[Senate Hearing 113-225]
[From the U.S. Government Publishing Office]
S. Hrg. 113-225
AGING WATER INFRASTRUCTURE
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HEARING
before the
SUBCOMMITTEE ON WATER AND POWER
of the
COMMITTEE ON
ENERGY AND NATURAL RESOURCES
UNITED STATES SENATE
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
TO
RECEIVE TESTIMONY ON THE ISSUES ASSOCIATED WITH AGING WATER RESOURCE
INFRASTRUCTURE IN THE UNITED STATES
__________
JULY 25, 2013
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the
Committee on Energy and Natural Resources
_____
U.S. GOVERNMENT PRINTING OFFICE
87-360 PDF WASHINGTON : 2014
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COMMITTEE ON ENERGY AND NATURAL RESOURCES
RON WYDEN, Oregon, Chairman
TIM JOHNSON, South Dakota LISA MURKOWSKI, Alaska
MARY L. LANDRIEU, Louisiana JOHN BARRASSO, Wyoming
MARIA CANTWELL, Washington JAMES E. RISCH, Idaho
BERNARD SANDERS, Vermont MIKE LEE, Utah
DEBBIE STABENOW, Michigan DEAN HELLER, Nevada
MARK UDALL, Colorado JEFF FLAKE, Arizona
AL FRANKEN, Minnesota TIM SCOTT, South Carolina
JOE MANCHIN, III, West Virginia LAMAR ALEXANDER, Tennessee
BRIAN SCHATZ, Hawaii ROB PORTMAN, Ohio
MARTIN HEINRICH, New Mexico JOHN HOEVEN, North Dakota
TAMMY BALDWIN, Wisconsin
Joshua Sheinkman, Staff Director
Sam E. Fowler, Chief Counsel
Karen K. Billups, Republican Staff Director
Patrick J. McCormick III, Republican Chief Counsel
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Subcommittee on Water and Power
BRIAN SCHATZ, Hawaii, Chairman
TIM JOHNSON, South Dakota MIKE LEE, Utah, Ranking
MARIA CANTWELL, Washington JOHN BARRASSO, Wyoming
BERNARD SANDERS, Vermont JAMES E. RISCH, Idaho
DEBBIE STABENOW, Michigan DEAN HELLER, Nevada
JOE MANCHIN, III, West Virginia JEFF FLAKE, Arizona
AL FRANKEN, Minnesota TIM SCOTT, South Carolina
Ron Wyden and Lisa Murkowski are Ex Officio Members of the Subcommittee
C O N T E N T S
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STATEMENTS
Page
Barrasso, Hon. John, U.S. Senator From Wyoming................... 2
Galloway, Gerald E., PE, Ph.D., Glenn L. Martin Institute
Professor of Engineering, University of Maryland, College Park,
MD............................................................. 17
Hannon, James R., Chief of Operations and Regulatory, Army Corps
of Engineers, Department of the Army........................... 8
Kiely, Charles, Assistant General Manager, District of Columbia
Water and Sewer Authority...................................... 27
Pimley, Lowell, Deputy Commissioner of Operations, Bureau of
Reclamation, Department of the Interior........................ 4
Schatz, Hon. Brian, U.S. Senator From Hawaii..................... 1
Stern, Charles, Specialist in Natural Resources Policy,
Congressional Research Service................................. 11
APPENDIXES
Appendix I
Responses to additional questions................................ 37
Appendix II
Additional material submitted for the record..................... 45
AGING WATER INFRASTRUCTURE
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THURSDAY, JULY 25, 2013
U.S. Senate,
Subcommittee on Water and Power,
Committee on Energy and Natural Resources,
Washington, DC.
The subcommittee met, pursuant to notice, at 2:30 p.m. in
room SD-366, Dirksen Senate Office Building, Hon. Brian Schatz
presiding.
OPENING STATEMENT OF HON. BRIAN SCHATZ, U.S. SENATOR FROM
HAWAII
Senator Schatz. Good afternoon.
Today the Subcommittee on Water and Power is holding an
oversight hearing on aging water infrastructure in the United
States. In 2008 this subcommittee held a similar hearing and we
learned then that the maintenance backlog for the Bureau of
Reclamation's water facilities alone exceeded $3.2 billion.
Unfortunately this situation hasn't improved much in the last 5
years.
In fact we just witnessed a near disaster right here in the
Nation's capital when water in Prince George's County was
nearly shut off to tens of thousands of residents during the
hottest week of the summer due to an aging water main that was
about to collapse. This incident has brought much needed
attention to today's hearing topic.
Just this year the American Society of Civil Engineers gave
the United States a D or worse for nearly every water
infrastructure category on its report card. This is not
acceptable because the impacts of a failing water system can be
profound. Dam failures pose a significant risk to the safety of
our communities and deteriorating water treatment facilities
can lead to water borne illnesses.
In my home State of Hawaii these impacts are well known to
residents. In 2006, after more than 40 days of rain, the
privately owned Kaloko Reservoir Dam on Kauai failed releasing
more than 300 million gallons of water on the community below
and killing 7 people. The dam was more than 100 years old and
had never once been inspected prior to its failure.
Recently the waste water system on Oahu failed causing tens
of thousands of gallons of raw waste water to contaminate
nearby streams.
While these examples highlight failures at non-Federal
facilities much of the large water infrastructure in the
Western United States including dams, levees and irrigation
structures is operated or maintained by either the Bureau of
Reclamation or the Army Corps of Engineers.
The Bureau of Reclamation is the Nation's largest wholesale
water supplier serving more than 31 million people, providing
irrigation water for 10 million acres of farm land and is the
second largest producer of hydroelectric power in the West.
The Army Corps of Engineers maintains over 700 dams with
353 hydropower generating units that can provide up to 25
percent of our country's hydropower.
As Chair of this subcommittee I often think about the
connection between energy and water. The topic of aging
infrastructure is a critical component of the energy/water
nexus. So much of our water infrastructure is tied to energy.
Hydropower is the obvious example, but water infrastructure
is also responsible for irrigation which helps to grow our
biofuels and is used for cooling at power plants and used to
extract and move energy resources such as coal, oil and gas.
When our water infrastructure begins to break down not only do
we lose water through leaky pipes, we also waste energy. So
aging water infrastructure quickly becomes a topic of concern
for those of us interested in the production of energy and
energy efficiency.
The economic impacts of unreliable water delivery and waste
water treatment services increase costs to businesses and to
households. According to a report from the American Society of
Civil Engineers, between now and 2020 the cumulative loss to
the Nation's GDP would be over $400 billion. Disruptions to
electric generation due to aging water infrastructure will also
increase the cost of electricity to those states and regions
that use Federal hydropower.
Many challenges exist in managing and financing the
upgrades and repairs needed to mitigate the impacts of aging
water infrastructure. Further, severe weather events are
increasing stresses on existing facilities. Floods will strain
waste water systems and ongoing drought will mean reduced
hydroelectric power generation.
I'm hopeful that today's hearing will provide the
subcommittee with a holistic look at aging water infrastructure
by including the Federal perspective from the Bureau and the
Army Corps, as well as the local perspective with DC Water. I
hope we can begin the discussion on possible solutions to
address this ongoing problem.
I want to welcome all of our witnesses to the committee
today. I look forward to hearing from them.
Now I'd like to turn to our Ranking Member, Senator
Barrasso, for comments.
STATEMENT OF HON. JOHN BARRASSO, U.S. SENATOR
FROM WYOMING
Senator Barrasso. Thank you, Mr. Chairman.
I'd like to join you in welcoming our witnesses today. I'm
pleased to be sitting in for subcommittee Ranking Member
Michael Lee from Utah. He and I share the same concerns
regarding addressing aging infrastructure, especially in the
West where the Bureau of Reclamation facilities are located.
Water is the most fundamental issue in my home State of
Wyoming. The need to provide a clean, abundant supply of water
is essential to the survival of the Intermountain West. The
infrastructure we have today in my home State and across the
Nation is aging.
Where the weak points are? We don't fully know.
The longer we wait. The more likely these facilities will
fall into disrepair.
This will impact the economic livelihood of ranchers and
farmers in Wyoming and across the West that rely on these
facilities to provide water.
I'm very pleased that the Interior Department and its
leadership has been--actually I'm very concerned that the
Interior Department and its leadership has been less than
forthcoming about the depth and scope of these problems. I'd
asked then Interior Secretary nominee, Sally Jewell, during her
confirmation hearing the following with regard to the Bureau of
Reclamation's backlog.
I asked the question, ``Most of the agency's infrastructure
has an average age of over 50 years. In 2008 Reclamation
testified before this committee that maintenance needs on
Reclamation facilities exceeded $3.2 billion. What's the
current estimated backlog?''
Her response was, she says, I understand that addressing
the Bureau of Reclamation's aging infrastructure is a priority
for the Department. She went on to say, I recognize
Reclamation's important role in delivering the water and power
to the West and will work with my colleagues in the Bureau in
the Department to better understand and address the challenges
it faces.
Mr. Chairman, this is a non answer.
I find it hard to believe that the then nominee Jewell and
the staff at Interior couldn't answer the basic question which
is the current estimated backlog. This is consistent with the
responses I've gotten from the Agency on what the backlog of
projects is in my home State of Wyoming. When I requested a
State-wide backlog project repair list I received a sheet with
18 backlog projects.
No dollar figure associated with the repair projects
listed.
The repair descriptions were very abbreviated, not taking
up, you know, mostly taking up maybe 5 or fewer words.
This doesn't give me a good idea of what the repair
projects are or what are the highest priority and what these
projects are going to cost.
So in addition, Mr. Chairman, I asked ten written questions
related to this topic to Interior Secretary Jewell as part of
the June 6 full committee hearing on the programs and
activities of the Department of the Interior. So today is July
25, we're well over a month beyond when I asked the questions.
Still don't have any answers.
Among these questions are what's the current estimate of
Reclamation's indicated maintenance backlog?
Does the Bureau of Reclamation maintain a listing including
dollar amounts of Reclamation's deferred and indicated
maintenance needs at the project level?
Even how much of this information is publicly available?
It would just seem much more productive though that I and
our colleagues on this committee be afforded answers to these
questions prior to a hearing like the one today on this topic.
It's not a partisan issue, Mr. Chairman. Any Senator with aging
infrastructure should be very concerned and is concerned about
addressing these problems.
I want to work together with my colleagues to get the
answers that all of us need to find the solutions that we need
to improve the aging water delivery system in the Bureau of
Reclamation and the Army Corps facilities across the country.
Thank you, Mr. Chairman.
I look forward to the testimony.
Senator Schatz. Thank you, Ranking Member Barrasso.
Now let me take a moment to introduce our distinguished
panel. We have 5 witnesses today.
Mr. Lowell Pimley, the Deputy Commissioner of Operations
for the Bureau of Reclamation.
Mr. James Hannon, the Chief of Operations and Regulatory
Affairs at the United States Army Corps of Engineers.
Mr. Charles Stern, a specialist in natural resources policy
for CRS.
Dr. Gerald Galloway, a professor of engineering at the
Department of Civil and Environmental Engineering at the
University of Maryland.
Mr. Charles Kiely, the Assistant General Manager of the
District of Columbia Water and Sewer Authority.
Gentlemen, thank you for being here and welcome. Your full
testimony will be included in the hearing record. So please
take 5 minutes to summarize your testimony.
Mr. Pimley, please proceed.
STATEMENT OF LOWELL PIMLEY, DEPUTY COMMISSIONER OF OPERATIONS,
BUREAU OF RECLAMATION, DEPARTMENT OF THE INTERIOR
Mr. Pimley. Thank you.
Chairman Schatz, Ranking Member Barrasso, I'm Lowell
Pimley, Deputy Commissioner of Operations, Bureau of
Reclamation.
Thank you for the opportunity to be here today alongside
the Corps of Engineers and the other distinguished members of
this panel to discuss the issues associated with aging
infrastructure in the United States. My full statement has been
submitted for the record. I would like to proceed with a few
brief remarks.
As the owner and operator of the largest number of
facilities across the West, Reclamation is aware of the many
challenges faced by agencies operating and maintaining water
and power facilities. Reclamation is proactively maintaining
and improving its existing infrastructure for system
reliability, safety and sustained water conservation. Action is
required to address future water supply and power generation
challenges given anticipated increases in population and
renewed emphasis on domestic energy production and the need for
aquatic water supplies--or I'm sorry adequate water supplies.
Maintaining our infrastructure is becoming more costly over
time due to the conditions of some of our components, cost
increases in the broader economy and the need for additional
facilities, rehabilitation, replacement and extraordinary
maintenance. Most of Reclamation's major dams, reservoirs and
hydroelectric plants and irrigation systems are 60 or more
years old. A facility's age is not the sole measure of its
condition, but the condition of each component really is the
central factor in the long term maintenance nees of the general
asset.
In order to address reliability, efficiency and safety of
our assets we've developed several programs detailed in my
written statement. We will continue to work to improve the way
we provide maintenance and rehabilitation of our entire
portfolio of infrastructure to ensure that it is sound, safe
and reliable.
For example, Reclamation has partnered with my colleague to
the left, the Army Corps of Engineers, to address
infrastructure, modernization challenges related to hydropower
through the Hydropower Modernization Initiative. The program
that assesses and prioritizes the inventory or the investment
needs of federally owned hydropower facilities. Results from
that program allowed Reclamation to assess potential capacity
increases in our 58 hydroelectric plants to estimate
incremental energy increases from efficiency gains and to
estimate potential greenhouse gas offset that could be a credit
to those energy increases.
In 1948 Reclamation initiated its facility review program
to assess the condition of assets constructed by Reclamation
and operated and maintained by non-Federal operating partners.
These activities continue today and as a result of our
preventative maintenance philosophy and related oversight
initiatives, have successfully extended the service life of
many of our water and power facilities beyond original
expectations.
Our large portfolio of water resource infrastructure
constantly presents new maintenance, replacement and
modification challenges. The aging process will inevitably lead
to increased pressure on Reclamation and our 350 operating
partners' budgets. As such Reclamation and the operating
entities anticipate infrastructure maintenance needs will
continue to grow over time.
As part of Reclamation's asset management strategy, regular
operation maintenance activities will be managed in concert
with our strategy to improve effectiveness and funding
rehabilitation and replacement needs.
In closing I'd like to stress the key component of
Reclamation's mission is sound and reliable infrastructure.
Reclamation will continue to ensure the integrity and
reliability of Federal water and power assets. While
Reclamation's reach across the West is widespread, our
employees take the safety of our facilities and the protection
of local customers and surrounding communities very seriously.
Thank you for the opportunity to discuss these important
topics. I am prepared to answer as many questions as you may
have. Thank you.
[The prepared statement of Mr. Pimley follows:]
Prepared Statement of Lowell Pimley, Deputy Commissioner of Operations,
Bureau of Reclamation, Department of the Interior
Chairman Schatz and members of the Subcommittee, I am Lowell
Pimley, Deputy Commissioner of Operations of the Bureau of Reclamation
(Reclamation). I am pleased to provide the Department of the Interior's
perspective on Reclamation's asset management strategy to address our
aging water and power infrastructure.
As the owner and operator of large numbers of facilities across the
West, Reclamation is acutely aware of the many challenges faced by
agencies operating and maintaining water and power facilities. In order
to efficiently manage water resources, Reclamation is proactively
maintaining and improving its existing infrastructure for system
reliability, safety, and sustained water conservation, in an era of
constrained budgets and changing climate. In light of the importance of
Reclamation's infrastructure in the 17 Western States on the economy
and environment, Reclamation continues to prudently decide how to
invest available resources. Proactive engagement will be required to
address many anticipated future water supply and power generation
challenges and maintain economic productivity in communities served by
Reclamation projects throughout the West. Anticipated increases in
population, renewed emphasis on domestic clean energy development, and
the need for adequate water supplies will place additional demands on
Reclamation's infrastructure. Maintaining the key features of our
infrastructure is becoming more costly over time due to the condition
of some of the components, cost increases in the broader economy and
the need for additional facilities rehabilitation, replacement, and
extraordinary maintenance.
Reclamation's mission is to ``manage, develop, and protect water
and related resources in an environmentally and economically sound
manner in the interest of the American public.'' We are the Nation's
largest wholesale water supplier, and the 348 reservoirs we administer
have a total storage capacity of 245 million acre-feet of water. We
bring water to more than 31 million customers and provide approximately
20 percent of western farmers with water to irrigate about 10 million
acres of farmland. We are also the Nation's second largest producer of
hydroelectric power, generating more than 40 billion kilowatt-hours of
energy each year. In the 111 years since Reclamation's creation, the
Federal government has invested almost $19 billion in original
development costs for our facilities. In present value terms, the
amount that the Federal government has spent to construct this
infrastructure is estimated to be $94.5 billion.
Most of Reclamation's major dams, reservoirs, hydroelectric plants,
and irrigation systems are 60 or more years old.\1\ All structures age
over time. We monitor the condition of our facilities on an ongoing
basis. We are working to invest in the maintenance and rehabilitation
of these structures and their component systems, where needed.
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\1\ http://www.usbr.gov/power/data/recl-wid.pdf
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Reclamation has long recognized the many challenges associated with
managing a large portfolio of water and power infrastructure with a
wide array of ages and conditions. In order to address the reliability,
efficiency and safety of our portfolio of assets, Reclamation has
developed several programs summarized below to address these issues,
each targeted to address a specific type of challenge. Reclamation's
Hydropower Modernization Initiative guides investments in our
hydropower assets. Our Canal Inspection Program addresses canal safety
and reliability. Our Dam Safety Program addresses design deficiencies
and other factors contributing to conditions unsafe enough to justify
corrective action. Reclamation's Facility Maintenance and
Rehabilitation Program identifies, schedules and prioritizes necessary
rehabilitation work at ``reserved works,'' facilities where Reclamation
still performs operations and maintenance. Our Associated Facilities
Review of Operations and Maintenance Examinations is a longstanding
process employed by Reclamation to track facility condition at
facilities where operations and maintenance (O&M) responsibility has
been transferred to others. Our authority for Extended Repayment of
Extraordinary Maintenance assists non-Federal sponsors who have
difficulty financing a large amount of extraordinary maintenance in a
single year. And lastly, Reclamation's Title Transfer process
facilitates situations in which the best course of action is to de-
federalize a facility or associated asset. Through these existing
programs, we are, and will continue to work to improve the way that we
provide maintenance and rehabilitation of our entire portfolio of
infrastructure to ensure that it is sound, safe, and reliable.
Reclamation partnered with the United States Army Corps of
Engineers (USACE) to address infrastructure modernization challenges
related to hydropower through the Hydropower Modernization Initiative
(HMI), a program that assesses and prioritizes the investment needs of
federally-owned hydropower facilities. The HMI Asset Investment
Planning (AIP) program is designed to: 1) review the comprehensive list
of power train assets and corresponding key attributes, 2) analyze and
prioritize asset investment projects by year based on factors including
Benefit-Cost Ratio, Net Present Value, and Risk, and 3) prioritize the
allocation of annual budget dollars to maximize return on investment
and reduce risks in the asset portfolio.
Results from the HMI allowed Reclamation to assess the potential
for capacity increases at the 58 existing hydroelectric plants, and to
estimate incremental energy increases from efficiency gains that would
result from replacement of older turbine runners with modern runners,
and to estimate potential greenhouse gas (GHG) offsets that could be
credited to the incremental energy increases. The results of the study
were presented in a 2010 Reclamation report entitled, Assessment of
Potential Capacity Increases at Existing Hydropower Plants, which is
available at http://www.usbr.gov/power/AssessmentReport/
USBRHMICapacityAdditionFinalReportOctober2010.pdf
Improved technologies, as well as innovative construction
processes, like the one occurring on the Joint Federal Project at
Folsom Dam near Sacramento, assist Reclamation in managing costs while
fostering collaboration. Together with USACE, Reclamation is
undertaking a historic effort to jointly construct features that will
address both safety of dams concerns, as well as expand flood
protection for the City of Sacramento. Working together to design and
construct features consistent with these two distinct activities,
Reclamation and the USACE estimate the joint project will lead to
significant cost and time savings. Project construction has proceeded
in phases by Reclamation and the USACE.
On April 17, 2008 Reclamation provided testimony before this
committee focused on infrastructure improvement challenges related to
Reclamation's canals and irrigation facilities. Our 2008 statement
highlighted a canal failure in Nevada resulting in uncontrolled water
releases into residential areas causing damage to homes. The canal,
operated and maintained by the Truckee-Carson Irrigation District under
a contract with Reclamation, provides water to agricultural and wetland
uses in the Fernley and Fallon, Nevada areas. This canal was built over
a hundred years ago.
In response to this failure $10 million in funding was provided
under the American Recovery and reinvestment Act of 2009 to inspect
Reclamation canals located in urbanized areas, where the consequences
of a facility failure would typically be higher. From 2009 through
2012, Reclamation developed an inventory of canals located in urbanized
areas and performed inspections of over 250 canal reaches representing
more than 1,000 miles.
Reclamation also developed tools to assist in categorizing the
observations on each canal reach, and expected actions associated with
each rating category. For canal reaches identified as being in the
``immediate action'' or ``follow-up monitoring'' categories, additional
technical analysis and/or field investigations were performed as
needed. Based on additional technical analysis and field
investigations, Reclamation has developed formal recommendations to
address concerns for particular canal reaches in coordination with the
regional and/or area office staff and the responsible operating entity.
These recommendations are tracked until completion, similar to the
recommendations resulting from Associated Facilities Review of
Operations and Maintenance examinations, the longstanding process
employed by Reclamation to track facility condition at facilities where
operations and maintenance (O&M) responsibility has been transferred to
others.
As these urbanized canal reaches are evaluated, categorized, and
prioritized, the results have been used in determining future
inspection frequencies and necessary activities under the program. This
process is currently captured in Reclamation's temporary Directive and
Standard, The Bureau of Reclamation's Associated Facility Review of
Operations and Maintenance Program--Inspection of Canal Reaches Located
in Urbanized Areas (FAC TRMR-55).
As a result of these inspections, responsible operating entities
may need to provide additional funding for extraordinary operation and
maintenance (XOM). Funding options such as the extended repayment
authorities provided under Title IX, Subtitle G of Public Law 111-11
assist operating entities in funding this type of work. Reclamation
continues to refine requirements to address XOM related to canals in
urbanized areas, locations for these activities, and related funding
needs.
In fiscal year 2014, Reclamation's Dam Safety Program will continue
corrective actions underway at seven facilities across the West.
Reclamation has also requested funds to study the need for potential
corrective actions at 10 other facilities.
In 1948, Reclamation initiated a Facility Review Program to assess
the condition of assets constructed by Reclamation and operated and
maintained by non-Federal operating partners. These activities continue
today and, as a result of our preventive maintenance philosophy and
related oversight initiatives, have successfully extended the service
life of many of our water and power facilities beyond original
expectations.
Reclamation's budget is carefully crafted to include an appropriate
amount of repair, maintenance, and rehabilitation funding for each
project. The President's Budget includes $896 million across three
accounts (Water & Related Resources, Indian Water Rights Settlements,
and San Joaquin River Restoration) to accomplish this task. The
Administration urges the Congress to fund the Bureau of Reclamation at
the requested level to support these activities.
Our large portfolio of water resources infrastructure constantly
presents new maintenance, replacement, and modification challenges.
Similar to other agencies with such infrastructure, Reclamation has a
fiduciary duty to maintain services to its power and water customers in
a cost efficient manner and to meet other requirements including
environmental and endangered species management obligations. The
general wear and tear of Reclamation's facilities over time will
inevitably lead to increased pressure on Reclamation and our 350
operating partners' budgets, and it will be a challenge to maintain
user rates while keeping infrastructure service and reliability
commensurate with past levels. As such, Reclamation and the operating
entities anticipate an increase in infrastructure repair needs that
will continue to grow over time and will inevitably and appropriately
be reflected in user charges. As part of Reclamation's asset management
strategy, regular operation and maintenance activities will be managed
in concert with other programs and activities addressed in our strategy
to improve efficiency and effectiveness in funding rehabilitation and
replacement needs.
Procedurally, Reclamation's Facility Maintenance and Rehabilitation
Program identifies, schedules and prioritizes necessary rehabilitation
work at ``reserved works,'' facilities where Reclamation still performs
operations and maintenance. To fulfill these responsibilities,
Reclamation provides studies and designs, purchases equipment and
services, and provides the resources to support the overall maintenance
and rehabilitation program. Project beneficiaries advance funds for
annual O&M work performed by Reclamation. However, for some of our
other facilities, rehabilitation and replacement needs may exceed
annually available resources and could potentially increase the risk of
service interruption. To fund this work, given that operating partners
cover a substantial portion of the O&M costs, the use of the entity's
reserve fund is one of the first places we look for funding. However,
these funds may not be contractually required, nor sufficient to meet
the amount needed for major rehabilitation and replacement work. In
these cases, long-term financing may be an option.
One of the challenges we face is the varying economic strength of
our operating partners. For some of these partners, the cost-share
requirements associated with the review and repair activities are
simply beyond their means. The Administration has and will continue to
be opposed to projects that are authorized without adequate cost
controls and built-in accountabilities to ensure that the Federal
Government is not subject to undue costs. While circumstances for each
project vary, in order for projects to be sustainable, the non-federal
sponsors must be responsible for a fair share of project costs and, for
facilities that are being operated and maintained by non-federal
entities, these entities must be accountable for maintaining the
assets.
A key component of Reclamation's mission is sound and reliable
infrastructure. Reclamation will continue to assure the integrity and
reliability of Federal water and power assets. While Reclamation's
reach across the West is widespread, our employees take the safety of
our facilities and the protection of local customers and surrounding
communities very seriously. To meet our obligations to the public,
Reclamation ensures that our infrastructure is in good working order. I
am very proud of our record to date.
This concludes my written statement. I would be pleased to answer
any questions.
Senator Schatz. Mr. Hannon.
STATEMENT OF JAMES R. HANNON, CHIEF OF OPERATIONS AND
REGULATORY, ARMY CORPS OF ENGINEERS, DEPARTMENT OF THE ARMY
Mr. Hannon. Mr. Chairman, I'm Jim Hannon, Chief of
Operations and Regulatory for the U.S. Army Corps of Engineers.
I'm honored to appear here today before you to discuss the
issues associated with our aging water resources and
infrastructure.
The Corps manages an extensive water resources
infrastructure portfolio. In this role the Corps helps to
maintain coastal ports and their channels, operate and maintain
inland waterways, support flood risk management activities,
operate and maintain multipurpose dams and the reservoirs
behind them and restore aquatic ecosystems. The Corps today is
focused on the maintenance, repair and replacement of key
features of our infrastructure and on the repair of aquatic
ecosystems.
The overall budget for the program is primarily devoted to
maintaining these systems so that they can continue to provide
economic and environmental benefits to the Nation and address
significant risks to safety.
The operation and maintenance program, for example,
provides funding to help maintain our coastal ports, our inland
navigation, our hydropower projects, flood risk management
projects and our multipurpose dams.
Similarly the construction program deals priority to dam
safety and also provides funding to rehabilitate the locks and
dams on the inland waterways to support commercial navigation.
The infrastructure that the Corps helps to maintain
includes 705 dams, 14,700 miles of levees, 13,000 miles of
coastal harbors and channels, 12,000 miles of inland waterways,
241 locks and hydropower plants at 75 sites with 353 generating
units. These projects help provide protection and reduce risk
to the Nation, facilitate approximately 2 billion tons of
commerce to move on the Nation's waterways and can provide up
to 24 percent of the Nation's hydropower.
The Corps constructed much of this infrastructure in the
first half of the 20th century. Some of it is experiencing
various stages of degradation and disrepair.
Almost 60 percent of our locks are at least 50 years old.
Almost half of our dams at our hydropower plants are more
than 50 years old.
However, in an attempt to address the aging infrastructure
we have rehabilitated many of the components of these locks and
dams, hydro facilities and other water resource infrastructure.
All structure age over time. With proper maintenance and
periodic rehabilitation we are attempting to extend the
lifetime of the facilities that are owned or operated by the
Corps of Engineers. Maintaining the key features of our
infrastructure is becoming more costly over time due to the
conditions of some of the components as well as cost increases
in the broader economy.
Operational demands have also grown and changed,
particularly over the past 30 years which creates additional
stress on the infrastructure.
Over the last 3 years the Corps has been developing an
approach that we call ``Civil Works Transformation.'' The goal
of the Civil Works Transformation is to link national
objectives with strategic goals and needs using a systems based
watershed approach to ensure that our infrastructure continues
to provide an appropriate level of service to the Nation.
A key pillar of our Civil Works Transformation is our
infrastructure strategy. This strategy focuses on managing the
infrastructure projects more efficiently to improve asset
performance levels and support the Nation's water resource
needs.
It incorporates an integrated approach to managing existing
assets and future investments through their life cycle.
It also includes an evaluation to inform recommendations on
whether an existing project or series of projects should or
should not remain a Federal responsibility prior to making
further substantial investments.
It also focuses on adjusting levels of service to make the
best use of available funding.
The strategy focuses on life cycle portfolio management. As
part of this effort the Corps has developed a national
inventory of assets and is assessing the condition of each
major infrastructure component and the risk associated with
these conditions. End of life cycle analyses will support
recommendations regarding which projects to repurpose, which
projects to transfer to other parties and which projects may
need de-authorization or decommissioning.
The Corps is also exploring alternative financing and
funding options to include public/private partnerships and
infrastructure banks. The intent of the strategy is to
facilitate the best use of the Federal and the non-Federal
dollars in investing in the Nation's water resources
infrastructure. In some cases non-Federal sponsors have
expressed interest in contributing funds to enable work to
occur more quickly. Before entering into an agreement to accept
such funds, we carefully evaluate the overall workload to
ensure that execution of the proposed work will not adversely
affect the directly funded programs, projects and activities.
The implementation of our infrastructure strategy will
allow us to make informed recommendations to reduce risk and to
improve the reliability of our infrastructure. Collaboration
with our customers, stakeholders and the public, including the
Congress will enable us to implement this approach.
Mr. Chairman, this concludes my statement. Again, I
appreciate the opportunity to be here today and testify. We'll
be pleased to answer any questions you might have.
Thank you.
[The prepared statement of Mr. Hannon follows:]
Prepared Statement of James R. Hannon, Chief of Operations and
Regulatory, Army Corps of Engineers, Department of the Army
Mr. Chairman and distinguished members of the Subcommittee, I am
Jim Hannon, Chief of Operations and Regulatory for the U.S. Army Corps
of Engineers (Corps). I am honored to appear before you today to
discuss the issues associated with aging water resources infrastructure
in the United States.
The Corps manages an extensive national water resources
infrastructure portfolio. In this role, the Corps helps to maintain
coastal ports and their channels; operate and maintain the inland
waterways; support flood risk management activities; operate and
maintain multipurpose dams and the reservoirs behind them; and restore
aquatic ecosystems.
The Corps today is focused on the maintenance, repair, and
replacement of the key features of our water resources infrastructure,
and on the repair of the aquatic ecosystems. The overall budget for the
program is primarily devoted to maintaining these systems so that they
can continue to provide economic and environmental benefits to the
Nation, and to address significant risks to safety. The operation and
maintenance program, for example, provides significant funding to help
maintain our coastal ports, our inland navigation, our hydropower
projects, flood risk management projects, and our multipurpose dams.
Similarly, the construction program gives priority to dam safety
assurance, seepage control, and static instability control work, and
also provides funding to rehabilitate the locks and dams on the inland
waterways to support commercial navigation.
The infrastructure that the Corps helps to maintain includes 705
dams, 14,700 miles of levees, 13,000 miles of coastal harbors and
channels, 12,000 miles of inland waterways, 241 locks at 197 sites, and
hydropower plants at 75 sites with 353 generating units. These projects
help provide protection and reduce risk to the Nation, facilitate
approximately two billion tons of commerce to move on the Nation's
waterways, and can provide up to 24 percent of the Nation's hydropower.
The Corps constructed much of this infrastructure in the first half
of the twentieth century. Some of it is experiencing various stages of
degradation and disrepair. Almost 60 percent of our locks are at least
50 years old. Almost half of our dams are more than 50 years old.
However, in an attempt to address the aging infrastructure, we have
rehabilitated many of the components of these locks and dams,
hydropower facilities and other water resource infrastructure.
All structures age over time. With proper maintenance and periodic
rehabilitation, we are attempting to extend the effective lifetime of
the facilities owned or operated by, or on behalf of, the Corps of
Engineers.
Maintaining the key features of our infrastructure is becoming more
costly over time due to the condition of some of the components, as
well as cost increases in the broader economy. Operational demands have
also grown and changed, particularly over the past 30 years, creating
additional stresses on this infrastructure.
Over the last three years, the Corps has been developing an
approach that we call ``Civil Works Transformation''. Transformation of
the Civil Works program is intended to foster a more targeted delivery
of the Civil Works program that provides the highest returns to the
Nation. The goal of Civil Works transformation is to link national
objectives, strategic goals and needs using a systems-based watershed
approach to ensure that our water resources infrastructure continues to
provide an appropriate level of service to the Nation.
A key pillar of Civil Works Transformation is the Corps
infrastructure strategy. This strategy focuses on managing the Corps
infrastructure projects more efficiently to improve asset performance
levels and support our Nation's water resource needs. It incorporates
an integrated approach to manage existing assets and future investments
throughout their lifecycle. The strategy also will include an
evaluation to inform recommendations on whether an existing project or
series of projects should, or should not, remain a Federal
responsibility, prior to making a substantial further investment. The
strategy also focuses on adjusting levels of service to make the best
use of available funding.
This strategy also focuses on lifecycle portfolio management. As
part of this effort, the Corps has developed a national inventory of
Corps assets, and is assessing the condition of each major
infrastructure component and the risks associated with these
conditions. End of lifecycle analyses will support recommendations
regarding which projects to repurpose, which projects to transfer to
other parties, and which projects to de-authorization and decommission.
Lifecycle portfolio management is already being used to inform funding
priorities based on the risk and consequences of failures and
unscheduled outages.
The Corps is also exploring alternative funding and financing
options for water resources infrastructure, including public private
partnerships and an infrastructure bank. The intent of this strategy is
to facilitate the best use of Federal and non-Federal dollars in
investing in the Nation's water resources infrastructure. In some
cases, non-Federal sponsors have expressed interest in contributing
funds to enable work to occur more quickly. Before entering into an
agreement to accept such funds, the Corps carefully evaluates its
overall workload to ensure that execution of the proposed work will not
adversely affect directly-funded programs, projects and activities.
The implementation of our infrastructure strategy will allow us to
make informed recommendations to reduce risk and to improve the
reliability of our infrastructure. Collaboration with our customers,
stakeholders, and the public, including the Congress, will enable us to
implement this approach.
Mr. Chairman, this concludes my statement. Again, I appreciate the
opportunity to testify today. I would be pleased to answer any
questions you may have.
Senator Schatz. Thank you very much.
Mr. Stern.
STATEMENT OF CHARLES V. STERN, SPECIALIST IN NATURAL RESOURCES
POLICY, CONGRESSIONAL RESEARCH SERVICE
Mr. Stern. Chairman Schatz, my name is Charles Stern. I'm a
specialist in natural resources policy with the Congressional
Research Service. Thank you for inviting CRS to testify on
issues related to aging water resources infrastructure.
As the Nation's dams, levees, divergent structures and
other water resource infrastructure age, decisionmakers are
faced with the question of whether to operate Federal water
projects under the current statutory framework or to alter
existing policies to facilitate the repair, rebuilding or
transfer of those assets. My testimony will focus on water
resource infrastructure owned by the Federal Government.
The Federal Government owns water resource facilities with
a combined replacement value of about $352 billion. The Bureau
of Reclamation and the Army Corps of Engineers are the
principle agencies charged with constructing and maintaining
these investments, many of which are more than 50 years old. As
these facilities continue to age, agencies and stakeholders
have observed an uptake in needs for major project maintenance
and repairs which they believe are likely to continue or
increase over time.
The risk associated with aging water infrastructure
include, among other things, threats to public safety, loss of
services and capacity and hindrance of future economic growth.
Under some circumstances failure of infrastructure may result
in the loss of life and property. Congress has responded to
past water infrastructure failures by authorizing and funding
inspection and repair programs which focus on specific types of
infrastructure such as dams and canals.
Perhaps a more common scenario then outright failure of a
facility is reduced services. While it is difficult to measure
the exact effects of aging infrastructure analysis of available
performance data indicates that deteriorating facilities may be
affecting services.
For instance, according to Corps and Reclamation data at
least 12 Federal reservoirs are being operated at reduced
levels due to dam safety concerns. Similarly hydropower unit
availability at Corps and Reclamation facilities has been down
and forced outages have been up over the last 10 years.
However, it is impossible to say the extent to which these
trends are due to aging infrastructure.
Primary challenges associated with aging water
infrastructure have been identified in past assessments and can
broadly be divided into two categories, evaluation of needs and
financing for rehabilitation.
First, evaluation.
Independent expert assessments have previously noted that
data on the condition and upgrade needs of Federal water
infrastructure are generally unavailable at project and
aggregate levels. Available estimates may encompass more than
just aging infrastructure or be based on informal field surveys
which are not publicly available or sufficient to inform all
decisions. The absence of comprehensive, authoritative
information at project and aggregate levels makes it difficult
to establish what the needs of these Federal water facilities
are and what progress is being made in addressing these needs.
Notably, other Federal programs supporting transportation,
drinking water and waste water infrastructure are required to
report regularly on estimated future needs using a consistent
methodology.
The second anticipated challenge is financing. Several
assessments have concluded that aging water resource
infrastructure is likely to become a greater challenge over
time due to increasing repair needs and expected flat or
declining appropriations. In light of these challenges some
have proposed alternative financing arrangements as one
potential solution.
However, alternative financing for water resource projects
may pose some challenges not faced by other types of
infrastructure. In contrast assets which are owned by State and
local governments or which receive funding from those sources
many Federal water projects have historically received the
majority of their funding from the Federal Government. These
projects may have beneficiaries or users that are difficult to
identify or who may not be able to provide viable revenue
streams to fund project upgrades.
Furthermore, even some projects with identifiable
beneficiaries and revenue streams have experienced difficulties
accessing capital due to other limitations. My written
statement discusses these challenges as they apply to
alternative financing arrangements that are commonly proposed
to boost infrastructure spending.
Another way to address financing could be increasing non
Federal participation in selected Federal projects. This could
come from allowing more contributions from non Federal
partners, raising existing fees or pursuing divestment of some
assets.
For example, recently enacted authorities may expand non
Federal funding available for Corps project upgrades. Similarly
some Reclamation stakeholders favor more flexibility for the
Bureau to transfer ownership of existing Federal projects to
non Federal entities. Deciding which assets that will remain a
fully Federal responsibly, which ones require increased user
funding and which can be transferred to non Federal entities
may be a key question going forward.
This concludes the remarks of my prepared statement. I
would be happy to address any questions you may have.
[The prepared statement of Mr. Stern follows:]
Prepared Statement of Charles V. Stern, Specialist in Natural Resources
Policy, Congressional Research Service
Chairman Schatz, Ranking Member Lee, and members of the
subcommittee, my name is Charles Stern. I am a Specialist in Natural
Resources Policy for the Congressional Research Service (CRS). Thank
you for inviting CRS to testify on issues related to aging water
resource infrastructure.
The federal government owns water resource infrastructure with a
total replacement value of more than $352 billion. As these dams,
levees, diversion structures, hydropower facilities, and other water
resource infrastructure continue to age, decisionmakers are faced with
the question of whether to continue to operate federal water projects
under the current statutory framework, or to alter existing policies to
increase the focus on repair, rebuilding, or transfer of these assets.
My testimony will focus on water resource infrastructure owned by the
federal government.
overview of aging water resource infrastructure
Aging conditions are a significant challenge for the multiple types
of federally owned and operated water resource infrastructure. These
facilities are varied and complex, and include dams, canals, levees,
locks, floodwalls, hydropower facilities, and related infrastructure.
They have been constructed over two centuries to serve a number of
purposes. As a result, a system of shared responsibilities to plan,
construct, finance, operate, maintain, and repair this infrastructure
has emerged over time, with various units of state and local
government, nongovernmental organizations, and the private sector
involved in the development and management of individual projects.
The Bureau of Reclamation (Reclamation) and the Army Corps of
Engineers (Corps) are the principal agencies charged with constructing
the federal government's largest investments in water infrastructure.
Other agencies and federal entities such as the Natural Resources
Conservation Service, the Tennessee Valley Authority, and the U.S.
section of the International Boundary and Water Commission, among
others, also have played roles in water resource development.
Federal water resource infrastructure receives significant use, and
in many cases individual facilities are operating beyond their original
design lives. On average, Corps and Reclamation facilities were built
more than 50 years ago, and some were built more than 100 years ago.
They are used for commerce, recreation, flood hazard protection,
electric power generation, crop production, and conservation of fish
and wildlife. While appropriations for the maintenance of these
facilities have remained flat or are declining in real terms over the
previous 30 years, agencies and stakeholders have noted an uptick in
needs for major project maintenance and repairs that they believe are
likely to continue over time.
risks associated with aging water resource infrastructure: failure,
service interruptions
The risks associated with aging water resource infrastructure have
been documented by agencies and stakeholders and include, among other
things, threats to public safety, loss of services and capacity, and
hindrance of future economic growth. Under some circumstances, failure
of water resource infrastructure may result in the loss of life and
property. Congress has responded to past events, including the failure
of facilities near populated areas, by authorizing and funding
inspection and repair programs that focus on specific types of
infrastructure, such as dams and canals.
Perhaps a more common scenario than outright failure of a facility
is reduced or lost services. While it is difficult to measure the exact
effects of aging infrastructure, deteriorating infrastructure may be
affecting services such as water supply, hydropower production, and
movement of commodities. Some of the examples of service disruptions
documented by federal agencies that have been connected to aging assets
include reservoir storage restrictions for dam safety, decreasing
hydropower unit availability, and increasing lock unavailability.
Specific examples include:
Reservoir Storage Restrictions: According to the Corps and
Reclamation, at least twelve federal reservoirs are currently
operating at lower storage levels than designed as a result of
dam safety concerns, some of which relate to aging
infrastructure;
Hydropower Unavailability and Forced Outages: According to
agency data, overall hydropower peak availability over the last
10 years was down by about 7% and 9% at Corps and Reclamation
units, respectively. Forced outages for both agencies were also
up over this same period. There is insufficient information to
determine the extent to which these trends are attributable to
aging infrastructure (as opposed to other causes), but some
have assumed there is a correlation;
Lock Unavailability: According to Corps data, lock
unavailability, which often occurs due to repairs related to
deteriorating infrastructure, has increased by approximately
45% over the last 20 years in terms of the number of lock
outages and has increased by almost three-fold in terms of
hours of repair.
Federal agencies have taken steps to address their aging water
resource infrastructure based on statutory direction and Administration
initiatives. This includes, among other things, inspections and safety
programs focusing on specific infrastructure types (e.g., dams,
levees), as well as implementation of broader asset management
strategies that are risk-based and which target funding to certain
assets. These programs and activities have generally focused on
identifying and addressing the highest risks to public safety and
operations among specific facility types and classifying the level of
risks and conditions at other facilities.
addressing aging infrastructure
Challenges associated with management of the federal government's
aging water resource infrastructure have been identified in past
assessments. Generally speaking, two of the primary areas where
observers have noted challenges are evaluation of needs and financing
for rehabilitation.
measurement and evaluation
While we know that federal water resource assets are aging and that
this is generally likely to result in reduced performance and increased
costs over time, outside of the aforementioned inspection programs
there is limited publicly available information on the magnitude and
timing of the issue. Previous independent expert assessments noted that
detailed information on the condition and associated upgrade needs of
water resource infrastructure are generally unavailable at project and
aggregate levels. Available needs estimates may encompass more than
just aging infrastructure repairs. For instance, they may include
upgrades needed for optimal economic performance along with those to
maintain public safety, security, and current services. Other estimates
may be based on informal field surveys that are insufficient for long
term planning. The absence of comprehensive, authoritative information
at project and aggregate levels complicates efforts to evaluate the
needs of these facilities. It also makes it difficult to gauge year-to-
year progress in meeting the challenges of aging infrastructure at the
local, regional, and national levels.
In contrast to water resource infrastructure, other federally
supported infrastructure programs, including those for water supply and
transportation, are required by Congress to report regularly on
estimated future needs. The Environmental Protection Agency (EPA) and
states conduct needs assessments for wastewater and drinking water
treatment facilities, and the Department of Transportation (DOT)
regularly publishes a needs survey for highway, bridge, and transit
infrastructure. In both cases, agencies regularly report on needs using
a consistent methodology at project and aggregate levels. For the EPA
assessments, aggregate reported needs are based on a peer reviewed,
random sample of facilities that is broken down by need type.
Individual project cost estimates must be documented in the form of
capital improvement plans and other project-specific information. While
these assessments and the infrastructure they evaluate are not without
their own challenges and limitations, they provide a data set and
baseline for performance that is not available for most federally owned
water resource infrastructure.
financing for rehabilitation
Observers such as the National Research Council (NRC) have judged
that regardless of available information on the extent of the problem,
aging water resource infrastructure is likely to pose an increasing
challenge to federal agencies over time. This is assumed to be the case
due to increasing repair needs and appropriations which some observers
believe will be flat or declining, as they have been over the past 30
years. As a consequence, observers have also noted that financing
arrangements outside of traditional appropriations are likely to be
needed to maintain these projects. Observers have proposed alternative
financing arrangements for multiple infrastructure types, including
water resource infrastructure. However some water resource projects may
face greater challenges than other project types when it comes to
implementing these options. In contrast to other projects which are
owned by state or local governments and which receive funding from
those sources, many water resource projects have historically received
most or all of their funding from the federal government. These
projects may also have beneficiaries or users that are difficult to
identify, or who may not be able to provide viable revenue streams to
fund project upgrades. Even federal projects that are largely self-
funding or which have identifiable beneficiaries have experienced
difficulties accessing capital due to statutory and budgetary
limitations resulting from federal ownership, among other things. This
is the case for some federal hydropower and irrigation projects that
have customers who are interested in financing upgrades, but are
generally not authorized to commit future revenues toward these
purposes because they are federal facilities.
The challenges for aging federal water resource projects to obtain
financing outside of regular appropriations manifest themselves in some
of the commonly proposed policy solutions to increase other types of
infrastructure spending. Some of the options that have been considered,
and the challenges they pose for federal water resource infrastructure,
are discussed below.
Special Purpose Entities (SPE)
Infrastructure banks, corporations, and other special purpose
entities have regularly been proposed as a means to finance
infrastructure investments, but have yet to be authorized at the
federal level (although they have been authorized by some states).
Water resource infrastructure has not been consistently included among
the potential recipients in many such proposals, nor has it regularly
benefited from funding provided by state infrastructure banks (these
state entities have generally focused on transportation projects). This
may in part be due to the fact that, in order for projects to receive
financing from an SPE, they must demonstrate credit worthiness and
proof of a revenue stream that will allow for repayment. Additionally,
since many water resource projects are federal assets, commitment by
the federal government of any future project revenues may require full
budgetary treatment of costs (i.e., full scoring for these costs in a
budget and appropriations context).
Public Private Partnerships (PPP)
Public private partnerships involve arrangements in which a
nonfederal or private entity assumes some risk or responsibility for a
project. As applied to transportation programs, public-private
partnerships have generally provided for the transfer of state or local
projects to private entities, who are in turn authorized to make
upgrades and institute user fees to repay these costs. Due to the
aforementioned issues with revenue streams, such a model may not be
viable for all federal water resource projects. Proposed legislation in
the 113th Congress, such as S. 566 and Section 2025 of the Senate-
passed Water Resources Development Act of 2013 (S. 601), would
authorize a pilot program to allow the Corps to shift a limited number
of construction projects to nonfederal entities. It is unclear whether
this pilot program could be used for aging facilities, but it appears
to differ from the framework of transportation PPP's referenced above
in that no user fees would be authorized under this authority.
Observers have noted that because of their revenue generating
potential, federal hydropower projects are a natural fit for some sort
of PPP-like authority. A 2012 report by the NRC noted that outside of
the Bonneville Power Administration, only a few Corps hydropower units
have been upgraded for increased reliability and productivity. Applied
to hydropower projects, a PPP model could allow operators to enter into
contracts with a private company to finance the upfront costs for
project repairs and upgrades. In exchange, the private entity would
receive a commitment of a portion of future revenues associated with
the upgrades that would be sufficient to repay the investment and
result in a profit. Such an arrangement may have associated budgetary
scoring requirements if it commits future federal revenues to an
outside source.
``Innovative'' Finance
Innovative finance for infrastructure projects is typically a
shorthand term for some mix of loans, traditional funding, and/or other
financing. Such a program was recently proposed under Title X of S.
601. It would allow the Corps (as well as the EPA) to provide direct
loans or loan guarantees to selected projects that meet certain
criteria. Similarly, a Loan Guarantee program for rehabilitation
projects by the Bureau of Reclamation was previously authorized in
Title II of P.L. 109-451, the 21st Century Water Works Act, but has yet
to be funded. These programs would fund a portion of qualifying
projects with direct loans or loan guarantees, and leave the remainder
of project costs to be funded through other financing (either
traditional appropriations or other sources). While some view these
authorities as promising, repayment ability may still pose issues for
some projects with insufficient revenue streams, and some projects may
need to have new user fees authorized before they can utilize these
programs. Disagreement regarding the executive branch scoring of
Reclamation's loan guarantee program suggests that even after
authorization, these programs may face additional hurdles.
In addition to the aforementioned financing alternatives, some have
proposed increasing nonfederal participation in selected federal
projects through proposed and existing authorities. Specifically, some
have proposed allowing more contributions from nonfederal partners,
raising existing fees, or pursuing divestment of some federal water
resource assets (although the latter is generally authorized on a
project-by-project basis). Recent changes, such as congressional
enactment of expanded Corps authority to receive project funding from
nonfederal contributors, could address aging infrastructure issues for
some projects. Another option is outright transfer of some federal
projects to nonfederal entities. For example, some Reclamation
stakeholders favor increased flexibility for the Bureau to transfer
ownership of existing federal projects to nonfederal entities, thereby
allowing them to use these projects as collateral to obtain financing.
In its 2012 report on Corps infrastructure, the National Research
Council noted that divestment of some Corps resources may be considered
to better manage the agency's portfolio, but that the prospects for
greater private sector involvement will vary by project type. How to
prioritize among those water resource assets that should remain a fully
federal responsibility, those which require increased user funding, and
those which should be transferred to nonfederal entities may be a key
question going forward for the Executive Branch and Congress.
My testimony today focused on federally owned water resource
infrastructure, but many observers have noted that aging infrastructure
issues are perhaps an even larger threat to nonfederal water
infrastructure. Most observers note that needed repairs for nonfederal
dams, levees, and other facilities are probably greater than the
federal needs noted above. Some of these facilities have been proposed
for additional support or have received increased federal support in
the past. Additional federal funding for this nonfederal infrastructure
would likely require new authorities.
In closing, publicly available information and data are currently
limited, but federal water infrastructure assets are aging over time.
Many have concluded that needs associated with this process will
increase. Therefore, if these conditions are to be addressed, policy
makers are faced with deciding what changes to existing policies are
most appropriate, and the extent to which they should be authorized.
This concludes the remarks of my prepared statement. Thank you for
the opportunity to appear before the Subcommittee today. I would be
happy to address any questions you may have.
Senator Schatz. Thank you.
Dr. Galloway.
STATEMENT OF GERALD E. GALLOWAY, PE, PH.D., GLENN L. MARTIN
INSTITUTE PROFESSOR OF ENGINEERING, UNIVERSITY OF MARYLAND,
COLLEGE PARK, MD
Mr. Galloway. Thank you very much, Senator. I'm Gerry
Galloway, a Professor of Engineering and Public Policy at the
University of Maryland.
The Nation's neglect of its water resource infrastructure
threatens our long term economic vitality and our national
security. I'd like to make 5 points about this.
First, there is no question that the water infrastructure
is aging and its condition is fragile. Study after study,
including the ASCE report card you mentioned, clearly make this
information available.
The average age of our 87,000 dams is 52 years.
There are at least 40,000 miles of levee, many of which are
seriously deficient.
By 2020 nearly half of our 54,000 drinking water systems
will have exceeded their design life or will be in very poor
condition.
Our more than 14,000 water treatment facilities and 700,000
miles of buried pipes are in much the same shape.
As Mr. Hannon said, much of our water way system is over a
half a century old. The vast majority of this infrastructure is
in the hands of local and private entities, not just the
Federal Government. They're all looking to Washington.
Second, climate change will exacerbate the impacts of this
aging and will increase the potential for system disruptions
and collapse.
Third, there's a substantial link between the production of
energy and the condition of water resource infrastructure.
Energy needs water as you noted and water needs energy.
Fourth, the Nation must take steps to address the aging
infrastructure problem now. The cost of the Nation to remediate
identified deficiencies and support modernization of the
national water infrastructure is estimated to be as high as
$500 billion or even higher. It's another case of pay me now or
pay me a lot more later.
Fifth, Congress must act to deal with challenges that fall
within its domain. There must be realism and open discussion of
the funding shortfalls. An honest acknowledgement of what we
can and can't do in Washington needs to get sent out to the
people in the field who have to live with the challenges that
still exist.
Let me briefly expand on two of these points.
First, climate change is only going to make things worse. A
recent National Research Council study found that and I quote.
``Climate change is occurring and poses significant risk for a
broad range of human and natural systems.''
It points out the potential for sea level rise, large
storms, coastal erosion, more intense rainfall and finds that
these threats make it prudent to design the infrastructure for
transportation, water and utilities to withstand a range of
weather extremes. More recent national and international
studies confirm these same conclusions.
In June, FEMA released a report indicating a potential 45
percent increase in areas subject to flooding across the United
States as a result of climate change and population growth
between now and 2100.
Point two.
There's a substantial link between water and energy. In
2012 the heads of 15 of the world's largest national academies
met here in Washington to discuss important issues. One of the
3 was Energy and Water.
They found that and I quote. ``Needs for affordable and
clean energy, for water of adequate quantity and quality and
for food security will increasingly be the central challenge
for humanity. These needs are strongly linked. It is important
that planning and investment in energy and water infrastructure
take into account the interaction between water and energy.''
They also pointed out that fossil fuel and nuclear power
plants require large water withdrawals and some consumption and
that even the use of increasingly important unconventional
sources such as tar, sands, gas hydrates and gas and oil in
tight formations have substantial implications for quantity and
quality of water.
I would note that our aging waterway infrastructure also
has a significant impact on energy. Twenty-two percent of the
Nation's energy products are carried on inland waterways.
Hydropower production, although providing only 8 to 12
percent of the national energy pool, has also provided critical
resources in many parts of the country. But more than half of
the 2,000 hydroelectric dams regulated by FERC are older than
80 years.
What must be done?
I would put 3 things at the top of the list.
One, we must determine the full extent of the problems we
face.
As Mr. Stern just said, studies have been directed by
Congress must be completed and those that are undertaken must
be sufficiently resourced to get the information that is needed
and not just an overview.
Two, we must find ways to fund what needs to be done.
Mr. Stern also discussed some of the things that might be
done and are under consideration and do merit immediate
attention.
Third, we must recognize we most likely cannot do all the
infrastructure work that needs to be done and that we must
embrace alternatives that reduce the magnitude of the
infrastructure investment. This would include both conservation
of energy and water and use of natural systems, green
infrastructure for flood risk reduction and water supply.
Individuals and communities can do much to assist.
Let me conclude.
The Nation is faced with an aging water resource
infrastructure with significant resource implications. We have
no plan to properly maintain and upgrade this infrastructure
and to adapt it to the potential impacts of climate change.
It's time to act.
Thank you very much.
[The prepared statement of Mr. Galloway follows:]
Prepared Statement of Gerald E. Galloway, PE, Ph.D., Glenn L. Martin
Institute Professor of Engineering, University of Maryland, College
Park, MD
Chairman Schatz, Ranking Member Lee, Members of the Committee. It
is a distinct privilege to participate in this important and timely
hearing concerning our much neglected aging water resources
infrastructure. I want to thank the Committee for the opportunity to
speak.
I am Gerald E. Galloway, a Glenn L. Martin Institute Professor of
Engineering and Affiliate Professor of Public Policy at the University
of Maryland, where I teach and do research in water resources and
natural disaster management. I came to that position following a 38
year career in the US Army and eight years service in the federal
government, most of which was associated with water resources
management. I served for three years as District Engineer for the Corps
of Engineers in Vicksburg, MS, and later, for seven years as a member
of the Mississippi River Commission. I also serve as a consultant to a
number of national and international government organizations. I am
currently a member of the Governor of Louisiana's Advisory Commission
on Coastal Protection, Restoration and Conservation and a Senior Fellow
in the Department of State Energy and Climate Partnership of the
Americas charged with sharing US experiences in these fields with our
Latin American neighbors. I am also a member of a WWF (UK)--China
Ministry of Water Resources team that is reviewing flood risk
management worldwide. In 1993 and 1994, I was privileged to be assigned
to the White House to lead an interagency study of the causes of the
Great Mississippi River Flood of 1993 and to make recommendations
concerning the nation's floodplain management program.\1\ As a member
of the American Society of Civil Engineers (ASCE), I have worked
closely with ASCE staff in disseminating the ASCE Report Card on
national infrastructure. I am a former president of the American Water
Resources Association and chaired National Water Policy Dialogues in
2002, 2005, 2007 and 2008. In 2011, I was a co-principal investigator
for FEMA on a University of Maryland Review and Evaluation of the
National Dam Safety Program, and from 2011-2013, I chaired a National
Research Council study of Levees and the National Flood Insurance
Program.
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\1\ Interagency Floodplain Management Review Committee, Executive
Office of the President. 1994. Sharing theChallenge: Floodplain
Management into the 21st Century. Washington, GPO. (available athttp://
www.floods.org/Publications/free.asp)
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The nation's neglect of its water resources infrastructure
threatens our long-term economic vitality and our national security.
This infrastructure is aging and is not being upgraded to meet the
demands of this century. Much of what we do every day and many of our
economic successes are tied to the availability of water
infrastructure. The gradual deterioration of what was once a world
class water resources infrastructure can only have deleterious effects
on the nation. To this end, I would like to make five points with
respect to the aging water infrastructure of the United States:
There is no question that our water infrastructure is aging
and that its condition is fragile. Study after study has made
this clear. The impacts from having aging infrastructure are
substantial and without action they will become critical.
Because most of this infrastructure is out of sight and because
many fine professionals work every day to keep it operating
under difficult conditions, the full extent of the challenge we
face is generally not understood by government officials,
businesses, and the public.
Climate change will exacerbate the impacts of this aging and
will increase the potential for system disruptions and
collapse. Climate change could be a ``tipping point.''
There is a substantial link between the production of energy
and the condition of the water resource infrastructure. In many
cases these linkages are overlooked or are poorly understood.
Energy needs water and water needs energy.
The nation must take steps to address the aging
infrastructure problem. It is another case of ``pay me now'' or
``pay me a lot more later.'' A failure to act on aging
infrastructure will have serious consequences now and will
increasingly burden our children and grandchildren. Delay only
drives up costs. Priorities must be established based on the
risks to public safety and the national economy. A fix-as-fails
approach is unsustainable and short sighted.
Congress must act to deal with the challenges that fall
within its domain and, through its influence and bully pulpit,
provide leadership to the nation as a whole where it does not.
There must be realism and open discussion of the funding
shortfalls and honest acknowledgement of what will and won't
get done under our current unsustainable `business as usual'
approach. Suggesting that funding is around the corner when it
is not could cause those who operate and maintain that
infrastructure to be waiting for help when little will be
coming, thereby jeopardizing the long term well-being of those
who rely on this infrastructure.
our aging water infrastructure
What Is It?
The nation's water infrastructure is found in every city and
village across our land. It is the dams that provide storage for
floodwaters, water supply, recreation, hydropower, downstream
navigation, and environmental stewardship. It is in the engineered
rivers that carry millions of tons of cargo from farm fields, fuel
extraction, and factories to ports and facilities and that drive
domestic and international trade. It is the irrigation canals that
carry millions of gallons of water to many of the same farm fields. It
is the levees, coastal barriers and other flood mitigation activities
that provide security for those living in areas at risk of flooding and
hurricanes.
The extent of this infrastructure becomes apparent in examining the
statistics on the numbers and nature of structures. However, true
appreciation emerges in recognizing the diversity behind these numbers.
Dams vary in size from the giant (Grand Coulee) to the small (local
recreation dams). Major locks and dams on the Mississippi provide 1200
foot chambers for transiting vessels, while small facilities facilitate
commerce and recreation on rivers like the Monongahela and the
Ouachita. Water and wastewater treatment facilities serve millions of
our citizens in metropolitan areas but also provide support to the
residents of small villages.
The statistics describe a massive national asset base:
87,000 dams in the National Inventory of Dams and tens of
thousands smaller dams that are not. The average age of the
87,000 dams is 52 years. Of 14,000 high hazard dams, 2000 are
deficient. More than half of the 2525 hydroelectric dams
regulated by the Federal Energy Regulatory Commission (FERC)
are older than 80 years.\2\
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\2\ Water Policy Collaborative, University of Maryland. 2011.
Review and Evaluation of the National Dam Safety Program. http://
www.fema.gov/library/viewRecord.do?id=5794; 2012 Statistics on State
Dam Safety Regulation: Association of State Dam Safety Officials -
www.damsafety.org
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At least 40,000 miles of levees.\3\ Because, in the case of
many levees, the current structures were built on top of or
integrated within earlier structures, it is difficult to
accurately determine their ages. The legacy of many of the
major structures dates to the late 19th or early 20th century.
Reports by FEMA and the US Army Corps of Engineers indicate
serious deficiencies in many of the structures.
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\3\ National Research Council (NRC). 2013. Levees and the National
Flood Insurance Program: Improving Policies and Practices. Washington:
National Academy Press.
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8,116 miles of irrigation canals for which the federal
government is responsible and thousands of miles of canals
operated by local sponsors.\4\
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\4\ US Bureau of Reclamation. Reclamation Facts. http://
www.usbr.gov/facts.html
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54,000 community drinking water systems with over one
million miles of pipe. In 2002, EPA estimated that by 2020 the
useful life of nine percent of the nation's drinking and waste
water piping will have expired and 36% will be in poor or very
poor condition. There are some 240,000 water main breaks each
year.\5\ Even the National Capital Region is not immune.
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\5\ AWWA. 2011. Buried No Longer: Confronting America's Water
Infrastructure Challenge. American Water Works Association.; ASCE 2013
Report Card for America's Infrastructure. http://
www.infrastructurereportcard.org/a/#p/home: EPA. 2002. The Clean Water
and Drinking Water Infrastructure Gap Analysis. http://water.epa.gov/
infrastructure/sustain/infrastructureneeds.cfm).
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14,780 municipal waste water treatment facilities.\6\ The
normal life span of such facilities varies by type but is in
the range of 25 years for mechanical-electrical components and
50 years for structures. As with drinking water piping, there
is no national inventory of wastewater piping but estimates
range from 700,000 to 800,000 miles, much of which was
installed immediately following World War II and its now at the
end of its useful life.\7\ The growing need to develop adequate
storm water capacity adds to the challenge. (Capacity
limitations of 19th century stormwater drainage caused a
significant flood in the Washington DC Federal triangle in 2006
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\6\ EPA. 2010. Clean Water Needs Survey 2008 http://water.epa.gov/
scitech/datait/databases/cwns/upload/cwns2008rtc.pdf
\7\ EPA. Id.
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12,000 miles of commercially navigable channels, with over
200 lock chambers.\8\ More than 50% of the locks and dams have
exceeded their design life, and many are over 70 years old.
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\8\ ASCE 2013 Report Card
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300 commercial harbors and 600 smaller harbors.\9\ The
viability of these facilities is a function of the maintenance
of adequate channel and harbor width and depth. The growing
size of modern vessels exceeds the current depths of many
coastal ports and inadequate dredging has reduced the capacity
of many inland ports.
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\9\ Id; National Waterways Foundation. 2012. Waterways Working for
America. Based on study by Texas Transportation Institute.
Grading the condition of the water infrastructure
Every four years, ASCE sends the nation a Report Card for America's
Infrastructure,\10\ which grades the current state of its national
infrastructure on a scale of A through F. In 2013, ASCE's most recent
Report Card gave the nation's infrastructure an overall grade of D+, a
slight rise from the 2009 Report Card. As highlighted in figure 1*
below, in the water arena all categories were rated at D or below
except for ports which were rated C l. ASCE indicates that since 1998,
grades in all categories have been near failing primarily due to
delayed maintenance and underinvestment.
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\10\ ASCE 2013 Report Card
* Figures 1-3 have been retained in subcommittee files.
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Figure 1. The ASCE 2013 Report Card for America's
Infrastructure.\11\
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\11\ Id.
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The cost to the nation to remediate identified deficiencies and
support modernization of the national infrastructure by 2020 is in
excess of $3.6 trillion. Figure 2 identifies ASCE's estimated funding
needs for water infrastructure, the expected funding given past history
and the $187 billion funding gap that exists as a result. The ASCE
figures are supported by information available from the federal
agencies involved and other infrastructure reports.\12\
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\12\ Shapiro, M., EPA. 2013. Financing Water Infrastructure: Clean
Water and Drinking Water Revolving Funds. Presentation to NAS Panel,
Infrastructure Funding Mechanisms. June 25, 2013
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Figure 2. Water sector resource needs through 2020.\13\
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\13\ Id.; EPA. Clean Watersheds Needs Survey 2008. http://
water.epa.gov/scitech/datait/databases/cwns/upload/cwns2008rtc.pdf
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According to ASCE, although slight increases in short-term federal
funding in some of the categories such as drinking and wastewater have
prevented a further decline of those grades over the past four years,
many continued to fall. The funding picture for the future, given
sequestration and economic realities, is not bright.
Unfortunately, the exact condition of the infrastructure is not
accurately known and aging continues. Recent reports on dams and levees
indicate that in the case of levees both the exact location and
condition of a substantial percentage of the national levee stock is
unknown. In the case of dams, lack of funding for inspections and
differences among standards applied by states call into question the
uniformity and arguably the reliability of the assessments that are
made. Some dams such as those related to mine tailings receive only
cursory review emphasizing only the potential risks to miners and not
necessarily to surrounding communities. Water and wastewater systems
are buried, and even with sophisticated technologies, accurate
assessment of their condition is difficult and costly to obtain.
A look at the daily papers quickly provides examples of failures in
infrastructure across the nation. Last week we saw a near-disaster with
a broken water pipe right outside of the District. Bridges have
collapsed on major highways, lock gates have fallen off their hinges on
major waterways, water and sewer lines have broken and left communities
without water or dumped raw sewage into nearby rivers, and the
condition of many levees and dams has been declared unsatisfactory
increasing the risk to those that live in their shadows. Much of the
national water infrastructure has exceeded its design life and some is
approaching the century mark. Major levee failures such as those in New
Orleans result in billions of dollars of damages. Dam failures in the
past have resulted in significant loss of life. As was illustrated in
the weeks following Superstorm Sandy, loss of water and wastewater
systems can bring communities to their knees and shut down all economic
activity. Offices are unable to open and factories are unable to
produce. When flood structures fail or their capacity is exceeded,
transportation corridors are closed and health and sanitation
facilities become inaccessible.
climate change and population growth
According to the 2011 study, America's Climate Choices, conducted
by the National Research Council at the behest of U.S. Congress (P.L.
110-161), ``. . .climate change is occurring, is very likely caused by
human activities, and poses significant risks for a broad range of
human and natural systems.'' The study points out the potential for sea
level rise and large storms to result in significant coastal erosion
and for more intense rainfall to increase the probability of flooding
in selected areas around the nation. The study notes that these threats
make it ``prudent to design the infrastructure for transportation,
water, and utilities to withstand a range of weather extremes including
intense rainfall flooding and drought scenarios. . .''
A Federal Advisory Committee Draft Climate Assessment\14\, released
earlier this year, found that:
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\14\ Federal Advisory Committee Draft Climate Assessment. 2013.
http://ncadac.globalchange.gov/
``Summer droughts are expected to intensify in most regions
of the U.S., with longer term reductions in water availability
in the Southwest, Southeast, and Hawai'i [sic] in response to
both rising temperatures and changes in precipitation.
Floods are projected to intensify in most regions of the
U.S., even in areas where average annual precipitation is
projected to decline, but especially in areas that are expected
to become wetter, such as the Midwest and the Northeast.
Expected changes in precipitation and land use in aquifer
recharge areas, combined with changes in demand for groundwater
over time, will affect groundwater availability in ways that
are not well monitored or understood.
Sea level rise, storms and storm surges, and changes in
surface and groundwater use patterns are expected to challenge
the sustainability of coastal freshwater aquifers and
wetlands.''
The assessment also reports that the ``reliability of water
supplies is being reduced by climate change in a variety of ways that
affect ecosystems and livelihoods in many regions. . ..''
The 2012 report by a task committee of the Intergovernmental Panel
on Climate Change, Managing the Risks of Extreme Events and Disasters
to Advance Climate Change Adaptation, identifies many of the same
impacts.
Growth in population will also influence the need for
infrastructure activity. The U.S. Census Bureau currently projects that
the population of the United States will increase by 27%, 85 million,
between now and 2050.\15\ This growth will increase the need for
expansion and upgrading of much of the water infrastructure and, as
indicated below, will increase the number of people at risk to floods
and coastal storms. The aging infrastructure may well be both too old
and too small.
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\15\ United States Population Projections: 2000 to 2050. Jennifer
M. Ortman and Christine E. Guarneri http://blogs.census.gov/2012/12/12/
what-a-difference-four-years-make-u-s-population-projected-to-grow-at-
a-slower-pace-over-the-next-five-decades/
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In June 2013, the Federal Emergency Management Agency released a
report indicating the increases in potential flooding across the United
States that could result from climate change and population growth
between now and 2100.\16\ ``For the [contiguous US] riverine
environment, the typical 1% annual chance floodplain area nationally is
projected to grow by about 45%, with very large regional variations.
The 45% growth rate is a median estimate implying there is a 50% chance
of this occurring. . . 30% of these increases in flood discharge, SFHA,
and base floodplain depth may be attributed to normal population
growth, while approximately 70% of the changes may be attributed to the
influence of climate change. . . for the coastal environment, under the
assumption of a fixed shoreline, the typical increase in the coastal
SFHA is projected to also be about 55% by the year 2100, again with
very wide regional variability. The 55% increase is a median estimate
so there is a 50-percent chance of this occurring.'' Figure 3 provides
the geographic distribution of these changes.
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\16\ FEMA. The Impact of Climate Change and Population Growth on
the National Flood Insurance Program through 2100. AECOM.
---------------------------------------------------------------------------
Figure 3. The land area covered by the floodwaters of the base
flood is the Special Flood Hazard Area (SFHA) on NFIP maps. The SFHA is
the area where the National Flood Insurance Program's (NFIP's)
floodplain management regulations must be enforced and the area where
the mandatory purchase of flood insurance applies. Source: FEMA\17\
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\17\ Id.
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Climate and population change will have direct effects on our aging
water infrastructure. Structures designed to protect against current or
past flooding and coastal erosion threats may not be able to stand up
against the forces of larger events or deal with the increased
magnitude of these events. Increases in population, will in many cases
require current water and wastewater systems to be not only upgraded
but also to be sized to the increased demands that will be expected.
Additional surface or subsurface storage may be required and older
facilities may not be in a position to be modified or expanded. Major
storm flows, which are currently stressing many of existing dams and
levees, may increase even more under climate change and further
threaten those that rely on these structures. Sea level rise is already
affecting the US East and Gulf coasts.
Droughts will also increase the stress on water infrastructure.
During droughts rivers run low and substantially increase the amount of
dredging and other maintenance activities required in channels and at
ports. Droughts result in severe stress on water supply systems,
whether for agricultural or municipal and industrial use. They also
increase the pressure for additional storage or expansion of the water
supply storage in existing facilities.
the energy and water nexus
There is a substantial link between water and energy. This should
be recognized and addressed in in plans to deal with aging water
infrastructure.
In 2012, the heads of 15 of the world's largest National Academies
met in to discuss important scientific issues facing the world
community.\18\ The ``Energy and Water Linkage: Challenge to a
Sustainable Future'' was one of three topics addressed by the group.
Following the meeting, in which I was fortunate enough to participate
as a facilitator, the Academy heads signed a statement identifying the
issues they had discussed. In this statement, they reported that
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\18\ G-Science Academies Statements 2012. Energy and Water Linkage:
Challenge to a Sustainable Future. US National Academies: Washington.
Participants included representatives of the national academies of
Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan,
Mexico, Morocco, Russia, South Africa, UK, and the US.
``Needs for affordable and clean energy, for water and
adequate quantity and quality, and for food security will
increasingly be the central challenges for humanity: these
needs are strongly linked. . . It is critically important that
planning and investment in energy and water infrastructure and
associated policies take into account the interaction between
water and energy. A systems approach based on specific regional
circumstances and long-term planning is essential. Viewing each
factor separately will lead to inefficiencies, added stress on
water availability for food protection and for critical
ecosystems, and a higher risk of major failures or shortages in
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energy supply.''
They also noted that energy production requires water and that the
production of water supplies in adequate amounts and quality requires
energy. They pointed out that fossil fuel and nuclear power plants and
solar thermal require large water withdrawals and some water
consumption and indicated that even use of ``increasingly important
`unconventional sources' such as tar sands gas hydrates in gas and oil
and tight formations have substantial implications for quantity and
quality of water. . .producing alternative transportation fuels, in
particular biofuels. . . can involve substantial impacts on water
resources and water quality.'' .
Our aging inland waterway infrastructure also has a significant tie
to energy production. Twenty-two percent of the nation's energy
products are carried on inland waterways barges that are energy
efficient. Inland waterways separate potentially volatile cargo from
heavily populated areas. Operating as part of the national intermodal
transportation system, waterways also provide alternative routes should
problems occur with energy product movement on parallel systems such as
pipelines and rail, increasing the resilience of the overall system and
the resultant national security.
Hydropower production, although providing only 8 to 12 percent of
the national energy pool, provides critical services in many parts of
the country. 20th century development in the Tennessee Valley and in
the Columbia basin relied on use of low cost hydroelectric power. Many
communities are reliant on hydropower for base supply and many others
for the peaking power necessary to meet electricity needs during
periods of high demand. Many of the nation's hydropower facilities are
aging and, although carefully supervised by the Federal Energy
Regulatory Commission and state agencies, require substantial and
continuous attention. Again, where rate setting becomes political
instead of true cost based, funding challenges will develop.
what must be done?
ASCE's Report Card together with reports from agencies and
independent bodies have alerted public officials to some of the
problems of aging and poorly maintained infrastructure that is reaching
the end of its useful life. Unfortunately, what we see may be only the
tip of the iceberg. In spite of the alerts, little seems to get done.
What steps are necessary to move our efforts forward with
infrastructure renewal and alternative approaches to meet our water
needs?
Filling the information gaps
As a follow-up to Katrina, in 2009 a congressionally directed
National Committee on Levee Safety reported that considerable attention
needed to be paid to the development of an inventory of the nation's
levees and their conditions. Some work has been accomplished by the
U.S. Army Corps of Engineers and FEMA in addressing levees under their
oversight but the work is far from complete and no action has been
taken by the Congress on recommendations of the National Committee on
Levee Safety. The condition of tens of thousands of miles of levees in
the US has yet to be assessed and many of these levees have yet to be
precisely located.
Information about the condition of only 75% of the 87,000 dams has
become part of a national inventory of these structures. We know where
the dams are located and if their failure would pose a threat to those
below the dams, but we have yet to complete thorough assessments of the
condition of all dams. Some of these dams date to before the Civil War.
On a positive note, the condition of the approximately 4000 dams under
federal oversight has, for the most part been assessed and continues to
be monitored, even if funds to deal with identified problems cannot be
fully addressed. Four percent of dams are federally owned and the
Federal Energy Regulatory Commission (FERC) provides oversight of an
additional 2525 private and public dams.\19\
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\19\ Federal Energy Regulatory Commission. Personal communication,
16 July 2013
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In 2007, Section 2032 of the Water Resources Development Act (PL
110-114) directed the President to, within two years, conduct an
analysis of the vulnerability of the nation to flooding. Such an
analysis would identify the exposure--what is in the path of a
potential flood or storm surge--and the vulnerability of affected
communities to such events. Vulnerability reflects the ability of
existing flood protection infrastructure to carry out the functions for
which it was designed. No funds have been appropriated by Congress for
this activity, in the nearly six years since the law was passed and, as
a result, no analysis has taken place.\20\
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\20\ Blumenauer, Earl. Congressional Record. July 9, 2013.113th
Congress, 1st Session Issue: Vol. 159, No. 97 - Daily Edition, H4242.
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The Environmental Protection Agency has invested resources in
gathering information about the condition of water and wastewater
infrastructure and has prepared reports that identify the challenge the
nations faces in drinking and waste water. Such analyses however
represent only estimates and given that much of the infrastructure is
below ground, there is considerable uncertainty with the completeness
of the survey information.
Considerably more is known about the condition of the inland
waterways and ports, although, as with water and wastewater there is
still some uncertainty given that much of the infrastructure is below
water or underground and is reaching or has exceeded its design life.
Funding approaches
As indicated earlier in this testimony, addressing deficiencies in
aging infrastructure and ensuring that the infrastructure will be ready
for the impacts of climate change and population growth will require
significant resource commitments or close attention to innovative
alternatives to structural approaches. The Congress, the
Administration, state and local governments, and businesses including
those that are directly affected by or operate water resources
infrastructure have been struggling to find funding outside of direct
federal expenditures.
Immediately following Hurricane Katrina, former Sen. Warren Rudman
and businessman Felix Rohatyn proposed the development of National
Infrastructure Investment Corporation with the authority to issue bonds
with maturities of up to 50 years to finance infrastructure
projects.\21\ Their recommendations went nowhere. States like
California have issued bonds to deal with critical infrastructure
issues such as levees, but its example has not been followed in many
places. Public-private partnerships have been suggested for some
infrastructure, but unlike toll highways where a future revenue stream
can be seen, such partnerships for levee maintenance and repair have
lacked credibility. The water and wastewater communities generate
revenue through user charges, but these charges generally have not kept
up with the full costs of providing these services. History indicates
that it is frequently difficult for these agencies (approximately 90%
public in water supply for communities over 10,000 and 98% public in
wastewater\22\) to garner the local political support necessary to
raise the rates to a level necessary to carry out the needed
infrastructure servicing.
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\21\ It's time to rebuild America. Washington Post, December 13,
2005
\22\ EPA. 2002. The Clean Water and Drinking Water Infrastructure
Gap Analysis; 2009. Drinking-water infrastructure needs survey and
assessment: Fourth report to Congress (2007). Office of Water. EPA-816-
R-09-001.
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The inland waterway community has suggested raising the tax on fuel
use by their vessels to increase the amount of funding available in the
Inland Waterway Trust Fund to carry out needed infrastructure renewal.
Legislation to this end is currently being considered in the Water
Resources Development Act, but even this self-taxing has opponents who
see it as a violation of the `no new taxes' principle.
Much of the infrastructure for ports and harbors is privately or
non-federal government owned as opposed to being supported by the
federal government. Various approaches have been used to successfully
modernize the on-land infrastructure necessary to operate the ports.
Funding of dredging to maintain channel depth and width is shared by
the federal government and local sponsors and, where the federal
government does not have plans for its share of the work, local
sponsors must either assume the entire cost or live with the
consequences of inefficiently sized channels.
Similarly a large percentage of dams are privately or non-federally
owned. There are a few state loan or grant funding sources to
rehabilitate dams and some federal funding through the Department of
Agriculture Natural resources Conservation Service, but these funds
usually only support state or municipally owned dams. Private owners,
even the most conscientious ones, typically do not have the funding
needed to do necessary safety upgrades.
Several other proposals have been made in recent years and some
others are currently under consideration to assist in meeting the
significant gaps in drinking water and waste water infrastructure
funding. They include\23\
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\23\ Copeland, C., William J. Mallett, Steven Maguire. 2012
Legislative Options for Financing Water Infrastructure, Congressional
Research Service. R42467.
Increased funding for State Revolving Fund programs under
the Clean Water Act and the Safe Drinking Water Act.
Lifting of the private activity bond restrictions on water
infrastructure projects
Creating a federal water infrastructure trust
EPA reports\24\ that the President's 2014 Budget request:
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\24\ Shapiro. Id.
Supports lifting the cap on private activity bonds for
sewage and water facilities. This will help address the
hundreds of billions of dollars needed for capital investment
over the next 20 years.
Includes a proposed National Infrastructure Bank that would
have the ability to leverage private and public capital to
support infrastructure projects of a national and regional
significance, including water infrastructure.
Proposes establishment of America Fast Forward Bonds
(AFFBs). The program would reduce the cost of infrastructure
financing for municipalities and their private sector partners
by providing interest subsidies on taxable bonds.
The Senate version of the Water Resources Development Act includes
a pilot version of the Water Infrastructure Finance and Innovation Act
(WIFIA) that would fund water projects that are too large to receive
EPA State Revolving Fund loans and that could be used to finance a
variety of water projects whose cost is greater than $20 million.\25\
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\25\ Id; AWWA, Undated. Water Environment Federation, Association
of Metropolitan Water Agencies. A Cost-Effective Approach to Increasing
Investment in Water Infrastructure: WIFIA.
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Adapting to a murky future
Recognizing that full funding of actions needed to repair and
upgrade aging infrastructure may not occur or may be slow in coming,
every effort must be made to ensure that the water resources community
carefully examines those steps that can be taken to adjust current
operations and activities to better deal with the advent of climate
change and funding shortfalls and to ensure that it fully considers
those actions that do not require or lessen the need for structural
measures. If our water resources infrastructure is to be resilient to
the many forces which could threaten its viability, action must be
taken.
In 2010, the US Geological Survey, U.S. Army Corps of Engineers,
the National Oceanographic and Atmospheric Administration, and the
Bureau of Reclamation prepared a report outlining steps that could be
taken to better adapt water resource activities to these
challenges.\26\ Since that time major federal agencies, operating under
the coordination of the White House Council on Environmental Quality,
have been working through task forces to develop steps that can be
taken to reduce the impact of climate change and to find ways to face
this challenge using innovative approaches, many of which are
nonstructural. Efforts to promote conservation, efficiency, and changes
in operating procedures that would influence both demand and use of
water resources have been highlighted.
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\26\ USGS Circular 1331. 2009. Climate Change and Water Resources
Management: A Federal Perspective. http://pubs.usgs.gov/circ/1331/
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Many communities have embarked on programs that use natural
hydrological features increase rainfall infiltration and reduce the
necessity for stormwater systems. Many of these systems also provide
for water capture and reduction in heat islands in urban areas.
Consolidation of area and regional water systems can also reduce the
costs associated with modernization. The need for flood reduction
structural systems can similarly be reduced through use of natural
storage during major events as was demonstrated by the U.S. Army Corps
of Engineers during the 2011 floods on the Mississippi River. Natural
storage can also be combined with sound land-use planning to remove
most frequently flooded properties and ensure that future development
takes into account climate change and other potential changes in the
landscape.
Use of renewable energy sources and micro-hydropower systems can
reduce the necessity for complete replacement of some aging hydropower
facilities. As has been suggested by National Research Council
studies,\27\ upgrade of some locks and dams might be able to be delayed
through use of nonstructural approaches such as congestion management
and scheduling, or in the case of low-use segments, the divestment of
these assets. Non-structural approaches not only may reduce
infrastructure investment costs but may also significantly enhance the
natural environment.
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\27\ National Research Council. 2005. Waterway; National Research
Council. 2012. Corps of Engineers Water Resources Infrastructure:
Deterioration, Investment, or Divestment?
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on being both realistic and honest
The nation is faced with an aging water resources infrastructure
and with resource significant requirements to properly maintain and
upgrade this infrastructure, and to adapt it to the potential impacts
of climate change and growth.
Unless there are significant and rapid changes in the national
economy and adjustment of long-standing responsibilities, it is
unlikely that the federal government will be in a position to fund the
needed maintenance, rehabilitation and upgrades. It is more likely that
new approaches will have to be taken and that much of the burden will
continue to rest at the local level. This fact must be recognized by
all concerned.
Continuing to believe or to support beliefs that somehow enormous
sums of money will be found by the federal government to completely
eliminate this significant national backlog in the infrastructure is
unrealistic and support of this belief is unethical. For example, the
Senate version of the Water Resources Development Act contains
provisions that would provide local levee districts access to $300
million annually for levee repairs. Given that the maintenance backlog
is estimated to be over $50 billion, it would be foolish for levee
districts across the country to believe that all they need do is wait
until their turn for funding to deal with the infrastructure
deficiencies they currently face. Similarly, putting off other actions
such as price rises for services in the hope that they may later be
found to be necessary, is unrealistic and deceptive.
It should be made clear that federal resources that are available
will go to those facilities where there is the highest national
interest and need and where the return on investment is highest and the
greatest risks to life and property exist.
in sum
The nation's water infrastructure is aging and its condition
is fragile.
Climate change will exacerbate the impacts of this aging .
There is a substantial link between the production of energy
and the condition of our water resource infrastructure.
The nation must take steps to address the aging
infrastructure problem. A failure to act on aging
infrastructure will have serious consequences now and will
increasingly burden the future.
Congress must act with realism and openness to deal with the
challenges that fall within its domain and, through its
influence and bully pulpit, provide leadership to the nation as
a whole where it does not. It must also overcome the tyranny of
agency silos and committee turf to address these challenges in
a comprehensive manner. Something must be done now.
Thank you for your attention.
Senator Schatz. Thank you.
Mr. Kiely.
STATEMENT OF CHARLES KIELY, ASSISTANT GENERAL MANAGER, DISTRICT
OF COLUMBIA WATER AND SEWER AUTHORITY
Mr. Kiely. Good afternoon, Chairman Schatz. I am Charles
Kiely, the Assistant General Manager of Customer Care and
Operations at the District of Columbia Water and Sewer
Authority, known as DC Water. I am grateful for the opportunity
to provide testimony today on the very important subject of
aging water and sewer infrastructure.
DC Water serves the more than 17 million people who live,
work and visit the District every year. We maintain and operate
1,350 miles of water pipe, over 3,700 valves, 4 pump stations,
5 reservoirs, 3 elevator water tanks, more than 9,300 public
hydrants that deliver our current water across Washington, DC.
The median age of the water system is over 78 years old with
some pipes in service today that were installed before the
American Civil War.
Once that water is used it is returned to our sewer system
that is even older than the water system with a median age of
85 years old. The sewer system has 1800 miles of separated and
combined water and storm water lines, 9 base water pumping
stations, 16 storm water pumping stations, 12 inflatable dams
and a swirl facility. The existing sanitary sewer system in the
District dates back to 1810.
I have with me an actual section of tuberculated, unlined,
cast iron main that we frequently encounter on our drinking
water system to bring to the surface what lies deep along the
ground in many areas across the country. Tuberculation is the
cause of corrosion materials inside the pipe that accumulate
over time. As these deposits grow they restrict the flow of
water for everyday use and fire suppression.
The tuberculated deposits can also impact the quality of
the water we deliver and they promote microbiological activity
and can cause discolored water and can also impact
disinfection.
This aging infrastructure that delivers water and sewer
services is a vital resource to every home, business and
facility in the District, including the Capitol. Our work also
affects vital ecosystems and our rivers and waterways.
Balancing the delivery of service, improvements in treatment
and the cost to ratepayers is one of the largest challenges
facing DC water today.
Over the next 10 years DC Water plans to spend over $3.8
billion on capital improvements with $1.7 billion allocated to
meet federally mandated environmental projects. Another $1.2
billion in our 10-year plan will be used to improve the aging
water and sewer infrastructure. We are ramping up to replace 1
percent of this infrastructure per year, 3 times the rate of
replacement in previous years, but still on a hundred year
replacement cycle.
As you know direct Federal investment in water and sewer
infrastructure has severely declined. In fiscal year 2012 the
District of Columbia received $6.9 million from the Clean Water
State Revolving Fund and $8.9 million from the Drinking Water
State Revolving Fund. Although we are grateful for these funds
the overwhelming majority of this work is funded by the 135,000
ratepayers that we serve. The scale of the work needed means
that our ratepayers will have to shoulder rate increases each
year well into the foreseeable future unless other funding
sources become available.
Unlike roads and bridges our extensive assets are very deep
underground and problems can persist for many years without
detection. Some may recall that DC Water was involved in
emergency work recently at 14th Street where segments of the
road fell down and actually collapsed the sewer that was
constructed in 1897. All told the emergency repairs caused most
of the intersection to be closed for 11 days.
We have not received all the invoices to date. But we
anticipate spending upwards of close to $2 million when
everything is finally paid. We have provided other examples in
our written testimony to illustrate the costs and customer
inconvenience experienced when there is catastrophic failure of
the aging infrastructure which seems to be happening with more
frequency in the past few years. Emergency repairs are costly
and they do not rehabilitate or replace the 100-year-old assets
that remain in the ground.
Moreover, extreme weather events place additional stress on
the aging combined sewer system. For unusually intense rain
events in the summer and fall of 2012 resulted in damaging
overland flooding and sewer line backups in homes located in a
section of the northeast boundary trunk sewer. This system
originally constructed by the Federal Government in the late
1800s was identified as insufficient soon after its
construction. More recent development and the associated
increase in a previous area only exacerbated the problem.
DC Water is in the process of addressing the capacity
concerns in this area through the use of short, medium and long
term engineering projects that will ultimately cost over $600
million. Limited resources force DC Water to make strategic
investments in our water infrastructure by prioritizing
replacement projects based on age and material, customer
feedback, water quality testing and other inspections we do.
When defects are discovered consideration is given to
implying various new technologies including structural and non
structural pipe linings and coatings, corrosion protection
technologies, and various other products and techniques to
build a robust toolbox of methods to suit our various needs. In
addition to utilizing technology on our linear assets, DC Water
is also constructing bio-sol digester, an advanced waste water
treatment facility that will turn waste produced by a treatment
process into fuel. This nationally recognized project will make
DC Water the largest generator of renewable electricity in the
metropolitan area.
Ultimately the project will save the equivalent of 554,000
tons of coal energy every day and save the agency approximately
$20 million.
We hope to work with Congress to address the critical issue
of aging infrastructure. We also look forward to working with
the committee to help advance innovative technologies that will
allow us to improve the service to our customers, decrease
costs and improve the environment.
Thank you for the opportunity to provide my remarks today.
I'm happy to answer any questions you may have.
[The prepared statement of Mr. Kiely follows:]
Prepared Statement of Charles Kiely, Assistant General Manager,
District of Columbia Water and Sewer Authority
Good afternoon Chairman Schatz, Ranking Member Lee and members of
the Senate Committee on Energy and Natural Resources Subcommittee on
Water and Power. My name is Charles Kiely and I am the Assistant
General Manager of Customer Care and Operations at the District of
Columbia Water and Sewer Authority, known as DC Water. I am grateful
for the opportunity to provide testimony today on the very important
subject of aging water and sewer infrastructure.
DC Water serves the more than 17 million people who live, work, and
visit the District of Columbia every year. We maintain and operate
1,350 miles of water pipes; over 37,000 valves; four pumping stations;
five reservoirs; three elevated water tanks; and more than 9,300 public
fire hydrants to deliver water across Washington, DC. The median age of
the water system is over 78 years old with some pipes in service today
that were installed before the American Civil War. Once that water is
used, it is returned to our sewer system that is older than the water
system with a median age of 85 years old. The sewer system has 1,800
miles of separated and combined sewer and storm water lines, nine
wastewater pumping stations and 16 stormwater pumping stations, 12
inflatable dams and a swirl facility. The existing sanitary sewer
system in the District of Columbia dates back to 1810, and includes a
variety of materials such as brick and concrete, vitrified clay,
reinforced concrete, ductile iron, plastic, steel, brick, cast iron,
cast in place concrete, and even fiberglass. A significant number of
the sewers in the DC Water system were constructed more than one
hundred years ago and are still in operation today. An image of this
type of structure is included in my written testimony along with a
chart depicting the age of our water and sewer system.
The aging infrastructure that delivers water and sewer services is
a vital resource to every home, business and facility in the District,
including the U.S. Capitol. Our work also plays a critical role in
ensuring the health of the environment. Balancing the delivery of
service, improvements in treatment, and the cost to ratepayers is one
of the largest challenges facing DC Water. Over the next ten years, DC
Water plans to spend over $3.8 billion on capital improvements with
$1.7 billion dollars allocated to meet federally-mandated environmental
projects. Another $1.2 billion in the 10-year plan will be used to
improve our aging water and sewer infrastructure. We are ramping up to
replace one percent of our aging infrastructure per year, three times
the rate of replacement in previous years, but still a 100-year
replacement cycle.
As you know, direct federal investment in water and sewer
infrastructure has severely declined. In Fiscal Year 2012, the District
of Columbia received just $6.9 million from the Clean Water State
Revolving Fund and $8.9 from the Drinking Water State Revolving Fund.
Although we are grateful for these funds, the overwhelming majority of
this work is financed by our ratepayers. The scale of the work needed
means that our ratepayers will have to shoulder rate increases each
year well into the foreseeable future unless other funding sources
become available.
I have with me an actual section of tuberculated unlined cast iron
main that we frequently encounter in our drinking water system to show
what is deep below the ground in many areas across the country.
Tuberculation is the deposit of corrosion materials inside the pipe
that accumulate over time. As these deposits grow, they restrict the
flow of water for everyday use and fire suppression. The tuberculated
deposits can also impact the quality of water because they can promote
microbiological activity, cause discolored water, and impact
disinfection Limited resources force DC Water to make strategic
investments in our water and sewer infrastructure by prioritizing
replacement projects based on the age and material of the asset,
customer feedback, water quality testing, and camera inspections. Given
that our infrastructure is located beneath roadways, DC Water works
closely with the District Department of Transportation to coincide
water and sewer infrastructure upgrades with transportation projects in
public space whenever possible.
We are also exploring alternative technologies to minimize
disruption to the public and decrease road restoration costs. In
addition to a data-driven and coordinated replacement schedule, DC
Water utilizes alternative technologies that are less invasive than the
traditional open trench replacements to reduce the cost of improving
our infrastructure. For example, DC Water is responsible for
maintaining approximately 150,000 sewer laterals in public space and we
replace approximately 400 per year. A sewer lateral is the underground
pipe, typically four inches in diameter that connects the home or
business to the main sewer line. For decades, DC Water employed the
conventional open cut construction method for lateral replacements,
resulting in significant restoration costs, labor charges, and
unavoidable customer inconveniences. DC Water has evaluated and
employed trenchless technologies to reduce the life cycle costs by
selecting a cured in place pipe (CIPP) solution. Typically, it can be
installed in less than one day compared to the four days needed for the
conventional. Work is completed with minimal surface excavation,
providing a far safer environment for employees and minimizing customer
disruption. The CIPP process virtually eliminates road and pavement
restorations associated with open trench construction while also
reducing the need for traffic control. Time spent on the job site is
significantly reduced, and the average cost of installation is about
$3,900--or a $7,300 savings over the conventional open cut method.
Quite simply, we are spending 65 percent less to do more by working
smarter.
DC Water was also one of the first water utilities to implement an
advance meter infrastructure to not only provide customers with
accurate bills but also to monitor the consumption from the service
line into the customer's home or business to proactively detect leaks
from aging infrastructure. DC Water is also piloting various emerging
technologies including sonic and ultrasonic leak detection, radar for
the geophysical detection of underground voids associated with large
diameter pipes, and metallurgical analyses of metal for the strength of
pipe components. When defects are discovered, consideration is given to
applying various new tools including structural and non structural pipe
linings and coatings, and corrosion protection technologies.
Unfortunately, age, corrosion, and weather often force us to
address our aging infrastructure in a less proactive manner. Unlike
roads and bridges, our extensive assets are buried and problems
underground can persist for years without detection. Some may recall
the large diameter water main break on Constitution Avenue NW in the
fall of 2010. The break resulted in the closure of three blocks of a
major arterial roadway, and surrounding buildings like the Smithsonian
Museum of Natural History and the U.S. Department of Justice were left
without water service until the repairs were completed. Once
replacement materials were identified and repairs were made, three
blocks of the severely damaged roadway had to be resurfaced. All told,
the emergency work took three days to complete and cost $740,000.
This past May, DC Water was involved in emergency work related to a
sinkhole on the heavily trafficked intersection of 14th and F Streets
NW. The hole developed when segments of the road fell upon a portion of
our sewer that was constructed in 1897. The falling road debris caused
the sewer to collapse and triggered the road to cave in. Repairs to
sewer infrastructure can be more complicated than water mains since the
infrastructure is located 15 feet or more below the roadway. To
determine the cause and repair the sewer, DC Water crews had to cut
through old trolley tracks and navigated a multitude of gas, electric
and telecommunication lines. Fixing our 54-inch brick sewer meant
cutting four foot sections of steel pipe and re-welding them together
underground inside the broken sewer--essentially lining the existing
tunnel to avoid digging a long trench 20 feet below the roadway
surface. The steel had to be specially cut so that connections to the
existing sewer laterals could be reconnected. All told, the emergency
repairs caused most of the intersection to be closed for 11 days. We
have not received all of the invoices for this work yet, but we
estimate that the repair will cost ratepayers $1-$2 million.
Disruptions from aging infrastructure are not limited to commercial
areas downtown. Recently, an 8-inch water main break on a residential
street washed out two manholes that extended 50 feet below the surface
to a deep sewer. The restoration work took 31 days and ultimately cost
our customers over $600,000. While the repair was taking place, DC
Water had to run pumps and generators to bypass the sewer flow. The
street was closed for over one month causing a major inconvenience to
our customers in the neighborhood.
While DC Water has prioritized maintaining and upgrading our water
and sewer delivery system, emergency repairs will be a routine
occurrence as our system continues to age. Though it may not sound
ambitious, our goal of replacing one percent of our aging
infrastructure per year exceeds the replacement average of many of the
older cities that we have surveyed. Moreover, DC Water has projected an
additional need of $2.3 billion over the 20-year horizon for water and
sewer infrastructure improvements. We hope to work with Congress to
identify measures to help address the critical issue of aging water and
sewer infrastructure. Thank you for the opportunity to provide remarks
today and I am happy to answer any questions you may have.
Senator Schatz. Thank you very much.
Ranking Member Barrasso.
Senator Barrasso. Thank you very much, Mr. Chairman.
Mr. Pimley, you state in your testimony that most of the
agency's infrastructure has an average age of over 60 years. In
2008 Reclamation testified before this committee that
maintenance needs of Reclamation facilities exceeded $3.2
billion. I didn't really see a figure in the written testimony
today.
Do you know what the current estimated backlog is?
Mr. Pimley. Excuse me, the apples to apples comparison of
that number we project 5 years out what the needs are and that
today is about calculated at roughly two and a half billion,
2.5 billion.
Senator Barrasso. Two and a half.
Is that information public that we could, kind of, go
through and take a look at?
Mr. Pimley. The overall listing is not necessarily
publicized because it's constantly changing. But it is
reflected in our annual--we prioritize that--and it's reflected
then in our annual appropriations request.
Senator Barrasso. OK.
You talk about in your testimony the Bureau of Reclamation
proactively maintaining and improving its existing
infrastructure for system reliabilities a safety sustained
water conservation in an era of constrained budgets and
changing climate. Can you tell me a little bit about how much
money is being spent on maintenance backlog versus spending
money on climate change adaptation?
Mr. Pimley. We put about $400 million a year into
operations and maintenance every year. Roughly 140 million of
that is in against the projects that are included in that 2.5
billion list of 5-year projects out there.
Our contribution to that list is about half. We put in half
and our partners put in about half. So we basically we double
up that investment every year against the $2.5 billion 5-year
projection.
I don't have the information on how that would compare to
the climate change, but we could provide that for the record.
Senator Barrasso. I'd appreciate that.
I'm just curious in terms of what, in your opinion, which
is more important use of the money?
Mr. Pimley. We continue to try to operate the systems that
had been funded over the years.
Senator Barrasso. Mr. Stern, in your testimony you talked
about the limited publicly available information on the
magnitude and timing of the issue and talked about detailed
information on the condition and associated upgrade needs of
water resource infrastructure being generally unavailable. You
talked about the EPA does these types of project by project
upgrade needs lists for facilities under their charge with cost
estimates. You did, kind of, a comparison there.
What are the benefits as well as the disadvantages, if any,
of the Bureau of Reclamation developing and releasing such a
list to policymakers and to the public as well, in your
opinion?
Mr. Stern. Senator Barrasso, as you know we don't draw any
conclusions or have any opinions about what's appropriate and
what's not appropriate information for the agencies to provide.
Certainly what we can say is that based on what's out there
now, it's difficult to evaluate what the needs and what the
year to year progress in addressing the challenge of aging
infrastructure are. There are other needs assessments that are
out there, as you mentioned, for drinking water and waste water
infrastructure and transportation infrastructure. Those are
different kinds of infrastructure with different challenges but
there is simply nothing comparable that's available from
Reclamation.
Senator Barrasso. Thank you.
Mr. Kiely, I was just curious about for DC Water how DC
Water is financing its efforts to address aging infrastructure?
Mr. Kiely. The majority of DC Water's funding is through
our rate base and through the capital markets. We issue our own
revenue bonds. We do seek the capital market to cover our water
and sewer infrastructure needs.
So the $3.6 billion that I mentioned in the testimony,
would actually be accessed through the capital markets.
Senator Barrasso. Alright. Thank you.
Thank you, Mr. Chairman.
Senator Schatz. Thank you, ranking member.
There are 80,000 dams in the country and yet only about 3
percent of them produce hydropower. So my question is for Mr.
Hannon from the Army Corps of Engineers and perhaps followed by
Mr. Stern from CRS.
Do you have any thoughts about the potential for
hydropower?
For Mr. Stern, on hydropower in particular it seems to me
that the innovative financing tools that are being proposed and
the difficulty behind them is a lack of a revenue stream. It
seems to me that increasing hydropower at Federal facilities
may provide the revenue stream to make some sort of innovative
financing tool more viable.
But Mr. Hannon first, please.
Mr. Hannon. Thank you, Mr. Chairman.
Certainly one of the things that we're doing within the
Corps is meeting with our private sector interests who are
interested in developing non Federal hydropower development at
our Corps facilities. So we're working closely with the Federal
Energy Regulatory Commission.
We have a memorandum of understanding with the FERC to look
at how we can collectively improve the review of the
applications from non Federal hydropower development so that we
avoid duplication. We're continually looking at our processes
to see how that we can more streamline, if you will, those
processes to be able to have that non Federal development at
our Federal infrastructure move forward and move forward in a
quick manner.
Senator Schatz. Thank you.
Mr. Stern.
Mr. Stern. Mr. Chairman, your general assertion that
outside observers have noted that hydropower facilities could
potentially lend themselves to alternative financing, more so
than other facilities, has been confirmed by independent expert
assessments. Most recently a report by the National Research
Council on the Corps of Engineers noted that hydropower
facilities would lend themselves, perhaps more than other
projects, toward public/private partnerships specifically
because upgrades to those facilities could provide for
increased revenues.
The fundamental challenge with Federal hydropower
facilities is since they are Federal facilities any commitment
of future revenues associated with those facilities would be
coming in normally to the Federal Government. So there would
need to be legislation from Congress that would allow for those
revenues to be committed to the private entities to make the
upgrade.
Senator Schatz. Thank you very much.
Dr. Galloway, can you expand on some of the alternative
financing ideas that you included in your written testimony and
in particular this committee is interested in the concepts
based on TIFIA as it may apply to water infrastructure?
Mr. Galloway. Yes, sir.
As you may well know that's under consideration in the--
currently to have a water base of that. The idea would be to
supplement and provide for the high dollar value projects more
revenue than is currently available through the State revolving
fund loan system. It is something that is needed.
It's supported by the industry. People are looking for ways
to get major projects taken care of. Right now it seems that if
you're looking for a high value project that isn't capable of
being quickly funded. So the idea of having a WIFIA is very
attractive to people.
Another approach that's being used right now certainly is
the raising of the gas tax, the fuel tax, on inland water ways.
The group is supporting that. Quite surprisingly, to me,
they're running into objections because it is taxed. Whereas
this is the group that is using it is saying we want to put
more money into the pot so that our infrastructure can be taken
care of in a better manner.
So that's another one. There are others. The ideas of
infrastructure banks have been around for some period of time.
But they're never run through to fruition.
I think what's needed is the systems look at what are the
opportunities and how could they be combined and how could the
Federal Government deal with this as a whole?
Senator Schatz. Thank you.
Senator Barrasso.
Senator Barrasso. I just had one question, Mr. Chairman to
Mr. Pimley.
You said there's about a $2.5 billion backlog. Senator
Risch and I were just discussing that. I don't know if you have
a specific State-by-State breakdown so that, you know, you
could say, yes. This much of this $2.5 billion is Wyoming. This
much of the $2.5 billion is Utah.
I take a look at the list that I have for Wyoming of the
various--there's no price related to it. I'm just trying to get
a better handle on the backlog and how you value the cost to
see if we agree on that.
Mr. Pimley. Right now the best data that I have is there's
about 15 million of that account in what we called deferred
maintenance within the State of Wyoming. I don't have a
breakdown for other states. But that is what is in Wyoming, at
least identified right now.
Senator Barrasso. Alright. Thank you. Thank you.
I know Senator Risch would like a similar breakdown.
Mr. Pimley. I'm sorry I don't have that.
Senator Barrasso. OK. I appreciate your attention to that.
Thank you.
Senator Schatz. Mr. Pimley, following up on Senator
Barrasso's question.
Is there an annual reporting mechanism to the Congress with
respect--I understand that it's a moving target. That makes
perfect sense to me. But is there an annual reporting mechanism
because it seems to me that at some point in time you should
have a sort of an accounting of where we are by geography, by
priority, by cash-flow, by category, all the rest of it.
Are you reporting to the Congress on a periodic basis other
than to the extent that we conduct hearings?
Mr. Pimley. I'm not aware of a specific reporting tool that
we send to Congress. I do know that we maintain internal data
bases to make sure that we are tracking the progress we're
making against the priority list that we come up with. But I'm
not aware, as I sit here today, of what we have as far as
specific reports.
Senator Schatz. I think what you're hearing from this
committee is that those data bases need to be a little more
than internal and a little bit more than a, sort of, a working
tool, but a real reporting to Congress so that we can exercise
our own oversight responsibility.
I have a question about your testimony which mentioned the
possible de-Federalization of facilities as a potential course
of action. Mr. Hannon, you mentioned that as well.
But what would be the criterion and processes for
consideration of that? How would you undertake the possible
transfer of assets from the Federal Government to some other
entity?
Maybe Mr. Hannon first.
Mr. Hannon. Yes, sir, Mr. Chairman.
We have transferred some ownership in the past of some of
our locks and dams. An example is the Wisconsin's Fox River. We
transferred to the State of Wisconsin when the volume of
commercial traffic went down.
Right now we do not have authority though to really
decommission ourselves. So it's a process that we go through.
Studies looking at both the environmental, looking at the
safety aspects and working with within the Administration and
Congress to get the authority to actually decommission and de-
authorize.
Senator Schatz. On a one by one basis basically?
Mr. Hannon. Yes, sir.
Thank you.
Mr. Pimley.
Mr. Pimley. We've been looking at title transfer for,
excuse me, for a number of years within Reclamation. Of course,
we deal very closely with our operating partners. Specifically
we look for willing partners that are willing to take on the
duties and responsibilities and liabilities of that facility.
Once we identify that and if the project has a very limited
Federal role such as a single use project, we do proceed with
the title transfer process which is relatively straight--or
well established within our agency.
The advantage, from our perspective, is candidly we have a
smaller portfolio to manage as far as operation maintenance.
The advantage to the operating entity is they have a little
more flexibility in their operations.
Senator Schatz. Thank you very much.
I'm going to ask this question of the entire panel before
we end this hearing.
What is the one thing that the Congress ought to be doing
to address our aging water infrastructure from your
perspective?
Starting with Mr. Pimley.
Mr. Pimley. I guess from our perspective we prioritize this
list of what needs the money first every year. All I would ask
of Congress is that you keep that in mind that we do try to
prioritize that. Also please keep in mind that, as I think
everyone here on the panel has mentioned, that that list and
that request is likely to grow in the coming decades.
Senator Schatz. Thank you.
Mr. Hannon.
Mr. Hannon. Thank you, sir.
I think in my testimony, you know, I mentioned our
implementation of our infrastructure strategy. I think one of
the keys for us from the Corps of Engineers perspective, as we
continue to mature the strategy and look at opportunities to
make recommendations to reduce the risk and improve the
reliability, we want to continue that relationship working with
our customers, stakeholders and of course, working with the
Congress to enable us to implement that approach.
Mr. Stern. Mr. Chairman, as you know, CRS doesn't make
recommendations to Congress on what should be done. But what we
can do is summarize what previous expert assessments have
concluded. In that regard the most recent expert, independent
assessment on Reclamation was an NRC report I believe in 2006.
The most recent report on the Corps was in 2012.
I believe the 2012 report on the Corps did note that
private sector involvement in these Corps projects is likely to
vary by asset type. So the suite of options that Congress
chooses may depend on what the specific asset type you're
looking at is.
In addition to that the same report concluded that more
guidance in general from Congress on which specific classes of
assets are priorities from the Federal perspective and what
should be transferred and moved on to--move more toward user
fees would also be helpful guidance from Congress.
Mr. Galloway. Mr. Chairman, we need a national water
strategy of some kind to bring together the disparate issues
that are here that deal with water. How to meet present and
future challenges? Right now the Federal Government works in
silos and there are over 24 Federal agencies with
responsibilities, all of which touch on this infrastructure
problem.
Our implementation is decentralized. Coordination is
fragmented. Communication is relatively non-existent.
Now that's not my quote. That's a quote from Congressman
Jim Oberstar when he was the head of the T and I committee.
This is a problem that's been around.
We are dealing with this in terms of eaches and not as a
whole. As you've seen and mentioned with the energy water
nexus, it's critical that we bring these things together in the
way we address them.
Thank you.
Mr. Kiely. From the distribution perspective the debt that
we will have to incur to deal with the aging infrastructure is
very, very large. From a Federal Government perspective we'd
like to see more of a holistic viewpoint in terms of how
funding is allocated and among transportation and other types
of projects. If we could tie some of those in to the funding
mechanisms to deal with parts of the water and sewer
infrastructure it would help in some of the financing.
But there's other things we could be considering also.
For example, when we go out to the debt markets, to the
capital markets for debt, we're generally going out for 30-year
terms. If we could extend the terms of that debt through some
type of Federal subsidy, through an infrastructure bank or
something we can actually stabilize the rates that we're
putting out to our customers and deal faster with an aging
infrastructure that is becoming a problem.
Other things that we could do is getting into somewhat of a
more public/private partnerships where the public and the
private entities are willing to take on some of the risk and
also some of the reward as we deal with some of these problems
moving forward.
Senator Schatz. I thank the testifiers. I agree with the
Ranking Member Barrasso. This is a bipartisan issue. The need
to repair our aging infrastructure in water and elsewhere
applies to each of our States.
I also agree with what Dr. Galloway said. We do need a
national water strategy as well as a national infrastructure
strategy.
I thank you for all of your deep thinking on this matter.
It may be that we need some statutory changes to allow public/
private partnerships to be more easily done. I think the
process of de-Federalizing assets also needs our oversight and
our assistance so that you're not actually wasting time doing
them on a one off basis.
There's no doubt that we need appropriations. I think
innovative financing tools are encouraging and are interesting.
But this is really a Federal responsibility. This is something
we're going to have to appropriate the dollars to help to
solve.
Finally, Mr. Pimley, we look forward to working with you in
improving your reporting to the Congress so that we can work
with you better to assess your needs and appropriate toward
them.
Thank you very much.
[Whereupon, at 3:25 p.m., the hearing was adjourned.]
APPENDIXES
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Appendix I
Responses to Additional Questions
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Response of James R. Hannon to Question From Senator Schatz
Question 1. In the Super Storm Sandy Supplemental Appropriations
Bill billions of dollars were set aside to rebuild coastal
infrastructure. What are agencies like the Corps and Interior doing to
ensure that those funds are spent in ways that address aging water-
related infrastructure and in ways that are resilient to future storms
and potential impacts of climate change?
Answer. Prior to Hurricane Sandy and since, the Corps has been
working with the National Oceanic and Atmospheric Administration
(NOAA), Federal Emergency Management Agency (FEMA), United States
Geological Survey (USGS), other agencies, and national and
international experts to evaluate how future conditions such as sea
level rise and future storms could affect water-related infrastructure.
As part of this effort, the agencies have been seeking to improve our
understanding of how climate change might affect the performance of
water resources infrastructure and require adaptation of how we
develop, implement, and manage that infrastructure. The Corps has
participated in activities of the Climate Change and Water Working
Group (since 2007), the working groups of the Interagency Climate
Change Adaptation Task Force (since 2009), and the National Climate
Assessment. With the help of an interagency team including staff of the
NOAA, USGS, FEMA, Federal Highway Administration, U.S. Coast Guard,
National Park Service, and experts from academia and the private
sector, the Corps has also drafted guidance on how to account for
expected changes in sea levels and how those changes influence
infrastructure, including water resources projects. At its foundation,
the guidance offers a tiered approach for disclosing how new and aging
infrastructure might function in response to changes in sea levels
(ranging from extrapolated historical sea level trends to a higher
curves which incorporate additional ocean warming and ice melt) so that
such information can be considered among factors affecting funding
priorities.
Following Hurricane Sandy, an evaluation (Hurricane Sandy Project
Performance Evaluation Study, HSPPES) of the performance of existing
projects constructed by the Corps and affected by Hurricane Sandy was
conducted, in accordance with PL113-2, to determine how well each
project performed during the storm. The results of the evaluation are
being integrated into the Corps ongoing North Atlantic Coast
Comprehensive Study (NACCS), which seeks to deliver a framework for
addressing flood risks among vulnerable coastal populations within the
geographic boundaries of the Corps North Atlantic Division that were
affected by Hurricane Sandy. The NACCS is looking at an array of
potential measures/strategies that might be pursued to deliver more
sustainable reductions in risk for these communities and the
environment.
The Corps is using each of these above-referenced efforts to inform
the use of the funds provided in PL 113-2. For instance, the
``Infrastructure Systems Rebuilding Principles'' (February 2013)
jointly authored by the Corps and NOAA were developed to help guide
rebuilding efforts and promote delivery of sustainable risk reduction
measures. The principles reflect recognition of a changing environment
and emphasize the significance of economic, social, and environmental
factors on the sustainability of risk-reduction strategies and the
resulting resiliency of coastal communities. The NACCS is exploring how
integrated land-use planning, floodplain management, and a range of
other risk-reduction approaches--(e.g., traditional projects (beaches,
concrete, and steel, etc.), non-structural, nature-based, and natural--
) can be integrated to result in more sustainable risk-reduction
strategies that reflect contemporary planning practices, existing
scientific knowledge, and modern engineering principles.
Responses of James R. Hannon to Questions From Senator Barrasso
Question 1. What is the impact of aging infrastructure on the Corps
hydropower generation? Has the Corps developed a reinvestment strategy
for its hydropower infrastructure, and if so what are the anticipated
annual funding needs for the next decade and how does that compare to
the rates of appropriations for FY2012, FY2013, and the request for
FY2014? How much additional hydropower could be generated under optimal
investment scenarios?
Answer. Since 2000, overall unit forced outage rates due to
mechanical and/or electrical breakdown have more than doubled for the
Corps hydropower program. Hydropower unit availability during peak
demands for energy has decreased more than 12 percent over the same
time period. Hydropower is considered a renewable energy source; when
it is replaced with thermal generation, more greenhouse gases are
emitted into the atmosphere.
Under its Hydropower Modernization Initiative (HMI), the Corps
assesses rehabilitation and upgrade opportunities for 54 of its 75
hydropower plants (those that are located outside of the Columbia River
basin). The Corps evauates the potential investments in terms of the
risk of failure and economic consequences and ranks them for
consideration in the Budget process.
The Corps executed $395 million in FY 2012 and $280 million in FY
2013 for the hydropower program. The FY 2014 Budget for the Corps
included $210 million for this program. This funding would support
operation and maintenance of our hydropower projects, and completion of
construction work on hydropower units at Garrison Dam, Lake Sakakawea,
North Dakota. There were no appropriations in FY 2012 or FY 2013 to
start the construction of new hydropower replacement projects, and the
FY 2014 Budget did not propose to start the construction of such
projects. The HMI primarily focuses on this form of investment, but
also includes other types of investment such as major maintenance,
which the Budget has been funding based on the priority of that work.
The HMI has identified approximately $3.4 billion of potential work
over the next 20 years to replace equipment and otherwise restore and/
or improve their reliability and operating efficiency, including $1.5
billion over the next 10 years. If the Congress does not appropriate
these funds, the power users could fund this work.
Approximately 915 million kilowatt-hours of additional
hydroelectric generation can be produced on an annual basis by the end
of the 20-year period if the Corps were to receive the maximum that it
can efficiently and effectively use each year for such work over the
20-year period. This level, which is roughly a 1.5 percent increase in
the current amount generated from all Corps projects, would only be
achieved by the end of the 20 years of added investment. The first
decade of this period would not yield any significant energy gains
while the work on replacement and/or major maintenance of power plant
components proceeds.
The Civil Works Budget allocates funding among studies and projects
on a performance basis in a manner that will enable the Corps to use
that funding effectively and efficiently. The capability estimate for
each study or project is the Army Corps of Engineers estimate for the
most that it could efficiently and effectively spend during the fiscal
year for that study or project. However, each capability estimate is
made without reference to the availability of manpower, equipment, and
other resources across the Army Civil Works program, so the sum of the
individual capability estimates exceeds the amount that the Corps
actually could spend in a single fiscal year. Also, while the Corps
could obligate additional funds for some studies and projects beyond
the amounts proposed, offsetting reductions within the Army Civil Works
program would be required to maintain overall budgetary objectives.
Question 2. Can you provide an example or two of how aging
infrastructure has disrupted the production of federal hydropower, the
provision of water supplies, or movement of energy products on
waterways or at harbors?
Answer. In 2010, Units 1 and 4 at the 45-year old Barkley power
plant experienced generator winding failures. As a result, two 35
megawatt units were out of service for several months. Also, in 2009, a
large section of a turbine blade broke off of the hydraulic turbine at
the 45 megawatt Stockton power plant, resulting in an outage for seven
months.
We are not aware of a case in which aging Corps infrastructure
disrupted the provision of water supplies. The Corps closes the locks
on the inland waterways from time to time, both for scheduled and
unscheduled repairs. In these cases, barges generally cannot use that
lock until the Corps has repaired or replaced the components in
question. This can affect the movement of cargo on that waterway,
including energy products. The extent of the impacts will vary
depending upon a range of factors, such as the length of the closure,
when the shippers and users knew that the closure would occur (for
scheduled outages) or learned about it (for unscheduled outages), the
amount and nature of the traffic at that location that time of year,
the availability of another lock at the same dam site, and the
availability of alternative modes or routes of transportation,
alternative destinations for the product, or other options (such as
shipping that cargo earlier or later, or obtaining the product from
another source).
Question 3. In your statement, you mentioned that the Corps is
exploring whether alternative financing, public-private partnerships,
and divestment may be possible for some of its infrastructure. Are
there lessons from this research that may apply to the Bureau of
Reclamation or nonfederal water resource infrastructure reinvestment?
Answer. The Corps is in the early stages of developing these
alternative financing and public-private partnership concepts, some of
which can be very complex and require additional authority. Our initial
efforts are examining what we can do within our existing authorities,
to include development of some initial ``pilot'' projects to determine
opportunities to engage additional non-federal investment in water
resources infrastructure consistent with existing authorities. While we
will not have specific lessons learned to share with our federal
partners in the near term, we have had regular discussions of
alternative financing strategies with the Bureau of Reclamation during
our quarterly and annual leadership meetings. We will most definitely
share our lessons learned in these forums as our initiative progresses.
Question 4. Does the Corps have the ability to provide assistance
in the case of imminent failure of an aging nonfederal water resource
facility?
Answer. Under authority of Public Law (PL) 84-99, the Corps can
provide assistance in the case of imminent failure of an aging non-
federal water resources facility for flood risk management projects,
e.g., levees, flood damage reduction channels, single or multi-purpose
dams constructed to reduce the risk of flood damage, and beach
replenishment and other storm damage reduction projects, etc. PL 84-99
assistance for threatened flood risk management projects (whether aged
or new) is provided at 100 percent federal cost and includes technical
assistance, provision of flood fight supplies, and emergency
contracting for work such as seepage blankets, riprap, driving sheet
piles, and temporary levee raises. For active flood risk management
projects in the PL 84-99 Rehabilitation Program damaged by a flood or
coastal storm, PL 84-99 assistance may repair the project to its pre-
storm condition or level of protection.
Other types of water resources facilities, e.g., locks, navigation
dams, hydropower units, and aquatic ecosystem restoration projects, are
beyond the scope of PL 84-99.
If the water resource facility is a dam, the Corps may also provide
inspection services under the National Dam Inspection Act, PL 92-367,
at the request of the non-federal owner.
Question 5. Can the Corps provide technical assistance to address
state or local aging infrastructure challenges?
Answer. Yes, the Corps has authority to provide technical
assistance to address state or local aging infrastructure challenges.
Section 22 of the Water Resources Development Act (WRDA) of 1974, as
amended, authorizes the Corps to provide technical assistance to
support state, local government, or Native American Tribe preparation
of comprehensive water and related land resources development plans,
including watershed and ecosystem planning. Technical assistance
provided under this authority is cost shared 50 percent federal/50
percent non-federal.
Question 6. Do the Corps and the Bureau collaborate on developing
best financial and technical practices for addressing aging
infrastructure?
Answer. In relation to hydropower, both agencies utilize the
Hydropower Modernization Initiative to prioritize projects for
modernization and/or replacement of major generating components.
Additionally, both agencies collaborate on the development of major
component operating condition assessments and operation and maintenance
practices. Additional collaboration between the agencies is in the area
of performance metrics definitions and utilization.
Question 7. What is the Corps estimated backlog for maintenance
needs, including those related to aging infrastructure? Is it
comparable to the Reclamation-cited figure of $2.6 billion?
Answer. The Corps does not keep track of a backlog of maintenance
work as such on an ongoing basis. Instead, it compiles a new estimate
each year of the sum of all amounts not funded that the individual
project managers say they could efficiently and effectively use by the
end of the fiscal year. All of the maintenance work funded in the
Budget is of higher priority than the unfunded work. Also, a large
portion of the unfunded work is not related to the aging of
infrastructure.
The mix of both funded and unfunded maintenance work in the Civil
Works program, and the priority of each item of such work, changes from
year to year. Maintaining the key features of our infrastructure is
becoming more costly over time. Generally, this is because of the
condition of some of the components, as well as cost increases in the
broader economy, not because of the age of our projects. Operational
demands nationwide have also grown and changed, particularly over the
past 30 years, creating additional stresses on this infrastructure.
Also, we understand that the Reclamation figure is a five-year
estimate of the costs of certain potential investments, and that many
of these costs are not a federal responsibility. The Corps estimates of
unfunded work covers a single year, and only includes the federal share
of the costs.
______
Response of Lowell Pimley to Question From Senator Schatz
Question 1. In recent years the Bureau of Reclamation has become
increasingly involved in ecosystem restoration in carrying out its
mandate. Can you tell us more about the Bureau's work in retrofitting,
decommissioning, and changing the operations of aging infrastructure to
support healthy ecosystems? How does this work address challenges
associated with repairing and replacing aging infrastructure?
Answer. Reclamation's actions to support healthy ecosystems often
require facility modifications or ``retrofitting'', but more often
tailoring the way major infrastructure is operated is the principal
means by which Reclamation supports healthy ecosystems. Participation
in open, multi-party programs with Reclamation customers and interested
stakeholders is the most common forum for these activities. A prime
example is the Platte River Recovery Implementation Program (Program),
a joint effort by local stakeholders, the states of Colorado, Wyoming
and Nebraska and the Department of the Interior to manage the Platte
River to improve habitat for three bird and one fish species listed
under the Endangered Species Act (ESA).
Through a contract between Reclamation and the State of Wyoming,
Reclamation provides water to the Program by delivering water from the
Pathfinder Modification Project through Reclamation's other facilities
on the North Platte to the Program's Environmental Account in Lake
McConaughy, a privately-owned facility in western Nebraska. The water
provided to the Environmental Account is a contribution to the Program
by the State of Wyoming, and the water is further re-timed to provide
flows to the Central Platte River in order to reduce shortages to
target flows by an average of 130,000 to 150,000 acre-feet per year.
This water is also used to provide short duration high flows in the
spring to create vegetation-free sand bars suitable for nesting by
piping plovers and least terns, and to create roosting habitat for
whooping cranes, which are three of the Program's target species.
Several other actions are part of the Program, and the Program's
ongoing activities provide critical ESA compliance for operation of
Reclamation projects on the North and South Platte Rivers, which
includes the Colorado-Big Thompson and North Platte projects, that
supply water and power to irrigators and municipalities in the three
states.
In some cases, actual facility modifications are undertaken to
address ecosystem needs. One such example is the installation of
temperature control devices on dams that allow for water to be drawn
from different depths of the reservoir. Instead of only drawing water
from original dam intake openings which can be fairly deep and cold,
temperature control modifications allow for warmer water to be drawn
from closer to the reservoir surface, in order to retain a cold water
pool for use at certain times of the year. The goal is to determine the
right temperature combination of the cold and warmer water flows to
benefit the native and/or endangered fish, while avoiding the
possibility of encouraging competitors (non-native, warm-water fish)
into the system. Temperature controls have been installed on several
dams including: Flaming Gorge (UT), Shasta (CA), Hungry Horse (MT), and
Jordanelle (UT).
Removal of dams may be considered in cases where the benefit of
continued operation is outweighed by the cost of doing so. Such costs
will include required operations or structural modifications to allow
continued operation pursuant to applicable laws or dam safety
requirements. This Committee's June 20 Roundtable on Water Resource
Issues in the Klamath River Basin featured an in depth discussion on
this subject, which is continuing.
As with any agency objective, there are costs associated with
supporting healthy ecosystems, just as there are costs associated with
the operations, repair and replacement of aging infrastructure. There
is no single correlation between ecosystem-based activities and
traditional water delivery for human uses, because the activities are
intertwined under modern natural resources law. Reclamation's work to
support healthy ecosystems has a statutory basis, as does Reclamation's
work to design, build and maintain traditional water supply
infrastructure with its customer community.
Responses of Lowell Pimley to Questions From Senator Barrasso
Question 1. What are the aging infrastructure hotspots within
Reclamation's portfolio for the next decade? What is the strategy for
making these investments?
Answer. Each Reclamation project and facility is different, and all
have their own set of maintenance challenges that can stem from aspects
of the original design, general wear and tear that comes with age,
environmental conditions during their lifespan, demands of operation,
and many other factors. Facilities like the Colorado-Big Thompson
Project (CO), Minidoka Area Projects (ID), Milk River Project (MT), and
Middle Rio Grande Project (NM) are examples of projects with
significant work scheduled or underway in the next decade. The ongoing
modifications at Glendo and Guernsey Dams (WY) are good examples of our
efforts to modernize our infrastructure and where infrastructure is
being addressed through the Safety of Dams program. Seminoe (WY) and
Bull Lake (WY) Dams are also good examples of aging infrastructure that
will be addressed through the Safety of Dams program in the near
future. Reclamation's overall Asset Management Strategy relies on
analysis of four types of data to make investment decisions that are in
turn presented in our annual budget request: 1. condition assessments;
2. condition and performance metrics; 3. technological research and
deployment; and 4. strategic collaboration to continue to improve the
management of our assets and deal with aging infrastructure challenges.
Reclamation applies the results of these analyses through a
preventive maintenance philosophy in collaboration with operating
entities to identify deficiencies and issues at an early stage.
Regularly-scheduled inspections (condition assessments) of reserved and
transferred works are conducted, resulting in prioritized formal
recommendations which are tracked until completion. Through the
completion of these recommended actions, more significant concerns are
avoided or minimized such as service interruptions, structural
failures, and extraordinary operation and maintenance (XOM) activities.
To address XOM activities in a timely manner, Reclamation uses its
established Extraordinary Operation and Maintenance prioritization
criteria, which evaluates: engineering need, consequences of failure,
efficiency opportunities, financial consideration, and schedule.
Question 2. What has been Reclamation's experience with alternative
financing for addressing aging infrastructure? What is the status of
Reclamation's loan guarantee program?
Answer. Authority for what may be called ``alternative financing''
was provided in Title IX of Public Law 111-11. This law provides
authority for the extended repayment of extraordinary (non-routine)
operations and maintenance costs (XOM), and Reclamation has developed
eligibility criteria in the Reclamation Manual. Reclamation has
received five requests for funding and repayment under Title IX. All
five requests have been approved; however, only three of the requesting
entities chose to move forward with the funding. Two of the entities
opted to use their own funds for the necessary extraordinary operation
and maintenance (XOM) costs after the request for Title IX funding and
repayment had been approved. Reclamation is aware of an additional
request that is in preparation at this time for XOM funding and
repayment under Title IX.
P.L. 109-451 authorized loan guarantees for certain rural water
supply projects; operation and maintenance of facilities authorized by
or under contract pursuant to Reclamation law, and improvements to some
existing Bureau of Reclamation water projects. Reclamation requested
public comment on a proposed rule to implement the loan guarantees
program published in the Federal Register on October 6, 2008. The
proposed rule established criteria to determine eligibility of entities
to use loan guarantees to fund Rural Water projects, as well as
extraordinary maintenance and rehabilitation for existing federal
facilities. Reclamation received comments from 14 entities mainly
dealing with: 1) the appropriate portion of loans to be guaranteed; and
2) using loan origination fees to offset appropriations needed to fund
the program. The rule has not been finalized. Authority for the program
will end in December 2016.
Question 3. Is there interest at the state, local, and customer
level in the transfer of ownership of Reclamation facilities? If so,
which categories of facilities are attractive for transfer and how
might such a transfer affect the federal balance sheet in the short-run
and the long-run?
Answer. There is interest at the state, local and customer level in
the transfer of ownership of some Reclamation facilities, but it is
very focused on specific facilities in specific areas, with a specific
set of circumstances. Over the past 20 years, Reclamation has
transferred title to numerous projects and facilities across the West.
In most cases, the recipients of title were already responsible for
operations and maintenance of these facilities--both for carrying out
the work and for paying the cost. In most cases, taking title has
afforded recipients some additional flexibility with respect to
operations and the recipients' ability to seek loans and other sources
of funding, since loan eligibility often hinges on asset ownership. For
Reclamation, title transfer has enabled us to redirect some of our
limited resources to other activities.
When projects are fully repaid, the benefits to the United States
of title transfer include the elimination of any future liabilities or
costs on Reclamation's appropriated budget related to ownership--
specifically design, construction, safety, and management oversight and
responsibility to address any deficiencies or inadequacies. The
potential disadvantages include the possibility of costs associated
with the preparation of an asset for title transfer; and the challenges
of ensuring that the title transfer relieves the Federal Government of
all future liabilities and costs. Additional information on title
transfer, as well as a checklist of prerequisites that make title
transfer a viable option, are available to Reclamation customers on our
Web site at http://www.usbr.gov/title/.
Approximately two-thirds of Reclamation's assets have been
``transferred'' to non-federal operating entities where the operation
and maintenance of these assets is the responsibility of operating
entities that benefit from the projects. These ``transferred works''
are facilities owned by Reclamation where operation and maintenance of
the facility has become the responsibility of an operating entity
(irrigation district, state, county, city, local customers, managing
partners, or others) pursuant to contracts with Reclamation.
``Transferred works'' are not the same as projects where title transfer
has occurred. Title transfer refers to the asset leaving the federal
portfolio and being fully owned by non-federal entities.
Only transferred works facilities are operated and maintained by
non-federal operating entities. ``Reserved works'' are facilities
operated and maintained on a day-to-day basis by Reclamation staff, and
this designation applies to approximately one-third of Reclamation
assets.
Question 4. When federal hydropower facilities are not available
for generation, it results in reduced federal revenues. What were the
estimated federal revenue losses due to the decrease in availability of
Reclamation hydropower units over the last 10 years?
Answer. Hydropower units are unavailable for generation for two
main reasons; scheduled outages and forced outages. Scheduled outages
are those outages that are planned to accomplish routine maintenance
and minor and major rehabilitation. Because they can be planned, every
effort is made to plan them at times when the impact to the Bulk
Electric System and federal revenues is minimized. This is usually
during the spring and fall months as electricity demands are lower in
those months. These outages usually last for a period of a few weeks to
several months but can last over a year for major work. When they
extend past the low demand periods, the likelihood of the outage
impacting revenues is increased. In some cases and for some periods
during a scheduled outage, other generators may be able to meet the
demand and eliminate impacts to revenue. Forced outages are those that
are caused by unexpected equipment failures and system conditions or
emergencies. By their nature, they can occur at any time and last from
a few minutes to months. Because of this, their impact on revenues
varies significantly. In some cases, when a plant is not running at
full load, other generators can fill in to absorb the lost generation
and prevent loss of revenue.
Reclamation works with our power customers to maintain a robust
program of inspection, repair, and replacement that is intended to
minimize forced outages, minimize the impact of scheduled outages, and
maximize the efficiency and reliability of our hydropower facilities.
This collaborative decision-making process helps us to make cost-
effective, appropriately-timed investments to address specific needs at
each of our facilities. Because lost revenue depends largely on outage
timing and length and system conditions during the outage period,
Reclamation does not track lost revenue. However, we do track our
facilities' forced outage factor, which has averaged 2.2% in recent
years, equal to the overall industry average. We also track the
condition of major generator and turbine related components, and in
recent years we have maintained over 90% of those components in good or
fair condition.
Question 5. Analytics are increasingly used by utilities to manage
their assets and performance; analytics describes technologies and
processes that use data to understand and analyze business performance.
These can include real-time monitoring sensors of structural integrity
and processes to support predictive maintenance strategies. What role
do analytics play in Reclamation's asset management and performance
strategy?
Answer. As summarized in the answer to Senator Barrasso's question
1, Reclamation's overall Asset Management Strategy relies on condition
assessments, condition and performance metrics, technological research
and deployment, and strategic collaboration to continue to improve the
management of our assets and deal with aging infrastructure challenges.
The outcome of these data points are recommendations that are required
to be acted upon over various periods of time and in many cases in
collaboration with our operating entities. Regularly-scheduled
inspections (condition assessments) of infrastructure (e.g. Power,
Dams, Associated Facilities) are conducted, resulting in prioritized
formal recommendations which are tracked until completion in systems
such as the Reclamation's Dam Safety Information System and the Power
Review Information System.
______
Responses of Charles Stern to Questions From Senator Barrasso
Members of the Senate Energy and Natural Resources Committee
requested that the Congressional Research Service respond to
questions for the record from the July 25, 2013, Senate Energy
and Natural Resources Committee, Subcommittee on Water and
Power hearing titled ``Issues Associated with Aging Water
Resource Infrastructure in the United States.'' The following
provides responses to the questions. CRS does not make
recommendations; questions asking for recommendations or
opinions are addressed by providing relevant information and
identifying recommendations made by other entities.
Question 1. What are the lessons for state or local water resource
investment efforts based on your research and recent federal
experiences with alternative financing?
Answer. There are advantages and disadvantages associated with the
use of alternative financing for federal water resource projects,
including the use of Special Purpose Entities, ``innovative'' finance
(i.e., a mix of federal loans and traditional financing), and Public-
Private Partnerships. Some of these lessons may apply to state or local
projects. Generally speaking, an important lesson seems to be that some
water resource projects may face greater challenges than other types of
infrastructure in successfully implementing these options. Some
specific challenges to federal facilities that may apply to state or
local water resource investments are discussed below.
Regardless of the specific type of alternative financing that is
used, new revenues (often in the form of project-based user fees) are
likely to be needed to facilitate various forms of alternative
financing. Whether projects are owned by the federal government or
another entity, water resource projects may have difficulties raising
revenues for a number of reasons. One such difficulty, associated with
many Army Corps of Engineers (Corps) projects and some Bureau of
Reclamation (Reclamation) projects, is that water resource projects
often have multiple beneficiaries which are difficult to identify. This
may in turn make it difficult to institute user fees that may be
required to facilitate alternative financing. Water resource projects
may be operated for any number of purposes (e.g., flood control,
municipal or agricultural water supply, navigation, recreation,
ecosystem restoration hydropower), and each of these purposes may have
different users who benefit from a project to varying degrees. If most
or all of a project's expenses are funded out of a government's general
revenues (i.e., the General Fund of the Treasury, or a comparable state
or local source), there may not be a need to identify and charge the
beneficiaries for these projects. However, this is not the case for
projects financed by user fees. In the latter case, defining these
beneficiaries and assessing fees on them can be a challenging exercise.
On the other hand, a water resource project with existing
relationships with users (e.g., Reclamation irrigation projects) and an
established process for repaying some investments may not have a
problem identifying project beneficiaries, but may face other
difficulties. Prior experience suggests that these users may have
difficulties financing high cost aging infrastructure projects through
existing or new user fees. This is largely due to the cost of repairs
and ability to repay them through project revenues. For other types of
infrastructure, such as transportation projects, alternative financing
has largely been utilized with high-use infrastructure projects where
it is possible to institute user fees that do not result in significant
disruptions to user behaviors. These projects are most likely to
provide a reliable stream of revenue that repays the investment of the
financing entity, and are thus more attractive to investors. The extent
to which this is the case for water resource projects is largely
unknown.
Taken together, these complications suggest that significant
analyses of investment requirements and user behaviors at individual
water resource facilities, and extrapolation to the larger portfolio of
investments, may be required to make any actionable decisions regarding
the potential use of alternative financing. The required analyses may
in some cases be highly complex, and require a significant degree of
sophistication that may pose challenges for project sponsors.
CRS has completed limited analyses that have hypothetically applied
alternative financing concepts to federal water projects and that may
be illustrative for state and local entities. One potentially
illustrative analysis estimated the cost of construction of five new
locks on the Upper Mississippi River. It employed a number of
assumptions in regards to traffic levels, borrowing costs, and related
factors to these projects, and assumed the construction would be
financed only by user fees (i.e., not cost shared between the Inland
Waterway Trust Fund and the General Fund of the U.S. Treasury). CRS's
analysis found that for a comparable barge trip from Minneapolis to New
Orleans, such an approach would require four times as much in user fees
as is currently collected in federal fuel taxes. Other independent
expert assessments, including one such assessment by the National
Research Council, have similarly concluded that the potential for
alternative financing to benefit water resource projects appears to
vary significantly and depend on project type. These same assessments
concluded that those projects with existing revenue streams, high usage
and significant commercial value, such as hydropower and port projects,
seem to possess the most potential for this type of financing.
Question 2. What are the practical impacts for congressional
decision makers of not having comprehensive data on federal aging water
resource infrastructure?
Answer. Some stakeholders and Members of Congress assert that the
lack of a comprehensive source of publicly available information on
aging infrastructure makes it difficult to evaluate the status and
needs of aging water infrastructure, both for individual water resource
facilities and the larger portfolio of these federal investments. While
this information is in some cases available upon request from agencies,
it is not typically provided in a regular, publicly available reporting
format that uses consistent terminology, methodologies, and performance
metrics. The lack of such a frame of reference to use as a basis for
discussion of aging infrastructure issues could potentially delay or
complicate congressional deliberations such as annual appropriations
bills, which recommend funding levels for individual Corps and
Reclamation projects as well as broad categories of funding (i.e., dam
safety improvements and extraordinary operations and maintenance
programs). Additionally, the lack of comprehensive data on aging
infrastructure could theoretically affect congressional consideration
of authorizing legislation and agency oversight activities related to
the status of infrastructure investments, since this information may be
used by Congress to inform these deliberations. The extent to which any
of this would actually be the case would likely depend on the specific
project or program under consideration, and the extent to which
information needed for decision making is readily available from the
agency or other sources.
Appendix II
Additional Material Submitted for the Record
----------
Statement of Robert C. Weaver, Kelly & Weaver P.C.
Discussion Paper.--National Investments in American Clean Water
Infrastructure
an american clean water trust fund to support national clean water
goals
February 2013.
All Americans benefit from clean and safe water. Adequately
performing, sustainable and continuously improving wastewater and water
infrastructure is critical to protect public health and the
environment, and economically strong and vibrant American communities.
These expenditures are financed chiefly by local governments--cities,
counties and separate publicly owned wastewater utilities.
The federal government made significant investments to contribute
to achievement of secondary treatment for wastewater in the 1970s and
1980s through Clean Water Act grant funding. But construction to
control of combined and separate systems wet weather overflow controls,
replacement of aging infrastructure and to provide more stringent water
quality-based treatment remains a local cost alone as financed
primarily by local municipal bonds and loans from the federal state
revolving loan funds for wastewater and drinking water facilities.
Expanded national investments including grants supported by
national dedicated revenue would:
(1) Advance the national commitment to clean water;
(2) Provide jobs;
(3) Provide a further incentive for investments by local
governments in wastewater and drinking water infrastructure;
(4) Support compliance with enforceable Clean Water Act
requirements;
(5) Capture benefits to downstream users now financed by
communities upstream;
(6) Expand community sustainability; and
(7) Add to the Nation's infrastructure base and related
economic benefits; and (8) assist with the replacement of aging
infrastructure some parts of which are over 100 years old.
local rate increases & improved management alone are not sufficient
Local governments spend $63 billion annually on clean water
infrastructure--second only to education. Since the inception of the
Clean Water State Revolving Fund loan program in 1990, local
governments have financed most facilities with municipal bonds or SRF
loans requiring repayment from local customer fees. Over 97 percent of
all wastewater construction is financed using local resources provided
by local economies.
The National Association of Clean Water Agencies (``NACWA'') has
reported that member agencies responding to its 2009 Service Charge
Survey reported average rate increases of 8.5 percent while the
national Consumer Price Index fell by 0.4 percent that year. NACWA,
2009 Service Charge Index. In the wastewater community, private
financing generally has been avoided since private companies must
provide a profit to shareholders and pay taxes. An efficient public
wastewater utility further reduces total service costs freeing more
investment capital than an efficient private utility.
Utility Asset Management
Over the past decade local utilities have expanded the use of tools
known as asset management. The use of these tools is considered in
developing capital project estimates. An Environmental Protection
Agency (``EPA'') source has said that the rate of adoption of asset
management has been very fast over the last couple of years. At least
50 percent of the larger utilities are well on their way to adopting
significant aspects of an asset management approach. Within a couple
more years, there will be very few utilities, that aren't moving
towards basic asset management practices.
Water Efficiency and Growth
More efficient water use, which may cut operation and maintenance
costs initially, is short-run fine-tuning. Efficiency may reduce the
need to invest today in growth-related infrastructure, but estimates of
the national funding gap do not include a component for growth. By
reducing demand on treatment plants, water conservation can at best
defer investments in capacity expansion, but in the long run, nothing
else changes.
Watershed Management
Reduction in costs from the application of watershed management are
estimated as limited across the country and the potential to reduce
investments at wastewater utilities is limited to perhaps 2-3 percent
based on the number of water-quality limited stream segments that
contain POTWs.
economic benefits of wastewater infrastructure investments
Public investments in wastewater facilities improve: (1)
competitiveness for American industry, (2) jobs, (3) private
profitability, and (4) wages, which in turn yield higher tax revenues.
Businesses, particularly manufacturers, benefit from continual
improvement in wastewater treatment facilities.
An increased national commitment to meeting the gap in clean water
infrastructure would be a sound national economic investment for jobs
and growth. Each $1 billion in wastewater improvements generates over
47,000 direct and indirect jobs. By comparison, total job creation by
highway and road construction has been estimated to be approximately
34,000, for each $1 billion spent. A Report on Clean Water Investment
and Job Creation prepared by the National Utility Contractors
Association by Apogee Research, Inc., March 30, 1992.
Additionally, the U.S. Conference of Mayors has reported that
construction of wastewater facilities infrastructure has an estimated
gross domestic product multiplier of 6.3 to 1.
Grant funding is a stronger economic incentive
Only federal grants can provide adequate incentive and capital for
moving the national clean water program forward at an appropriate pace
recognizing the burden of massive requirements placed on local
governments. Additionally, national grants limit local fiscal impacts
that would provide incentive for businesses to move to other
communities where local rates are not as high.
Finally, infrastructure networks are a national priority with
social, economic and environmental equity implications when provided
unevenly across America. Congress recognized these networks as a
national in enacting the Clean Water Act of 1972 and the Safe Drinking
Water Act in 1974.
national, sustainable, long-term, reliable capital
National requirements for wastewater infrastructure are driven by:
(1) the federal Clean Water Act enforced by EPA and NPDES delegated
states; and (2) three waves of aging infrastructure constructed from
the late 19th Century to the 1960s, the useful lives of which are now
ending. Approximately $10 billion dollars annually is required to close
the national gap in wastewater infrastructure construction, with a
similar amount for drinking water infrastructure.
In 2000, a coalition of organizations under the Water
Infrastructure Network (``WIN'') documented the importance of a
national source of sustainable, reliable and long-term capital
recognizing that all Americans benefit from clean water. The WINow 2000
Report projected that the costs of maintaining and advancing water
quality and reducing wet weather flows would require $550 billion in
new construction. An additional $450 billion is needed in new, drinking
water construction.
In 2002 and 2003, EPA and the General Accountability Office
reported a gap of $300 billion to $500 billion between what is being
spent and what needs to be spent on legacy infrastructure replacements
and new construction to meet future water quality requirements.
EPA's Progress in Water Quality Report issued in 2000
concluded that, if additional improvements are not made,
America could see a return to pre-Clean Water Act levels of
stream impairments by as early as 2016.
National requirements for clean water are estimated to cost
well beyond local governments' ability to pay and will result
in major increases in local water and wastewater rates
nationwide.
Wastewater infrastructure is no less important than other
infrastructure because of the value of clean water to the
nation as a whole, public health of American communities, the
downstream and interstate impacts of polluted waters, and the
networking benefits of such facilities.
Local governments are simultaneously building other
infrastructure to assure public health, safety and well-being.
Debt incurred from all infrastructure needs is a major burden
on communities, thereby, limiting future borrowing capacity,
and the ability to meet national water quality goals and
objectives.
Grants capture downstream clean water benefits: Treated
wastewater is a national public good. Under present financing
arrangements including the CWA SRF loan program, down stream
communities and their ratepayers realize, but do not contribute
to, clean and safe water benefits from infrastructure
improvements financed by upstream communities. Expanded federal
funding that includes matching grants supported by national
dedicated revenue would capture those benefits.
Continuing advances in advanced water and wastewater
infrastructure technologies are critical to public health and
water quality improvements, improved service, and effective
asset management.
Expansion of SRFs provide additional funding to pay for
municipal bond insurance and guarantees, now authorized for the
existing SRF programs, and thereby attract more private
capital.
A sustainable source of new public capital is essential:
Local capital funding, municipal bonds, and SRF loan paybacks
all increase local customer rates. As rates increase, the
ability of local governments to pay off bonds and SRF loans
decreases, and with it, local government credit ratings on
which further bond financing and loans are based.
New capital from a national source, representative of the national
funding gap and the national commitment to clean water, is fundamental
and essential to advance water quality in America. Even with federal
grant funding, most of the cost of infrastructure improvements will be
financed by local customer rates.
elements of a national clean water trust fund (``ncwtf'')
Essential Objectives and Uses include:
Matching grants to local utilities for construction of
wastewater treatment and transport facilities, overflow
controls, and biosolids treatment.
Matching grants to states to further capitalize state
revolving funds for loans, bond insurance and other SRF
assistance.
Research, development and full-scale demonstration of
advanced wastewater treatment technologies.
Grants to advance watershed management including substate
water quality management planning for American rivers, lakes
and streams including under Sec. 208 of the Clean Water Act.
Grants for urban stormwater and rural nonpoint source
management.
Grants for rural nonpoint source programs.
Permanent funding for Sec. 106 Clean Water Act state
program management grants to support Sec. 301 water quality
standards; Sec. 303(e) continuing planning process by states;
and the Sec. 402 NPDES permit program.
Grants for substate water quality management planning and
total maximum daily loads development under Sec. 208.
Permanent funding for the Sec. 319 nonpoint source program
and other CWA programs.
Innovative financing supportive of the SRF programs.
Other similar authorities under the Safe Drinking Water Act.
national clean water user fees
All Americans--citizens and their places of employment and
community, benefit from clean water and all should contribute to a
renewed national commitment. To be successful and nonburdensome,
revenue sources to finance a national trust fund would be:
(1) Funded from the national economy instead of local
economies,
(2) Long-term,
(3) Sustainable,
(4) Reliable,
(5) Low rate,
(6) Broad-based on products solid in interstate commerce, and
(7) Fair and equitable.
One combination of clean water user fees meeting these criteria
include:
Low rate user fees on a range of flushable products sold
nationally;
Low rate fee increment on the national corporate income;
Fines and penalties collected under the federal Clean Water
Act; and
Other similar national user fees.
benefits
Such revenue helps reduce the current deficit in the federal
General Fund.
States could be authorized to charge an additional increment
on national fee sources for use in further aiding wastewater
construction in their states.
National, dedicated revenue trust funds have been extremely
successful as a source of national capital devoted to national
infrastructure improvements such as for highways, mass transit
and airports.
Federal or state taxes on local governments or their
wastewater and water utilities would only increase the burden
on local governments and local economies, and are opposed by
local governments and their national organizations.
A national clean water trust fund would be deficit neutral
because it would be financed by new revenue, dedicated to the
purposes and uses of the fund for clean and safe water
infrastructure. Authorizing legislation should establish a
fire-wall to assure that the funds would be spent only for
those purposes on an annual basis.
Government Accountability Office Report
A Variety of Issues to be Considered When Designing a Clean Water Trust
Fund Bill
certain implementation challenges
2009
In December 2007, Congressman James Oberstar, Chairman of the House
Transportation and Infrastructure Committee requested the U.S.
Government Accountability Office (``GAO'') conduct a study of potential
revenue sources for a National Clean Water Trust Fund.
GAO's report, A Variety of Issues to be Considered When Designing a
Clean Water Trust Fund Bill, was issued in June 2009 and hearings were
held on the report by the House Transportation and Infrastructure
Committee on July 15, 2009.
The 2009 GAO report reviewed and analyzed the following national
revenue options: (1) excise taxes on flushable products, pesticides,
fertilizers, pharmaceuticals, and water appliances and plumbing
fixtures; (2) an additional tax on corporate income; (3) a water use
tax based on volume and added to residential, commercial, industrial
utility rates paid by local customers and collected by local utilities;
and (4) an industrial discharge tax.
A summary of GAO's findings include:
1. Excise taxes on products that may contribute to the
wastewater stream would:
Identify precise product definitions.
Modify IRS's current excise tax collection
and enforcement framework.
``According to IRS officials, collecting and
enforcing an excise tax at the manufacturing level is
preferable because it involves fewer taxpayers than a
tax that is levied at the retail level.''
2. Additional Tax on Corporate Income
``According to IRS officials, implementing
an additional tax on corporate income would require
defining the type of corporations and the portion of
their income that would be subject to his tax.''
The current collection system for the
corporate environmental income tax for the Superfund
program is available and ``was levied only on
corporations that had income in excess of $2 million.''
3. Water Use Tax on Localities
``Collecting this tax could be difficult,
because . . . it would most likely involve relying on
some of the billing systems in place for the nation's
existing 50,000 community water systems and over 16,000
publicly owned wastewater plants along with other local
government entities'' that together do not use uniform
billing systems. Some systems charge based on volume
used and others use flat fees or other types of rate
structures.
``In addition, decisions would need to be
made regarding which users of the system--households,
commercial, and industrial--would be subject to the
tax.''
4. An Industrial Discharge Tax
An industrial discharge tax or fee would
require determining whether to charge amounts in
discharge permits or actual discharges.
Suffers from a lack of complete and accurate
data on the number of permittees and quantities of
industrial discharges.
Determining whether individual or general
NPDES permits would be taxed and setting a tax rate.
Effluent and levels of discharge can vary
significantly between ``and charging a flat tax to all
permit holders may not be equitable.''
EPA ``would have to develop a basis for
establishing a tax rate and put in place a collection
and enforcement framework before a permit-based tax
could be implemented.''
``Currently, EPA does not collect any taxes
on industrial discharges, and to implement such a tax
would require EPA to put in place a collection and
enforcement framework.''
EPA does not have complete data for
designing and for an enforcement framework on the
environmental and human health hazards posed by such
discharges.
There are a large number of chemicals and
their varying characteristics, and there are ``inherent
scientific difficulties in using existing toxicity
weighting systems to compare toxicity among
chemicals.''
The GAO report also provides information on: (1) stakeholder and
industry interest in revenue options based on a limited sampling data;
and (2) estimates of revenue, also based on limited information that
could be collected under the options included in the report. A
comparison of revenues analyzed by the GAO report and included in the
newest House bill follows.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
chronology of policy and legislative developments
1996
EPA reported to Congress on alternative funding and dedicated
revenue options.
2000
The Water Infrastructure Network reported construction needs of
$550 billion for wastewater and $450 billion for drinking water, and
needs continue increase.
2000
EPA's Progress in Water Quality Report concluded that, if
improvements are not made, America could see a return to pre-Clean
Water Act levels of stream impairments by as early as 2016.
2002 & 2003
EPA and the Government Accountability Office (``GAO'') report a gap
of $300 billion to $500 billion between what is being spent and what
needs to be spent on legacy infrastructure replacements and new
construction to meet water quality requirements.
2005
Congressman John Duncan (R-TN) and bipartisan cosponsors introduced
H.R. 4560 to establish a clean water trust fund subject to revenue
source studies.
2009, June
GAO report, A Variety of Issues to be Considered When Designing a
Clean Water Trust Fund Bill, detailing suggested revenue options and
reasons not to impose federal tax on local government wastewater and
drinking water systems.
2009, July
H.R. 3202, Water Protection and Reinvestment Act introduced by
Congressman Blumenauer (D-OR) and bipartisan cosponsors to fund the
clean water and drinking water SRFs, grants for wet weather control,
state CWA and SDWA programs, and research and development.
2010
Simpson-Bowles National Commission on Fiscal Responsibility and
Reform recommend reauthorization of transportation trust funds with
dedicated revenue to maintain national investments in highways and
transit systems.
2011
H.R. 4135 Water Protection and Reinvestment Act of 2011 introduced
by Congressman Bishop (D-NY) and bipartisan cosponsors to reauthorize
clean water SRF, establish clean water trust fund, provide for a
Congressional Budget Office report on revenue sources for the fund,
establish a Water Innovative and Finance Infrastructure Authority
program, and for other purposes.
2011
The Administration and Congress begin reductions in federal capital
grants to states for the clean and safe water SRFs, though national
commitment to clean water and regulations remain and needs continue to
expand. One estimate is that the corpuses of SRFs will reduce 30
percent in 10 years if annual federal capital grants are ended by the
Congress.
2012
Congressmen Bishop (D-NY), LaTourette (R-OH) and Blumenauer (D-OR)
send letter to the Congressional Budget Office (``CBO'') requesting
analysis and report of national revenue sources for clean water trust
fund legislation.
2012
Senate committee hearing witnesses support trust fund legislation.
2012, August 1
Congressman Earl Blumenauer (D-OR) H.R. 6249 introduces Water
Protection and Reinvestment Act to create a clean water trust fund to
support the Clean Water Act State Revolving Fund program and related
EPA programs.
wide national support
An overwhelming majority of Americans (84 percent) would support
legislation in the U.S. Congress that would create a long-term,
sustainable and reliable source of federal funding for clean and safe
water infrastructure. Luntz Research for NACWA.
The Clean Water Trust Fund has attracted support from many
individuals and organizations as reported by Clean Water America,
www.cleanwateramerica.org. Among supporting national organizations are:
Ducks Unlimited, Trout Unlimited, American Rivers, National
Association of Towns and Townships, Association of State and
Interstate Water Pollution Control Administrators, American
Society of Civil Engineers, Western Coalition of Arid States,
Rural Community Assistance Partnership, National Association of
Clean Water Agencies, American Sportfishing Association,
American Council of Engineering Companies, Theodore Roosevelt
Conservation Partnership, Construction Management Association
of America, International Association of Fish and Wildlife
Agencies, American Public Works Association, Association of
Equipment Manufacturers, The Associated General Contractors of
America, Design Build Institute of America, Underground
Contractors Association, Plastics Pipe Institute, American
Concrete Pressure Pipe Association, American Supply
Association, Portland Cement Association, Associated Equipment
Distributors, BASS/ESPN Outdoor.
conclusion
Continuing under-investment in clean water threatens water
resources, the environment, public health, community sustainability and
the national economy. The national government is best able to provide
new sources of capital for national investments in essential
infrastructure because funding can be available even in periods of
fiscal stress by:
Support from the national economy rather than depending on
local economies alone;
Removing the present clean water and drinking water SRFs and
related program costs from the federal General Fund to reduce
its deficit; and
Providing new funds supported by new, dedicated revenue to
move the national clean water program forward for the benefit
of all Americans.
Enactment of a National Clean Water Trust Fund financed by a fair
and equitable system of clean water restoration user fees would provide
a national source of capital for investments to contribute to the
achievement of national clean water goals and job creation.
______
Statement of Peter B. King, Executive Director, the American Public
Works Association
Chairman Schatz, Ranking Member Lee, and members of the
subcommittee, thank you for the opportunity to submit testimony
relating to the recent hearing on the state of water infrastructure in
the United States. My name is Peter King, Executive Director of the
American Public Works Association (APWA). I submit this statement on
behalf of the more than 28,500 public works professionals who are
members of APWA. Improving the condition of our nation's aging water
infrastructure requires increased funding for capital investment, and
local governments will need a suite of financing tools to meet these
funding demands.
background
APWA is an organization dedicated to providing sustainable public
works infrastructure and services to millions of people in rural and
urban communities, both small and large. Working in the public
interest, APWA members plan, design, build, operate and maintain
transportation, water supply and wastewater treatment systems,
stormwater management, drainage and flood control infrastructure, waste
and refuse disposal systems, public buildings and grounds, emergency
planning and response, and other structures and facilities essential to
the economy and quality of life nationwide.
APWA's members play an important role in providing clean and safe
water to their communities. However, the current water infrastructure
system is deteriorating and strains under the increasing demands for
sound flood control, efficient waterway transportation systems and for
clean and safe water. In their most recent infrastructure report card,
the American Society of Civil Engineers (ASCE) gave the state of our
nation's water infrastructure, encompassing dams, levees, wastewater
and drinking water infrastructure, an average grade of a D. There are
an estimated 240,000 water main breaks per year in the United States
and the average age of the 84,000 dams in the country is 52 years old.
Nearly 14,000 of those dams ranked as high hazard.
Inadequate investment will only exacerbate the dire state of our
aging water systems. According to the ASCE report, capital investment
needs for the nation's wastewater and stormwater systems are estimated
to total $298 billion over the next twenty years. Additionally, reports
released by the Environmental Protection Agency (EPA), the American
Water Works Association and others show our drinking water utilities
and wastewater utilities face needs upwards of $1 trillion or more to
fund their systems over the next twenty years.
Currently, local governments are the primary investors in water and
sewer systems. According to a 2008 report by the US Conference of
Mayors, local governments cover 95 percent of the costs for water
infrastructure maintenance and 99 percent of the cost of wastewater
infrastructure maintenance. Local governments will need strong state,
federal, and private partnerships to meet the significant financial
needs of our water infrastructure. Additionally, the federal government
is encouraged to curb the practice of imposing unfunded mandates and
ensure that state and local governments receive strong financial
support to fulfill federal mandates. To ameliorate the state of our
water infrastructure, APWA supports a variety of funding mechanisms and
initiatives to increase capital investment in our dams, levees,
drinking water, and waste water infrastructure.
programs and initiatives to bolster capital investment in water
infrastructure
Water Infrastructure Finance and Innovation Act (WIFIA)
APWA supports the Water Infrastructure Finance and Innovation Act
(WIFIA). WIFIA is one of the many innovative funding mechanisms that
will be essential to closing the water infrastructure funding gap.
Modeled after the popular Transportation Infrastructure Finance and
Innovation Act or TIFIA plan, the WIFIA plan will lower the cost of
borrowing funds for municipal water/wastewater agencies. This will be
accomplished by leveraging funds directly from the U.S. Treasury which
would subsidize borrowing costs and lend the money at a lower interest
rate than is available in the municipal bond market. APWA supports
WIFIA because it gives local government agencies access to low cost
funds for water infrastructure projects. However, APWA supports all
efforts to establish increased funding opportunities for water,
wastewater and stormwater treatment system enhancements. WIFIA should
be one of the many tools that local government agencies can use to
finance water capital projects.
State Revolving Funds
In addition to WIFIA, APWA supports continued federal funding for
programs such as the State Revolving Funds (SRFs) that have proven to
be successful mechanisms for providing local jurisdictions with
necessary funds for water infrastructure capital. Clean and Safe
Drinking Water SRFs have provided $111 billion to local governments for
water infrastructure since their inception. SRFs are a vital resource
for financial support especially for small and rural communities. The
Clean Water SRF provides 23 percent of water infrastructure funding for
localities with fewer than 10,000 residents and the Drinking Water SRF
provides 37 percent.
Clean Water Trust Fund
APWA also supports the establishment of a trust fund as a
complement to the WIFIA program. A trust fund could serve as the
funding vehicle for a WIFIA program or simply as another financing tool
available to water infrastructure projects. The establishment of clean
water trust fund will ensure that there is a permanent, dedicated
funding source for clean water and drinking water infrastructure in the
U.S. There are a number of potential methods to fund the clean water
trust fund. Organizations such as the Water Infrastructure Network
(WIN) propose using fees on objects such as bottled beverages,
flushable products, pesticides, agricultural chemicals, and
pharmaceuticals to finance such a trust fund. APWA supports these and
many other innovative measures to ensure that there is a dedicated
funding source for water and wastewater infrastructure projects in the
future. A dedicated water infrastructure funding source supports local
governments and gives them the stability needed to finance and plan
long term infrastructure projects that typically span years.
Reauthorization of the Water Resources Development Act
APWA supports the reauthorization of The Water Resources
Development Act of 2013 (WRDA). A WRDA has not been authorized since
2007. A new authorization is necessary to continue approved flood
control, navigation, and environmental projects and studies by the
United States Army Corps of Engineers that improve and maintain our
nation's water infrastructure. Reauthorization of WRDA is important to
public works and the communities they serve. WRDA promotes investment
in the nation's critical water resources infrastructure, authorizes
projects that improve our nation's water infrastructure and
environment, and accelerates project delivery, saving local government
time and money. WRDA reauthorization will demonstrate that investment
in water infrastructure is a national priority
Other Initiatives
Additionally, APWA supports the creation of public private
partnerships. A government service or private business venture funded
and operated through a partnership of government and one or more
private sector companies will provide additional needed capital funding
for water infrastructure projects. Public private partnerships will
also shift the financial, technical and operational risk in the
projects from taxpayers to private companies. APWA also supports
raising the cap on private activity bonds, maintaining the tax exempt
status of municipal bonds, the creation of a long term dedicated
funding source such as a trust fund to fund local water system
projects, and the establishment of a national infrastructure bank as
potential funding vehicles for water infrastructure.
Conclusion
The consequences of inadequate investment in water infrastructure
are serious. Without increased funding in water infrastructure, local
communities will not be able to keep pace with growing demands for
flood control, waterways transportation, and clean and safe drinking
water. Economic opportunities will be lost. Water infrastructure
funding should be a national priority; the stakes are too high to
neglect this problem.
Chairman Schatz and Ranking Member Lee and members of the
subcommittee, thank you for holding this hearing and continuing to
pursue a solution to the nation's aging water infrastructure. We are
especially grateful to you and subcommittee members for the opportunity
to submit this statement. APWA stands ready to assist you and your
Congressional colleagues as you work to craft a solution to this
critical problem.
______
Statement of David Rabbitt, Chair, North Bay Water Reuse Authority
Chairman Schatz and members of the Subcommittee, I am David
Rabbitt, chair of the North Bay Water Reuse Authority (NBWRA), a
regional-scale partnership of 10 water resource agencies and local
governments in three counties (Marin, Napa and Sonoma) that rim the
north San Francisco Bay. I appreciate the opportunity to provide the
Authority's perspective on the issue of how the federal government can
assist local agencies in addressing the challenge of addressing the
critically important issues of aging and inadequate water
infrastructure.
Our North Bay communities face long-term water challenges to meet
the needs of agriculture, urban centers and environmental protection.
The North Bay Water Reuse Program (NBWRP) is developing and
implementing a series of regional-scale projects that are helping to
meet the region's water supply needs by producing, distributing and
storing a reliable source of recycled water and addressing water demand
and wastewater discharge issues concurrently using an integrated,
regional approach. The NBWRP promotes collaboration of smaller
sanitation districts and allows them to have access to funding and
expertise that they would normally not have. It also allows the
partnership to leverage state and federal funding. The NBWRP is unique
in its approach of collectively expanding reuse efforts--and in doing
so redefining regional--scale water reuse.
Addressing the problem of aging and inadequate water infrastructure
is a major challenge for the NBWRA members, as well as the country's
water and wastewater industry as a whole. The Environmental Protection
Agency has estimated that nationwide water agencies must invest $633
billion over the next two decades just to keep the existing water
infrastructure operating at current levels of service. Consistent with
these estimates, our own experience is that our member agencies will
need to invest more than $150 million, over the next ten years, in
treatment plants, pumping stations, storage facilities and distribution
lines around the three county region just to maintain current levels of
service.
In addition to the challenges of making age-related repairs to
existing water infrastructure is the challenge of addressing climate
change-related impacts. 2009 estimates by national water utility
organizations indicate that utilities will be required to invest
between $448 billion and $944 billion to address climate change-related
issues. The NBWRA members face similar pressures: drought conditions
have become more frequent; traditional sources of surface and
groundwater supplies are limited; and the quality of groundwater
supplies continue to degrade.
Without any new surface or groundwater supplies available, water
reuse offers the best near-term, reliable regional water supply
alternative.
Recent Successes in Accelerating Investments in Water
Infrastructure.--Implementation of Phase I of the NBWRP is well
underway. Under Phase I, the Authority members have six recycled water
projects underway or constructed. When complete, Phase I will provide
5,500 AFY of tertiary treated recycled water for agricultural and
landscape irrigation, salt marsh restoration and other environmental
benefits. Phase I will also create the backbone of a system that will,
in Phase II, generate more than 30,000 acre-feet of water per year.
The NBWRP has been successful in obtaining both state and federal
support. Phase I is authorized to receive $25 million in federal
construction assistance, for example. To date, the NBWRP has received
$16,590,000 in federal assistance under this authorization through a
combination of American Recovery and Reinvestment Act (ARRA) and Bureau
of Reclamation (Reclamation) WaterSMART and Title XVI grants.
In addition to federal assistance, the NBWRA members have been
awarded $2,875,000 through the various State of California competitive
grant programs and the members expects to receive an additional $5
million from other state sources between now and calendar year 2019,
when Phase I is scheduled to be complete.
The federal and state assistance, totaling $32,875,000, will be
matched by approximately $71,125,000 in non-federal program sponsor
funding. Of the $104 million total project cost for Phase I, the non-
federal sponsors are covering 68 percent of the costs. The message is
that WaterSMART and Title XVI are working. The programs, with a limited
federal investment, are making it possible for local agencies to invest
far greater sums to not only address their aging water infrastructure
challenges, but meet the broad water supply needs of a region in a
cost-effective, affordable and sustainable manner. Without the federal
and state investments, the local agencies would not have been
incentivized to work together to address the broad water supply needs
of the region, and a much delayed, piecemeal solution would have
necessarily and understandably been pursued by the individual member
agencies.
Additional Tools Needed to Facilitate New Investment in Aging Water
Infrastructure.--The NBWRA has begun planning work on Phase II of its
project, which, again, is expected to yield an additional 25,000 acre-
feet of water per year for a broad array of beneficial purposes.
Because of many of the systems, particularly the treatment facilities,
of Phase I were constructed to be easily expanded, Phase II will
achieve this five-fold increase in water yield through an additional
investment of somewhere between two-and-a-half and three times the
costs of Phase I, or $150 to $175 million.
Much of Phase II will focus on increasing available storage of
recycled water. Storage is the key to capturing the full value of
recycled water systems.
To secure the benefits of Phase II and assist other regions of the
West in addressing their aging water infrastructure challenges, the
NBWRA recommends the following:
WaterSMART, Title XVI.--The NBWRA recommends funding
WaterSMART, Title XVI at the highest practicable levels. The
President's request of $14 million for FY 2014 in the
WaterSMART Title XVI grant program is less than half that
requested in FY 2012, and a fraction of the actual need
expressed by the many water reuse projects previously studied
and authorized by Congress. Water recycling and reuse remains
the one reliable and readily available new source of fresh
water. Yet Reclamation still maintains a backlog of between
$400 million and $600 million in authorized federal cost-share
funding that could be leveraged in partnership with willing
non-federal water purveyors in the construction of these viable
and necessary water reuse projects under Reclamation's Title
XVI program, creating literally hundreds of thousands of acre-
feet of clean, usable water supplies annually--water that is
currently lost to the ocean.
Support Regional-Scale Water Reuse Projects.--The NBWRA
recommends that Congress direct Reclamation to support
regional-scale water reuse projects by expanding available
planning assistance under Title XVI for regional-scale projects
that include multiple jurisdictions and generate environmental,
as well as water supply benefits. These regional projects can
require longer planning timeframes than other more narrowly
focused projects. Accordingly, the NBWRA urges Congress to
direct Reclamation to allocate a portion of the funds within
the overall Title XVI program to advance regional-scale water
reclamation and reuse projects by providing planning grants of
up to $2.5 million over periods of up to five years.
Reclamation currently only makes available planning grants of
up to $150,000 and requires the funds to be expended within 24
months. Moreover, projects, even large-scale regional projects,
are barred from applying for multiple planning grants. This is
Reclamation's policy; there is no statutory prohibition to
increasing the size of available grants and extending the
period of time over which they must be expended.
Support Access to Long-Term, Low Interest Financing for
Water Infrastructure Projects.--The NBWRA urges Congress to
approve an amendment to the Twenty-First Century Water Works
Act (Title II of Public Law 109-451) that would authorize the
Bureau of Reclamation to make long-term, low-interest financing
to large-scale, regional water infrastructure projects that
generate multiple benefits, including water reuse facilities.
The 113th Congress has recently seen the introduction of
several water infrastructure loan programs, including a pilot
provision in the Senate passed Water Resources Development Act
(WRDA) of 2013, mirrored after the Transportation
Infrastructure Finance and Innovation Act (TIFIA). The Water
Infrastructure Finance and Innovation Act (WIFIA) would allow
for the Army Corps of Engineers (Corps) and the Environmental
Protection Agency to provide loans, lines of credit, and loan
guarantees to eligible water infrastructure projects with a
total cost of over $20 million (the Senate WRDA pilot program
allows for a smaller $5 million threshold for rural (< 25,000
population) community water projects) in an amount not to
exceed 49 percent of the total cost of the project. The Senate
WRDA pilot program would provide for a low interest rate (T-
bill rates) and a longer repayment period (35 years, including
an upfront five year no-payment grace period) than traditional
financing mechanisms, but would not allow communities to access
tax exempt municipal bonds to finance the 51 percent balance of
the project's cost. Eligible water projects, among others,
include water reuse, recycling and desalination projects. While
this type of assistance would be very helpful to water reuse
and recycling projects in the West, the NBWRA urges Congress to
broaden this authority to the Bureau of Reclamation for this
purpose as well.
One avenue to congressionally authorize a Reclamation
Infrastructure Finance and Innovation Act program, or RIFIA,
would be to amend existing law rather than pass an entirely new
authorization or add the agency to the current effort in the
Senate WRDA, both of which require a significant effort in the
Congress to find offsets for any new authorization or amend an
already Senate passed bill.
Title II of Public Law 109-451 already authorizes the Secretary of
the Interior, acting through the Commissioner of the Bureau of
Reclamation, to provide loan guarantees to finance up to 90
percent of the cost of an eligible water project for certain
non-federal borrowers as defined in Title II. For non-federal
water projects financed by Title II guarantees, such guarantees
would only ``cost'' the federal agency appropriated funds in
the amount of the actual risk (subsidy) underwritten by the
federal guarantee, which in most cases for publicly owned water
infrastructure equals about 2-5 percent of the total amount
guaranteed. However, Title II was written with more traditional
Reclamation projects in mind, including the rehabilitation and
betterment of existing water infrastructure. Due to the way the
provision scores in the budget process, no loan guarantees have
been made under the authority.
Create Expanded Grant Opportunities to Support the
Implementation/Construction of Integrated Water Management and
Storage Facilities.--The NBWRA urges Congress to expand the
opportunities within Reclamation to compete for grants that
support integrated regional water management and reuse
projects. Currently, Reclamation only has authority to
participate in water management projects with cost-shared
grants of not more than $5 million per project. Projects that
support sustainable water management practices should be
eligible to compete for grants of up to $15 million and funds,
once granted, should remain available for up to five years.
Transfer Title to Certain Reclamation Facilities or
Separable Elements of Such Facilities.--The NBWRA urges
Congress to consider steps that can be taken to create
opportunities for the non-federal sponsor of a Reclamation
project to invest in the project to allow the project to
continue to provide or enhance authorized project purposes to
project beneficiaries. The federal budget rules create barriers
to Congress providing assistance to non-federal sponsors of
federal projects to help them make investments to maintain or
improve federal projects. To address this problem, Congress
should grant the Secretary, under specific conditions, the
authority to transfer to a non-federal operating entity of a
reclamation project or a separable element thereof constructed
by the United States and titled in the name of the United
States where the project construction and other obligations
have been paid out by the project beneficiaries, the project is
in need of additional investment by the non-federal operating
entity in order to continue to provide or enhance project
purposes to project beneficiaries, and the transfer meets all
federal requirements (such as NEPA/ESA/etc.). Once transferred,
an opportunity for congressional review should also be
provided. Allowing the non-federal operating entity to obtain
access to low cost, long-term federally-backed RIFIA financing
under these circumstances would not constitute a ``third-
party'' financed obligation, would be favorably ``scored''
under congressional budget rules, and would provide an
incentive for the non-federal operating entity to make these
essential investments.
conclusion
The NBWRP can serve as a model for how communities of a region can
join together, develop and implement a common vision, and work in
partnership with the federal and state governments to maximize the
benefits of limited water resources in the West. The NBWRP experience
highlights the importance of continued federal and state investments in
water infrastructure and some of the ways those essential, yet limited,
federal investments can be made most effective.
______
National Taxpayers Union,
Alexandria, VA, August 6, 2013.
Hon. Brian Schatz,
Chairman,
Hon. Mike Lee,
Ranking Member, Subcommittee on Water and Power, Committee on Energy &
Natural Resources, 304 Dirksen Senate Office Building,
Washington, DC.
Dear Chairman Schatz, Ranking Member Lee, and Members of the
Subcommittee: On behalf of National Taxpayers Union's (NTU's) 362,000
members, I write to offer comments for the record in regard to the
Subcommittee's July 25 hearing to address aging water infrastructure
resources in the United States. NTU applauds you for exploring this
topic, which has major implications for taxpayers.
As you may know, NTU's members believe that the nation's
considerable challenges for replacing, renovating, and financing
infrastructure must be met in a fiscally responsible manner that
encourages innovative policy approaches at all levels of government and
relies more heavily on private-sector involvement. According to
calculations from Harris Kenny of the Reason Foundation, the combined
2012 renewal rate of private contracts for water and wastewater
services by local governments (whether re-approving the incumbent or
awarding to a new bidder) was nearly 90 percent. This should be a
testament to the feasibility of public-private partnerships in
delivering such a critical infrastructure component. Although far from
perfect, recent Congressional action on a pilot program version of a
Water Infrastructure Finance and Innovation Authority is another sign
of bipartisan interest in developing alternatives to high-cost funding
processes for water and sewer initiatives. Yet, given the fact that the
estimated average replacement value of the entire water network in the
U.S. could amount to trillions of dollars, the need for a fundamental
shift in thinking about this issue remains clear.
Accordingly, I wish to commend your attention to a report NTU
commissioned in April concerning one component (amounting to roughly 60
percent) of this massive potential liability for taxpayers and
ratepayers: underground pipes. The full study*, entitled Reforming Our
Nation's Approach to the Infrastructure Crisis: How Competition,
Oversight, and Innovation Can Lower Water and Sewer Rates in the U.S,
is available at www.ntu.org. Gregory Baird, President of the Water
Finance Research Foundation (WFRF), examined for NTU the challenges of
decaying water and wastewater systems in the U.S., and determined that
impediments to change are more fiscal and political in nature than they
are technical.
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* Document has been retained in subcommittee files.
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For example, although corrosion is the main factor in deteriorating
metallic pipes such as cast and ductile iron--boosting long-term
replacement costs to a trillion dollars or more--other types of
material could, with proper evaluation for local needs and conditions,
help to reduce or control that problem. Drawing upon established
industry standards and research from prestigious institutions, WFRF
developed a methodology incorporating pipe diameters, water main
breakage/decay tests, pressure specifications, and other variables to
provide an estimate of potential savings by allowing materials such as
PVC pipes to be considered in the water delivery process. Among the
study's findings:
A nationwide switch from cast iron and ductile iron pipes to
PVC, given open procurement and cost justification analysis,
could benefit water ratepayers and taxpayers in the average
total amount of $371 billion, or 17.4 percent of the total
replacement value of U.S. underground water pipe
infrastructure. About one-fourth of these savings would occur
over roughly 25 years, with the rest in subsequent decades.
However, population growth will drive the need for new
underground infrastructure, not just replacement. If these
pipes were also subjected to rigorous open procurement and cost
justification analysis across the country, an average total of
$139.6 billion in savings could be realized through the year
2050.
Individual states and cities, many of which do not allow
open procurement policies, could reap large benefits from such
reforms. The author conducted PVC-based cost-cutting estimates
for places such as Chicago ($33.6 million in savings) and
Detroit ($8.5-$11.9 million in savings).
Baird noted that various industries and utilities are likely to
argue over the estimates, but they are missing the point of the NTU-
WFRF study: reforms such as open procurement practices and life-cycle
cost analysis (LCCA) methods allow that very kind of debate to occur in
a rational way. Indeed, NTU believes that LCCA should be a standard for
all types of infrastructure considerations, including roads. As Baird
wrote, ``The issue at hand is not really the selection of one pipe over
another, but the ability for a utility to take advantage of all
materials, processes, technologies, and products that create the most
cost-effective solution while meeting sustainable performance levels.''
In any case, other stakeholders, including most recently the Mayors
Water Council of the U.S. Conference of Mayors, have spoken out for
competitive procurement of underground infrastructure, improving the
prospects for overhauling current, flawed practices. Furthermore,
according to Baird, utility managers and elected officials must embrace
regular public reviews and financial analyses of their operations,
including multi-year condition assessments, to reduce risks to
ratepayers and earn their confidence.
Although an abundance of research exists on the salutary fiscal
impact of these methods, ensuring that they are employed at the most
basic decision-making levels will require a more concerted effort.
While NTU believes that Washington's involvement in local government
infrastructure projects should be minimized, federal grants and cost-
sharing will likely persist in this area in the near term. For that
reason, lawmakers should thoughtfully design guidelines that help
encourage utilities and other entities to embrace open procurement and
life-cycle costing techniques. While care must be taken to avoid
regulatory impulses that restrict localities' freedom to experiment or
that add to compliance expenses, it is reasonable for Congress to offer
positive leadership that will protect taxpayers and ratepayers from
subpar infrastructure asset management in their communities.
NTU is committed to helping citizens and elected officials reach a
mutually productive consensus on the need for better stewardship,
oversight, and allocation of the public's resources toward all manner
of infrastructure, including water and wastewater undertakings. Please
feel free to call upon us in your future deliberations over these and
other matters that come before your subcommittee. Our members are most
grateful for your consideration of these comments.
Sincerely,
Pete Sepp,
Executive Vice President.
______
Statement of Bob Chalker, Executive Director, NACE International, the
Corrosion Society
Can a water pipeline outlive its design life? With proper materials
and installation, and vigilant maintenance, pipelines and other vital
infrastructure can outlive its proposed design life. When it comes to
water pipelines, corrosion control plays an essential role in extending
the life of a pipeline or ensuring the safe, productive life of a new
pipeline.
It is more than time that causes infrastructure to weaken and fail;
corrosion has caused billions of dollars of damage nationwide each
year, with estimates as high as $452 Billion, which is approximately
$1,500 per American citizen. We see headlines about the nation's aging
infrastructure and we live each day hedging our bets that our old
infrastructure will provide the safe delivery of water and energy to
our homes and businesses, but these are true risks to public safety and
a potential waste of taxpayer money.
Water main breaks can be prevented if precautions are taken from
the outset through the use of a corrosion control plan and timely
maintenance practices implemented throughout the life of the water
main. The only reason to replace a water pipeline is if it is damaged
beyond repair and totally nonfunctioning, or if a community outgrows it
due to increased use. For example, if a community that consisted of
1,000 people now has 10,000 people, the demand for water resources will
overwhelm the existing community infrastructure.
Today, the majority of America's water infrastructure is
approaching the end of its useful life. In the United States, there are
over 155,000 public water systems, and, by 2020, nearly half of these
systems will be in poor condition or have exceeded their designed life
span. In its 2013 Infrastructure Report Card, the American Society of
Civil Engineers (ASCE) gave the United States' water infrastructure a
grade of D+ and warned that many of our pipes and mains are in need of
replacement.
The average age of water and wastewater systems is 41, with some
systems being built around the time of the Civil War. Our
infrastructure is beginning to fail, and millions of Americans are
starting to suffer the consequences. The ASCE estimates that there are
240,000 water main breaks each year in the United States. According to
a New York Times article in 2010, ``A significant water line bursts on
average every two minutes somewhere in the country.''
Water main breaks can have a profound impact on public safety and
the economy. In 2008, a water main break in Bethesda, Maryland flooded
a road stranding drivers in their cars until they could be rescued by
boats and helicopters. More recently, residents of Prince George's
County Maryland just miles away from the Nation's Capital faced a major
crisis when a 4\1/2\ foot main, built in 1965, was expected to fail. In
an interview with the Washington Post, Scott Peterson, spokesman for
Prince George's County Executive Rushern L. Baker III (D), said the
``economic impact of this event will be the equivalent of a natural
disaster hitting the county.''\1\ Ultimately local utilities were able
to find a solution; however, the pipe supplies water to nearly 100,000
people and regional business including the commercial complex at
National Harbor, and all of those people and businesses were forced to
scramble to prepare for the days ahead without water. Businesses
closed, the 2,000 room Gaylord hotel was forced to relocate its guests
and events to other hotels, grocery stores were empty. Emergency
shelters were set up, fire departments we prepared with contingency
plans; the failure of the pipeline may have been averted, but some of
its potential impact was not.
According to an American Water Works Association (AWWA) report the
U.S. will need to spend $1 trillion over the next 25 years to maintain
current levels of water service. A 2011 survey released by the
Environmental Protection Agency indicates that $384 billion is needed
to invest in pipes, treatment plants and storage tanks to meet the
needs of 73,400 water systems across the country over the next 20
years. The AWWA report notes that ``delaying the investment can result
in degrading water service, increasing water service disruptions, and
increasing expenditures for emergency repairs.''
Reports from ASCE, AWWA, and many other stakeholders capture the
problems and challenges we face; however, simply investing billions of
dollars into updating infrastructure is only part of the solution. Any
investment into infrastructure should adequately address one of life's
most basic, yet avoidable natural occurrences--corrosion. Like other
natural hazards such as earthquakes or severe weather disturbances,
corrosion can cause dangerous and expensive damage to everything from
automobiles, home appliances, and drinking water systems to pipelines,
bridges, and nuclear plants. It's an issue that is usually not
considered until it's too late.
Over the past 22 years, the U.S. has suffered 52 major weather-
related disasters--including hurricanes, tornadoes, tropical storms,
floods, fires, droughts, and freezes--incurring total normalized losses
of more than $380 billion. According to a cost of corrosion study
published by the Federal Highway Administration (FHWA) in 2002, the
direct cost of corrosion in the United States is 3.1% of the U.S. Gross
Domestic Product per year, or more than $450 billion annually by
today's estimates.
Specifically, the 2002 FHWA report stated that the total annual
direct cost of corrosion for drinking water and sewer systems is $36
billion, roughly $50 billion in 2013 dollars. These estimates include
the costs of replacing aging infrastructure, lost water from
unaccounted-for leaks, corrosion inhibitors, internal mortal linings,
external coatings, and cathodic protection. Because of corrosion in
water infrastructure, the U.S. loses approximately 11% through leaks
each year. Unlike other natural disasters, corrosion can be controlled,
and it is estimated that one third of the annual cost is preventable
with the application of existing corrosion control technologies. Such
existing corrosion control technologies include organic and metallic
protective coatings; corrosion-resistant alloys, plastics, and
polymers; corrosion inhibitors; and cathodic protection--a technique
that creates an electrochemical cell in which the surface to be
protected is the cathode and corrosion reactions are mitigated.
In the both of the examples listed above, corrosion was the direct
cause for water pipe failure. In the case of Prince George's County,
one of the reasons local utilities were able to mitigate damage and
prevent a pipe blowout, which has roughly the same force as a small
bomb, was because a corrosion-detection plan was in place. The
Washington Suburban Sanitation Commission had installed an acoustic
cable designed to detect the sounds of the concrete pipe's reinforcing
steel wire as it begins to snap from corrosion, signaling that the pipe
is weakening in that spot.
Unfortunately, with respect to the pipe failure in Bethesda, MD, a
corrosion plan was not put in place. It's since been reported that the
contractor who installed the pipe installed it directly against a rock,
which led to cracks and corrosion. Additionally, the contractor failed
to place a bed of gravel along the pipe, which would have delayed the
corrosion process. As Washington Suburban Sanitation Commission Chief
Engineer Gary Gumm noted in an interview, these actions ``started a
process of corrosion that ultimately brought about the failure of the
pipe.''
It's clear that unmitigated corrosion can cause significant damage
to public safety, the environment, and the U.S. economy. By
implementing a corrosion-plan before beginning construction on
infrastructure projects, we improve public safety, save billions of
dollars in damage, and protect the environment from the harmful effects
of corrosion. Corrosion-control measures can extend the life of aging
infrastructure and new construction, and we believe that all federally
funded projects should have a corrosion control plan and require the
use of qualified professionals to ensure corrosion control technology
is properly installed and maintained. These measures will result in a
longer, safer useful life of an asset.
As the world's leading resource for information, education and
expertise in corrosion control, NACE International is a technical
society composed of more than 32,000 individual members with expertise
in corrosion science and engineering. Our members work together on more
than 350 technical committees to produce trusted industry standards.
The organization provides the most specified technical training and
certification programs, conferences, reports, and publications
dedicated to the control and prevention of corrosion.
Our association includes members from a wide array of industries
such as: industrial and potable water, aerospace, military, chemicals
and allied products, infrastructure, transportation, pipelines, waste
management and more. Our members include students, engineers,
inspectors and technicians, scientists, business owners and CEOs,
researchers, and educators. These members are drawn together to learn
and develop ways to mitigate the causes of corrosion. The mission of
the organization is to protect people, assets, and the environment from
corrosion.
On behalf of NACE International, I look forward to working with the
Subcommittee, the overall Committee, and the Senate as policy makers
and staff move forward on efforts to rebuild America's infrastructure.
NACE International welcomes the opportunity to be a resource and to
provide insight and expertise to ensure the safety and productivity of
our nation's infrastructure.
______
Statement of Thaddeus Bettner, PE, General Manager, Glenn-Colusa
Irrigation District
Chairman Schatz and Members of the Subcommittee, I am Thaddeus
Bettner, the General Manager of the Glenn-Colusa Irrigation District
(GCID), the largest irrigation district in the Sacramento Valley and
the third largest irrigation district in the State of California. I
appreciate the opportunity to provide GCID's perspective on the issue
of how the federal government can help address the challenge aging and
inadequate water infrastructure in the United States.
GCID covers approximately 175,000 acres in Glenn and Colusa
Counties, and is located about 80 miles north of Sacramento. Our
district contains a diverse working landscape including a variety of
crops such as rice, tomatoes, almonds, walnuts, orchards, vine seeds,
cotton, alfalfa, and irrigated pasture. Just as important, we convey
water to three Federal wildlife refuges totaling more than 20,000
acres, and also deliver water to more than 50,000 acres of seasonally
flooded wetlands. GCID is a Sacramento River Settlement Contractor and
diverts water directly from the Sacramento River through the largest
flat plate fish screen in the world. GCID's Settlement Contract was
first entered into in 1964 and it resolved disputes with the United
States related to the seniority of GCID's rights over those of the
United States and, in fact, allowed the US Bureau of Reclamation
(Reclamation) to obtain water rights from the State Water Resources
Control Board for the Central Valley Project. GCID's water rights
originated with a filing in 1883 for 500,000 miner's inches under 4
inches of pressure, one of the earliest and largest water rights on the
Sacramento River. Other Sacramento River Settlement contracts were also
entered into among water right holders on the Sacramento River and
Reclamation.
Notwithstanding the seniority of our water rights on the Sacramento
River, the greatest water infrastructure challenge we face is in
securing new storage. The pressures on our water infrastructure
continue to grow each year from population growth and new demands for
water for the environment. In this context, I want to focus on three
issues: (1) why we need additional storage in the Sacramento Valley;
(2) our experience working to advance Sites Reservoir, an up to 1.8
million acre-foot capacity offstream north-of-the-Delta reservoir; and,
(3) going forward, how the federal government can help advance new
storage projects.
the importance of storage
New storage is vitally important to GCID and all of Northern
California because the federal Central Valley Project (CVP), which our
water diversions are intertwined with, and the State Water Project have
both lost water supply yield and operational flexibility. That yield
and flexibility has eroded over time due to increased contractual
obligations and increased water demands to meet the needs of endangered
species and the state and federal refuge system.
We do not need much in the way of additional water supplies in the
Sacramento Valley, but without new storage, the pressure on our
existing water supplies will continue to grow. The State's population
continues to increase and the reallocation of water to environmental
uses is expanding. This reality continues to play itself out,
especially given that no new investments in the development of
additional water supply or storage have occurred. For water users north
of the Delta, in the area of origin, the ever-increasing demand for
water, coupled with no new storage, represents a threat to the vitality
of irrigated agriculture in the Sacramento Valley, our local
environment including the protection of the Pacific Flyway, and our
groundwater system which sustains our rivers, creeks and streams. A
strong agricultural sector and healthy environment depend heavily upon
a certainty of water supply. Disrupt that certainty, allow the strain
on existing water supplies to persist, and investments in agriculture
will not be as readily forthcoming. That lack of investment translates
into a dim future for agriculture and continued instability in water
supplies, which will threaten the economic health of the state as a
whole.
the sites experience
The North-of-the-Delta Offstream Storage (NODOS) investigation is a
feasibility study being carried out by the California Department of
Water Resources (DWR) and Reclamation, in partnership with local
interests. The study emanates out of the CALFED Bay-Delta Program's
Programmatic Environmental Impact Statement/Report Record of Decision.
One of the alternatives under consideration includes three
configurations of a dam and reservoir located about 10 miles west of
the town of Maxwell, California, and otherwise referred to as Sites
Reservoir.
Since Fiscal Year 2002, Reclamation has spent approximately $12.7
million on the Sites feasibility study alone and DWR has spent many
millions more. Unfortunately, despite this effort and the many promised
benefits that would result from the Sites project, we still find
ourselves in a place where it is difficult to clearly articulate the
benefits of the project, the costs, and how the project will be funded.
The funding to date has allowed the agencies to complete a number of
important reports, such as a project scoping report produced in 2002,
an Initial Alternatives Information Report completed in 2006 and a Plan
Formulation Report finalized in 2008. The agencies were originally
scheduled to release a draft Environmental Impact Statement/
Environmental Impact Report (EIR/EIS) under the National Environmental
Policy Act (NEPA) and the California Environmental Quality Act (CEQA)
and a draft Feasibility Report in the summer of last year. However,
that target date was not met and the current schedule remains
uncertain. The greatest obstacle to completing this work remains the
convoluted planning process and political will to make key decisions,
at both the federal and state levels.
While part of the delay is certainly due to the complexities
associated with multiple state and federal agencies being involved in
the project, other delays are attributable to shifting environmental
requirements. For example, delays in completing the Sites project
environmental review process are attributable in part to changes in
operational conditions described in the Central Valley Project
Operations Criteria and Plans (OCAP) Biological Opinions (BOs) in 2004/
2005 and then again based upon a Biological Opinion from U.S. Fish and
Wildlife Service regarding the Delta Smelt issued in 2008. In both
instances, DWR and Reclamation had to go back and remodel the project,
based on the revised BOs. As Reclamation's Mid-Pacific Regional Office
noted in a letter to ``Interested Parties'' in May 2009, ``Changes are
continuing so rapidly that our studies and reports are not keeping
pace.''
This new information did not, in fact, change the fundamentals of
the project. The fundamentals of the project remained sound, but the
process stalled further increasing costs and further delaying the
availability of the many benefits a Sites Reservoir will provide.
Growing concerns about the delays and costs associated with the
Sites project as well as the need for a local voice, led to the
formation, in August of 2010, of the Sites Project Joint Powers
Authority (Sites JPA). The Sites JPA, which includes Glenn County,
Colusa County, Reclamation District 108, Glenn-Colusa Irrigation
District, the Tehama-Colusa Canal Authority, Maxwell Irrigation
District and Yolo County Flood Control and Water Conservation District,
was formed with the stated purpose of establishing a public entity to
design, acquire, manage and operate Sites Reservoir and related
facilities to improve the operation of the state's water system. The
Project would also provide improvements in ecosystem and water quality
conditions in the Sacramento River system and in the Bay-Delta, as well
as provide flood control and other benefits to a large area of the
State of California. The formation of local JPA's was included as a key
provision in the 2009 California Water Package Water Bond legislation
for the purposes of pursuing storage projects that could be eligible
for up to 50% of project funding for public benefits.
As the Sites JPA began working with Reclamation and DWR, the JPA
took a common sense approach. The JPA worked with Reclamation and DWR
to put together what we refer to as Foundational Formulation
Principles. In other words, first identifying the needs of the water
operations system and then designing the project that would meet those
needs. We conceived a project that would be integrated with the system
we already have, but one that would also operate effectively regardless
of future operational changes, such as conveyance to south-of-Delta
exporters. The JPA wanted to maximize the benefits associated with our
existing infrastructure, and provide as much benefit as possible to
both the existing state and federal water projects at the lowest
feasible cost.
We approached the Sites project with the goal of making the best
possible use of limited resources, and in the end, we believe we are on
a path that will lead to a project that is both affordable and will
provide significant benefits. It maximizes ecosystem benefits
consistent with the State water bond, which states that at least 50
percent of the public benefit objectives must be ecosystem
improvements. Other benefits include water supply reliability, water
quality improvements, flexible hydropower generation, recreation and
flood damage reduction. In short, we approached the Sites project with
the goal of generating water for the environment while improving
statewide water reliability and regional sustainability in Northern
California, and we believe we have achieved that goal.
One of the greatest environmental benefits of the project is a
greatly expanded cold water pool that would be created in upstream
reservoirs. Flow modifications to manage river temperatures, habitat
conditions and flow stability would be greatly enhanced with a
constructed Sites Reservoir.
A 1.8 million acre foot capacity Sites Reservoir, for example,
would generate an average annual yield of 400,000 to 640,000-acre feet,
in dry and critical years, and in addition would provide nearly 900,000
acre feet of additional storage in Shasta, Oroville, Folsom and Trinity
Lakes during the operationally important months of May through
September through the system integration and operation.
Our experience with the Sites project has revealed at least three
bureaucratic and regulatory challenges. First, the environmental review
process that Reclamation is forced to deal with through existing
federal law does not support the common sense approach that the JPA has
attempted to pursue on the Sites project. Under NEPA, a great deal of
time and money is expended on studies and analysis of multiple inferior
alternatives to the original purpose and need statement, only to use
the EIS process to eliminate these lesser alternatives and arrive back
at the project that you originally proposed as the solution with the
greatest benefit for the dollars expended.
In the case of the Sites project, Reclamation and DWR initially
investigated and considered 52 alternative reservoir sites before
identifying Sites Reservoir as the preferred location for an offstream,
north-of-Delta storage reservoir. That iterative screening process was
completed in 2008, yet some have recently suggested that even that
process was carried out too quickly and perhaps the agencies should
have taken even more time to examine still other sites before narrowing
the list to three separate storage configurations at the Sites
location. Ironically, the three configurations being evaluated today in
the EIR/EIS are very similar to the project originally envisioned in
the 1960's. Still, Reclamation is unwilling to focus on any alternative
for the ``fear of being predecisional'' prior to completion of the EIR/
EIS, which only continues to delay and increase the cost of the
environmental review process.
Second, although the Sites project would provide significant
benefits in any operational environment, the environmental review
process does not accommodate the real-world requirement that any new
water supply project be flexible in, and responsive to, a constantly
evolving regulatory environment. As noted above, any changes to the
operating criteria for the federal and state water projects resulted in
a requirement to develop new models to reflect those changes, when, in
fact, the Sites project benefits remained constant regardless of the
new demands for environmental water.
Finally, under NEPA, the costs of alternatives are not considered
until after the environmental review documents are completed. In our
view that is just not a practical way to develop a project. In the case
of water supply, you can end up with a project that no one can afford,
sacrificing any opportunity for even incremental storage benefits. The
process must consider project costs, both the total costs and how the
project is going to be paid for, earlier in the process.
recommendations for advancing new water storage projects
Reduce Regulatory and Bureaucratic Barriers
In his 2011 State of the Union Address, and again in August 2011,
President Obama called for further steps to enhance the efficient and
effective permitting and environmental review of infrastructure
development ``through such strategies as integrating planning and
environmental reviews; coordinating multi-agency or multi-governmental
reviews and approvals to run concurrently; setting clear schedules for
completing steps in the environmental review and permitting process;
and utilizing information technologies to inform the public about the
progress of environmental reviews as well as the progress of Federal
permitting and review processes.''
All of these are worthy goals, but in water resources development,
at least in California, there is little evidence that these goals are
actively being implemented and turned into new practices.
Our experience with the Sites project suggests the following steps
to reduce regulator and bureaucratic barriers are worthy of
consideration:
1. Statutory Directives.--Adopt statutory directives for all
relevant departments and agencies to work with the states and
local water supply agencies to make it a priority to improve
the efficiency of the regulatory and permitting processes
associated with water supply projects. Attitudes are important
in the agencies, and even without mandatory deadlines,
statutory directives would encourage the agencies to make it a
priority to streamline the environmental review process.
2. Statutory Deadlines.--Establish statutory deadlines where
appropriate for the completion of the environmental review
process. For example, federal agencies should expeditiously
review and approve administrative drafts that then can be
publicly released as a draft Environmental Impact Statement
(EIS). Once a draft EIS is released, the agencies should be
required to establish a timeframe within which the EIS and even
a Record of Decision will be finalized.
3. Greater Coordination.--Require all federal agencies with a
role in preparing and reviewing NEPA documents for water
storage or water resources projects to coordinate their reviews
concurrent with one another. Earlier and better coordination is
essential to resolving conflicting standards and avoiding
unnecessary project delays.
4. Alternatives Analysis.--Agencies with a role in the
environmental review process for new water supply projects
should be required to develop a simpler approach to
alternatives analysis. Streamlining this process can save money
and time without sacrificing the legitimate need to thoroughly
explore project alternatives or project sites that will cause
the least negative environmental impact.
5. Costs.--NEPA should permit project costs to be considered
in an open fashion, before the environmental review process is
complete. Currently, Reclamation relies upon Feasibility
Studies to examine the costs and allocation of benefits,
however, that effort is done internally by Reclamation and
potential beneficiaries and locals have no ability to
participate in this process. We need to make certain that the
projects that make it through the environmental review process
have beneficiaries, public and private, that can afford to pay
for them, especially in light of the Federal government fiscal
climate
6. Federal Role.--Lead federal agencies should determine
their role in a project as soon as practicable. In water
storage projects, as with other major infrastructure projects,
there is growing interest in public-private partnerships and
non-federal water supply development, in general, that may rely
upon a combination of public dollars, private equity,
government-backed financing and the like. If Reclamation is a
customer for the benefits of a project rather than the
developer of the project that should also create an opportunity
to further streamline the regulatory and environmental review
processes.
7. Budgeting.--Regulatory and environmental streamlining
means that more funding resources may be needed upfront to
enable agencies to accelerate the review process and establish
realistic schedules. Our experience with Sites suggests that
Reclamation's relatively modest budget requests over the years
for the Sites study process, at a minimum, did not permit the
study to proceed on an optimum schedule. This does not mean the
agencies need to spend more overall, however. Limited funds
should be prioritized to support completing the study and
review process in a timely fashion.
Innovative Financing--Water Infrastructure Finance and Innovation Act
(WIFIA)
Finally, Congress should explore methods of highly leveraging
limited federal funding in order to increase its impact and, in effect,
do more with less. Although federal funding for water infrastructure
projects is already leveraged in the form of local matching
requirements for federal grants, this leverage can be increased by
developing innovative, market-based financing tools that provide
significant financial savings for localities while shifting the bulk of
financial risk from the taxpayer to the private sector.
Specifically, Congress should authorize Reclamation to provide
access to long-term, low interest credit assistance modeled after the
highly successful Transportation Infrastructure Finance and Innovation
Act (TIFIA) program, which has been operated by the Department of
Transportation (DOT) since 1998. A WIFIA program set up under
Reclamation could help finance large-scale and costly infrastructure
projects by leveraging each dollar of federal funding into $10 of
credit assistance and $30 of infrastructure investments. The $122
million authorized for TIFIA, the level authorized in the last
transportation reauthorization bill, has allowed the program to provide
$1.22 billion in credit assistance and help finance $3.66 billion in
transportation infrastructure improvements annually.
Like TIFIA, WIFIA should be structured to provide eligible
applicants with access to long-term, up to 40-year, financing at low
interest rates. Currently, the TIFIA interest rate is 3.71 percent for
a 35-year repayment period (the program provides for a five-year window
after substantial completion of a project where no repayment is
required). On large projects, like the Sites project, which is
currently estimated to cost as much as $4 billion, every saved tenth of
an interest point would translate to millions of dollars in local
savings.
Under TIFIA, projects are selected by DOT for funding based upon
the extent to which they generate economic benefits, leverage private
capital, and promote innovative technologies, among other objectives.
Projects do not need to be congressionally authorized to be eligible
for TIFIA financing. I encourage you to set up a similar process of
determining eligibility under a Reclamation WIFIA program as well.
WIFIA, like TIFIA, should also offer three separate forms of
financing. The program should offer direct loans that offer flexible
repayment terms to cover construction and capital costs of a project.
WIFIA should also be constructed to allow Reclamation to provide loan
guarantees to enable institutional investors, such as pension funds, to
make loans to the project sponsor. Finally, like TIFIA, WIFIA should be
authorized to allow Reclamation to offer lines of credit to projects to
represent contingent sources of financing, in the form of direct
federal loans, to supplement project revenues and make it easier for
the project to attract financing from the private sector.
Again, WIFIA would greatly benefit a wide variety of water supply
projects, like Sites, and I encourage the Committee to give careful
consideration to establishing such a program under Reclamation.
Thank you for the opportunity to submit this testimony, and I
greatly appreciate the Subcommittee highlighting the impediments to
addressing the aging and inadequate water infrastructure nationwide.