[Senate Hearing 112-958]
[From the U.S. Government Publishing Office]





                                                        S. Hrg. 112-958

                     LOCAL GOVERNMENT PERSPECTIVES
                        ON WATER INFRASTRUCTURE

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

                                HEARING

                               before the

                   SUBCOMMITTEE ON WATER AND WILDLIFE

                                 of the

                              COMMITTEE ON
                      ENVIRONMENT AND PUBLIC WORKS
                          UNITED STATES SENATE

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

                           FEBRUARY 28, 2012

                               __________

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






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               COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

                      ONE HUNDRED TWELFTH CONGRESS
                             SECOND SESSION

                  BARBARA BOXER, California, Chairman
MAX BAUCUS, Montana                  JAMES M. INHOFE, Oklahoma
THOMAS R. CARPER, Delaware           DAVID VITTER, Louisiana
FRANK R. LAUTENBERG, New Jersey      JOHN BARRASSO, Wyoming
BENJAMIN L. CARDIN, Maryland         JEFF SESSIONS, Alabama
BERNARD SANDERS, Vermont             MIKE CRAPO, Idaho
SHELDON WHITEHOUSE, Rhode Island     LAMAR ALEXANDER, Tennessee
TOM UDALL, New Mexico                MIKE JOHANNS, Nebraska
JEFF MERKLEY, Oregon                 JOHN BOOZMAN, Arkansas
KIRSTEN GILLIBRAND, New York

                    Bettina Poirier, Staff Director
                 Ruth Van Mark, Minority Staff Director
                              ----------                              

                   Subcommittee on Water and Wildlife

                 BENJAMIN L. CARDIN, Maryland, Chairman
MAX BAUCUS, Montana                  JEFF SESSIONS, Alabama
FRANK R. LAUTENBERG, New Jersey      JOHN BARRASSO, Wyoming
SHELDON WHITEHOUSE, Rhode Island     DAVID VITTER, Louisiana
TOM UDALL, New Mexico                MIKE CRAPO, Idaho
KIRSTEN GILLIBRAND, New York         LAMAR ALEXANDER, Tennessee
BARBARA BOXER, California (ex        JAMES M. INHOFE, Oklahoma (ex 
    officio)                             officio)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
                            C O N T E N T S

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                                                                   Page

                           FEBRUARY 28, 2012
                           OPENING STATEMENTS

Cardin, Hon. Benjamin L., U.S. Senator from the State of Maryland     1
Sessions, Hon. Jeff, U.S. Senator from the State of Alabama......     3
Inhofe, Hon. James M., U.S. Senator from the State of Oklahoma, 
  prepared statement.............................................    81

                               WITNESSES

Rawlings-Blake, Hon. Stephanie, Mayor, City of Baltimore, 
  Maryland.......................................................     6
    Prepared statement...........................................    10
    Responses to additional questions from:
        Senator Cardin...........................................    21
        Senator Inhofe...........................................    22
        Senator Sessions.........................................    24
Johnson, Jerry N., General Manager/CEO, Washington Suburban 
  Sanitary Commission............................................    27
    Prepared statement...........................................    30
Horne, Kathy, Executive Director, Alabama Rural Water Association    41
    Prepared statement...........................................    43
    Responses to additional questions from:
        Senator Cardin...........................................    62
        Senator Inhofe...........................................    63
        Senator Sessions.........................................    66

                          ADDITIONAL MATERIAL

Photo of an un-lined cast iron pipe..............................    83
Photo of a galvanized steel pipe.................................    84

 
         LOCAL GOVERNMENT PERSPECTIVES ON WATER INFRASTRUCTURE

                              ----------                              


                       TUESDAY, FEBRUARY 28, 2012

                               U.S. Senate,
         Committee on Environment and Public Works,
                        Subcommittee on Water and Wildlife,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 10 a.m. in 
room 406, Dirksen Senate Office Building, Hon. Benjamin L. 
Cardin (Chairman of the Subcommittee), presiding.
    Present: Senators Cardin and Sessions.

         OPENING STATEMENT OF HON. BENJAMIN L. CARDIN, 
            U.S. SENATOR FROM THE STATE OF MARYLAND

    Senator Cardin. Good morning, everyone. Let me welcome you 
to the Subcommittee on Water and Wildlife of the Environment 
and Public Works Committee.
    Senator Sessions will be joining us shortly. He is 
balancing two committees; he is the ranking Republican member 
of the Budget Committee, which is also meeting at this time 
with Secretary Panetta on the Department of Defense budget. So 
he will be joining us and will most likely not be able to stay 
for the entire hearing, but I thank him for his cooperation in 
arranging this morning's Subcommittee hearing.
    I also want to thank Chairman Boxer and Ranking Member 
Inhofe of the full Committee for authorizing us to have a 
series of hearings dealing with our water needs. And I want to 
thank our witnesses for being here.
    There is a public expectation that when they turn their 
faucets on and when they drink the water that we have in front 
of us that it is safe and that it is clean. There is also an 
expectation that our wastewater will be treated in a way that 
will not cause us harm from public health. The realities are 
that we have an aged system and that it is very vulnerable and 
that we need to pay attention to make sure that in fact the 
public expectations are realized.
    Every year we have 54,000 episodes of our septic systems 
overflowing, causing a concern as to whether we have a public 
health risk. Excuse me, I gave you the wrong number, there's 
actually 75,000 sanitation sewage overflows every year, causing 
as many as 5,500 illnesses due to storage contamination of our 
beaches, our streams, and our lakes. There are 54,000 community 
drinking water systems in America that serve 250 million 
Americans.
    Every year the wastewater treatment plans treat billions of 
tons of pollutants from reaching our rivers, our lakes, and our 
coastlines. And we are at risk, as I said, as a result of the 
aged system. The needs are great.
    I could give you many examples of breaches in our water 
mains in our country. But let me just talk a little bit about 
my own State of Maryland. Mayor Stephanie Rawlings-Blake is 
here, and she recalls that we have--it seems like too 
frequently--water main compromises in our city and in our 
State. Every day we hear of more examples of water mains that 
have broken and caused problems. We had a major break in 
Baltimore that caused the flooding of our downtown community. 
Our Mayor responded to that. But when you are dealing with 
pipes that are over 100 years old, it is challenging. And the 
amount of maintenance and replacement is beyond the capacity of 
any municipality.
    In Prince Georges County we had a major break recently that 
caused us to close the Beltway around Washington. And we all 
recall when River Road in Montgomery County, Maryland, became a 
river and required actually an air rescue in order to deal with 
stranded motorists. Those types of episodes are occurring all 
too frequently in our communities.
    One of the challenges that we have with our water 
infrastructure that, unlike the roads and the bridges and the 
transit systems that people see every day, and they can tell 
when there is a need for a change, they see the congestion on 
the roads, or they see the failure of a bridge, they can 
visually see and demand that we deal with our transportation 
infrastructure. The same is not true for the underground pipes 
that supply us with the drinking water and treat our 
wastewater.
    We need to do a more effective job so the public 
understands just how critically important it is that we 
maintain our water infrastructure. Our water infrastructure is 
equally important to our transportation infrastructure for 
America's growth.
    The needs are rather immense. The Mayor's Water Council 
reported that in 2008, in order to meet mandates of Clean 
Water, the annual cost was about $93 billion. That is estimated 
to increase. That is estimated to increase by 2028 to somewhere 
between $189 billion to $421 billion. Now, again, the major 
responsibility for this rests with local governments.
    In the best of times, they would have a challenge meeting 
these needs. But in these economically challenging times it is 
just impossible to expect our municipalities to be able to 
handle this without the partnership from the Federal 
Government. The partnership from the Federal Government has 
taken on many forms. The State Revolving Funds are, of course, 
one of the principal areas. And we are pleased--if you look at 
the last 3 years, there has been some significant increase in 
funding in the State Revolving Funds, in the operational 
budgets as well as in the recovery funds. But as we look at the 
current budget year there is an inadequate amount of money 
being made available to deal with the State Revolving Fund, and 
we need to deal with this.
    The issues here are not just health-related issues, and 
there are health-related issues. There are also energy issues 
that are involved. We have a very inefficient system for 
delivering our water, causing us to use more energy than we 
should.
    It is an environmental issue. We waste a lot of water. 
Water is a precious resource. A significant amount of our water 
is wasted every day because of leakages from the pipes that 
transport that water.
    And we also have an economic issue here. The United States 
Conference of Mayors said for every dollar we spend on water 
infrastructure, we get back over six times in our economy in 
the GDP. The National Association of Utility Contractors 
estimates for every billion dollars that is spent on water 
infrastructure, it will create 26,000 jobs.
    Today we have witnesses that really understand these 
issues, and I want to thank our three witnesses for being here. 
I am going to introduce two, Senator Sessions is going to 
introduce the witness from the State of Alabama.
    But before I do that, let me turn to Senator Sessions for 
any introductory comments that he would like to make.

           OPENING STATEMENT OF HON. JEFF SESSIONS, 
             U.S. SENATOR FROM THE STATE OF ALABAMA

    Senator Sessions. Thank you very much, Mr. Chairman.
    As you know, I am Ranking on the Budget Committee, and we 
have the Secretary of Defense in today talking about his 
budget, how much it is going to be cut and where else we can 
find the savings in our Government to put us on a path of 
sustainability. And we are not on a sustainable path right now, 
we are just not, and it is not going to be pleasant. And 
sometimes you just have to not spend what you don't have, the 
money you don't have. The Governor of Alabama, Governor 
Bentley, said the other day we are going to spend the money we 
have.
    Well, we are not doing that here. We are spending 40 
percent more than we take in. So this is our difficulty, and it 
impacts the good goals that we have for each of you.
    So I want to thank Senator Cardin for having this hearing, 
to receive this testimony. Importantly, more than 90 percent of 
the Nation's community water systems serve populations under 
10,000 people, in mostly rural areas. Where I grew up, that is 
so. They have a water system now. We had an artesian well 
across the road, a pipe ran and served two or three houses. But 
now people there who have been struggling for water can have it 
at a reasonable price. And it pays for itself through the 
payments.
    America's water infrastructure is vast, 800,000 miles of 
pipes and 600,000 miles of sewer lines, much of which is at a 
point that it needs to be replaced. In fact many rural systems 
lose a quarter--as you said, Mr. Chairman--to one-third of 
their water through leaks. That is an energy cost; that is an 
environmental difficulty.
    It is also true that America is on an unsustainable debt 
path. And we are running the fourth consecutive deficit of over 
$1 trillion. Debt like that will lead to the most predictable 
economic crisis in our Nation's history, as the Debt Committee 
Chairmen Bowles and Simpson told us.
    So we need to look for ways to improve. Unfortunately the 
$800 billion stimulus that the President pushed through in 
2009, which was sold on the idea of fixing crumbling 
infrastructure, spent only a tiny fraction on water 
infrastructure, a really small amount on roads, about 4 percent 
on crumbling bridges and highways. In the wake of the largest 
single borrow and spend in our history, we still have not 
invested the money we need in infrastructure programs.
    And the reason I tend to favor infrastructure spending is 
it creates American jobs, it creates an infrastructure 
improvement that is not here today and gone tomorrow, but will 
be here for decades to come.
    So Mr. Chairman, thank you for having the hearing. I will 
need to go back and forth to a hearing. I would say how pleased 
I am to have Kathy Horne here. Kathy, nice to see you. Thank 
you for the leadership you have given to our State for many 
years.
    And just to give a bit of a bio, if I could at this time, a 
little bit out of order, she has had more than 25 years of 
experience on rural water issues. Currently she serves as 
Executive Director of the Alabama Rural Water Association, a 
position she has held for more than 9 years. As Executive 
Director, she directs several programs in Alabama through the 
USDA Rural Development Agency and the U.S. Environmental 
Protection Agency as well as numerous State-funded programs.
    She is a member of the American Water Works Association, 
the Alabama Water Pollution Control Association, the Society of 
Water Professionals, the National Rural Water Association, and 
serves on various boards and committees. In 2001 Kathy was 
elected by her peers to receive the Executive Director of the 
Year award for the National Rural Water Association, and in 
2004 she received the USDA Rural Development Leadership Award.
    She is the mother of four children and active in local 
school, church, and community activities, an outstanding 
citizen of Alabama. I am proud that she will be able to provide 
important testimony today.
    I also would note that she has with her Mr. Randolph Hall, 
General Manager of South Bullock County Water Authority, and 
William Snyder, Manager of the Monroeville Water Works Board. 
Monroeville is my home county, the county of Harper Lee and To 
Kill a Mockingbird and a lot of other wonderful folks there. So 
we are glad to have them here.
    Mr. Chairman, we are dealing with a very important issue. 
Anything we can do to use our money more effectively, help 
these people accomplish their goal more effectively is a good 
challenge for us all.
    Thank you.
    [The prepared statement of Senator Sessions follows:]

                   Statement of Hon. Jeff Sessions, 
                 U.S. Senator from the State of Alabama

    At this Subcommittee's last hearing we heard testimony 
about the condition of America's water infrastructure from a 
variety of perspectives--States, pipe makers, civil engineers, 
and others. I want to thank Senator Cardin for calling today's 
follow up hearing to receive testimony specifically from 
municipalities and rural communities. Importantly, most of the 
Nation's community water systems serve populations under 10,000 
people in primarily rural areas. So I am really pleased that 
Alabamian Kathy Horne is here. She is the Executive Director of 
the Alabama Rural Water Association. I know we will benefit 
greatly from Kathy's testimony about the challenges facing 
rural water utilities.
    America's water infrastructure is vast, with at least 
800,000 miles of water pipes and 600,000 miles of sewer lines--
much of which needs to be replaced. In fact many rural systems 
lose one-quarter to one-third of their water through leaks. 
There are billions of dollars in needed investment to upgrade 
these systems. It's also true America is on an unsustainable 
fiscal path. This year, we will run the fourth consecutive 
deficit over $1 trillion. Debt like that will lead to the most 
predictable economic crisis in our Nation's history. So, in 
this era of tight Federal budgets we need to look for ways to 
leverage additional investment in water infrastructure without 
adding more debt.
    Unfortunately, President Obama's $800 billion stimulus in 
2009, which was sold on the idea of fixing our crumbling 
infrastructure, spent only a tiny fraction on water 
infrastructure. Ironically, in the wake of the single largest 
borrow and spend program in the Nation's history, we are now 
struggling to find the money to keep existing infrastructure 
programs at near current levels. For instance the President's 
budget proposes to cut the State Revolving Loan Fund program by 
more than $350 million. We cannot just dismiss cuts like that 
out of hand, but I know those cuts are troubling to rural 
utilities. The stimulus was touted as the way to fix our 
Nation's infrastructure, but in the end it was one of the 
biggest bait and switch schemes of all time. It left us with 
even more debt but little new infrastructure to show for it.
    So, how can the Federal Government alleviate this situation 
without adding to the debt? First, we must keep in mind that 
energy costs are the single greatest expense for rural water 
utilities. We need to keep electricity rates as low as 
possible. Regrettably, this Administration has issued a wave of 
new rules--like the Utility MACT issued in December--that will 
add billions in energy costs to the U.S. economy.
    Second, we need to reduce regulatory burdens and ensure 
that rural communities have the flexibility to resolve water 
quality issues in a cost-effective manner.
    Third, when cities and counties are sued for water or sewer 
problems, we need to be sure that only reasonable, cost-
effective, and achievable obligations and timelines are 
imposed.
    Fourth, while water infrastructure is primarily a State and 
local obligation, we need to reauthorize and improve Federal 
programs, like the State Revolving Loan Fund Program, that help 
rural and municipal utilities.
    Fifth, we should lift the volume caps on private activity 
bonds issued for water infrastructure projects. This is one way 
to facilitate more investment in water infrastructure. As long 
as the costs associated with this proposal are appropriately 
offset and do not grow the national debt, I would vote for it.
    There are certainly other ways we can address these 
challenges. I look forward to hearing from our panel today.
    Thank you.

    Senator Cardin. Senator Sessions, thank you for your 
opening comments and thank you for your leadership on the 
Budget Committee. I know that you are busy on that committee 
today.
    We need a game plan for our budget. And Senator Sessions is 
one of our key players in trying to bring us together to 
develop a responsible, credible plan to get our deficit under 
control. It will require sacrifices at all levels of government 
and a more efficient government at all levels of government. 
Clearly, the Department of Defense, our largest single agency, 
needs to be in the forefront of those efforts. So I know how 
important today's hearing is up in the Budget Committee, and I 
thank you for taking time to come down and visit with us on 
this subject, which is extremely important also. We appreciate 
that.
    Let me invite our witnesses to the table. First I am going 
to introduce my good friend and colleague, Mayor Stephanie 
Rawlings-Blake, who currently serves as the 49th Mayor of 
Baltimore. She has dedicated many years of work to 
strengthening Baltimore's neighborhoods, which includes 
ensuring that her constituents have access to clean, safe 
water.
    Prior to being elected Mayor of Baltimore she was President 
of the City Council of Baltimore. Mayor Rawlings also serves in 
a leadership position on the U.S. Conference of Mayors. She is 
Co-Chair of the Mayors' Water Council where she assists local 
government in providing high quality water resources in a cost-
effective manner.
    Mayor Rawlings-Blake has been an innovator for us in 
Baltimore. Being a mayor of a major city is a very difficult 
task. The Federal Government pushes some of its problems off on 
the counties. The counties push some of their problems off on 
our municipalities. There is no place for a mayor to turn to 
push off issues. She has to confront them directly, and our 
Mayor of Baltimore City does exactly that.
    So we are looking forward to your testimony and to your 
suggestions as to how we can find creative ways in order to 
help you in your task of helping the people of Baltimore.
    We are also joined by Mr. Jerry Johnson, who currently 
serves as the General Manager of the Washington Suburban 
Sanitary Commission. The Commission provides water and 
wastewater services to 1.8 million residents in Prince Georges 
County and Montgomery County in my home State of Maryland. As 
General Manager, Mr. Johnson is employing cutting edge 
technologies in an effort to find cost-effective solutions to 
his customers' water infrastructure needs.
    I am very impressed with what you have been able to do in 
innovation and creativity, trying to do more with the limited 
amount of funds that are available.
    And Ms. Kathy Horne, your Senator has already introduced 
you. But I thank you for what you do for the people of Alabama, 
but also to bring to this panel the perspective from the rural 
communities. Maryland is a State that has two major urban 
centers, but we do have rural communities that depend upon the 
water facilities that are different in its nature. I was at 
Smith Island not too long ago, which is a pretty isolated 
community in Maryland. Their water needs were of paramount 
concern, and we have to work a different type of solution for 
rural American than we do for our urban centers.
    So I thank all three of you for being here today.
    We will start with Mayor Stephanie Rawlings-Blake.

          STATEMENT OF HON. STEPHANIE RAWLINGS-BLAKE, 
               MAYOR, CITY OF BALTIMORE, MARYLAND

    Ms. Rawlings-Blake. Thank you very much, Mr. Chairman, and 
thank you for your leadership on this issue. I certainly 
appreciate the partnerships that we have had over the years.
    My name is Stephanie Rawlings-Blake, and I am the Mayor of 
the city of Baltimore, Maryland. I want to thank you for the 
opportunity to speak to you about the challenges that cities 
such as Baltimore face in operating and managing water and 
wastewater systems. These challenges are especially difficult 
in today's climate of unfunded Federal mandates, as well as a 
struggling economy.
    In Baltimore we have a regional water and wastewater system 
that serves almost 2 million people living and working in the 
city and surrounding counties. Baltimore's water and wastewater 
utilities are about a $400 million business, with more than 
1,700 employees and a $1.8 billion 6-year capital improvement 
program. So when it comes to financial pressures of running a 
water, wastewater, and stormwater system, Baltimore is not 
alone. But as you mentioned, we are on our own.
    Over the next 20 years an estimated $4 trillion will be 
spent nationally for water and wastewater projects. Ninety 
percent--90 percent--will be funded locally. Even with our 
large capital program Baltimore has about a $4 billion gap in 
funding over the next 6 years. And that figure does not include 
the $2 billion needed to replace existing stormwater pipes.
    Having to direct our investment toward meeting our Federal 
mandates has had dire consequences on the condition of our 
water infrastructure. Deferred maintenance and capital 
investment have resulted in the loss of finished water of over 
20 percent every day. So if you are a Baltimorean, Mr. 
Chairman, it would be just about the equivalent of turning our 
World Trade Center upside down and filling it up with water 
every day. That is about the amount that we are losing.
    Major water breaks and emergencies create lengthy service 
disruptions, damage and loss to property, increase sediment 
loads to streams and the harbor. It is hard to convince your 
citizens and your ratepayers to accept an annual increase in 
water and sewer rates to comply with Federal mandates when 
basic infrastructure needs continue to crumble.
    To meet these challenges we employ a multitude of 
strategies to finance our water needs. With an enterprise fund, 
we are able to sell water and wastewater revenue bonds to fund 
our capital programs. While revenue bonds are an excellent 
source of funds, the capital demands of our system have doubled 
our water and wastewater debt from fiscal year 2004 to fiscal 
year 2011. To leverage our capital dollars, we have competed 
for and received State Revolving Loan Funds. These low and no-
interest funds have helped us with our financing.
    But the size of our system makes for very large and costly 
projects. Declining Federal funding for the State Revolving 
Loan Fund has only increased the competition for these limited 
dollars. We hope that Congress will continue to recognize the 
importance of this program by ensuring that it continues the 
funding at a meaningful level.
    Baltimore may also need to introduce a fee on all 
impervious areas within the city to fund our stormwater 
program, in order to comply with our MS4 permit. As you can 
imagine, a new fee will be difficult for our citizens and 
businesses to absorb in this economy. But without a stable 
source of funding we will not be able to meet our environmental 
obligations.
    We are not just looking to our ratepayers to fill in the 
gap of our funding needs. We are also looking for ways to 
reduce our costs as well as our energy. And it is certainly one 
area where we have been successful. We have reduced energy 
costs with methane harvesting as well as solar installations.
    Cities like Baltimore are looking for new and innovative 
funding options to help expand the opportunities to assist with 
our fiscal challenges. For example, the creation of a loan 
guarantee program that provides low-cost capital for water 
infrastructure modeled after the TIFIA program. A WIFIA program 
could provide secured direct loans and loan guarantees, a 
standby line of credit for infrastructure and an annual Federal 
funding to budget for credit defaults.
    Federal credit can make a project more attractive for 
private capital and lower interest rates on private lending. 
And credit available on Treasury borrowing rates can reduce 
borrowing costs by up to 20 percent.
    Since water utilities have existing revenue streams which 
they can use to repay Federal credit assistance an investment 
of this nature is even more financially sound than a widely 
supported TIFIA program. Another example is the creation of a 
clean water trust fund. The fund could be supported by national 
dedicated user fees that are low rate and broadly based on a 
range of products sold in interstate commerce. This trust fund 
could provide a long-term and sustainable national funding 
source for water and wastewater investment. It could fund 
research and development of advanced treatment technology. It 
could support expansion of State Revolving Funds as well as 
provide grant assistance for watershed, urban, stormwater, and 
rural non-point source management.
    A source of sustainable national funding is essential to 
the recovery of our Nation's water infrastructure and our 
environment. Local governments cannot carry the financial 
burdens by themselves. Increased funding is only one side, 
however, of the coin, in improving our water infrastructure. 
Cities need more flexibility in meeting the requirements of the 
Clean Water Act and the Safe Drinking Water Act. We must meet 
our responsibilities, our environmental responsibilities. I 
don't think you will find one mayor in this country that thinks 
our environmental obligations are not serious. We want to meet 
those responsibilities. It is important to the health and the 
welfare of all our communities. But our resources are finite.
    I am happy to report to the distinguished members of this 
Subcommittee that the EPA has heard our message, and they have 
acknowledged the strain that municipalities are under. They are 
willing to work with us to develop a more flexible and tailored 
program to achieve a cleaner environment without bankrupting 
cities in the process. EPA headquarters has been working hard 
to develop these ideas into a concept called integrated 
planning. Integrated planning is a big change in the way EPA 
approaches enforcement, and it could not have come at a better 
time for cities across the country. In the past EPA enforced 
compliance with Federal environmental laws through a series of 
unfunded mandates. Each mandate was pursued individually and 
with the same sense of urgency.
    Through integrated planning, we will be able to look at all 
of our environmental projects holistically to determine the 
environmental, social, and health benefits of each one of them 
so we can place projects with the greatest benefits to the top 
of our capital plan and address the less effective projects 
later.
    In January EPA released a draft framework for integrated 
planning which outlines the overarching principles that should 
guide the development of an integrated plan. My city is already 
developing its own integrated plan. We are in the process of 
looking at all of our responsibilities under the Clean Water 
Act and the Safe Drinking Water Act, our operations and 
maintenance requirements, as well as our future capital 
investment needs and ranking each project based on its overall 
benefit. After extensive stakeholder consultation and outreach 
we will develop a long-term plan for effective management of 
our utilities.
    You will notice that I mentioned Baltimore's Safe Drinking 
Water Act responsibilities as an element of our integrated 
plan. Right now EPA only wants Clean Water Act mandates 
included in the integrated plan. But Baltimore, like many other 
cities, is responsible for metropolitan drinking water and 
wastewater systems as well as stormwater controls and treatment 
within our borders. Our citizens and ratepayers pay for these 
systems, and all three utilities run under the same streets. An 
integrated plan for Baltimore must address all three systems.
    While EPA has not agreed to including drinking water, they 
have left the door open for further negotiation on this issue. 
And I am confident that we will reach a solution that protects 
human health as well as the environment.
    One challenge to implementing integrated planning will be 
to establish a legal framework for the resulting plans. In my 
opinion there can be no one size fits all approach to this 
challenge. Each municipality will have to reach an agreement 
with EPA and its State regulators that is unique to its 
resources and its unique challenges.
    I am very proud that my city is at the forefront of the 
integrated planning effort. I believe that this program 
presents an excellent opportunity for each city and utility to 
comprehensively assess their water, wastewater, and stormwater 
programs and to plan in a way that produces the best results 
for both people and the environment.
    I am pleased that the EPA agrees and is willing to partner 
with us in developing a new and more productive approach to 
meeting our environmental obligations.
    Again, Mr. Chairman, I thank you for your kind attention 
and will be happy to answer any questions, either now or at the 
end of the panel.
    [The prepared statement of Ms. Rawlings-Blake follows:]
    
    
   
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
 
    
    
    Senator Cardin. Thank you very much.
    We will hear from the panelists, then we will have some 
questions.
    Mr. Johnson.

STATEMENT OF JERRY N. JOHNSON, GENERAL MANAGER/CEO, WASHINGTON 
                  SUBURBAN SANITARY COMMISSION

    Mr. Johnson. Good morning, Mr. Chairman.
    I am Jerry Johnson, General Manager and CEO of the 
Washington Suburban Sanitary Commission. We provide water and 
wastewater services to 1.8 million residents of Prince Georges 
and Montgomery County, as you mentioned earlier, which border 
on the Nation's capital. WSSC has a combined operating capital 
budget for fiscal year 2012 of $1.2 billion.
    It is an honor to be here today, and I thank you for 
inviting me to join you on this relatively balmy morning. We 
are enjoying the warm weather. But it is particularly 
significant to our utility operators, for warm temperatures 
have meant fewer water main breaks to WSSC customers, employees 
and to our bottom line. Water main breaks in our service area 
also affect many Federal facilities that we serve and even the 
region's economy.
    We had only 336 breaks in the month of January, and in all 
of last year our customers only had 1,600 breaks. But it is 
counter to the long-term trend of upward numbers and upward 
count of water main breaks. Our yearly average is over 1,700, 
and our fear is that if we don't act quickly enough, one day in 
the not too distant future the number of breaks will reach a 
tipping point where we are unable to keep up with repairs.
    You may have heard about the study released yesterday by 
the American Water Works Association, which estimates that 
nationwide, to replace our aging underground water 
infrastructure as well as to add new pipes for the growing 
population, the cost will be well over $1 trillion over the 
next 25 years. Much of that is unplanned and currently not 
budgeted. Sitting in the national capital area, WSSC represents 
a microcosm of the conditions described in that report. With 
nearly 5,600 miles of underground water pipes fed by two water 
filtration plants, approximately 1,500 miles of those pipes--or 
26 percent--are well over 50 years old. Several years ago, we 
embarked on an aggressive program to address this issue.
    During the current fiscal year, we plan to replace 41 miles 
of water pipe. By 2015, the number will top out at 5,500 miles 
of water pipe, assuming that we can afford to keep up that 
pace. In today's dollars the cost to replace a mile of pipe is 
approximately $1.4 million. Over the next 6 years, the price of 
replacing underground water pipes will cost our ratepayers an 
estimated three-quarters of a billion dollars, and we will need 
to keep that pace up forever. It is kind of like painting a 
bridge, when you get to one end of it and you are finished, you 
have to go back to the beginning of it and start over again.
    Our biggest challenge is funding. Ninety-five percent of 
our revenue comes from our customers. For 6 years WSSC has had 
no rate increases, followed by 3 years of increases that were 
below the inflation rate. For the last 5 years, however, even 
in this troubled economy, our county councils have recognized 
the pressing issues and have approved rate increases between 6 
percent and 9 percent. Unfortunately, more increases will be 
needed, even though our recent increases are lower than those 
in many parts of the country.
    So what are we doing about this challenge at WSSC? We have 
undertaken a comprehensive multi-year asset management program. 
When completed it will provide a road map for the optimum 
schedule for either repair, refurbishment, or replacement of 
every single WSSC asset. Our goal is to use technology to most 
effectively manage our customers' resources.
    WSSC has chartered an infrastructure funding working group, 
made up of WSSC and county stakeholders, to study various ways 
to fund infrastructure replacement while attempting to reduce 
some of the burden on our ratepayers. We look at every avenue 
to control and reduce costs.
    For example, energy is among our highest annual operating 
expenditures. For the last 4 years, we have been purchasing 
wind power as a direct purchaser from a wind farm in 
Pennsylvania. Now wind power provides about one-third of the 
electric power needed for our operations and saves our 
customers about $800,000 per year.
    We have also substantially reduced greenhouse gases as a 
result, in the equivalent of taking 20,000 cars off of the 
Washington Beltway on an annual basis.
    With help from Federal grants we are also studying 
anaerobic digestion, which could allow us to use methane to 
provide power for some of our energy needs. We are extending 
the life of our large transmission mains--those between 36 and 
96 inches in diameter--by installing acoustic fiber or optic 
fiber. This system of cables installed in the pipes allows us 
to listen for potential snapping of support wires embedded in 
the concrete walls of the pipe, allowing us to monitor 
conditions with a computer 24 hours, 7 days a week. Along with 
a regular inspection regime this will prevent another incident 
like the near-tragedy that you mentioned earlier that occurred 
on River Road as well as the one in 2010, which shut down the 
interstate for several hours.
    But at this point I have really given you only half of the 
story, the drinking water side of the story. WSSC also has 
5,400 miles of underground sewer pipes and seven wastewater 
treatment plants. Like many urban communities in this country, 
including DC and Baltimore, we are under a consent decree to 
repair and improve the sewage collection system. And we and our 
customers are also contributing $18.5 million annually to the 
Maryland State fund used to help clean up the Chesapeake Bay.
    But there are other costs that we incur as well. For 
example, there are three-quarters of a billion dollars for 
sewer pipe maintenance and replacement over the next 6 years. 
And again, these costs will continue into the future. We are in 
the process of adding enhanced nutrient removal to our five 
largest wastewater treatment plants as a part of the Bay 
program. These projects, when completed in 2015, will cost 
$61.4 million, of which we expect to get $56 million in 
construction grants from the Chesapeake Bay fund, which is 
levied by the State.
    WSSC ratepayers must also spend 46 percent of the cost for 
E&R for the Blue Plains wastewater treatment plant in the 
District of Columbia, with estimated construction costs of $311 
million, with only $227 million of that being reimbursed by the 
Fund.
    Along with the practical problems of rebuilding this 
massive infrastructure, we face another challenge. Unlike roads 
and bridges and even railroads, they are out of sight and out 
of mind. By and large, we deliver 24 hours a day, 7 days a 
week, 365 days a year on a demand basis. You turn on the 
handle, the water flows; you press the button, the wastewater 
goes away.
    These functions, water and wastewater, are not optional. 
And they rely on systems of national infrastructure no less 
critical than the roads, bridges, and airports. They are 
absolutely necessary for the health and the well-being of our 
citizens here and across the country. These systems prevent 
diseases, provided for fire protection, and are absolutely 
essential for the economic growth of the United States.
    We are out of sight and out of mind; however, we have 
projects that are shovel-ready. We are providing jobs for 
workers across a range of skills, and we can provide more, and 
we can do it quickly. We have customers who continue to carry 
the major part of the burden and who need the relief most of 
all.
    With the exception of some of our policymakers, like 
those--like yourself and those who are members of this 
Committee here today, underground infrastructure has been a 
relatively low priority. The levels of Federal funding for this 
critical national infrastructure have been falling in numbers 
over the years. Water infrastructure should be a larger part of 
the ongoing national conversation because these challenges are 
not unique to WSSC and the Washington Metropolitan area, nor 
Baltimore.
    I hope this thumbnail sketch of the challenges we face as a 
local utility have been helpful. I again want to thank you for 
the opportunity to appear before you here today. Let's hope 
that the rest of March will be as mild as the earlier part of 
the winter, so that we don't experience quite as many water 
main breaks. Thank you for your tolerance with the timing.
    [The prepared statement of Mr. Johnson follows:]
    
    
    
    
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    Senator Cardin. Thank you very much for your testimony.
    Ms. Horne.

  STATEMENT OF KATHY HORNE, EXECUTIVE DIRECTOR, ALABAMA RURAL 
                       WATER ASSOCIATION

    Ms. Horne. Thank you, Chairman Cardin, and Ranking Member 
Sessions, for the opportunity to testify here today.
    I am Kathy Horne, the Executive Director of the Alabama 
Rural Water Association, representing 550 public water 
utilities in the State of Alabama, serving 3.7 million people. 
I am also proud to represent the National Rural Water 
Association, which has over 28,000 small and rural community 
members.
    Alabama Rural Water has been in service since 1977. Our 
purpose is to assist and work with drinking water and 
wastewater systems in providing free localized training and 
onsite technical assistance. Many of the rural and small town 
water systems were constructed in Alabama during the 1950s and 
1960s. The vast majority of water suppliers serve a population 
of less than 10,000, which is equivalent to 3,333 customers.
    While most of the water systems in Alabama are managed 
successfully, very little net revenue is realized beyond the 
routine operational and maintenance cost. This makes it very 
difficult for small systems to meet the needs of financial 
reserves and system improvement funds while also properly 
maintaining the operation.
    I would like to highlight two areas of concern for 
community water systems and urge the Subcommittee to consider 
assisting in future Federal funding and policy. First is the 
problem of high unaccounted for water, and second is the lack 
of training resources for the governing body or board members 
of community water systems. Both of these challenges illustrate 
the critical need for increased funding to help in upgrading 
and expanding existing water system infrastructure.
    In Alabama 15 percent water loss is considered normal for 
firefighting, flushing, and routine line breaks. Last year 
Alabama Rural Water conducted 23 leak surveys free of charge, 
with an average water loss of 37 percent.
    On a national perspective, studies have estimated that 20 
percent to 25 percent of the treated water flowing within the 
distribution system is lost through leakage. I will give you an 
example. Last October, Alabama Rural Water conducted a leak 
detection survey for Centerville Water and Sewer Board in Bibb 
County. Centerville serves 1,945 customers. The survey resulted 
in the detection of a 6-inch main line that had blown apart at 
the coupling and was leaking 100 gallons per minute. Upon 
repair, this system saved approximately $6,480 monthly in 
service fees.
    This not only wastes the water supply but also the energy 
and the electrical costs associated with pumping and treating 
it. Energy bills are the highest expense for water utilities 
and correlate to a tremendous energy demand nationwide.
    My second concern is the lack of training resources for the 
governing board members of small water systems. In most all of 
the approximately 50,000 small community water systems, board 
members volunteer their time to make decisions on behalf of the 
citizens in their community regarding one of the most critical 
resources available to man: water. Many small water systems are 
lacking in essential resources like system maps, standard 
operating plans, et cetera. These are all very essential to 
identifying infrastructure conditions.
    As a part of this overall process, we urge Members of 
Congress, in addition to funding for tangible water 
infrastructure projects, to consider strengthening the capacity 
of local governments in providing additional resources in the 
investment of water and wastewater utility management. This 
would ensure the most effective use of State and Federal 
dollars invested in infrastructure projects.
    Federal funding sources have experienced drastic reductions 
in their most recent budgets, causing insufficient funding to 
address overdue improvement projects. With the shortfall the 
utilities are still expected to continue full service for the 
citizens, industry, economic growth and comply with all Federal 
and State regulatory requirements. Investing in the future of 
water infrastructure not only improves the quality of life for 
American citizens but also provides for future economic 
recovery, growth, and stability. It provides a natural 
resources that no one can live without.
    In summary, I respectfully urge Congress to consider the 
unique infrastructure needs and concerns facing our rural and 
small town water systems and incorporate these as priorities in 
future Federal water funding programs and policies.
    Thank you all for your service, and thank you for this 
opportunity.
    [The prepared statement of Ms. Horne follows:]
    
    

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    Senator Cardin. Thank you very much.
    Let me thank all our witnesses for their testimony. This is 
very important.
    Mr. Johnson, you mentioned the relatively low priority of 
these issues because of visibility, which I also pointed out in 
my opening statement. One of the reasons we are having these 
series of hearings is to establish the record which we hope 
will be for a greater commitment for the Federal Government in 
partnership on water infrastructure, but also a lasting 
commitment. We have made a lot of progress in the last 3 years, 
we really have. We increased dramatically the funding levels on 
the State Revolving Funds in the last 3 years. The budgets are 
higher.
    We see a dip this year, which has us greatly concerned. I 
plan to take some action on that and expect that some of my 
colleagues will be joining us in that regard.
    When it came to the use of recovery funds, we were able to 
get a significant amount of recovery funds dedicated to water 
projects. That was for two reasons: one because of the need, 
second the reason you just said, you were shovel-ready, which 
was something that we--unfortunately we have too many projects 
ready to go and not enough money to deal with those projects.
    Madam Mayor, let me ask you, I am very encouraged by your 
testimony in regard to your integrated plans with EPA. That is 
exactly what we want to see, a tailored program to deal with 
each of the communities. It is encouraging to hear your 
comments about EPA's willingness to try to tailor a program to 
meet your needs.
    Storm runoff is a challenge. Storm runoff could very well 
be a water quality issue from the point of view of the Clean 
Water Act, there is no question about it. We have a challenge 
in the Chesapeake Bay watershed as the largest single growth of 
pollutants going into the Bay are coming from the storm runoff 
issues.
    We also have a problem in managing the water treatment 
facility plants based upon the volume of storm runoff. We have 
that particular problem in Blue Plains, which has a major 
commitment to try to deal with storm runoff.
    I guess my question is--you mentioned that the EPA was 
having some difficulty in putting together the drinking water, 
safe drinking water with wastewater treatment, even though both 
come under basically their supervision. Are you having luck in 
dealing with the storm runoff with the wastewater treatment 
issues in an integrated plan with EPA? Are they willing to 
consider the challenges that you have in dealing with the 
infrastructure necessary to deal with storm runoff? We really 
have not had a great deal of Federal support in dealing with 
that part of the environmental challenge.
    Ms. Rawlings-Blake. I am encouraged. I have been mayor for 
just a little over 2 years. And in that time I have seen a lot 
of progress in the way that the conversation with EPA is going. 
So I know that the door is still open. Are we there yet? No. 
But the conversations, the fact that they are using the 
language of integrated planning, that they are talking about 
the possibility of a pilot city, I have one to recommend.
    I know that they are open to the common sense realities of 
what we face. I think what has been happening is a long 
tradition of dealing with all of these systems in segments. Our 
economies are forcing people to get out of that siloed thinking 
more than ever. To me, this is no exception. I believe that we 
can head that way, we can head that way in the future.
    So storm water is included, we are trying the drinking 
water included.
    Senator Cardin. Good. I appreciate that, because I think 
all three parts are important. If you can have an integrated 
plan, it makes a great deal of sense, rather than just 
stovepiping because of the funding source. And the funding 
source presents the challenge. So I am very pleased that EPA is 
willing to consider some flexibility.
    We do need to look at new avenues for partnership. I like 
your clean water trust fund; I think that makes a good deal of 
sense for us to consider that. To the extent that we can 
leverage the lower interest rates the Federal Government can 
obtain, to the extent that you can leverage the tax status, it 
gives us the possibility of leveraging more money. There is a 
lot of discussion here about infrastructure banks. And I have 
promoted that in any infrastructure bank, let's include water 
projects, not just the traditional thoughts of transportation 
or energy or education, which are the other areas that tend to 
get a lot of attention. We want to make sure that water is 
included in those areas.
    But I really applaud you, and the mayors collectively, for 
coming forward with creative sources. I think we should push 
for some form of a clean water trust account that could 
leverage the dollars that are available more effectively than 
we are doing today.
    Ms. Rawlings-Blake. Mr. Chairman, I agree, and I think we 
have a unique opportunity. There are not many national issues 
where rural areas and urban areas are dealing with an issue 
with the same amount of urgency. To me that provides an 
opportunity for partnership across the aisle and in ways that 
we haven't seen before. We are facing the same problems but in 
different ways. I really think we could all work together, 
rural areas, metropolitan areas, in the issue of water 
infrastructure funding, to create a solution that would help 
all across the country.
    Senator Cardin. I agree. I think there is bipartisan 
support here, as Senator Sessions indicated in his opening 
comments. Senator Inhofe has been a strong proponent of moving 
forward with water infrastructure as has Senator Boxer.
    Ms. Horne, I was concerned and impressed by your statements 
that talk about the challenges a rural community in getting the 
technical help that they need in order to be able to properly 
manage a water system. I must tell you, I visited many of the 
small water facilities that we have in Maryland, treatment 
facilities. I am impressed by the community sort of coming 
together to manage that. They don't have the same type of 
professional management that you would see in a large urban 
center.
    We do provide some technical help through the funds that 
are available nationally. But could you just go into the 
challenges that you see in the ability to manage a rural water 
plant that the Federal Government should be sensitive to trying 
to provide some--meeting some of those challenges?
    Ms. Horne. Some of the challenges that we see in the State 
of Alabama include, in working with members of management it is 
just the lack of opportunity that these individuals have for 
specific training that would help them to make better decisions 
regarding the management of that public water utility.
    They do have a lot of challenges that they deal with 
because their customer base is very small. And the regulatory 
requirements have not been reduced, of course; through EPA and 
the State regulatory agencies they have been increased. Many of 
those regulations impose some high costs, of course, for these 
utilities. And with small customer bases it is very difficult 
for management to be able to spread those costs throughout the 
customer base and to be able to maintain reasonable rates at 
the same time.
    So we primarily work with these utilities through 
governmental funding opportunities. And in doing so, that has 
provided a tremendous, a tremendous opportunity to assist those 
utilities with the infrastructure problems that they are 
facing. Yet there is so much, of course, that we have discussed 
today that still needs to be done that we haven't reached.
    I think that with the support from the Subcommittee to help 
us with resources that would allow the board members of these 
small public water utilities to have an opportunity to learn 
more about what resources are available to them and what 
others, even in larger municipalities, are doing to help in 
their particular cities, which may or may not be relevant to a 
small, rural community. It is still an opportunity for that 
person to become better informed and to make better decisions 
regarding that particular operation.
    Senator Cardin. Thank you.
    Let me yield to Senator Sessions.
    Senator Sessions. Thank you.
    Mr. Chairman, I would offer for the record a statement from 
the Birmingham Water Works Board.
    Senator Cardin. Without objection, it will be included.
    [The referenced statement follows:]
    
 
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    Senator Sessions. It deals with issues that we are talking 
about and the challenges that this older city system faces.
    Ms. Horne, Alabama Rural Water Association's purpose is to 
improve the quality of life for Rural Alabamians. Can you 
describe some recent situations where new water infrastructure 
has helped a rural community with economic growth and 
development?
    Ms. Horne. Sure. Most of the water systems in Alabama 
started, as I mentioned, back in the 1950s and the 1960s. Those 
were primarily funded through USDA loans and grants.
    I do know--what comes to mind is Millport, the water 
utility in Millport, that serves a little over 400 customers, a 
very small customer base. And a USDA loan and grant was made 
available to this utility to provide infrastructure 
improvements to allow Millport in Lamar County to be able to 
provide capacity to a recycling plant that was interested in 
locating there.
    Without this Federal support through funding, it would not 
have happened. It has worked very well; they did create this 
commercial user. And that is always really important in a rural 
community, to have an inviting environment where they can meet 
the demands of those particular industries or manufacturing 
plants that would even consider locating in those rural 
communities to be able to find the funding to improve their 
infrastructure to provide the service needed and meet the 
demands that are requested.
    Senator Sessions. You talked about the importance of the 
State Revolving Loan Fund, which provides low interest loans to 
communities so they can comply with the water standards that 
they need to meet and that the Federal Government requires. I 
understand that this program is due for reauthorization. It is 
a good example of a cooperative program between Federal and 
State governments that has helped meet our Nation's 
infrastructure needs. I think that is plain.
    The President's budget proposes some deep cuts, and we are 
facing deep cuts in a lot of different areas. We should respect 
that and just not immediately reject the budget that has been 
proposed. But could you explain why the SRF program is 
important to communities and how you think it is valuable and 
should be maintained?
    Ms. Horne. The State Revolving Fund is certainly valuable 
to all of our States. It provides a tremendous financial 
revenue source for our public water utilities and wastewater 
utilities through the Clean Water Revolving Fund. I think that 
with the State Revolving Fund, if more discretion could be 
given to the people in each State regarding the decisions that 
they make about the projects that are being approved, looking 
at priorities for those projects and determining whether or not 
the utility, for example, is in compliance or if they are 
having compliance issues.
    If that utility could be given some priority in the 
approval process and allow the discretion of those type 
decisions to be made at the State level. Who better knows the 
needs of that State than the people in the State? As we 
identify these areas of concern and the projects that are most 
needed with the public water systems that we work with, we 
partner in working with our regulatory agencies, USDA and 
others, to help identify these problems and then support the 
priority funding that is needed to correct the issue at hand.
    Senator Sessions. Well, thank you.
    Mr. Johnson, Ms. Rawlings-Blake, would you have any comment 
on that?
    Ms. Rawlings-Blake. I certainly agree that the Revolving 
Fund is important. My hope is that we can get the funding up to 
a meaningful level. The needs are great, and the Revolving Loan 
Fund, while it is important, does not come near to meeting the 
State's needs.
    We have very unique needs, rural communities, urban 
communities. If you take a look at the infrastructure 
improvements that are needed to meet the Federal mandates, that 
expense cannot be borne by ratepayers alone. We need to be able 
to leverage funds; we need access to cheaper capital money so 
we can make the improvements that we need.
    So we need the Revolving Fund as well as some other 
innovative financing options so we can work in partnership to 
create a safe environment for all of us.
    Senator Sessions. Mr. Johnson, would you have any comments 
on that, and maybe a question of increased flexibility?
    Mr. Johnson. I certainly agree with both speakers, with 
everything they have had to say. In particular the point of 
additional flexibility at the State level. What we found is 
that with the current affordability guidance, it makes it 
rather difficult for us to attract some of those moneys in the 
two counties that we serve. And if there were greater 
flexibility, I think those dollars would go a longer way.
    One of the things I think you have to understand is in an 
urbanized community like the two counties that we serve, 
Montgomery and Prince Georges, there are still areas and 
pockets of the community where there are unserved and under-
served residents who are still living with septic tanks and 
wells that are currently failing and going bad. We are now 
struggling to try to determine how we extend the modern system 
to many of those residents. We are talking about subdivisions 
of 40 houses here and 20 or 30 houses there, and sometimes 
single residents in some of the far reaches of the two 
counties.
    So I really empathize and understand and can very much 
relate to some of the things that are happening in the rural 
areas as well, although we are in a very urbanized area. So I 
think the notion of flexibility and certainly additional 
funding would do well to serve us in the State of Maryland.
    Senator Sessions. Mr. Chairman, as I think about water, my 
three rural grandparents' homes, all three, when I was a kid, 
still had a well, bucket well, shallow well where you got water 
from. All three had attempted with various degrees of success 
to drill a well, but some had too much iron, some sand would 
cave in, and it would be in trouble.
    In my mother's family home they liked the water from an 
artesian well. We would go periodically with jars and fill up 
with water, and so did my father's home place. So these are the 
kinds of things people have lived with for years and years.
    But a water system is relatively inexpensive. It is amazing 
to me how low the rates can be for people out on the road, with 
a new system, the plastic piping can rush out there and put a 
water tower up, and it works. So it becomes economically 
feasible and realistic, providing a reliable source of water, 
which also can attract business. And without it, you won't be 
able to attain business development.
    So I think it is a good infrastructure investment. We don't 
have near as much as we would like to have. I understand the 
difficulties with the budget. But I sure hope that we can 
figure out a way not to lose momentum in being able to expand 
the water systems in our country.
    Senator Cardin. Senator Sessions, thank you very much. I am 
going to follow up on some of your economic issues here because 
I think you are absolutely correct. If a business is going to 
be able to locate they have to have access to water. It is just 
a fact. They are not going to be able to do what your 
grandparents did in order to deal with their business needs. 
They are going to locate where they can get a reliable source 
of clean water.
    And as we look at where population trends are taking place, 
and when you try to have proper planning for economic growth, 
the availability of water through a system is critical. So it 
is absolutely directly involved in economic issues.
    But you raise a very important point. And that is, people 
are sort of accustomed to being able to get water at a rather 
reasonable, some would say cheap rate. And perhaps we are not 
doing an effective enough job in pointing out to the public 
what is involved in getting safe drinking water to their homes 
so that we can have revenue options that are currently not 
available through the rate increases to be able to get the 
continuation of reliable service in a more efficient manner, 
without all those leaks. Any suggestions here of how we can get 
a more realistic expectation from the users as to what the 
costs of these systems are involved?
    Mr. Johnson. Senator, I think that there are a number of 
elements that relate to that question. One is straightforward 
education, education, education. And it is making our customers 
more aware of what it takes to get water. And there are a 
variety of different things, from exposing them to our 
facilities and offering tours and opportunities for them to see 
what we are doing, taking them to our various work sites and 
the like.
    And when we are going into neighborhoods and doing pipe 
replacement, explaining to them the level of effort that it 
takes, the kind of equipment that it takes, the dollars that it 
takes to do that kind of work. Replacement of a mile of 
standard line, ductal line pipe, is about $1.4 million today. 
In addition to that replacement, we have to do extensions and 
other kinds of work.
    So I think that a good bit of it has to do with education. 
Truly, I believe that people are getting a real bargain with 
water supply and water service. When you compare the water bill 
to other utility costs and look at the essential nature of 
water service, it is a real bargain.
    But understand that in our urban areas communities can't 
function without fire protection. Hospitals can't operate 
without a clean, safe supply of water. Not all of the water, 
obviously, is used for consumptive purposes. There are many 
other uses of water. I think making people aware that they do 
have options for other utilization of re-used water and the 
like I think is also very important to our customers.
    And getting them to get behind certain other initiatives 
that we might be undertaking, things like the Mayor mentioned, 
the trust fund. If customers understood the nature of a trust 
fund and how something like that could work to benefit them and 
not to reduce the cost but to hold the trajectory of costs 
down, I think would be very important to them.
    And also looking at our assets and how we might be able to 
leverage them for more resources.
    Senator Cardin. Madam Mayor.
    Ms. Rawlings-Blake. Yes, thank you very much, Mr. Chairman.
    I have certainly worked diligently on the education effort. 
Because we have had to raise the rates--the water rates--
annually for the past few years. And with the clear 
understanding at the time that we started the roll out of the 
increases that it would go on for some time in the foreseeable 
future.
    So in Baltimore the relative cheapness or inexpense of 
water is going away. And people are feeling the squeeze. And it 
is becoming increasingly difficult when we know that we have 
inefficiencies and we know that we have daily water loss that 
costs us more money to be able to produce that water, when we 
know that because of an inefficiency in the way that we must 
deal with our capital projects, because we are not at the point 
where we have this integrated plan or this holistic plan means 
that we can't really deal with the aging infrastructure issue 
in a pace where we think would be helpful to keep the costs 
down, because we have to meet these other Federal mandates.
    So it is more expensive; it requires education. But at a 
point--at least in Baltimore--people are going to want to see 
evidence of more cooperation on providing the efficiencies and 
the autonomy that is needed to be able to save the ratepayer 
money. So the money that we are charging we know is going to 
create the most efficient and effective system possible.
    Senator Cardin. Just one last question on the economics 
here of moving forward, Mr. Johnson, you mentioned 1,700 breaks 
a year. That is an unbelievable number. If my math is right, 
that is four or five a day that you get every day of the year. 
And Mayor Stephanie Rawlings-Blake, you mentioned the number of 
leaks that you are having in Baltimore, and Ms. Horne, you 
mentioned 20 or 25 percent leakage. That is an unbelievable 
number of how much water is wasted.
    That is a huge cost. I can't imagine how much it costs you 
just to investigate each leak and try to deal with it before it 
becomes a major problem for a break that can cause a major 
disruption to a community, loss of water. In Dundalk we had 
people for days had to boil their water. They couldn't get 
water. And that is in Baltimore.
    So that is a huge cost. Can you quantitate that at all?
    Mr. Johnson. I can in just a minute. I can get that 
information back to you.
    Senator Cardin. I think it would be helpful for us to have 
if you could, quantitate the cost of inaction, the leakage plus 
the breaks plus all the repair work that you have to do. If 
deferred maintenance catches up with you, and that is what is 
happening in America, your analogy of painting a bridge is 
absolutely right. The problem is we haven't completed it the 
first time.
    Mr. Johnson. You are right.
    Senator Cardin. And it is already peeling at the back end. 
And we have to catch up in a much more aggressive way.
    Let me turn it over to Senator Sessions, and I will come 
back and give you all an opportunity.
    Senator Sessions. Mayor Rawlings-Blake, I offered for the 
record a statement from the Birmingham Water Works Board, which 
I think is doing very well. But I am sure you are probably 
aware that Jefferson County, which is also part of the 
Birmingham area water works system, declared bankruptcy, one of 
the largest bankruptcies, and what an embarrassing, difficult 
time that has been. The rates surged for the consumers to a 
point they couldn't be sustained.
    I was attorney general at a point when the EPA filed a 
complaint against the system. It was supposed to cost $1 
billion to fix the problems; it ended up costing about $4 
billion. And it was those bonds and the floating of that and 
some unwise decisions they made about how to finance it that 
led to this bankruptcy.
    I understand you had a recent settlement of $250 million 
with EPA. More than that? OK.
    Ms. Rawlings-Blake. I think the consent decree is around 
$1.2 billion settlement.
    Senator Sessions. Yes. I believe Mr. Johnson had a smaller 
one.
    I guess the question is, do you think you can stay on those 
numbers? Are you afraid that they will go out of control and 
not be able to accomplish everything you are mandated to 
accomplish? What kind of risk does that place you in?
    Ms. Rawlings-Blake. If you were to come to one of our Water 
Council meetings and see mayors from across the country, small 
cities, large cities, Republican, Democrat, deal with the 
fiscal reality of trying to meet these mandates, you will see a 
frustration beyond belief. Because every single one of us wants 
a safe water system. We want a safe environment.
    But we can't do it just on the backs of the ratepayers. We 
are all at risk. We don't want to see another story of a 
bankrupt city, another one, another one, when we know that 
there are other options out there. It requires us to think 
differently and smarter about these financing options so we can 
use the resources that we have.
    The ratepayers, I think the rate of default for these water 
bonds is one of the lowest out of any of it. You have the 
regular ratepayers paying the water bill. But we need to be 
able to leverage that to get a more efficient system quicker.
    Senator Sessions. Well, as I understand the EPA law, and I 
think it controls what they do, they are not able to say, well, 
your sewer system overflows, and you have to stop it, but you 
can do it over a period of time, which they do. But 
fundamentally they are required to end it immediately. If it 
creates a risk they are not supposed to consider particularly 
how you pay for it and what kind of system of repair over a 
period of years would be the most efficient way to achieve that 
goal. They push for rapid completion of these problem areas 
almost immediately. It can be a great cost.
    I sensed--when I observed the settlement of $1 billion in 
Alabama, I thought the city couldn't afford that. But before it 
was over it was about $4 billion. And it took them down.
    Mr. Johnson, you had a settlement also. Do you find that 
the EPA legal requirements are such that it makes it difficult 
to work out a cost-effective way to improve your systems?
    Mr. Johnson. I would assume, I think that is a relative 
question. It depends on the nature of the problem and the 
issues that you are dealing with. I have had the experience of 
doing this in several different cities and in the community 
that I am in now. And it is a heavy burden. And the burden 
comes on top of all of the other things that you know you have 
to do just as good management and good operating practices.
    The question that the Senator asked me just a minute ago 
about the cost of maintenance of the water and sewer pipes, 
just that maintenance alone is $21.6 million a year. So if you 
take that as a given, then recognize that you now have to take 
on a regulatory responsibility that has to be completed within 
a specified period of time, it does put a strain on the system, 
and you have to make some tough choices. Do you continue to 
replace these water mains and the other systems that you know 
are going to go bad, or do you let them languish while you go 
forward and focus on the other parts of the system that you are 
being required to do because of an EPA order?
    Those are very difficult. And you have to do it within a 
finite number of dollars and resources that you have available. 
This is not unique to our utility. As the Mayor indicates, this 
happens across the country and creates a very vexing kind of 
dilemma for the various organizations that have to undertake 
it.
    Senator Sessions. Thank you.
    Mr. Johnson. However, the comments that the Mayor made 
earlier about this integrated planning approach has great 
potential and has great opportunity to begin to save the 
ratepayers and the communities dollars. Because if we look at 
these issues in an integrated fashion and recognize, as an 
example, that sewer flow and stormwater flow are both water-
related issues, and all of it has to be dealt with through a 
wastewater plant or certain other facilities, and we begin to 
look at that planning effort on an integrated basis, that 
becomes method of saving money when we come out of that 
stovepipe.
    Senator Cardin. I have one more observation and one 
question, then we may have some additional questions for the 
record.
    Let me just point out, what Senator Sessions is saying 
about coordination, and Mayor Rawlings-Blake said about 
integrated plans, it takes me back--the problems in Baltimore 
pre-date our mayor, and pre-dates your service even as a city 
councilwoman. We have been in legal issues for a long time 
concerning compliance with Federal regulation in our water.
    We had an issue with the Army Corps with the Patapsco River 
restoration, where a lot of the pipes are laid, as to when they 
are doing the restoration work, why couldn't they at the same 
time do some of the water work and count it all as one project. 
And we had the hardest time getting them to do two things at 
one time, two different agencies.
    So I think Senator Sessions' point is a very valid point. I 
really am encouraged by what the Mayor is saying in your 
conversations with EPA, of looking at three different sources 
and putting them together as a coordinated plan. I know you are 
not quite there yet. But we are going to be interested in 
following that and trying to help you get through the 
administrative bureaucratic issues so that we can look at 
results.
    And we might want to bring in the programs, such as what 
the Army Corps does on restoration and say, look, that may be a 
source that we can also get some help, as we do some of our 
restoration work, also look at storm management and issues like 
that, that make your job a little bit easier, so that we sort 
of coordinate all this at one time.
    I am looking at the transportation bill as an opportunity 
to deal with storm runoff. We can use that as a way, again, to 
make your job just a little bit easier.
    But my last question deals with green technology. Mr. 
Johnson, you have been an innovator in looking at innovative 
ways to deal with water issues. Can you just briefly tell us 
the promise for green technology as you deal with managing the 
water issues as to how much promise that holds for not only 
being gentler to our environment but also more economically 
efficient?
    Mr. Johnson. As I mentioned in my earlier presentation, we 
have bought into a wind farm in Pennsylvania that is now saving 
our customers about $800,000 a year and reducing traffic on 495 
or the Beltway by about 20,000 cars per year. So that is one 
innovation. We are also looking at how we go about re-using 
much of what we do at the wastewater treatment plant. Are there 
ways that we can approach the digestion system at the plant, as 
an example, to recapture methane gas and re-use that for 
offsetting some of our energy needs. Are there ways that we can 
use solar power. We have fairly large land holdings. I think 
that presents some opportunities for us to do some of those 
kinds of activities.
    But the private sector investment also needs initiative. I 
think that some of the tax credits that have been provided by 
the Federal Government for some of those energy initiatives is 
something that could help us as well. Because then we can 
incent the private sector folks to come in and do the 
photovoltaic kinds of projects and other things that would 
allow us to function much better.
    We are also looking at better ways of eliminating biosolids 
and methods of re-using that in a more effective way, as we 
know that land application is not going to be the way of the 
future. So we have to look down the road at ways of dealing 
with that as well.
    So we look at the whole operation: can we reduce chemical 
use, and our carbon footprint to ensure that we have resources 
available for our children and their children's children in the 
future.
    Senator Cardin. Thank you.
    Do either of the other two witnesses want to comment on 
this issue?
    Ms. Rawlings-Blake. We are certainly looking, Mr. Chair, at 
uses of green technology in our holistic approach, our 
integrated planning proposal.
    Senator Cardin. Thank you.
    Let me thank all three of you for being here and just tell 
you some of the things that we are going to be looking at. 
Senator Sessions mentioned that the State Revolving Fund 
reauthorization is an issue that enjoys bipartisan support. 
This Committee has a history of working together on those 
issues. As we look at the future of the State Revolving Funds, 
I think the comment that Ms. Horne made is accurate, we are 
looking at ways of giving you more flexibility as we move 
forward with the Federal partnerships. So we will continue to 
do that.
    We also believe the funding levels have to be maintained. 
Senator Sessions raised a very valid point about our budget 
challenges. We all need to be mindful that we have to have a 
sustainable Federal budget. Infrastructure is a critically 
important priority for this country, and we want to make sure 
that water, along with our other transportation, our 
transportation priorities and energy priorities, are included 
at a high level. So we will continue to fight for that.
    We will look for creative ways to provide additional 
opportunities. I think the testimony of Mayor Rawlings-Blake 
helps us in thinking about additional avenues that we can look 
at to provide additional partnerships.
    But I really thought the point that all of you raised about 
coordination is important here. We have multiple goals. The 
easier we can work on those multiple goals and have the Federal 
Government helpful rather than just giving you mandates without 
an avenue to meet those needs in a more cost-effective way, 
which is what I think we all are trying to do with the Federal 
partnerships.
    So this hearing will be extremely valuable to our Committee 
in coming up with a strategy to try to help you, as your 
partner, to help meet the expectations of our public for safe 
and clean water. Thank you very much for your testimony.
    We will stand adjourned.
    [Whereupon, at 11:21 a.m., the Committee was adjourned.]
    [An additional statement submitted for the record follows:]

                  Statement of Hon. James M. Inhofe, 
                U.S. Senator from the State of Oklahoma

    I appreciate that Senator Cardin and Senator Sessions have 
called another hearing on water infrastructure needs in our 
country. I have often said that the best way to ensure we are 
providing safe drinking water and clean water is to improve 
water infrastructure. I look forward to working with them and 
other members of the Committee this year on this vital issue.
    It is clear that the United States' water infrastructure is 
in dire need of repair. In the American Society of Civil 
Engineers' most recent report card for United States' 
infrastructure, they gave the wastewater and drinking water 
infrastructure a grade of a D^. At our last hearing, Mr. 
Gregory E. DiLoreto, president-elect of ASCE, testified that if 
current infrastructure investment trends persist, by 2020 the 
anticipated capital funding gap will be $84 billion. He noted 
that ``Even with the increased use of sustainable practices and 
cost-effective development of other efficiency methods, the 
growing gap between capital needs to maintain drinking water 
and wastewater treatment infrastructure and investments to meet 
those needs will likely result in unreliable water service and 
inadequate wastewater treatment.'' Yesterday the American Water 
Works Association released a report showing that the United 
States will need to spend $1 trillion in the next 25 years to 
maintain the current level of drinking water service and 
accommodate economic growth.
    A nationwide investment in improving the aging water 
infrastructure will create jobs and protect public health and 
the environment. Public investment in improving the aging water 
infrastructure, according to the Department of Commerce, yields 
significant economic benefits estimating that $1 invested in 
water infrastructure generates more than $2 in economic output 
in other industries and that each job created in the local 
water and sewer industry creates nearly 4 jobs in the national 
economy. The U.S. Conference of Mayors notes that each public 
dollar invested in water infrastructure increases private long-
term GDP output by more than $6.
    Given the incredible need, the incredible benefits from 
investment, I was extremely disappointed to see that EPA's 
fiscal year 2013 budget requested a decrease in funding for the 
Drinking Water and Clean Water State Revolving Fund programs 
for the second year in a row. Every Federal dollar that EPA 
directs away from addressing the primary goal of the SRF 
programs reduces the capacity of a State to leverage Federal 
funding and address infrastructure needs. One million in 
Federal funds from these programs is leveraged into $3 million 
in capacity for funding additional infrastructure projects. As 
Joe Freeman, Chief Financial Assistance Division, from the 
Oklahoma Water Resources Board testified before this 
Subcommittee in December, ``In the past two decades few 
federally authorized programs have proven as effective in 
realizing their intended goals as the SRF programs.''
    I am looking forward to hearing about the challenges facing 
water systems, both small and large. I continue to believe that 
the most successful approaches to helping water systems meet 
their individual water quality needs are developed at the local 
level. Because water challenges differ from State to State and 
city to city we must promote solutions that are flexible and 
provide solutions for both small and large systems.
    I am especially pleased to have Kathy Horne, Executive 
Director of the Alabama Rural Water Association, here to share 
her perspectives on issues affecting rural water systems. As 
you know, Oklahoma has a large number of rural water systems. 
Rural systems often lack the financing and engineering 
resources of many larger systems yet still are tasked with 
providing safe drinking water to the people they serve. 
Ensuring that treatment technologies are cost effective is 
critical for these systems since they serve fewer people often 
over large geographical areas, and costs are shared between 
fewer people than urban drinking water systems. Rural 
populations often must pay more money to receive the same water 
service, which is not affordable for many rural Americans who 
live on fixed incomes.
    Considering the importance of water infrastructure to the 
well being of the American people and our economy, I will 
continue to support investment in water infrastructure and am 
looking forward to hearing the testimony of our witnesses on 
the important issues facing both rural and urban water systems.
    Thank you.

    [Additional material submitted for the record follows:]
    
  
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