[Senate Hearing 113-225]
[From the U.S. Government Publishing Office]





                                                        S. Hrg. 113-225

                       AGING WATER INFRASTRUCTURE

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

                                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




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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
                                 ------                                

                    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

                              ----------                              

                               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

                              ----------                              


                        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.
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    \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)
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    \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).
---------------------------------------------------------------------------
   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
---------------------------------------------------------------------------
    \6\ EPA. 2010. Clean Water Needs Survey 2008 http://water.epa.gov/
scitech/datait/databases/cwns/upload/cwns2008rtc.pdf
    \7\ EPA. Id.
---------------------------------------------------------------------------
   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.
---------------------------------------------------------------------------
    \8\ ASCE 2013 Report Card
---------------------------------------------------------------------------
   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.
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    \10\ ASCE 2013 Report Card
    * Figures 1-3 have been retained in subcommittee files.
---------------------------------------------------------------------------
    Figure 1. The ASCE 2013 Report Card for America's 
Infrastructure.\11\
---------------------------------------------------------------------------
    \11\ Id.
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \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
---------------------------------------------------------------------------
    Figure 2. Water sector resource needs through 2020.\13\
---------------------------------------------------------------------------
    \13\ Id.; EPA. Clean Watersheds Needs Survey 2008. http://
water.epa.gov/scitech/datait/databases/cwns/upload/cwns2008rtc.pdf
---------------------------------------------------------------------------
    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:
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    \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/
---------------------------------------------------------------------------
    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.
---------------------------------------------------------------------------
    \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\
---------------------------------------------------------------------------
    \17\ Id.
---------------------------------------------------------------------------
    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
---------------------------------------------------------------------------
    \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 
---------------------------------------------------------------------------
        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\
---------------------------------------------------------------------------
    \19\ Federal Energy Regulatory Commission. Personal communication, 
16 July 2013
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \20\ Blumenauer, Earl. Congressional Record. July 9, 2013.113th 
Congress, 1st Session Issue: Vol. 159, No. 97 - Daily Edition, H4242.
---------------------------------------------------------------------------
    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.
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \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:
---------------------------------------------------------------------------
    \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\
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    \26\ USGS Circular 1331. 2009. Climate Change and Water Resources 
Management: A Federal Perspective. http://pubs.usgs.gov/circ/1331/
---------------------------------------------------------------------------
    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.
---------------------------------------------------------------------------
    \27\ National Research Council. 2005. Waterway; National Research 
Council. 2012. Corps of Engineers Water Resources Infrastructure: 
Deterioration, Investment, or Divestment?
---------------------------------------------------------------------------
                   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

                              ----------                              


                               Appendix I

                   Responses to Additional Questions

                              ----------                              

      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.
---------------------------------------------------------------------------
    * 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.

                                   

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