Replacement 
Era.
    In 2005, I think there were truly landmark hearings here in 
this room by the Subcommittee examining the questions that have 
been previously raised and talking about where we go from here. 
And it was fascinating, one of the featured speakers at that 
hearing was the famous Republican poster, Frank Luntz. And his 
findings, I think, were telling, indicating that the vast 
majority of Americans believe clean and safe drinking water is 
a key national priority and that they would support a 
sustainable, dedicated source of funding for water 
infrastructure projects.
    I commend your staff for an excellent summary, as usual. 
This really drills down and captures it. And one element that 
they have placed before you--and it is one that I think all of 
us need to raise the banner and try and drive the point home--
is that, because of the wide and increasing gap between urgent 
local needs and available funding source, we are at risk of 
losing all our progress for the last 40 years.
    It is not a case of helping keep pace. It is not a case of 
trying to keep rates down. The fact is the progress that this 
Committee helped engineer with the Clean Water Act, for 
instance, is at risk because we are falling behind growth and 
aging systems.
    These hearings, your report, the work that you have done 
built a case for a significant increase in Federal funding. 
Under the Clean Water Act, as we are moving forward--back in 
the Carter administration, the Federal Government provided 78 
percent of the resources necessary to comply with the Act. It 
is now 3 percent. It is not a sustainable picture.
    Now, we had a number of witnesses in the past; and one 
element of testimony that I thought was very important came 
from the American Beverage Association. And the Ranking Member 
again indicated this is not exactly going to be the simplest 
task before us, because no one wants to be singled out. And 
they made the point right there and that has guided the 
legislation that I want to talk to you about and commend to 
you; and that is, her industry was willing to do its part and 
pay higher rates that reflected infrastructure needs but didn't 
think it was fair to make beverages be the sole source of 
funds. I agree. And that has guided the legislation that is 
before you.
    I won't, I guess, be increasingly redundant talking about 
the gap. You have some people here that will give you a more 
immediate, urgent, and local perspective on it. But the fact 
remains we have got to do something about dealing with the 
funding.
    In 2008, when Mr. Oberstar gave me permission to leave the 
Transportation and Infrastructure Committee, it was with the 
understanding that I would go to the Ways and Means Committee 
to try and find the resources necessary for you to be able to 
do your important work.
    We have been deeply involved for the last 30 months with 
efforts about how we finance rebuilding and renewing America. 
There is no more critical issue, in my judgment, in order to 
restart the economy, protect the environment, and revitalize 
our communities.
    You have referenced the GAO study that the Chair, Mr. 
Oberstar, and I requested. You will hear about it. Yes, there 
is no silver bullet, but it did deal with elements that we can 
weave together to provide a comprehensive approach to funding.
    The point is that the local communities are doing their job 
now. You are going to hear it. And some of you represent 
communities where the local fees, utility rates are crushing, 
and the prospects for the future are of them doubling, 
tripling, quadrupling in a way that is going to pose a huge 
problem on people with fixed incomes. It is crippling business 
development. What is missing is that the Federal Government 
needs to do a better job, like it did 30 years ago, in helping 
local communities meet the altogether appropriate requirements 
of the Clean Air Act.
    I have introduced legislation, the Water Protection and 
Reinvestment Act, H.R. 3202, that will establish such a trust 
fund. We have spent countless hours over the last year and a 
half trying to refine the elements. I know it is complex. I 
think we have given you a very good start for how it would 
work. It is firewalled, like we do with the Highway Trust Fund. 
It would be distributed mainly through the Clean Water and 
Drinking Water State Revolving Funds. But there would be 
additional resources available for critical grant programs, 
focusing on addressing current and future needs, things like 
combined sewer overflow, climate change. Most of the 
authorizing language will look very familiar to Members of this 
Committee and your staff because we built on your outstanding 
work in breaking the logjam over the last 2 years.
    We have taken the advice that there not be a single source 
to finance this. Nobody is going to step forward and 
voluntarily do it. They have a legitimate point that they don't 
want to be singled out and given the burden of closing the 
Federal gap.
    So what we have done is look at the four primary areas 
where they rely heavily on fresh, pure water and they burden 
the system and they profit from it.
    There is a 4 cent per container fee on water-based 
beverages, not the whole burden on them, but it is hard to 
think of an industry that is more dependent on an inexhaustible 
supply of safe, pure water.
    The second item is a 3 percent fee on items that are 
designed to be disposed of in wastewater. There are products--
toothpaste, cosmetics, toilet paper--that actually, if it 
weren't for the ability to dispose of them through our sewer 
systems, the products would have little or no value, or they 
would be very expensive if they were required--cooking oil, for 
instance, you required it to recapture and recycle it. This is 
directly tied to benefit.
    We are in a situation--and some of you have real problems 
at home--where we are slowly medicating the American population 
because of all the pharmaceuticals that are getting into the 
drinking water system, with real serious potential health 
implications, extraordinarily expensive for municipalities, 
whether they are large or small, to be able to extract them. 
This bill would add a small fee on the industry to support 
programs in the legislation to prevent the drugs from entering 
the drinking water system and to support research on 
remediation.
    The hill would assess a fee of one-fifteenth of 1 percent 
on corporate profits over $4 million. American industry relies 
on safe drinking water and safe disposal of sewage and 
stormwater. This is, again, a minuscule fee, but it has broad 
application.
    And, in total, these four sources that have been reviewed 
in your GAO report are sufficient to generate over $10 billion 
a year on an ongoing basis, doesn't put the primary burden on 
anyone, and they are all connected to beneficial use. It is a 
user fee.
    President Eisenhower and President Reagan understood the 
importance of user fees when, in the case of President 
Eisenhower, they implemented a Highway Trust Fund user fee. And 
both President Eisenhower and President Reagan increased those 
user fees because people benefited.
    You are going to hear from a wide variety of stakeholders--
and I won't go through the list--ranging from the American 
General Contractors, the environmental community, American 
Rivers. There have been a wide range of people who really are 
on top of this, and they will work with you to refine the 
legislation and to support some of the tough decisions that 
need to be made.
    I am particularly pleased with cosponsorship, the original 
cosponsor of this legislation, including three alumni of our 
Committee, Congressman LaTourette, Congressman Simpson--
actually, I guess Congressman Petri is not yet an alumni. I 
don't think he is on the Subcommittee now.
    I will conclude with a final point. I referenced the 
research by Frank Luntz, who talked about how important this 
was to the American public and how there was broad bipartisan 
support. Mr. Luntz came out with a new poll in January of this 
year. He found that a near unanimous 94 percent of the American 
public are concerned about the state of our infrastructure. He 
found these concerns cut across all regions--urban, suburban 
and rural. He found that 84 percent of the American public 
wanted the Federal Government to spend more money to improve 
infrastructure; and he found 81 percent, a majority of 
Democrats, Independents, and Republicans, are personally 
prepared to pay 1 percent more in taxes for this cause. I would 
point far, far more--a larger percentage than is included in 
this legislation.
    I deeply appreciate your courtesy in allowing me to testify 
in support of this bipartisan legislation; and I look forward, 
Madam Chairman and Members, to working with you and the other 
three Committees have that been assigned the legislation, to be 
able to help you meet the amazing task that you have been given 
as a challenge to make our communities more livable, dealing 
with the critical water infrastructure.
    Thank you.
    Ms. Johnson. Thank you very much. We won't have questions 
for you right now.
    Mr. Blumenauer. Okay.
    Ms. Johnson. No, we will not.
    Mr. Blumenauer. Oh, we will not. That's even better.
    Ms. Johnson. They will come later.
    Mr. Blumenauer. Yes, ma'am.
    Ms. Johnson. We will now seat the second panel: Ms. Anu 
Mittal, Dr. Robert Summers, Mr. Thomas Walsh----
    Mr. Boozman. Madam Chair, I just want to thank Mr. 
Blumenauer. I know he has worked very, very hard on this and is 
very passionate. And this is not something that he has done in 
the last month or so. I know you have been working on this for 
the couple of years. So we do appreciate you coming and we 
appreciate your testimony.
    Ms. Johnson. Thank you very much.
    Ms. Dereth Glance, Ms. Kristine Young, Mr. Bill Hillman, 
Mr. Dale Jacobson, Mr. Hamlet J. "Chips" Berry.
    I would like to ask each of you to try real hard to keep 
your remarks at 5 minutes, but you can file your entire 
statement, and we will have it all.

   STATEMENTS OF ANU MITTAL, DIRECTOR, NATURAL RESOURCES AND 
ENVIRONMENT, U.S. GOVERNMENT ACCOUNTABILITY OFFICE, WASHINGTON, 
D.C.; ROBERT M. SUMMERS, DEPUTY SECRETARY, MARYLAND DEPARTMENT 
    OF THE ENVIRONMENT, BALTIMORE, MARYLAND; THOMAS WALSH, 
ENGINEER-DIRECTOR/TREASURER, UPPER BLACKSTONE WATER POLLUTION, 
 MILLBURY, MASSACHUSETTS, TESTIFYING ON BEHALF OF THE NATIONAL 
ASSOCIATION FOR CLEAN WATER AGENCIES; DERETH GLANCE, EXECUTIVE 
   PROGRAM DIRECTOR, CITIZENS CAMPAIGN FOR THE ENVIRONMENT, 
  SYRACUSE, NEW YORK; KRISTINE L. YOUNG, PRESIDENT AND CHIEF 
   EXECUTIVE OFFICER, MILLER THE DRILLER, DES MOINES, IOWA, 
 TESTIFYING ON BEHALF OF THE ASSOCIATED GENERAL CONTRACTORS OF 
   AMERICA; BILL HILLMAN, CHIEF EXECUTIVE OFFICER, NATIONAL 
  UTILITY CONTRACTORS ASSOCIATION, ARLINGTON, VIRGINIA; DALE 
  JACOBSON, P.E., JACOBSON SATCHELL CONSULTANTS, INC., OMAHA, 
NEBRASKA, TESTIFYING ON BEHALF OF THE AMERICAN SOCIETY OF CIVIL 
ENGINEERS; AND HAMLET J. "CHIPS" BARRY, MANAGER, DENVER WATER, 
 DENVER, COLORADO, TESTIFYING ON BEHALF OF THE AMERICAN WATER 
                       WORKS ASSOCIATION

    Ms. Johnson. We will start in the same order that we called 
the names. Ms. Mittal, Director of Natural Resources and 
Environment, U.S. Government Accountability Office, Washington.
    Ms. Mittal. Madam Chairwoman, Ranking Member Boozman, and 
Members of the Subcommittee, thank you for inviting us to 
participate in your hearing on the opportunities and challenges 
in establishing a Clean Water Trust Fund.
    At the request of this Committee, GAO just released a 
report that you have just heard about that details a variety of 
issues that will need to be addressed when establishing a Clean 
Water Trust Fund. My statement today is based on the 
information contained in this report.
    Our report identified three main issues that will need to 
be addressed when establishing a Clean Water Trust Fund.
    First, it is important to decide how the trust fund will be 
administered. This will involve deciding which agency will 
manage it and whether the funds will support the existing State 
Water Revolving Fund or a separate program.
    Second, it is essential to determine what kinds of 
financial assistance the trust fund will provide. This involves 
deciding whether the trust fund will make grants or loans, or a 
combination of the two.
    Finally, it is necessary to decide which activities will be 
eligible for trust fund support. These activities could include 
planning and designing wastewater projects and implementing 
capital improvement projects, as well as other kinds of 
activities such as providing ratepayer assistance to low-income 
households.
    The next question you asked us to address was, how can we 
raise $10 billion annually to support a Clean Water Trust Fund? 
We identified various options that could generate this desired 
level of revenues, but each option poses implementation 
challenges, and it may be difficult to raise $10 billion from 
any single option. Instead, Congress may have to consider a 
combination of several options that could collectively generate 
the level of funding needed. I will briefly describe each of 
the funding options that we have identified and the related 
challenge.
    First, Congress could consider excise taxes on products 
that may contribute to the wastewater stream. These products 
include beverages, fertilizers and pesticides, flushable 
products, pharmaceuticals, and water appliances and plumbing 
fixtures. The amount of revenue generated by these taxes 
depends on the number of products taxed and the amount of tax 
that you apply. For example, raising $10 billion just from 
pharmaceuticals would require a tax of 6.4 percent, but raising 
this amount from water appliances and plumbing fixtures would 
require a tax of 39.2 percent.
    Congress could also consider a per-unit tax. For example, a 
5 cent tax on each bottle and can of beverage sold could yield 
about $10 billion.
    The second option that we identified is to levy an 
additional tax on corporate income. This tax would be similar 
to the corporate environmental income tax that helped fund the 
Superfund program until 1995. Increasing the current corporate 
income tax by an additional .7 percent could raise $10 billion. 
However, this level of taxation would significantly exceed the 
.12 percent tax that was used to support the Superfund program.
    The third option we identified is to levy a tax on water 
use. A tax on water use could be a volume-based charge or a 
flat charge added to the utility bills of all households. A 
volume-base charge of .1 cent per gallon could raise about $13 
billion, or a flat charge similar to Maryland's $30 flush tax 
applied to all households nationwide could raise about $2.6 
billion. To raise $10 billion, you would need to charge each 
household $116.
    A final option that we identified is an industrial 
discharge tax. A tax on industrial discharges could be levied 
in two ways. The first would be to levy a fee on NPDES permits, 
and the second would be to levy a tax on toxic chemicals 
released by industrial facilities. However, it is unclear what 
level of taxation would be needed to generate $10 billion from 
either of these options, because there are no good data on 
which to base these calculations.
    Regardless of which revenue options are chosen for a trust 
fund, we found that each poses implementation challenges. For 
example, each of these options involves establishing clear and 
precise definitions of the products or entities to be taxed. In 
addition, most of these options require establishing a 
collection and enforcement framework. And, finally, obtaining 
stakeholder and industry support for these options poses 
additional challenges. This is because many stakeholders do not 
perceive a strong connection between some of these options and 
their impacts on the wastewater infrastructure, and most 
industry groups are opposed to the idea of Congress taxing 
their products.
    In conclusion, Madam Chairwoman, while the establishment of 
a Clean Water Trust Fund is a viable option for addressing the 
water infrastructure funding gap, establishing such a trust 
fund comes with a host of challenges; the greatest of which may 
be obtaining stakeholder support.
    This concludes my prepared statement. I would be happy to 
respond to any questions.
    Ms. Johnson. Thank you very much.
    Dr. Robert Summers.
    Dr. Summers. Thank you, Madam Chair, Members of the 
Committee, for the opportunity to testify today.
    I would like to thank Maryland Congresswoman Edwards for 
her support of the efforts that we in Maryland government are 
making to restore Chesapeake Bay.
    In my testimony today I am going to provide information 
regarding Maryland's Bay Restoration Fund. And I want to start 
out by saying, though, that it really would not have been 
possible to do this without very broad support from Maryland 
citizens. They are very concerned about the health of our 
waters, particularly Chesapeake Bay, very interested in the 
restoration effort, and so there is a long history that this 
builds on.
    More recently, our Governor O'Malley has really championed 
this through the development of his BayStat Web page, which is 
actually a very user-friendly source of information regarding 
the Bay restoration effort. It is very consumer friendly, and 
it provides what everybody likes to call transparent 
information that we can use to track our progress in restoring 
the Chesapeake Bay. And the Bay Restoration Fund is a very 
important, although relatively small, part of this.
    Maryland has a very significant water and wastewater need. 
Our most recent need survey indicates over 14 billion for both 
point and nonpoint source pollution control and drinking water 
infrastructure.
    Maryland's Bay Restoration Fund covers about $1 billion of 
this need. It is focused on our largest sewage treatment plants 
and upgrading them to achieve enhanced nutrient removal. It is 
part of our solution, but it is not the whole solution. 
Maryland very much depends upon the State Revolving Loan Fund, 
financed by the Federal Government; and we strongly support 
your efforts to strengthen these funds.
    The staff asked a little bit about how this bill was 
passed. I have already mentioned that Maryland citizens are 
very concerned about the Bay. And it really initiated with the 
signing of the Bay Agreement in 1983. In 1984, Maryland 
established a General State Obligation Bond Fund to share costs 
in upgrading our sewage treatment plants in the State. By 2004, 
about 20 years later, we had achieved significant progress, but 
everyone acknowledged that it really was not enough to achieve 
our goals for cleaning up the Bay. And in Maryland's 2004 
session, former Governor Robert L. Ehrlich, Junior, introduced 
legislation creating the Bay Restoration Fund, financed by a 
$2.50 monthly surcharge on wastewater bills and subsequently on 
the fees paid by owners of septic systems or onsite sewage 
disposal systems.
    It was immediately dubbed the "flush tax." And I would just 
like to make one correction. We don't call it the "flush tax." 
It is the "flush fee." And that was a very important aspect of 
the success of this legislation. And when Governor Ehrlich 
introduced it, there was quite a lot of interest and support 
for it. The legislature actually jumped on board and added to 
the bill and added a $30-a-year fee on onsite sewage disposal 
systems, and there has been broad public support for this 
effort in Maryland.
    The structure of the fee is very critical to its success, I 
believe. It is paid by all users of municipal wastewater 
treatment facilities, all owners of private onsite sewage 
treatment systems, and by all commercial and industrial 
facilities that discharge nutrients to the water. It is, again, 
directed to the Bay restoration. It is a nutrient-reduction 
fund.
    The fee, as we have heard, is a flat rate, $2.50 a month or 
$30 a year for residential users; and it is paid as a surcharge 
on sewage bills for people who get sewage bills. For folks who 
live in the rural areas and are on septic systems, it is paid 
directly to the county government.
    For commercial and industrial users, the fee is based on a 
sliding scale, depending on how much wastewater they actually 
produce; and it is as a multiple of the amount that is charged 
to the individual residential owners.
    The fee is being used in two dedicated funds. And it is 
absolutely critical that those funds be dedicated funds. The 
citizens watch it very closely, the Governor, the legislature. 
There is a requirement for an annual report which we have to 
brief the legislature on every year. So that dedicated fund is 
absolutely critical.
    So, just to sum up, I think the things that we can learn 
from Maryland's experience for this important effort that we 
are talking about today, we have broad public understanding, a 
good public education effort to make sure people understand the 
connection. The source of the fee is understood to be related 
to that, and it is broadly and equitably distributed amongst 
the various users and the fee, just to emphasize, placed in the 
dedicated fund, absolutely critical.
    I think the items we just heard about that GAO has looked 
at meet a lot of those requirements, and we are very interested 
in working with you further to try to pursue this. Thank you.
    Ms. Johnson. Thank you very much.
    Dr. Summers, I forgot to give your title as Deputy 
Secretary of Maryland Department of the Environment in 
Baltimore.
    Ms. Johnson. Mr. Thomas Walsh, Engineer-Director, 
Treasurer--he runs the whole thing there--Upper Blackstone 
Water Pollution in Millbury, Massachusetts.
    Mr. Walsh. Good afternoon, Chairman Johnson and Members of 
the Committee.
    As you said, I am Tom Walsh. Just one small correction, it 
is not Upper Blackstone Water Pollution. It is Upper Blackstone 
Water Pollution Abatement District in Worcester, Massachusetts.
    I am honored to testify here on behalf of the National 
Association of Clean Water Agencies regarding the establishment 
of the Clean Water Trust Fund to help finance wastewater 
infrastructure projects. NACWA represents the interests of 
publicly owned wastewater treatment utilities, and many of our 
members also provide drinking water services.
    Projects financed through the trust fund will help ensure 
the protection of our vital water resources, improve public 
health, provide recreational enjoyment for all Americans, and 
promote economic prosperity.
    This hearing and the recently released GAO report on 
potential ways to finance and structure a Clean Water Trust 
Fund are important steps toward a long-term, sustainable 
revenue source to address the serious water and wastewater 
infrastructure funding gap. We believe a Clean Water Trust Fund 
is critical to ensuring communities continue to meet the Clean 
Water Act obligations.
    We commend GAO for its fair and objective report, including 
its review of a water tax. We also commend Congressman 
Blumenauer for introducing the Water Protection and 
Reinvestment Act, H.R. 3202, and for appreciating that a water 
tax does not bring new supplemental money to the table, for 
recognizing the need to fund wastewater, drinking water and 
stormwater projects, and for understanding very broadly that 
water is water.
    Municipalities face serious challenges in meeting their 
clean water goals. Among them are growing population, aging 
infrastructure, increased regulatory requirements and stepped-
up enforcement from EPA, and global competition driving the 
cost of labor and materials. In order to meet these challenges, 
all levels of government--Federal, State and local--must commit 
to a partnership that recognizes the role of science in 
establishing water quality criteria, utilizes pragmatic 
planning to prioritize projects, and understands the need for 
more investment in our Nation's clean water infrastructure.
    As the cost of compliance continues to go up, we see an 
infrastructure funding gap of $300 to $500 billion over the 
next 20 years. Meanwhile, EPA estimates that more than 40 
percent of the Nation's water bodies remain impaired, a figure 
that has not changed in 20 years. In other words, the water 
quality gains achieved since the Clean Water Act was enacted in 
1972 have essentially plateaued. Without a significant 
recommitment by the Federal Government and a change in the 
regulatory paradigm, we risk rolling back the water quality 
gains achieved in the past 37 years.
    Federal investment in clean water has declined sharply. 
Municipalities currently pay about 95 percent of the cost of 
wastewater infrastructure and 99 percent of the cost of 
drinking water infrastructure. NACWA's own Triennial Service 
Charge Index projects a steady rise in the average residential 
service charges over the next 5 years, and it anticipates that 
annual average cost to single-family residences will increase 
nearly 34 percent between 2008 and 2013.
    Since 2000, rates at my utility, which provides only 
treatment services to our members, have increased 450 percent 
in order to pay debt service for ongoing plant upgrades 
required to meet more stringent discharge standards. This has 
resulted in a 110 percent increase in sewer rates to our 
largest member community, which has a median household income 
of $36,000 per year. It goes without saying the small rural and 
low-income communities will be hit hardest by these increased 
costs.
    This brings us back to the subject of today's hearing, how 
to finance the enormous clean water funding need. Momentum is 
building to address the infrastructure funding gap in a 
meaningful way. We appreciate this Committee's work to move 
legislation increasing Federal funding for clean water 
infrastructure, including bills to reauthorize SRF and to 
provide $6 billion in stimulus funding to address our needs.
    While this represents solid steps forward, we must remove 
water infrastructure investment from the realm of uncertain 
annual appropriations and focus on a dedicated funding system. 
Municipalities are willing to share and will continue to do so. 
However, NACWA believes that the Federal Government must do 
more to address the shortfall facing our Nation's publicly 
owned wastewater treatment agencies.
    If highways merit a trust fund at $30 billion a year and 
airports, $10 billion, why should we not have a water trust 
fund for a national resource each of us uses every single day.
    During deliberations for the Clean Water Act, Congress 
decided that water infrastructure was a national good that 
demanded Federal investment. Representative Blatnik, the Chair 
of this Committee at the time, said the task of cleaning up the 
Nation's waters was even more monumental than establishing the 
Interstate Highway Program. Congress created a trust fund to 
ensure the long-term viability of the Nation's highway system. 
We ask that Congress do the same for our Nation's waterways.
    We look forward to working with you, the water 
infrastructure network and associations representing drinking 
water utilities that support the Blumenauer bill. Thank you for 
your time and for allowing NACWA to share its views on clean 
water funding for the 21st century.
    I would be happy to try to answer any of your questions.
    Ms. Johnson. Thank you so very much.
    Ms. Dereth Glance, Executive Program Director, Citizens 
Campaign for the Environment, Syracuse, New York.
    Ms. Glance. Thank you, Chairwoman Johnson, Ranking Member 
Boozman, and distinguished Members of the Committee. It is my 
great pleasure to testify before you today on the need to 
establish a dedicated fund for clean water for all Americans.
    My name is Dereth Glance. I am the Executive Program 
Director with Citizens Campaign for the Environment. We are an 
environmental and public health advocacy organization supported 
by over 80,000 members throughout New York and Connecticut. I 
also serve as the Treasurer and a board member on the National 
Clean Water Network and I also serve on Governor Paterson's 
Clean Water Collaborative.
    I believe establishing a dedicated fund to ensure that 
Americans have access to safe drinking water and that American 
waters are no longer fouled by sewage and polluted runoff is 
long overdue. The need is overwhelming and urgent. In New York 
State alone, we are estimated, over the next 20 years, to need 
$74 billion to meet our clean water and drinking water needs. 
Nationally, the EPA puts that estimate at $722 billion. To 
bring that back home, in Syracuse we need $1 billion to deal 
with our aging water pipes alone.
    I can speak at length about the overwhelming quantities of 
raw sewage that pour into our waters that happens almost every 
day. Just on the 4th of July weekend at Lake George, on their 
million-dollar beach, over 6,000 gallons of raw sewage spewed 
onto the beaches, closing the beaches, ruining summer vacations 
and the businesses that depend on those tourists.
    The same is true for our water mains. On Mother's Day in 
Syracuse over 1 million gallons of water flooded downtown 
churches, day-cares and businesses, closing a day-care 
permanently.
    We have removed lead from gasoline, from paint, and from 
toys. Now is the time to ensure that our children and Members 
of Congress and your staff can drink tap water that is not 
delivered through lead-leaching pipes. Water is a powerful 
compound and sewage is caustic.
    With so many other problems in plain sight, investing in 
clean water is often ignored for too long until it is too late 
and it is even more expensive. We must make rebuilding and 
reinvesting in a fundamental sanitary service a national 
priority. We need Federal resources to protect Americans and 
our right to basic sanitation.
    Sewage treatment plants are some of the energy-intensive 
and expensive municipal taxpayer expenses. By investing in 
energy and water efficiency, we have many benefits to gain, as 
well as controlling our costs. We can look at an example just 
in Dallas. They have been able to avoid controversial water 
projects by providing incentives for both the commercial and 
residential consumers to practice water efficiency practices.
    Now, a dedicated and robust Clean Water Trust Fund will 
assist States and local municipalities in closing that gap for 
water infrastructure, and the economic benefits will be felt 
far and wide. We are going to be improving water quality, 
creating jobs, and protecting public health. And I applaud 
Congress, and especially the leadership in this Committee, for 
including much-needed funding in the American Recovery and 
Reinvestment Act. In particular, there was key language that 
was included that encouraged green infrastructure, innovative 
solutions that promote outside-the-pipe thinking and also 
provided funding for water and energy efficiency improvements 
at our treatment plants.
    And I am also encouraged by the much-needed funding that is 
moving forward through the SRF authorizations for both clean 
water and drinking water. The SRF is an effective and important 
funding source for American water projects, but its need 
consistently exceeds funding. The solution is the American 
Water Protection and Reinvestment Act. It outlines a 21st 
century approach to deal with our 21st century water needs.
    And I want to highlight a few of those key provisions for a 
successful Clean Water Trust Fund.
    First, we need a fix-it-first approach. We need to make 
sure this fund is not funding pipes to nowhere. We need 
sensible growth. We need to make sure that we have funding 
research and development. Our 21st century water infrastructure 
needs need to be grounded in 21st science and engineering. We 
need to have national research centers and programs at our 
universities to develop those bright minds to bring about a 
sustainable water future. We need to encourage our innovative 
clean water solutions.
    The EPA tells us to manage water efficiently. We need slow 
it down, spread it out, and soak it in.
    We need to make sure that we are keeping pharmaceuticals 
out of the water. Our treatment plants are not equipped to deal 
with removing endocrine-disrupting and estrogen-mimicking 
medications.
    Grants are necessary for our local municipalities that are 
cash strapped.
    We need to deal with climate change and mitigation. These 
are challenges that water infrastructure has not seen, and they 
can be part of the solution by generating clean renewable 
energy on-site.
    We need to supplement, not supplant, the SRF. And we need 
dedicated funding from a variety of sources. The small fees on 
pesticides, beverages, and users create a sensible and diffuse 
way to fund this program.
    And of all things, water is a public trust. It is necessary 
for us to drink or we perish. And of all things to hold in 
public trust what could be more important to Americans than 
access to save and clean water? Thank you.
    Ms. Johnson. Thank you very much.
    We have a vote and we have five votes. That is going to 
take at least 30 to 40 minutes, but we will have to take a 
break and come back. And I apologize if this is going to mess 
your day up so much, but they don't listen to us on that floor.
    With that, we will return and the questions will come after 
we complete the testimony.
    Mrs. Napolitano. [Presiding.] The Water Resources and 
Environment Subcommittee hearing on Opportunities and 
Challenges in the Creation of a Clean Water Trust Fund has now 
reconvened. We will move on to our next witness, Ms. Kristine 
Young, President and Chief Executive Officer, Miller the 
Driller, Des Moines, Iowa.
    Welcome.
    Ms. Young. Hi. As you said, I am Kris Young from Des 
Moines, Iowa. I would like to thank you for having me here, and 
we are excited to be a part of this process.
    I am part of a family-owned business. We have been in 
construction for 62 years now, and we have helped 
municipalities and communities recover when systems have gone 
down. So we are very much aware of what goes on at the local 
level, the State level and at the Corps of Engineers. I am a 
certified DBE in many of the States that we work in, and I am 
very proud to be here to represent the 33,000 members of AGC of 
America on the Opportunities and Challenges in the Creation of 
a Clean Water Trust Fund.
    Even before the current economic downturn, many of our 
cities and towns have experienced substantial challenges 
repairing and replacing water infrastructure that is quickly 
reaching the end of its useful life. Many communities do not 
currently have the resources to make the investments necessary 
to replace aging infrastructure and meet Federal water quality 
standards.
    As a contractor, I see firsthand what neglecting our 
infrastructure can do to our communities. As a resident of Des 
Moines, Iowa, I also know what it is like to go without water 
for 30 days, when your water system goes down in a flood in 
1993.
    Until recently with the passage of the Recovery Act, which 
is providing over 7.4 billion for EPA and USDA water programs, 
congressional appropriations for water infrastructure projects 
have been diminishing steadily over the years, while our needs 
are ever increasing. Our industry is facing a crisis much like 
the infrastructure. In June alone construction employment 
declined by 79,000 jobs while over the past 12 months almost 1 
million construction workers have lost their jobs. Overall, 
unemployment is at 9.7 percent, but 17.4 percent of 
construction workers are now unemployed.
    The GAO report, which is the subject of the hearing today, 
acknowledges that our Nation faces tremendous challenges in 
replacing and rehabilitating our water infrastructure. We are 
all aware of the various studies, projecting needs approaching 
600 billion over the next 20 years.
    As the GAO's report to this Committee states, the trust 
fund for water infrastructure would establish a multiyear 
commitment to address the Nation's pressing water needs. If 
Congress can develop a fair and defensible system for raising 
the revenue, a water infrastructure trust fund is achievable, 
and the benefits to the American people, business and 
environment would be enormous.
    Infrastructure investment enhances our quality of life, 
provides good-paying jobs for Americans. In fact, a study 
conducted by AGC, completed in the spring of 2008, estimated 
that every 1 billion in nonresidential construction spending 
would add about 3.4 billion to the gross domestic product, 
about 1.1 billion to personal earnings and create and sustain 
over 28,000 jobs.
    At the Federal level we have used dedicated trust funds to 
tackle problems too big for States to handle alone. Financing 
water infrastructure through a trust fund would have advantages 
over general fund financing. It would be deficit neutral. The 
funding stream would not be subject to the annual 
appropriations process, providing the certainty that State and 
local officials need to commit to long-term infrastructure 
financing. And it would get the job done, providing the 
revenues for revision to meet the need.
    We as an association have been dedicated to educating our 
members and the public about the current needs that exist in 
clear terms that every American can understand. With our 
support, the Penn State Public Broadcasting documentary Liquid 
Assets, the State of Our Water Infrastructure, has been 
broadcast over 700 times in 94 percent of the PBS stations. We 
thank the efforts of Chairwoman Johnson and Ranking Member 
Boozman and all 535 Members of Congress who have received and 
hopefully looked at the Liquid Assets documentary.
    The number of Americans who understand the need to improve 
our water infrastructure is growing, and their patience is 
diminishing as those who have failed to make investment in 
water infrastructure a priority. AGC acknowledges that in these 
tough economic times, raising taxes may be a difficult pill for 
the American public and corporate America to swallow. However, 
we think infrastructure is different. It is an investment 
program, and we have an obligation to provide the American 
people with the assurance that the water they drink is clean 
and safe and that our infrastructure is delivering 
environmental benefits.
    I thank you for the opportunity to speak to this Committee 
today.
    Mrs. Napolitano. Thank you for your testimony.
    And in light that Mr. Barry has a plane to catch, we will 
jump over--gentlemen, if you don't mind.
    Mr. Barry. Thank you, Madam Chairman. I appreciate your 
letting me testify today and in changing the order a little 
bit. That is very gracious of you. Thank you.
    Mrs. Napolitano. Thank the gentleman.
    Mr. Barry. And I thank the gentlemen to my right who have 
to suffer through my testimony first. I will keep this very 
brief.
    I am testifying on behalf of the American Water Works 
Association, which is an association of utilities throughout 
the United States, more than 50,000 members. There are 
utilities in every State, and certainly all the large utilities 
in the country belong to AWWA. That is whom I am representing, 
although my job is as General Manager of the Denver Water 
Department.
    I just have a couple of things to say about this bill. I am 
not here to oppose it. I am not here to support it. I want to 
make some observations and give you some perspective about it.
    Number one, the primary responsibility for funding water 
and wastewater infrastructure in this country has always been 
local. We think it should remain so. Americans are best served 
by water systems that they pay for themselves. It is more 
responsive. It is direct government, it is direct democracy; we 
don't want to see that change.
    Aging water infrastructure in this country is an issue, but 
I don't think it is a crisis, and all the infrastructure is not 
crumbling. There are many reports and a lot of numbers out 
there, but the thing I want the Committee to remember is that 
the water industry itself now invests $80 billion a year in 
water and wastewater infrastructure. That is $80 billion a 
year.
    Now, this funding gap of 300-some-odd billion, supposedly, 
after 20 years is, in fact, only a 20 percent funding gap. And 
EPA itself says that if utilities will increase their water 
rates at 3 percent above the rate of inflation, that gap is 
largely closed. Though it is not a crisis and it is not all 
crumbling, it is an issue that we have to pay attention to on a 
local, issue-by-issue, State-by-State kind of basis.
    Now, there is definitely a role for the Federal Government 
in lowering the cost of capital. And particularly, in special 
circumstances, low-income communities, combined sewer overflow 
problems, small systems, there is a disparity in the ability of 
different communities to fund their infrastructure, and the 
Federal Government can help.
    I think that is very important to note that they can help, 
but I am not--one of our concerns is, I don't want to see the 
Federal Government take over this responsibility. It is a local 
responsibility and it needs to remain so.
    One of our concerns about the bill is, we think that a 
trust fund is, in fact, not a very good mechanism. I think most 
of the Committee knows this, but the words "trust fund" in 
Federal Government parlance don't mean what they mean to the 
rest of the world.
    Federal trust funds don't have trustees, they don't have 
beneficiaries and they don't have segregated assets. They are 
simply accounting entries that Congress can change or eliminate 
at any time. There are 400 Federal trust funds; I think almost 
none of them actually spend all the money that comes supposedly 
to them for the purposes for which they were created.
    What I worry about is, we create a trust fund, create an 
expectation that the Federal Government is going to solve this 
problem through a trust fund, and in fact that is not the case. 
The history of trust funds tells you that it is a false 
promise, it won't work that way; that is one of our concerns. 
It is not that we oppose these taxes or that we oppose any 
Federal Government involvement. It is that the promise will be 
far greater than the performance, and the history of trust 
funds is very clear about that.
    We think there are more effective tools to get Federal help 
to the communities that need it. One of them is something 
called a water infrastructure bank. We have--AWWA has written a 
report about that. That bank could build on and leverage SRF 
money.
    Another thing we think is important, and it is in the bill, 
is broadening and enhancing the purposes and the mechanisms by 
which SRF money is administered. SRF money right now can't be 
used to fix aging infrastructure. That needs to be fixed, and 
that is in the bill, and we certainly appreciate that.
    The last thing I want to say--or almost the last thing, and 
there was a reference to it in the GAO testimony--is about a 
water tax. A water tax is something that makes many of us in 
the utility industry extremely nervous. We are not in favor of 
a national water tax, partly because it is an inefficient way 
to collect and spend money, partly because it, in effect, 
punishes those cities--and there are many of them--
municipalities who have maintained their systems to a high 
degree, who would now be taxed to have that money sent 
somewhere else.
    If this is a local responsibility, let us keep it generally 
local. We think that is an important concept.
    There are many things that AWWA is for in this arrangement 
and that is listed in the testimony; I won't go into detail 
about that.
    I will conclude with one thought, and that is that this 
bill, to me, implies--it doesn't say it explicitly, but it 
implies that clean water and wastewater infrastructure is no 
longer a local responsibility, the Federal Government is going 
to take care of it. Well, first of all, that doesn't give me 
any comfort. Second of all, the mechanism that the Federal 
Government in this bill was going to use is a trust fund.
    The trust funds don't work in the way they are supposed to 
achieve this objective.
    Mrs. Napolitano. Mr. Barry, would you wrap it up please, 
sir.
    Mr. Barry. Madam Chairman, I am wrapped up. I appreciate 
your letting me give this testimony. We like some parts of the 
bill, we don't like others; and you have heard some of our 
concerns and observations. Thank you.
    Mrs. Napolitano. Thank you very much for your testimony. 
Your concerns are noted. Some would agree; some would disagree. 
But we very much appreciate the fact that you have been very 
constructive in criticism. So thank you sir.
    And you are dismissed if you need to catch your plane. 
Thank you, sir.
    We will now hear from Mr. Bill Hillman, Chief Executive 
Officer, National Utility Contractors Association, Arlington, 
Virginia.
    Welcome, sir. And you're on.
    Mr. Hillman. Thank you, Madam Chair, and thank you so much 
for including us in this important proceeding today. I want to 
thank the Ranking Member and the Full Committee, as well as Mr. 
Blumenauer and GAO, for getting us to where we are today in 
this discussion. We supported this idea of a trust fund for 
many years, and it was lonely for a while; and now it is not, 
and it was due to all your efforts.
    At the outset, I want to share that we do support in 
concept the creation of a trust fund. And I would like to take 
a few moments to explain the key reasons why we do and, time 
allowing, some ideas on how it might be structured to be most 
effective.
    But first, at the request of a couple of Subcommittee 
Members, I would like to discuss for a moment why the 
investment gap that has been mentioned really matters. Because, 
for example, some speakers, including the previous witness, 
don't think it is really a crisis, and they make a case for 
that; and we have got some Members who think it is not a 
crisis.
    But just because people aren't dying right and left doesn't 
mean it is not a crisis. Its ramifications are not just 
inconvenient, they are very serious. And some of the previous 
testifiers, as well as Mr. Blumenauer, outlined quite 
succinctly and well some of the environmental protection 
implications and public health ramifications of our failure to 
address this growing gap.
    However, I want to add one more factor to the mix that we 
think is very important.
    The failure to narrow this gap effectively puts an economic 
straightjacket on our economy for a number of reasons, which I 
will explain. We recently, for example, put out a study through 
our coalition, the Clean Water Council--I think everybody has 
got a copy--called Sudden Impact, and it has been out for 
months. We released it with the consideration of the recovery 
package, but it extends far beyond that.
    This shows in the short term only, that is, during the 
period of construction only, a billion-dollar investment, 
similar to the AGC study, results in substantial, real changes 
in economic output; increases personal incomes which are spent 
on the economy; increases State and local tax coffers; and 
last, but certainly not least, extensive employment 
ramifications.
    We can create almost 27,000 jobs per billion at an average 
income of more than $50,000 per year. And for those of you who 
may be rolling your eyes after some of the numbers thrown out 
during the stimulus package hearings, you can stand by--these 
numbers are based on actual data from 116 jobs completed in the 
last year, and they are run through two economic models. So we 
felt we can look in the mirror in the morning and cite these 
figures without running away, and we want to point those out to 
the Committee.
    That explains why it is a crisis.
    There is another aspect to it. The problem, we believe, is 
structural. Despite all the efforts by the State and local 
governments and the SRF and bond referendums and everything 
else, the gap is not being diminished. And let me illustrate 
very quickly what I mean.
    In 1980, we were told the needs were 125 billion for 
wastewater. We spent 75 billion in the next 10 years to reduce 
it. Twelve years later the needs had gone up to 132 billion. 
That pattern has been continued every 2 to 4 years to the point 
where the gap is over $200 billion.
    What that says to us, business as usual, it hasn't been 
working. Furthermore, we believe--and we don't have a study for 
this, but even if you implement full-class pricing like many 
want to do and even if you have proper asset management and 
even if, as this Committee has done and the House has done, you 
pass a good SRF reauthorization bill and even with the recovery 
package, you are still going to have a gap.
    So something new, fresh and innovative has to be done. I 
think it is very difficult to argue against that. The big issue 
is what do you do? That is the big question. And we believe a 
trust fund, for a couple reasons, is the best mechanism.
    One is, it can raise enough money to actually do something 
about the problem.
    Number two--and, Madam Chair, you touched upon this in your 
opening statement--a trust fund that cites adequate funding 
provides consistent funding. It is very important for not only 
private sector contractors and engineers and labor, but also 
for State and local government. If you can't predict what 
funding is going to be, if you base your planning off of what 
the Subcommittee is going to vote on, what the President is 
going to introduce and what some voters are going to do, you 
are going to be a lot less likely to ramp up your employment 
and go out and buy that $300,000 track hoe and have enough 
jobs, shovel ready, when the opportunity arises. And I think 
that is another important point in favor of a trust fund.
    The third point is--and I disagree with at least one of the 
other witnesses on this--I think there is a Federal role to be 
played. The reason is actually quite simple. Water pollution is 
an interstate need, and the Federal Government is going to have 
to be involved in partnership with State and local. But as long 
as we have got the Pacific Ocean and the Atlantic Seaboard and 
the Mississippi River and the Great Lakes and the Chesapeake 
Bay and a hundred others, there is going to be a Federal role 
to play in financing.
    That concludes my 5 minutes. If I get a chance later on, I 
would be happy to share some ideas about how we would structure 
this and another idea for including additional stakeholders in 
the process.
    Thank you.
    Mrs. Napolitano. Thank you very much for your testimony, 
sir.
    Mr. Dale Jacobson, Jacobson Satchell Consultants, Omaha, 
Nebraska.
    Thank you for your patience, all of you.
    Mr. Jacobson. Good afternoon, Madam Chairwoman, 
Representative Boozman, and Members of the Subcommittee. My 
name is Dale Jacobson. I am a licensed professional engineer in 
Nebraska and Iowa, and the President of Jacobson Satchell 
Consultants, a consulting firm with offices in Omaha and 
Denver. I have about 40 years of experience in engineering 
wastewater and drinking water projects.
    Today, I am pleased to appear on behalf of the 146,000 
members of the American Society of Civil Engineers to testify 
on opportunities and challenges in the creation of a trust fund 
to provide funding for clean and safe water and to discuss the 
Water Protection and Reinvestment Act introduced by Mr. 
Blumenauer.
    America's drinking water and wastewater infrastructures 
systems are aging. Many systems are well beyond their design 
lives. New methods of financing improvements to these critical 
structures are vitally needed.
    ASCE believes that funding for water infrastructure 
improvements and the associated operations requires a 
comprehensive program to provide financial support. To that 
end, ASCE supports the creation of a trust fund to finance the 
national shortfall in funding of infrastructure systems under 
the Clean Water Act and the Safe Drinking Water Act.
    The Blumenauer bill would create a trust fund for drinking 
water and wastewater infrastructure needs and raise 
approximately $11 billion annually from new sources of revenue, 
each designed to provide a constant source of funds. The bill 
would provide a budgetary firewall to ensure that all moneys 
received into the trust funds would be appropriated into the 
two State revolving loan funds.
    There are some important points to be made about the bill 
before you. This legislation is vitally needed. If enacted, the 
Water Protection and Reinvestment Act would begin the process 
of restoring our Nation's threatened surface water and drinking 
water resources.
    In March, ASCE released its 2009 report card for America's 
infrastructure. We identified a $2.2 trillion need for 
infrastructure funding over the next 5 years with about half of 
that money assured under current funding arrangements. This 
leaves a gap of $1.1 trillion to be met from new sources of 
revenue.
    In our report card, drinking water earned a D- and 
wastewater also earned a D-. Our annual shortfall of $11 
billion is needed to replace aging facilities that are near the 
end of their useful life and to comply with new and future 
Federal regulations. This does not account for growth in demand 
for drinking water and wastewater services over the next 20 
years.
    Americans still enjoy some of the best tap water in the 
world, and as the gentleman from the American Water Works 
Association pointed out, it is delivered locally. But there are 
costs for treating and delivering that water that continue to 
outpace the funds available at the local level. A similar 
situation for funding exists with our wastewater systems.
    The bill would establish a trust fund that would receive 
money from the new taxes. Unlike other trust funds with a 
single source of revenue, the water infrastructure fund would 
have multiple sources of revenue, thus ensuring a more stable 
and dependable source of support for essential water systems.
    In January, this Committee led the fight to pass the 
American Recovery and Reinvestment Act. That act, signed into 
law in February, provided an estimated $100 billion for all 
U.S. infrastructure needs as an emergency job creation measure 
for fiscal year 2009.
    The Blumenauer bill will also create badly needed jobs. The 
Recovery Act and this legislation are more than about jobs. 
They represent a partial down payment on the $1.1 trillion, 5-
year infrastructure investment gap identified by our report 
card. That is why ASCE strongly supports the creation a trust 
fund to finance the national shortfall in funding of 
infrastructure systems under the Clean Water Act and the Safe 
Drinking Water Act. Such a trust fund would provide source 
funding for many decades to come.
    Let me close with a few brief points. The Nation's 
infrastructure faces some very real problems that threaten our 
way of life if not addressed. We determined in March that these 
problems are solvable, but we need to have the needed vision 
and leadership. Raising the grades on our infrastructure will 
require us to seek and adopt a wide range of structural and 
nonstructural solutions in every category, including 
technological advances, funding and regulatory changes and 
changes in public behavior and support.
    ASCE developed several strategic solutions to begin raising 
the grades. One of these is to increase Federal leadership and 
infrastructure to address the need for additional funding. This 
proposal would create a trust fund for water as the first step 
in that leadership.
    Madam Chairwoman, thank you for your time; and I conclude 
ASCE's testimony and would be pleased to respond to any 
questions you may have.
    Mrs. Napolitano. Thank you, sir, for your testimony.
    And that wraps up the testimony and we begin the questions 
to the panel. There are lots of them. I mean, I don't know 
where to start. There are certain things that have come up that 
bear a little bit more enlightenment, if you will.
    Mr. Hillman's testimony clearly stated that existing 
appropriations are insufficient to meet clean water needs, the 
current clean water needs. But how about the rest of you? What 
do you think?
    And I know it is not necessarily within your realm, Ms. 
Mittal, but I would appreciate it if you would be able to give 
some comment on this. Because I agree, there is just not enough 
in the stimulus, not enough in the ARRA to be able to do the 
needs of the infrastructure.
    And I disagree with Mr. Barry in terms of being able to say 
that they don't want government to set up a trust fund 
"because." Well, we need to do something. We need to be able to 
help small communities that do not have the ability to do it on 
their own and be able to see, whether it is lead or anything 
coming out of the infrastructure, how do we deal with it and be 
able to not tax the people or tax all the businesses?
    Everybody calls it a "tax," but certainly it bears a lot of 
soul searching about what we need to do. So would you, please?
    Ms. Mittal. Sure. As you said, this was not the main focus 
of our report, but during the course of our work, there were a 
couple things that came to light.
    One is, even though it is very difficult to figure out 
exactly what the funding gap is, there is a pretty strong 
consensus that there is a funding gap. Second, the SRF is a 
very important tool, but over the years the funding for the SRF 
has been declining; and finally the ARRA provided $4 billion, 
but that was, as you know, a one-time deal.
    So a couple of things that we did notice, and as you just 
mentioned, is that with the SRF there are certain limitations, 
and small communities in particular, as well as very large 
communities that have mega projects, are not able to get the 
money that they need from the existing SRF. Stakeholders told 
us that having a Clean Water Trust Fund that provides a little 
bit more flexibility to meet those needs would be beneficial.
    Mr. Summers. In my written testimony, I address the gap. 
Specifically, Maryland has a 14 billion need, based on our 
latest need survey.
    We currently, a combination of State, Federal and local 
funds, have about 130 million a year coming in to meet that 
need. And I guess a conservative estimate of the gap is about a 
half a billion a year. That is just for Maryland.
    I would also note with the ARRA funding, Maryland received 
about $120 million, for which we are extremely grateful. We 
received $3.4 billion of requests for that funding.
    Mrs. Napolitano. Mr. Walsh.
    Mr. Walsh. I can't really speak to absolute numbers in 
terms of the gap nationally. I can talk a little bit about what 
goes on in Massachusetts and give you an example of one 
community in Massachusetts.
    In Bedford, which just finished upgrading its wastewater 
treatment plant and is making major investments in its combined 
sewer overflow facilities, the debt service on those projects 
alone has brought New Bedford to the point where it has 
exceeded the 2 percent of median household income level that 
the EPA uses as an indication of affordability. So there is New 
Bedford which is already well above the affordability level, 
and I suspect there are a number of other communities across 
the country that are in that situation. Without the help of the 
Federal Government, it would be very difficult for those 
communities, I think, to afford further improvements to their 
infrastructure.
    Interestingly, also in the case of New Bedford, the reason 
that the EPA has decided to impose new stringent standards on 
them for treatment and is going to require them to go to 
nitrogen removal, the nitrogen removal is there because of 
issues in downstream areas such as Buzzards Bay and 
Narragansett Bay, which are national water resources, not just 
Massachusetts water resources. So I think what we are doing is 
we are trying to protect resources that are national in scope.
    That also applies to my utility. Most of the reason that I 
have more stringent effluent standards is to meet water quality 
requirements in the State of Rhode Island and in Narragansett 
Bay.
    So we have a very broad national scope in what we do and we 
have broad national need.
    Mrs. Napolitano. Thank you, sir.
    Ms. Glance.
    Ms. Glance. Yes. New York has overwhelming needs, $38 
billion in wastewater--$38 billion in drinking water over the 
next 20 years, $36 billion in wastewater over the next 20 
years.
    I had the privilege of standing with EPA Administrator 
Jackson, Governor Paterson, Congressman Hinchey and Congressman 
Tonko to announce EPA's largest wastewater infrastructure grant 
in history around Earth Day, $432 million from the stimulus 
funds. Thank you very much for that.
    Those projects--that funding, we were able to leverage 
that. We almost doubled it to over $700 million in New York. We 
still have hundreds of reviewed, ranked, and ready-to-go 
projects that still await funding. So we can get these projects 
out the door if we have the funding.
    I do want to speak to the economic benefits, too. The 
Brookings Institution took a look at a $26 billion Federal 
investment in just the Great Lakes region alone; and the vast 
majority of that price tag is tied up, dealing with CSOs, and 
found that $80 billion in economic benefits we would gain from 
that $26 billion up-front investment. We think that is a pretty 
good rate of return. And we need additional funding.
    New York State provides some funding in our State budget 
for wastewater infrastructure. We leverage our SRF as much as 
possible. There is funding from the local municipalities, but 
there is a clear role for the Federal Government. We have many 
shared waterways.
    Mrs. Napolitano. Thank you.
    Ms. Young.
    Ms. Young. I can speak particularly on the contractors' 
level, and in the Midwest where I work, we regularly have 
communities under boil orders because their water systems have 
become contaminated. We regularly have problems where old water 
mains break, streets open up, sinkholes.
    Mrs. Napolitano. You hold the thought.
    But how do they get the ability those entities to address 
those contaminations without funding?
    Ms. Young. Well, I think many of them don't address it 
until they have a catastrophe, and then they call construction 
companies to come out on the weekend and make emergency 
repairs. And it seems as though, in the municipalities that we 
are involved with, it is like they don't have the money until 
they are just forced to fix it and they need to fix it.
    The money--the contractors are ready and waiting to help 
with this, and what is really frustrating is to see 
municipalities put projects out and literally let us bid them, 
and then they don't have the funding to support them and the 
job just sits there and nothing gets done.
    Mrs. Napolitano. Mr. Hillman.
    Mr. Hillman. I testified as to our gap numbers already. I 
didn't talk about why the gap exists, and you begged that 
question in your last question. And I don't mean to be flip in 
saying it, but the biggest part of the reason for the gap is 
because the American public is seemingly unwilling to pay for 
what they want.
    We need an attitude adjustment. We need to change the 
definition of needs and have lower quality or step up to the 
plate in some way through a trust fund or other accommodations 
and belt a homer.
    Mrs. Napolitano. Thank you.
    I beg to differ, though, because the American public 
doesn't know where to go to complain, one. Two, they don't know 
what is involved and many of these--the water agencies, the 
cities--are informed and educated; the general public is not.
    If you phrase it the right way, they will agree.
    Mr. Hillman. Part of the problem is, it is unlike, for 
example, transportation infrastructure. Ours is more out of 
sight, out of mind. It just is.
    Now, we try to fight that. We put out a blog every day. We 
started last year. And I bring this up because I asked for some 
staff--we are going to do a daily blog, and all the 
catastrophes with sinkholes and collapsed infrastructure, do it 
once every 2 weeks. Two days later, you had better make it once 
a week; we have got enough stories already. Within 2 weeks we 
are doing it every day, but people still don't know.
    Mrs. Napolitano. But there should be an education component 
for the general public to understand. They will support it if 
they understand it--and if it is dedicated funding.
    Mr. Jacobson.
    Mr. Jacobson. I will address your question both from a 
macro and micro perspective. As I know--and I have been in this 
business from about the time the Clean Water Act was passed in 
1972, and through the years the EPA has generated their needs 
survey on both water and wastewater infrastructure.
    They don't do this by divining it from Washington. They 
work with the State regulatory agencies, and those regulatory 
agencies, in turn, work with the cities and the counties and 
the agencies in their State to determine the needs.
    So I believe that the needs surveys that have been 
generated periodically by the EPA are quite accurate and very 
reflective of the needs of the water and wastewater 
infrastructure.
    To answer from a micro perspective, my hometown is Omaha, 
and as has been noted by some other people, the combined sewer 
overflow is quite an issue. In Omaha, we have a $1.5 billion 
tab facing us for combined sewer overflow treatment or 
mitigation, and that doesn't address any of the other needs of 
the wastewater system within the community, whether it is 
within the collection system or the treatment system.
    So the need for a trust fund to help assist in such a 
funding mechanism is definitely something that we believe is 
necessary.
    Mrs. Napolitano. Thank you very much for your testimony. It 
was enlightening.
    Mr. Boozman.
    Mr. Boozman. Thank you, Madam Chair. I would like to kind 
of get back into the GAO report a little bit.
    GAO found that stakeholders identified three main issues 
that would need to be addressed in designing and establishing a 
Clean Water Trust Fund, namely, how the trust fund should be 
administered and used, what type of financial assistance should 
be provided, and what activity should be eligible to receive 
funding from the trust fund.
    How would you recommend that each of these issues be 
addressed? Mr. Walsh?
    Mr. Walsh. I don't know that I could tell you how I think 
the trust fund should be administered, say, from the top, but I 
think that there is a tremendous mechanism that is already in 
place that has worked very well in distributing funds for 
wastewater treatment systems, and that is the State revolving 
loan fund operation.
    Mr. Walsh. That is basically the same operation that was 
distributing funds during the construction grants stage. That 
program worked tremendously towards bringing our wastewater 
infrastructure up to the level that it is today. So I think 
that there is quite a bit of the administrative capability is 
there to run that sort of a fund.
    Mr. Boozman. And the type of financial assistance?
    Mr. Walsh. You are saying, should it be a grant? Should it 
be a loan? Is that the question?
    Mr. Boozman. Well, Mr. Summers is talking about having a 
fund that is really designed to reduce nutrients in a sense. We 
have other problems with aging pipes and infrastructure. I 
guess what I want to know is, if we have this trust fund, Mr. 
Blumenauer, in his testimony, talked about the fact that we are 
getting small, very minute quantities of drugs. That is very, 
very expensive to take out. So, again, I guess if we had this 
infrastructure fund, what are we talking about using it for?
    Mr. Walsh. I think that there are sufficient needs in terms 
of more stringent standards that are coming along, such as 
nutrient removal, such as better management, combined sewers, 
such as better management of sanitary sewer overflows, all of 
which are sort of new Federal mandates that the funds could be 
targeted for.
    I think local municipalities, local communities are capable 
of managing the maintenance of their systems, have been 
managing the maintenance of their systems. Frankly, I think 
they would manage the maintenance of their systems a lot better 
if these Federal mandates were funded better.
    I think many of us do tend to reduce the money that we 
spend on maintenance in order to spend money meeting the more 
stringent standards that are coming at us. So I think if we got 
relief on the newer mandates that would help us tremendously in 
being able to keep our systems in much better condition.
    Mr. Boozman. Thank you, Mr. Walsh. And whoever else would 
like to comment is fine.
    Ms. Glance.
    Ms. Glance. I think using the existing mechanisms through 
the SRF managers is a very good system. It is already set up. I 
do think that with establishing a trust fund that transparency 
and the public understands exactly where that money is going is 
going to be incredibly important to maintain public support. 
And I think that a diffuse funding source, the more funding 
sources that we can tap to help build the solid trust fund I 
think the more solid it is going to be. And I think pollution 
prevention activities are so much more cost effective. If we 
can prevent that pollution before we have to deal with it, it 
is going to be a lot cheaper in the long run.
    So we do need to have a holistic look at managing water 
where it falls and before it goes to the treatment plant so 
that we can stay on top of this and reduce our overall costs.
    And one of the things I do really like about this 
legislation is it deals with both drinking water and 
wastewater. This is our water infrastructure, and we need to 
look at them holistically together.
    Mr. Boozman. Ms. Young.
    Ms. Young. I would agree that you have three basic elements 
with water: You have the treatment, you have the rehab of 
existing systems, and then replacement or adding new systems to 
accommodate growing populations in certain areas.
    Education is real important for not only, like she said, 
how the water is handled before it gets to the treatment. AGC 
did that with liquid assets. We had people say, we didn't know 
that stuff.
    And I think the funding, the formulas are in place in most 
States to handle this. They just don't have enough money. And 
if they had money, it is like any business or any homeowner or 
individual. It is those capital improvements. They don't have 
the money to do it.
    Mr. Boozman. Since you bring that up, some of you have 
quoted Mr. Luntz on his opinion polls and things. The reality, 
though, is that, despite the surveys, despite what he says, it 
is really very, very difficult to raise utility rates, to get 
people to pay for the wastewater programs that we have.
    You gave us your views, Mr. Hillman. Does anybody else want 
to comment on that? I mean, like you said, it is one thing to--
it is kind of like bus mass transit. Everybody loves it, but 
they want their neighbor to ride it versus themselves.
    Mr. Summers.
    Mr. Summers. I would say that it is definitely true that 
there is a big resistance to raising rates, but in the case of 
Maryland, where we have invested a lot of time and effort in 
educating the public regarding the need for Bay restoration, I 
mentioned Governor O'Malley's BayStat Web page that gives a 
transparent, easily understandable accountability mechanism. 
There really is very broad support. I am not going to say there 
aren't people who object, certainly, but there is broad 
support.
    I live in Baltimore City. Baltimore City is subject to a 
judicial Federal consent decree, and we are spending over $1 
billion on SSO problems in the city. My rates have been going 
up steadily. And the Mayor just raised rates again this year, 
and really there was not the kind of outcry you might expect. 
People, when they really understand what is going on, they are 
supportive.
    Mr. Boozman. Let me just ask one more thing--and, again, 
Dr. Summers, you are alluding to it. Is it possible for 
municipalities to become self-sustaining without full cost 
pricing? Now, you mentioned Baltimore, and I don't know the 
particulars of that, but evidently, because they had resisted 
increasing rates, they got themselves in trouble. And then you 
have this crisis, and then everybody understands that if you 
don't get this done, then the Feds, through the Justice 
Department, step in and everything else. But is it possible to 
do that without full cost pricing?
    Mr. Summers. Well, in our case, we are doing it with a 
combination of grant funds through the State, the different 
programs that I have mentioned. The State is putting hundreds 
of millions of dollars into this problem already. The Federal 
SRF, as has been mentioned, has been going down, but it has 
been a major part of our effort.
    But there definitely needs to be also an increase in rates, 
and we are seeing that across the State rates are going up. We 
are doing more and more comparison and education of rates. And 
so I really do think that it is a multi-phased solution here. 
We are not going to do it based on the trust fund alone. It is 
definitely going to have a major rate component to it. But I 
think there are Federal mandates, and the Feds have a role in 
helping deal with the problem. So it has got to be a joint 
effort.
    Mr. Boozman. I need to yield back so we can go to Ms. 
Edwards, but I agree. The unfunded mandate aspect of this thing 
can be a huge problem.
    I yield back, Madam Chairman. Thank you.
    Mrs. Napolitano. Ms. Edwards.
    Ms. Edwards. Thank you, Madam Chairman; and thank you, 
also, Mr. Boozman, for your inquiry.
    My question is first to Dr. Summers--and it is always good 
to greet someone from the great State of Maryland. But I think 
that what Maryland has done is really instructive for us about 
how you can really engage the public with a broad public 
commitment to clean water, to a clean and healthy Chesapeake 
Bay, and then people are willing to invest in it.
    I live in the metropolitan area here just outside of 
Washington. And you would think you wouldn't be able to make a 
connection between the people who live in the immediate D.C. 
suburbs to the Bay, and yet people have an incredible 
connection to the Bay. They understand that what we do in the 
Potomac River has an impact on the Chesapeake Bay. We have 
embraced that, and we are willing to pay for it. So I don't 
actually buy the argument that people are not willing to pay 
for clean water, for healthy rivers.
    And because I was sitting here playing with my BlackBerry, 
I pulled up BayStat because I go to it often. And I looked and 
I noticed that many of the rivers that are tributaries into the 
Bay have a D, D plus, F rating. These are rivers that I fished 
in for 20-something years. And so it just highlights--I think a 
tool like this for consumers, for average citizens that is 
easily accessible and useable highlights for us what our 
responsibility is to our water and our water supply and engages 
us in the debate about the need to pay for it.
    And so I want to ask you, Dr. Summers, there is a tension I 
think between the opposition in some sectors to water use and 
funding a national water infrastructure initiative. And I 
wonder if you have specific recommendations of how you engage 
the public and create a sense of national support for 
infrastructure investment in the way that you have experienced 
in Maryland.
    Mr. Summers. Well, I think that is where the partnership 
that we have been talking about comes from. Each region of the 
country has a water problem of some sort or the other; and I 
think by having the Federal Government actively involved, 
providing the technical and financial support to the State 
organizations, which in turn work with our local governments, 
it has got to be a joint educational effort.
    The EPA has wonderful information on their Web page, which 
we use for educational opportunities. The interlinking these 
days with the worldwide Web--you were just looking at BayStat. 
One of the things we tried to do with BayStat is tie that in to 
other sources of information to help educate the public.
    So I think the interconnection amongst the various 
organizations--and I should also mention our nongovernmental 
organizations, Chesapeake Bay Foundation and the Riverkeepers 
and others, have really helped with the educational effort as 
well.
    So it has really got to be multi-pronged. The legislation, 
No Child Left Inside, has been something that I think 
Congressman Sarbanes has been working on; and the education of 
the youth is something that is absolutely critical.
    Ms. Edwards. In any case, I think that what you have 
highlighted is that it really takes a full-scale engagement. 
And this has been leadership that has cut across Republican and 
Democratic administrations in the State of Maryland; and I 
think that is instructive, too.
    I want to go on to a question to Ms. Mittal, and it has to 
do with your written testimony. I looked through it, and I 
culled out a quote, and I want you to clear up what I thought 
was a little bit of confusion.
    On page four of your testimony, you mention that, while 
past proposals for funding a Clean Water Trust Fund have 
identified these products--referring to certain beverages, 
fertilizers, pesticides, et cetera--as contributing to the 
wastewater stream, limited research has been done on their 
specific impact on wastewater infrastructure, according to EPA.
    And then on page seven of your testimony you say that, in 
addition, industry groups who are consistently opposed to 
attacks on their specific product groups to support a Clean 
Water Trust Fund, in their view their products did not 
contribute significantly to the deterioration of wastewater 
infrastructure and therefore should not be taxed.
    And I just want to make sure that you are not suggesting 
that the only reason that one should be identified--or an 
industry or a sector should be identified to contribute to 
clean water has to do with the deterioration of the 
infrastructure and that that has to be the only logical linkage 
in terms of identifying funding. Because that would be very 
problematic. I think we heard earlier testimony from Mr. 
Blumenauer that, in fact, we need to sort of spread the 
responsibility across multiple arenas and sectors to come up 
with the amount of money, the billions and billions that we 
need. So I just want to make sure that that is not what you 
were saying in your testimony.
    Ms. Mittal. Not at all. What we were saying was that there 
is no empirical data currently available that directly links 
some of these products to the wastewater infrastructure system. 
So although there is a general recognition that they do 
contribute to the wastewater infrastructure issues that we are 
dealing with, there is no good, solid, empirical evidence that 
says this is the exact impact that a particular product or 
pesticide or whatever has on the wastewater infrastructure 
system. So that is one thing.
    The other thing that I wanted to emphasize is we asked the 
stakeholders that we questioned about the linkages between some 
of these options that we identified and where there is a 
stronger linkage between the wastewater system and these 
products we found a much greater level of support for the tax. 
So nobody is going to step up to the plate and say, yes, tax my 
products, but where they see that linkage between the 
wastewater system and their product, they are much more willing 
to support the idea of a tax.
    Ms. Edwards. I just want to conclude here. I think it is 
certainly the opinion of this Member that if we were only 
looking at sectors that had an identifiable impact on 
deterioration, one, it would be very limited and, two, there 
are consumers like me who would say, well, heck, I don't fish, 
so why should I contribute to cleaning up the Bay or river? Or 
I don't produce as much waste as my neighbor does, and so why 
should I have to contribute more? I think if we go down that 
route, we run the risk that we will never be able to fund the 
Nation's water infrastructure needs.
    We have significant gaps, and so, at the very least, the 
Federal Government, I think, ought to be a partner in closing 
that gap so that then local responsibility and State 
responsibility can take over in the way that it needs to and 
fund things annually so that we don't run the risk 20 years 
from now that we have an even greater gap.
    And I will yield. Well, I don't have anything to yield, but 
I will just be quiet.
    Thank you, Madam Chair.
    Mrs. Napolitano. Ms. Edwards, if you need to continue, 
there is only us up here. If you feel compelled to continue----
    Okay. You give up. Thanks.
    The question for Ms. Mittal, in your testimony you suggest 
that there are challenges that need to be overcome for the 
creation of a Clean Water Trust Fund. Do you believe there 
would also be challenges to enactment of any other measure, 
whether a CSRS, for increasing the funding levels for 
wastewater infrastructure?
    For example, would there be a challenge to the concept of 
lifting the cap on productivity bonds, on creation of a 
national infrastructure bank? I mean, all of them would have 
challenges. So, because of that, all increases in water 
infrastructure would face legislative scrutiny and challenges, 
as you well know, but the challenge is in creating a trust fund 
surplus to those increases. How would that be able to be the 
best plan? What would be, in your estimation? More challenges? 
Less challenges?
    Ms. Mittal. We haven't actually done the comparison. All of 
those things that you identified were options that we 
identified during the course of our review, and we currently 
have a review ongoing for Congressman Mica where we are looking 
at the challenges that some of those other funding mechanisms 
could pose.
    So in about 4 or 5 months we will have a much better sense 
of what some of the positives and what some of the negatives 
are with applying some of those other alternatives for raising 
funding. At that point in time, we would definitely be able to 
look across all of the funding options and give you a better 
sense of which ones would pose greater challenges.
    Mrs. Napolitano. I specifically request that this 
Subcommittee be given that update if and when it comes. I 
appreciate it. Because that would be enlightening insofar as 
the different options and their challenges.
    Ms. Mittal. We would be happy to.
    Mrs. Napolitano. Thank you, ma'am.
    Mr. Hillman, in what ways does the lack of available 
financial resources to construct clean water infrastructure 
hurt the Nation economically? What economic benefits can be 
realized from the investment in water infrastructure? How would 
the creation of a Clean Water Trust Fund increase those 
benefits?
    Mr. Hillman. To follow up on my earlier comments, I think 
this gap does represent a huge lost opportunity to allow the 
economy to flourish. Comparing it to, for example, the creation 
of the Highway Trust Fund in `56, once you have created that, 
you have not only brought the country together, but the economy 
grew massively for half a century because of it. I think you 
can unleash the same type of results here.
    For example, in many communities where there is dilapidated 
infrastructure--and often it is because it is just old. It is 
nobody's fault. It is just old. And everyone should have some 
skin in the game. And they should. Because, often, upgrading 
that infrastructure, replacing it, is literally a precondition 
for a growing economy.
    I will give you what I think is a good example, but I am 
winging it a little bit here. Driving to work yesterday on 
Arlington Boulevard in Arlington to our office--and I would 
notice something like this--there is a utility contractor 
starting a job. I like to know who it is, are they pay-induced, 
and I couldn't see. But you have flaggers on Arlington 
Boulevard for safety. You have a gal watching the swing radius 
on a backhoe unloading relatively large diameter pipe on the 
side of the road. You have a couple of engineers with 
blueprints unrolled on their SUV. They are starting the job. 
And during that job you are going to create all of these 
results in here that are enumerated. I won't repeat them.
    But the minute that job is over, the sudden impact is over. 
But what happens is--and I have to do this by illustration 
because quantifying it is very difficult to do--for most of the 
life expectancy of that new infrastructure you are constantly 
adding on new things. In fact, I can pretty much guarantee that 
job is designed for redevelopment. For the next 5, 10, 15 
years, they are going to be knocking down these vacant 
buildings; they are probably going to be putting in housing 
units, entertainment, recreation, medical care, who knows what.
    And every time you do that it takes place because of the 
investment you are making now. If you don't make the investment 
now, if you don't close the gap, you don't get any of that.
    Mrs. Napolitano. Thank you, sir. That is very well put. But 
I would go even further than saying the contractor is creating 
those jobs. I would go to the laundry, food service, 
transportation. I mean, the list goes on. It creates a domino 
effect.
    Mr. Hillman. It is. And I am really glad you corrected me 
on that, because I forgot something. On page 10 of this, there 
is a graphic that illustrates--this is the short-term only--it 
summarizes some of the induced--not the direct and indirect 
jobs but the jobs that are induced by the creation of the 
infrastructure.
    And I am very proud of this, first of all, because it was 
my idea to put it in, but, more importantly, what it does is it 
really illustrates this induced multiplier effect. What this 
chart does is it lists out of those 20,000 jobs created, it 
just shows you the breadth of the employment. Actually, $1 
billion creates jobs in 325 different employment categories. It 
is virtually everything in the economy. Unless your job 
classification is hermit, you are going to get some impact from 
this.
    And when we have the story line in here, "everything in 
here from tires to tortillas", we are not being smart. It is 
actually true.
    And I don't have it today, but if you go out 325 
industries, it makes sense. You put $1 billion in something, 
you are going to be buying enough stuff that a plant is going 
to put somebody else on the tire line.
    Mrs. Napolitano. Thank you, Mr. Hillman. And, yes, that is 
very, very true.
    Thank you for being so patient, to the panel, for sticking 
with us while we had to go vote. If you have any additional 
testimony, please submit it to this Subcommittee. The record is 
being kept open for 10 business days. Based on the input of the 
testimony given, if you have any additional points to submit, 
please do so.
    We thank you very much, and this hearing is adjourned.
    [Whereupon, at 5:10 p.m., the Subcommittee was adjourned.]
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