[Senate Hearing 113-804]
[From the U.S. Government Publishing Office]
S. Hrg. 113-804
INNOVATION AND THE UTILITIES OF THE FUTURE:
HOW LOCAL WATER TREATMENT FACILITIES ARE
LEADING THE WAY TO BETTER MANAGE
WASTEWATER AND WATER SUPPLIES
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HEARING
before the
SUBCOMMITTEE ON WATER AND WILDLIFE
of the
COMMITTEE ON
ENVIRONMENT AND PUBLIC WORKS
UNITED STATES SENATE
ONE HUNDRED THIRTEENTH CONGRESS
SECOND SESSION
__________
DECEMBER 2, 2014
__________
Printed for the use of the Committee on Environment and Public Works
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Available via the World Wide Web: http://www.gpo.gov/fdsys
__________
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COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS
ONE HUNDRED THIRTEENTH CONGRESS
SECOND SESSION
BARBARA BOXER, California, Chairman
THOMAS R. CARPER, Delaware DAVID VITTER, Louisiana
BENJAMIN L. CARDIN, Maryland JAMES M. INHOFE, Oklahoma
BERNARD SANDERS, Vermont JOHN BARRASSO, Wyoming
SHELDON WHITEHOUSE, Rhode Island JEFF SESSIONS, Alabama
TOM UDALL, New Mexico MIKE CRAPO, Idaho
JEFF MERKLEY, Oregon ROGER WICKER, Mississippi
KIRSTEN GILLIBRAND, New York JOHN BOOZMAN, Arkansas
CORY A. BOOKER, New Jersey DEB FISCHER, Nebraska
EDWARD J. MARKEY, Massachusetts
Bettina Poirier, Majority Staff Director
Zak Baig, Republican Staff Director
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Subcommittee on Water and Wildlife
BENJAMIN L. CARDIN, Maryland, Chairman
THOMAS R. CARPER, Delaware JOHN BOOZMAN, Arkansas
SHELDON WHITEHOUSE, Rhode Island JAMES M. INHOFE, Oklahoma
JEFF MERKLEY, Oregon JOHN BARRASSO, Wyoming
KIRSTEN GILLIBRAND, New York JEFF SESSIONS, Alabama
CORY A. BOOKER, New Jersey DEB FISCHER, Nebraska
BARBARA BOXER, California (ex DAVID VITTER, Louisiana (ex
officio) officio)
C O N T E N T S
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Page
DECEMBER 2, 2014
OPENING STATEMENTS
Cardin, Hon. Benjamin L., U.S. Senator from the State of Maryland 1
Boozman, Hon. John, U.S. Senator from the State of Arkansas...... 3
Baldwin, Hon. Tammy, U.S. Senator from the State of Wisconsin.... 10
Vitter, Hon. David, U.S. Senator from the State of Louisiana,
prepared statement............................................. 121
WITNESSES
Johnson, Jerry, General Manager and CEO, Washington Suburban
Sanitary Commission............................................ 2
Prepared statement........................................... 5
Sigmund, Tom, Executive Director, Green Bay Metropolitan Sewerage
District....................................................... 10
Prepared statement........................................... 13
Harlan, Kelly, L., Jr., General Manager, San Francisco Public
Utilities Commission........................................... 31
Prepared statement........................................... 33
Kricun, Andrew, P.E. BCEE Executive Director/Chief Engineer,
Camden County Municipal Utilities Authority.................... 43
Prepared statement........................................... 46
Longsworth, Jeffrey, Partner, Barnes & Thornburg LLP............. 58
Prepared statement........................................... 60
Responses to additional questions from Senator Boxer......... 75
Hall, John C., Director, Center for Regulatory Reasonableness,
President, Hall & Associates................................... 82
Prepared statement........................................... 84
Responses to additional questions from Senator Vitter........ 94
INNOVATION AND THE UTILITIES OF THE FUTURE: HOW LOCAL WATER TREATMENT
FACILITIES ARE LEADING THE WAY TO BETTER MANAGE WASTEWATER AND WATER
SUPPLIES
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TUESDAY, DECEMBER 2, 2014
U.S. SENATE
Committee on Environment and Public Works
Subcommittee on Water and Wildlife
Washington, DC.
The subcommittee met, pursuant to notice, at 9:30 a.m. in
room 406, Dirksen Senate Building, Hon. Benjamin Cardin
(chairman of the subcommittee) presiding.
Present: Senators Cardin, Whitehouse, Boozman. Also
present: Senator Baldwin.
OPENING STATEMENT OF HON. BENJAMIN CARDIN,
U.S. SENATOR FROM THE STATE OF MARYLAND
Senator Cardin. The subcommittee will come to order.
I would like to thank the leadership of the full committee
for allowing us to have this subcommittee hearing on a subject
which I think is very important, and that is to look at how our
U.S. water utilities are using innovative approaches to deal
with the current demands on wastewater.
We have evolved from the system of using dilution to deal
with the effluents to new technologies and innovations, and we
look forward to hearing about it.
I want to thank Senator Boozman. The two of us have
conferred and we are going to spare you from our opening
statements in order to give maximum time to our witnesses. We
have a real serious time crunch since there are votes scheduled
at 10:30 on the floor and the full committee is meeting at
11:30 today. So we are going to have to try to condense the
hearing. I appreciate Senator Boozman's cooperation.
I do want to acknowledge, though, that this is the last
hearing for the Subcommittee on Water and Wildlife. I want to
thank Senator Boozman for his help and cooperation during this
term of Congress. I think we had very productive opportunities
in the subcommittee to advance water and wildlife issues and I
thank you very much. I want to acknowledge the hard work of our
staff, Josh Kline of my staff, Jason Albritton, Ted Illston,
Philip Moore, Brandon Middleton and Chris Tomassi. All have
contributed to the success of the subcommittee. I know the two
of us, the two Senators normally get the spotlight and the
attention, but our staff does incredible work. I just really
want to thank them for their service to this subcommittee, to
the full committee and to the U.S. Senate during this 2-year
term of Congress.
With that, Senator Boozman.
OPENING STATEMENT OF HON. JOHN BOOZMAN,
U.S. SENATOR FROM THE STATE OF ARKANSAS
Senator Boozman. Just very quickly, Mr. Chairman, I agree
with you totally. This really is a very important subject and I
appreciate the witnesses being here and really look forward to
hearing the testimony.
I also want to thank you for your leadership. I have been
on transportation and infrastructure since I was in Congress,
the House and here. The nice thing about these issues, most of
the time these are very bipartisan issues on which we work
together very, very well. Again, I appreciate your leadership
in this area, Senator Cardin. I think we have had some really
good hearings and have done a lot of good work.
I also want to thank the staff for their hard work. The
Senator is right, we get the credit, or sometimes not. Bad
credit.
[Laughter.]
Senator Boozman. But the staff does so much work and they
do a tremendous job, again, working together, which is so
important.
Thank you, Mr. Chairman. I yield back.
Senator Cardin. Thank you.
I will introduce the witnesses as they will speak to save
time. We will start with Mr. Jerry Johnson, the General Manager
and CEO of the Washington Suburban Sanitary Commission, which
serves part of the State of Maryland. We thank you very much
for your innovative leadership and we know that there are huge
challenges in this region in regard to how we treat our
wastewater. I would ask if you would try to limit your comments
to 5 minutes to give us a chance for questioning. And all of
your formal, written statements will be made part of the
committee record, without objection.
STATEMENT OF JERRY JOHNSON, GENERAL MANAGER AND CEO, WASHINGTON
SUBURBAN SANITARY COMMISSION
Mr. Johnson. Thank you very much, Senator.
Good morning, I am Jerry Johnson, General Manager and CEO
of Washington Suburban Sanitary Commission, headquartered in
Laurel, Maryland. We provide water and wastewater services to
1.8 million residents in Prince Georges and Montgomery
Counties. Those two counties, as you know, border on the
District of Columbia, our Nation's capital.
To put it in some perspective, WSSC's service area is
roughly the same combined population as the cities of
Philadelphia and Pittsburgh, Pennsylvania, combined. WSSC has a
combined operating and capital budget for this year of $1.4
billion.
WSSC has over 5,600 miles of underground water pipe fed by
two water filtration systems, one on the Potomac River, the
other on the Patuxent. Approximately 500 miles of those pipes,
or nearly 26 percent, are over 50 years old. WSSC operates
another 5,400 miles of underground sewers which are undergoing
a $1.5 billion federally mandated renovation. We also operate
seven wastewater treatment plants and a couple of dams for
water impoundment.
During the current fiscal year, we plan to replace 60 miles
of water pipe at a cost of $1.4 million per mile. Our
challenges, plans, infrastructure replacement and increasing
costs are representative of the situation that utilities face
across the Country.
Over the next 6 years, our capital improvement program,
which is the fastest-growing part of our budget and funds most
of the replacement of underground pipes, will cost our
ratepayers an estimated three quarters of a billion dollars.
Put differently, this is almost $125 million per year for the
next 6 years.
In anticipation of these expenses, WSSC has been using some
innovative cost-saving strategies to benefit our customers and
the agency. Ninety-five percent of our revenue comes from our
customers. But our customers are using less water through
conservation and more efficient appliances. For the last 5
years, even within the troubled economy, our county councils
have recognized the need for striving and putting together the
improvements that we have to do and approve rate increases of
from 6 to 9 percent.
In 2010, WSSC established a bi-county infrastructure
funding working group to identify options to change some of the
alternatives for less costly sources of revenue. One of the
ways to accomplish this goal was by making a stronger
commitment to sustainability. So WSSC is going green. Our
ratepayers can go green by participating in WSSC's initiative
to become environmentally friendly through electronic and
paperless billing. They can go green also through paperless
statements and online operation of many of the functions of
their own individual accounts. Ratepayers can use a mobile app,
which allows customers to use their smart phones to pay bills,
check on service alerts and report problems and do a great deal
more.
Our greenhouse gas action plan, which began implementation
in 2010, is a 20-year plan which outlines strategies to reduce
greenhouse gas emissions by 10 percent over each year, each 5
years from now until 2030. WSSC is advancing this goal in two
ways. First, we are directly purchasing about 30 percent of our
electric power from wind farms on a 10-year agreement. This 10-
year agreement will result in environmental benefits including
the reduction of 38,000 tons of greenhouse gas emissions per
year.
Second, we are using about 17,000 solar panels to power two
wastewater treatment plans. The solar energy provides 17
percent of the power going to those facilities.
For water utilities of the future, not going green is not
an option. That means that we must take advantage of every
seemingly useless product and return the savings to our
customers. We are currently look at a major bio-energy
facility. That bio-energy facility will save the organization
about $3.7 million and reduce energy, bio-solids disposal and
chemical costs. This project was actually spawned by a study
that formed the basis for this project that came through a
grant that was sponsored by Senator Cardin, so that we could
get that project started. That was a very well-placed
investment, sir.
As you know, a robust water system is essential to
maintaining public health and supporting both economic
development and growth. However, like many other urban areas in
America, WSSC is currently facing some unique financial and
infrastructure challenges, including financial sufficiency,
revenue stability, rate stabilization and affordability, while
trying to minimize the impacts on our customers.
With that, Senators, I will complete my oral presentation
and would be pleased to answer any questions that you might
have.
[The prepared statement of Mr. Johnson follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Cardin. Thank you very much, Mr. Johnson. We
appreciate it.
We have been joined by Senator Baldwin. It is a pleasure to
have you before our committee to introduce one of our
panelists.
OPENING STATEMENT OF HON. TAMMY BALDWIN,
U.S. SENATOR FROM THE STATE OF WISCONSIN
Senator Baldwin. Thank you, Chairman Cardin and Ranking
Member Boozman and Senator Whitehouse. Thank you for holding
this hearing and inviting me to say a few words this morning.
In Wisconsin, fresh water defines our landscape, from the
Great Lakes in the north and east to the Mississippi in the
west, and with our more than 15,000 inland lakes, fresh water
shapes our lifestyles and our economy. We Wisconsinites pride
ourselves in protecting our most important resource through
effective and common sense policy that ensures fresh water will
be available for many decades into the future.
As my colleagues will appreciate, one of the major
challenges facing our communities is the fight to reduce
phosphorous loading in our waterways, pollution which feeds
algae blooms and can lead to severe public crisis. In
Wisconsin, we are proud to have national leaders on the job
working to pioneer the solutions to this complicated issue. In
specific, we are most fortunate to have Tom Sigmund on the job.
Tom is here with us today to share the work he does as
Executive Director of NEW Water, which is the brand of the
Green Bay Metropolitan Sewerage District, where he is a pioneer
in watershed restoration.
With Tom at the helm, NEW Water has taken the focus of
water treatment beyond just municipal waste streams to look at
the health of the entire watershed. In doing this, NEW Water
has found allies from environmental groups to the agricultural
community. These efforts have reduced the amount of phosphorus
and nutrient runoff in Wisconsin's waterways and provided a
model for other States and municipalities that are looking for
the right approach for their own challenges.
In addition to his work in Wisconsin, Tom serves in
leadership roles with the National Association of Clean Water
Agencies, where he has led their Water Resources Utility of the
Future Task Force, and served on their steering committee.
I am really delighted that he is here with us today. Tom,
welcome, and thank you for making the trip here to share your
experience and our Wisconsin experience.
Senator Cardin. Mr. Sigmund, we will be glad to hear from
you.
STATEMENT OF TOM SIGMUND, EXECUTIVE DIRECTOR, GREEN BAY
METROPOLITAN SEWERAGE DISTRICT
Mr. Sigmund. Chairman Cardin, Ranking Member Boozman, and
members of the subcommittee, thank you for inviting me to
testify today.
As Senator Baldwin said, my name is Tom Sigmund. I am the
Executive Director at NEW Water, which provides water quality
services to 18 municipalities and 220,000 people in and around
Green Bay, Wisconsin. I also chair the Utility and Resource
Management Committee for the National Association of Clean
Water Agencies, and am pleased to testify on behalf of that
organization.
Forty years after passage of the Clean Water Act, clean
water agencies are transforming the way they deliver clean
water services. At the heart of this transformation is the
emergence of new technologies and innovations that can stretch
ratepayer dollars, improve the environment, create jobs, and
stimulate the economy. At NEW Water, we have embraced
innovation to provide better services to our ratepayers and
better environmental outcomes for our community.
We are working in the watershed with agricultural producers
to improve water quality, reduce phosphorus and tackle the dead
zone in Green Bay. We are embarking on a new bio-solids
facility that will recover energy as well as harvest the
beneficial byproduct that will be sold as commercial
fertilizer.
Perched amidst the Great Lakes, Green Bay's waters are
impaired with excessive nutrients, delivering one-third of the
total nutrients that enter Lake Michigan causing algal blooms a
significant problem.
NEW Water has been thrust into this issue due to
significantly more stringent phosphorus limits for point source
dischargers. To meet these stringent limits, NEW Water would
need to build additions to two treatment facilities at a
capital cost exceeding $220 million that would result in little
if any water quality improvement. In lieu of these upgrades,
NEW Water is exploring a program authorized by the State of
Wisconsin called adaptive management under which point source
dischargers are afforded flexibility and can defer or
potentially avoid costly infrastructure construction by
facilitating nutrient reductions within the agricultural or
other non-point sectors.
NEW Water has convened a group to tackle a 4-year adaptive
management pilot project in Silver Creek, a 4,800-acre sub-
watershed in our community that drains to Green Bay. The
stakeholder group includes several State and local entities,
including the Oneida Tribe of Indians, USDA's Natural Resource
Conservation Service, the Nature Conservancy and Ducks
Unlimited. The pilot project will demonstrate improvements to
water quality when best management land practices are
implemented. At the project's completion, it is hoped that
Silver Creek will provide a model approach that can be
replicated elsewhere.
NEW Water is also completing the design phase of an
innovative bio-solids project, resource recovery and electrical
energy known as R2E2. Two anaerobic digesters will break down
biodegradable material to produce a methane gas, which will be
captured and processed onsite into a biofuel and used to
produce electricity. NEW Water's annual energy costs are slated
to be reduced by more than 50 percent in the first year of
operation, reducing its greenhouse gas emissions by 22,000
metric tons.
Nutrient recovery is another exciting aspect of R2E2, as
the technology will allow recovery of struvite, a phosphorus-
based byproduct and an important ingredient in agricultural
fertilizer. By harvesting struvite from our influent, we reduce
maintenance costs associated with its removal and create a
commercial fertilizer product that we can sell. This win-win
means both resource recovery and supplemental non-rate based
revenue.
As NEW Water demonstrates, the market for innovation in the
clean water sector is strong. Resistance to change, however, is
also significant. Nothing short of a national strategic
comparative to reform the U.S. water sector is likely to drive
the kind of change that will be needed to fully address future
challenges. NACWA's Water Resources Utility of the Future Task
Force developed several policy recommendations for driving this
change, including ways to incentivize the private sector to
invest in innovation within the clean water sector. Included in
my written statement are additional proposals.
Thank you, and I am happy to answer any questions you might
have.
[The prepared statement of Mr. Sigmund follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Cardin. Mr. Sigmund, thank you very much for your
testimony. We very much appreciate it. And we thank Senator
Baldwin for being here.
We will now go to Mr. Harlan Kelly, the General Manager of
the San Francisco Bay Utilities Commission. Mr. Kelly, it is a
pleasure to have you here.
STATEMENT OF HARLAN L. KELLY, JR., GENERAL MANAGER, SAN
FRANCISCO PUBLIC UTILITIES COMMISSION
Mr. Kelly. Thank you. Good morning, Chairman Cardin and
Ranking Member Boozman and committee members.
I am Harlan Kelly, the General Manager of the San Francisco
Public Utilities Commission. I want to thank you for the
opportunity to speak on this important topic about innovation
and utility of the future.
I also want to thank the committee for your leadership in
the recent passage of the Water Resource Reform and Development
Act that included the new WIFIA program and the expansion of
the Clean Water Revolving Fund. These programs are essential if
we are going to make investments in our water and wastewater
system to support cities and communities.
I am proud of the investment that San Francisco is making
in our water and wastewater system and I am honored to share
our story with you today. The PUC is a department in the City
and County of San Francisco comprised of three essential
services: water, wastewater and municipal power. We are the
third largest public utility in California with 2,300 employees
working in seven counties with a combined operating budget of
nearly a billion dollars. Like many utilities across the
Country, our infrastructure is in dire need of repair. We
identified $10 billion in capital need over the next decade and
we are embarking upon two major capital improvements. The first
one is a water system improvement program which we are about 80
percent complete and nearly $5 million investments to make
seismic improvement, add redundancy and diversify our water
supply.
Since 2007, we generated 11,000 jobs and 7 million craft
hours through the investment in our water system. With our
investment in our water system nearly complete, we are now
beginning our sewer system improvement program, which is a 20-
year, multibillion dollar upgrade of our wastewater
infrastructure.
We are not alone in investing in infrastructure, creating
jobs and economic growth. A recent report of the national
economic and labor market impact of water utility sectors found
that $233 billion will be invested by 30 of the largest water
and wastewater agencies over the next decade. These investments
will generate over half a trillion dollars in economic output
in the next 10 years and support 300,000 jobs annually.
Our operations and capital plans offer the opportunity to
employ new initiatives and business strategies consistent with
being a utility of the future. For example, we are investing in
technology for resource recovery. As we build our treatment
plants, through our sewer system improvement program, we are
investing $1.7 billion in upgrading our digesters. Using new
technologies, these investments will maximize our conversion of
biogas to energy, resulting in the production of nine megawatts
of renewable energy and reduction of our energy costs. This
will allow us to meet 90 percent of the plant's need through
onsite energy generation with the ultimate goal being to
achieve net positive energy.
In addition, we are integrating climate change adaptation
in our planning effort through droughts that threaten our water
supply to rising sea levels that inundate our sewers. The
adverse effects of climate change are already affecting
infrastructure nationwide. In San Francisco, we are integrating
climate change risk analyses and adaptation consideration in
our sewer system planning. We are studying the impact of rising
sea levels, storm intensity and using inundation mapping to
help us identify future challenges to our systems. We are using
this data to determine how we can best make changes to our
design standards in order to accommodate variances in the
number, frequency and intensity of major storms. This will help
us consider the right mix of green and grey infrastructure as
we undertake our sewer system rebuild.
Finally, we value being a good neighbor in all that we do.
We are the largest local public agency in San Francisco and we
understand the impact that we have on communities where we
work. That is why we are the first public utility in the Nation
to adopt an environmental justice and community benefit policy
that guides the agency effort to be a good neighbor. Both
policies are being integrated in all the aspects of our work.
For example, we are working with contractors to include
community benefit commitments in all the professional service
contracts over $5 million. By the end of this year, we will
have commitments in 30 contracts totaling over $6 million in
direct financial contribution, voluntary hours and in-kind
donation at no cost to the city. We also are committed in
supporting work force development programs and connecting local
youth and adults to training and work experience
apprenticeships and employment. Approximately 40 percent of our
work force will be eligible to retire in the next 5 years, so
building these career pipelines not only creates opportunities
in the communities but it also addresses our broader agency
needs for a skilled work force.
In closing, these examples are just some of the ways that
San Francisco exemplifies what it means to be a utility of the
future. We are more than a service provider. We have a role to
play in making our community a viable, sustainable and thriving
place to live and work.
Senate hearings like this are important, since they shine
the spotlight on our invisible water infrastructure. Forums
like this help local utility leaders to elevate the importance
of water infrastructure in America. And I just want to thank
you for the opportunity to speak before this committee, and I
will be happy to answer any questions.
[The prepared statement of Mr. Kelly follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Cardin. Thank you, Mr. Kelly. We appreciate your
testimony.
We will now turn to Mr. Andrew Kricun, the Executive
Director and Chief Engineer, Camden County Municipal Utilities
Authority.
STATEMENT OF ANDREW KRICUN, P.E., BCEE, EXECUTIVE DIRECTOR/
CHIEF ENGINEER, CAMDEN COUNTY MUNICIPAL UTILITIES AUTHORITY
Mr. Kricun. Thank you very much, Mr. Chairman, Ranking
Member Boozman and distinguished Senators. It is a great honor
to have the opportunity to speak to you today about the future
of clean water infrastructure in our Country.
As you said, Senator Cardin, I am Andy Kricun, the
Executive Director of the Camden County Municipal Utilities
Authority. We operate an 80 million gallon per day wastewater
treatment plant in Camden City, New Jersey, which is one of the
most economically distressed cities in the Country, right
across the Delaware River from Philadelphia. The fact that the
city is so economically distressed informs a lot of what we do.
But first, I want to talk about the infrastructure
situation in general. As you probably know, the American
Society of Civil Engineers rated our clean water infrastructure
across the Nation as a D. In addition, the recent climate
history of Hurricane Sandy has shown that our infrastructure is
just not resilient enough as it stands today to deal with
today's climate challenges, let alone the climate challenges
that are projected. If Hurricane Sandy had been 50 miles
inland, our wastewater treatment plant would have been
completely inundated and billions of gallons of sewage would
have gone into the Delaware River.
So what is to be done with this infrastructure gap? I
believe the first thing that must be done is that clean water
utilities must improve their own efficiency. We at Camden
County MUA have implemented an environmental management system
to optimize our efficiency. As a result of that, we upgraded
our entire wastewater treatment plant over the last 10 years,
improved our water quality performance by over 40 percent and
did that and held our rates for 17 years, a rate that was $337
per household in 1996, it is $342 today, 18 years later.
So we optimized our efficiency and improved our
environmental performance through the efficiencies of the
environmental management system and also through the State
Revolving Fund, New Jersey's environmental infrastructure
trust, that helped us borrow the money to improve our
wastewater treatment plant at such low rates that the
operations and maintenance savings that we gained through the
improvements were greater than the debt service. So we were
able to improve our performance, upgrade our facility and hold
our rates steady for our customer. Again, because of Camden's
economic distress, that is an important thing for us have done.
The SRF is important, the SRF working together with
optimizing efficiency can help utilities improve performance
and hold the rates. So this is important to do, and it is
important to do it sooner rather than later, because emergency
repairs are so much more expensive than planned repairs.
Therefore, if you do it ahead of time in a planned way, you
will save money, as opposed to fixing something that is already
broken.
When we do this, not only do we protect our clean water
infrastructure, we are protecting the public health and the
environment and also have the opportunity to get a win-win by
closing the jobs gap. Closing the infrastructure gap and the
jobs gap together can be done through judicious investment in
our clean water infrastructure.
Utilities not only need to be efficient, as I described,
they also need to be innovative, as my colleagues have
described. We have a goal at our wastewater treatment plan to
be 100 percent clean by 2018. We are already 10 percent of the
way there, with private sector investment, a power purchase
agreement which helped with legislation from the Congress, we
put in solar panels that ended up saving our ratepayers
$300,000 per year in electricity costs and no capital costs to
our utility and reduced our reliance on the electricity grid by
10 percent. We are currently doing the same thing, with the
same model, and building a digester with a combined heat and
power system that will provide 60 percent of our electricity
needs through the biogas from our sludge and will cost our
ratepayers nothing. In fact, it will be a net savings to our
utility. So that will bring us up to 70 percent of our goal to
be 100 percent green by 2018 and be completely off the grid.
The other thing we are doing is because of Camden City's
combined sewer system being so dilapidated, we have been trying
to improve grey infrastructure but also implementing green
infrastructure. We have built green gardens throughout the city
to try to capture stormwater and reduce the burden on Camden's
combined sewer system.
We have also been innovative with collaborative
partnerships. We have a Camden Collaborative Initiative that
was formed by ourselves, the USEPA Region 2 and New Jersey DEP,
and 35 other environmental partners, including the Nature
Conservancy, National Park Service and many others, almost 40
partners together working on Camden City's environmental
problems. The city is strapped for resources; therefore these
partners are working together to deal with the city's flooding
problems, emissions and brownfields problems. Clean water
utilities can take a leadership role in collaborative
partnerships.
We also are working with people like Tom, Harlan, Jerry and
NACWA to try to better disseminate best practices across the
Country. There are best practices that are already being done
by the leaders in the Nation. The more we can spread that to
other utilities, the more it will improve the entire
environmental picture.
We also need to improve environmental education so that we
can gain better understanding and support from ratepayers for a
fair rate to support clean water infrastructure.
In summary, we utilities need to continue to be more
efficient and more innovative. We need assistance from the
Federal Government in the form of the SRF financing and
incentives for innovative approaches and regulatory flexibility
to do more with less. We need to educate our ratepayers who are
willing to pay a fair rate to protect their water
infrastructure, the public health and the environment. With
this partnership, we can continue to protect our environment.
Thank you.
[The prepared statement of Mr. Kricun follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Cardin. Mr. Kricun, thank you very much for your
testimony.
We will now turn to Mr. Jeffrey Longsworth, Partner, Barnes
& Thornburg LLP.
STATEMENT OF JEFFREY LONGSWORTH, PARTNER, BARNES & THORNBURG
LLP
Mr. Longsworth. Thank you very much, Chairman Cardin,
Ranking Member Boozman, and members of the subcommittee. My
name is Jeff Longsworth, I am a partner with Barnes &
Thornburg. I have served in the past on EPA's Federal Advisory
Committee on Urban Wet Weather Flows as well as many Federal,
State and local advisory committees, as well as clients.
Local water treatment agencies are leading the way in
protecting local water resources. Individual municipal separate
storm sewer system operators, or MS4s, and utilities are
developing many innovative strategies to address local water
resources, resource challenges and to implement green
infrastructure. You have heard some of the unique local
solutions to complex challenges through other testimony this
morning. Flexibility and limited resources to address unique
local and regional issues are also threatened in part by two
EPA initiatives.
First, EPA is forcing certain MS4s to adopt stormwater flow
and water retention standards for otherwise unregulated sites
based on, for example, the amount of impervious surface. But
Congress limited EPA's authority over MS4s to controlling the
discharges of pollutants from MS4s to the maximum extent
practicable. Congress did not authorize EPA to regulate
discharges into MS4s other than to prohibit non-stormwater
discharges. Congress also provided EPA with a specific
statutory process to expand its stormwater permit program under
Clean Water Act Section 402(p)(5) and (6) by first studying
unregulated stormwater discharges and then establishing
``procedures and methods to control stormwater discharges to
the extent necessary to mitigate impacts on water quality.'`
EPA must submit its study as a report to Congress before
promulgating new regulations. EPA successfully expanded its
stormwater program using this process in 1999. In 2009, EPA
reinitiated this process to add new and redeveloped properties
to the NPDES permit program, they call it their national
stormwater rulemaking. Last year, EPA halted this national
rulemaking but now includes identical mandates to force MS4
operators to establish pre-development runoff standards for
discharges into the MS4 system through the agency's permitting
power absent any formal rulemaking.
Specific permit examples are identified in my written
testimony. Of note are at least two Department of Defense bases
that have appealed their permits to the EPA Environmental
Appeals Board.
Even the stormwater guidance memo issued last Wednesday,
which promotes these types of practices, EPA's efforts to
bypass the Clean Water Act 4(p)(5) and (6) and its national
rulemaking, have denied the public the opportunity to
participate in the National debate on the legality of this
program expansion and to the detriment of MS4 operators, which
are saddled with the types of standards EPA publicly walked
away from when it deferred its national rulemaking.
As the DOD argued before the EAB, the NPDES permit program
is all about the discharge of pollutants from point sources to
waters of the United States. Stormwater flow is not a pollutant
as defined by the Clean Water Act and case law. Impervious
surfaces are not point sources, they are non-point source
runoff.
And while MS4s ultimately discharge into waters of the
U.S., that issue now has been confused and confounded by EPA's
and the Army Corps of Engineers' proposed rule to redefine
waters of the United States. MS4s are defined as conveyance or
systems of conveyance designed for using and collecting
stormwater. MS4 definition closely tracks the definition of
point source, confirming that storm sewers are established
points versus subject to NPDES permitting. EPA formally
distinguished MS4s as point sources on the one hand and waters
of the United States on the other in its 1990 stormwater
rulemaking. Under the new jurisdictional proposed rule, common
MS4 components could be confusingly and unnecessarily layered
with more Federal regulations jurisdictional waters. Certainly,
Congress never envisioned a circumstances where water of the
U.S. could be located within a point source.
Further, Section 303 requires that States adopt water
quality standards for waters of the United States. If an MS4
contains waters of the U.S., then States would need to
designate uses for those stormwater systems and then
potentially total maximum daily loads. But States are
prohibited from adopting the use for waste transport, which is
exactly what an MS4 system is, it is a drainage system that
moves points and treats systems leading up to a discharge. The
very purposes of the MS4, ditches, drains and gutters within
the system, is in fact a transport waste. It would be
impossible to designate a water quality standard for an MS4 for
any reason other than to convey stormwater, which is in plan
violation of EPA's regulations for water quality standards.
In closing, the EPA and Corps should clearly identify that
MS4s do not contain waters of the United States to address that
potential issue and the significant cost associated with having
to redesign their permit programs to meet both the pre-
development hydrology as well as this waters of the United
States issue at significant expense and resources to those
MS4s.
[The prepared statement of Mr. Longsworth follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Cardin. Thank you very much for your testimony, Mr.
Longsworth.
We will now turn to Mr. John Hall, the Founder and
President of Hall & Associates.
STATEMENT OF JOHN C. HALL, DIRECTOR, CENTER FOR REGULATORY
REASONABLENESS, PRESIDENT, HALL & ASSOCIATES
Mr. Hall. Good morning, Chairman Cardin, Ranking Member
Boozman and members of the subcommittee. As the President of
Hall & Associates and the Director of the Center for Regulatory
Reasonableness, it is a pleasure to be here this morning to
testify before the subcommittee.
The Center for Regulatory Reasonableness is a multi-sector
municipal industrial coalition that is dedicated to ensuring
that regulatory requirements are based on sound scientific
information and allow for cost effective compliance. My areas
of expertise are environmental engineering and environmental
law, with over 35 years experience in addressing complex Clean
Water Act issues across the Country from municipal and private
entities.
In my view, and based on my 35 years experience, it is
EPA's creation of new compliance requirements, based on limited
information, the continued imposition of unauthorized
regulatory mandates and the failure to update decades-old
regulatory approaches that are in fact the biggest impediments
to true water pollution control innovation and protection of
ecological resources. I would like to provide the subcommittee
with a couple of examples.
First, for decades, EPA understood that wastewater plants
could be subject to large flow variations due to major rainfall
events. To protect the plant operations that are sensitive to
flow, engineers designed facilities and split flow treatment
modes using physical, chemical and biological processes.
Sometimes this is called blending.
Historically, EPA grant-funded these designs as a cost-
effective solution to maximize wet weather flow processing,
protect the environment and avoid oversizing facilities while
meeting permit limits. If you will, a win-win for all
concerned. Unfortunately, this successful approach was
undermined in 2006, when EPA began to unilaterally enforce a
new policy without rulemaking that declared these wastewater
plant blending operations to be illegal, even when they meet
permit limits. EPA claimed that the existing secondary
treatment rules and bypass rules established 25 years earlier
mandated this action. EPA itself mandated the cost of this
change in policy to be $200 billion nationwide.
EPA's mandated blending ban in fact slowed down the ability
of communities to safely address untreated overflows while
eliminating a viable cost effective option that provided
treatments and met permit limits. Moreover, forcing communities
to biologically treat wastewater flows jeopardizes the
operation of sensitive nutrient reduction facilities, just the
type of innovation communities want to implement today.
In 2013, the Eighth Circuit ruled that EPA's approach was
irreconcilable with the adopted rules and vacated the policy as
illegal under the Federal Administrative Procedures Act. Given
the unequivocal nature of the decision and EPA's decision to
not appeal, one would have thought the mater would have been
closed. Incredibly, EPA then announced it would continue to
enforce the vacated rule amendments outside the Eighth Circuit,
including in the Chesapeake Bay States. Communities considering
innovative technologies that are sensitive to fluctuations must
have this issue resolved before installing those technologies.
Another multi-billion dollar Federal rule interpretation
adversely impacting innovation is EPA's position that all
collection system overflows are per se illegal and must be
eliminated regardless of the circumstances. While it goes
without saying that no one is in favor of a sewage overflow,
even the best operated and designed collection systems in the
Country will occasionally experience overflows and backups. If
the system is underwater, it is going to leak.
EPA's position is forcing communities to design facilities
to address extreme weather conditions under the theory that one
might be swimming in flood waters. The proliferation of $100
million detention basins and deep tunnels is a direct product
of this regulatory edict. As one would expect, mandating
excessive collecting system improvements comes at a price to
other innovative measures that could produce greater benefits,
such as green infrastructure, wetlands restoration, water re-
use. Consequently, if we want such innovation, we must first
deal with EPA's extreme regulatory interpretation that is
consuming resources and in fact, not producing benefits.
The final example of outdated regulatory provisions that
will continue to misdirect resources relates to waters of the
U.S. A waters of the U.S. designation carries with it a well-
known regulatory presumption. Federal regulations indicate that
all waters of the U.S. must have standards and are presumed
fishable-swimmable unless detailed studies are conducted to
refute the presumption. Gold book criteria, EPA's high-quality
fishery criteria, are presumed to apply to those waters, to
protect whatever exists in these ditches and intermittent
streams.
As a consequence, compliance with this presumption will
adversely impact the ability to implement a number of very
important best management practices, because, as Mr. Longsworth
pointed out, waters of the U.S. cannot be used for pollution
treatment. Consequently, previously authorized cost-effective
measures that we use to slow down waters and promote nutrient
assimilation will now be deemed impermissible if they cause, as
they will, increased plant growth and reduced dissolved oxygen.
While the existing Federal presumptions may have been
appropriate for waters that could reasonably support diverse
aquatic life, the continued application of those rules to
marginal waters will certainly result in a broad misallocation
of State, Federal and local resources.
Thank you for your consideration of the comments.
[The prepared statement of Mr. Hall follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Cardin. Thank you for your testimony, Mr. Hall. I
thank all six of the members of this panel for your
contribution, plus your willingness to stick to the 5-minutes.
I appreciate that very much.
Mr. Longsworth, I agree with your observation that the
local water operators are leading the way with changes and
reforms and innovations. I applaud you. I disagree with your
conclusion, you won't be surprised, to know that as it relates
to the importance of dealing with stormwater and dealing with
the waters of the U.S. and the Clean Water Act.
Looking at the Chesapeake Bay, which I am very familiar
with, the leading increased cause of concern is what happens
from storm runoff. Agriculture is still the leading source, but
the leading growth is in stormwater and how we deal with
stormwater. We have programs that deal with agriculture, most
recently the Regional Conservation Partnership programs. But on
storm runoff, we have limited tools.
What I want to focus on, if I might for a moment, is the
fact that I be4lieve in federalism. I really believe that the
local water operators are showing us the way, and I applaud the
efforts that are being made in Green Bay and the Great Lakes
and the Chesapeake Bay and Camden, which you have been able to
do, in putting together ways of dealing with energy, producing
your own energy sources, that is incredible, taking waste and
converting it to energy, taking waste and converting it to
fertilizer. That is a win-win, helping the customers, dealing
with agriculture in a very positive way.
So I guess my question to you, we have the State Revolving
Funds, we have the WIFIA program, I think Mr. Sigmund, you
mentioned that. The private-public partnerships, we have our
tax code which offers certain tools that are available. We have
a regulatory framework under the Clean Water Act. How can we
improve the tools that are currently available to allow more of
the innovative approaches that you have suggested? And in that
question, if I might also add, Mr. Johnson, you raised the
question about you are trying to conserve the use of water,
which means the amount of revenues you bring in would be less.
So what incentives are there to make sure that we conserve, at
the same time give you the revenue base that you need in order
to make the investments of the future? Mr. Johnson, we will
start with you and then whoever else wishes to respond to this.
Mr. Johnson. Thank you very much for that question,
Senator. There are a number of things that we have done just to
kind of squeeze the last juice out of the orange, if you would,
for what we are doing currently. One is switching our payments,
our debt service to a longer term, so that we are better
matching the assets with the number of years that we will be
paying debt service on it. Another is moving more of the fixed
cost of operating the system into a fixed payment from our
customers. Right now we are collecting about 96 percent of our
overall revenue from a variable revenue base. The reality is
that we have a much larger percentage of our costs that are
fixed. So we are trying to strike the right balance so we can
make that work.
Unfortunately, WSSC has not been able to attract SRF funds,
because of the income guidelines that have been established by
the State of Maryland. So those funds typically go to either
smaller jurisdictions or jurisdictions that have a more
stressed economy and ratepayer base. So if there was some
adjustment made in that, certainly it would be beneficial. I
think the current investment market and banking market has been
extremely beneficial to us in that we have been able to borrow
money at a much lower cost. But at this point, most of our
payments are actually coming from the ratepayers and very
little from the Federal programs.
Senator Cardin. Let me stop you there and go to Mr.
Sigmund. He has been writing lots of notes. Let me see how he
wanted to respond, and we are trying to keep everybody to our
time that is available.
Mr. Sigmund. Thank you. There really is no one silver
bullet out there that is going to solve all the issues that we
are facing. We certainly look for the flexibility, the
flexibility in both regulatory, the flexibility to be able to
finance it. Utilities are looking at what we do as a business.
We make business, my utility does business cases for all of our
investments, all of our projects. While there is no business
case to be made for regulatory compliance, there are different
ways that you can be in compliance.
The SRF program, as was mentioned, is a huge component for
us. The State of Wisconsin, the Clean Water Fund, which is a
version of the SRF, has been very well run. We use it a lot and
it is very important to how we do projects.
I would offer, and one of the things that has been talked
about with the public-private partnerships, it is becoming a
bigger part of the business. It is not big for us in Wisconsin,
but we do see it down the road and tax credits that have been
talked about here to attract private capital into these public
investments we do see as an opportunity to bring venture
capital folks into the business.
Senator Cardin. Let me turn to Senator Boozman. We will
have a chance, I think, at a second round to let the others
respond.
Senator Boozman. Thank you, Mr. Chairman.
Mr. Sigmund, you talked about the Silver Creek project and
all the good things that were going on. You also mentioned that
there was an effort by the EPA to make you do additional
regulation that when you looked at the benefit versus the cost
that there really wasn't much benefit. Can you talk a little
bit more about that. What is your standard now? What do they
want you to go to?
Earlier in the year last year, I think we had somebody from
Washington that was here that talked about they had spent a
billion dollars, lots of increase in rate pay and things, and
were going to be asked to spend almost the same amount with no
increased benefit. Can you talk a little bit about how that is
affecting you?
Mr. Sigmund. Yes. Our current limit for phosphorus, which
is the pollutant of concern right now, is 1 milligram per
liter, as it has been for a long time, for all the Great Lakes
dischargers. Through the State of Wisconsin regulations, which
were approved by EPA, we are going to go down to .1 milligram
per liter for our discharge. That came through a total maximum
daily load analysis that was done for the Fox River as it
discharges into the Bay.
The two treatment facilities that my utility runs discharge
about 2.5 percent of the total phosphorus that is delivered to
Green Bay each year. It is not zero, but it is a small amount.
As we look to go from where our current operation is down to
that .1 milligram per liter, it was a lot of money for a very
small amount.
We did work in municipal utilities as well as some of the
non-profit groups, worked with the State of Wisconsin, the
Department of Natural Resources, about 4 years ago to get some
rules on the books to provide some flexibility. Adaptive
management is one, trading was another. We are planning to take
advantage of the adaptive management. We believe that it is a
lower cost for our customers to work out in the watershed and
they will get additional benefits to water quality that they
would not get from us spending the treatment.
So that is really an example of the flexibility. We are
still going to work toward compliance, but it is a different
way than just straight, our treatments.
Senator Boozman. So has EPA bought into that? Do they
recognize the fact that not only are you doing your best to
reduce the phosphorus through the point source, but doing all
these other things? Do they take that into consideration?
Mr. Sigmund. EPA did approve the State of Wisconsin's
rules. The adaptive management process, as the name goes, is
going to be looking at it year to year, decade to decade to see
if we are making progress. So we need to be doing more than
just the bare minimum, we need to actually be making water
quality improvement. Our Department of Natural Resources we
hope will keep us in that program as long as we are continuing
to make progress.
So as best as I know, EPA is on board with that.
Senator Boozman. Good. I think one of the things that we
kept hearing from all the witnesses was the flexibility piece.
Can you, Mr. Longsworth and then whoever wants to jump in, can
you give some examples of flexibility? And then also maybe some
examples of inflexibility that we run into and that we need to
legislatively create more flexibility. Or is it just a matter
of the agency picking and choosing?
Mr. Longsworth. Thank you for that question. Actually, I
think Senator Cardin and I probably do agree on protecting
local water resources. We agree on federalism.
My point is that Congress gave EPA certain powers and
authority in these areas. And that not that States and
localities can't go beyond and often do go well beyond what EPA
prescribes. You have heard a number of different, creative,
flexible approaches that have been able to fit within the
current scheme. I raised two issues that I believe where
Congress is kind of attempting a kind of national command and
control that is actually standing in the way of those
flexibilities, and in which, both instances, I would argue, EPA
has expanded beyond its statutory authority. That is the type
of activity that stands in the way of and costs, absorbs
limited resources on a local basis.
Attempting to address those national impacts when in fact
they have very little local impact, we ought to provide the
resources to the locality to address those issues that they
need. I worked with Montgomery County as an advisor on water
quality for many years. I can tell you that there were a lot of
creative and innovative ways in which Montgomery County,
Maryland has in fact protected its local resources. Part of
that is again the partnership between localities, the States
and Federal Government in keeping EPA from dictating all the
way down through the system exactly how everything has to be
done.
Senator Boozman. Thank you, Mr. Chairman.
Senator Cardin. Thank you. Senator Whitehouse.
Senator Whitehouse. Thank you, Chairman, and thank you to
you and Senator Boozman for holding this hearing.
I think it was Mr. Kricun who said that our water
infrastructure was given a D by the American Society of
Engineers. What I see in Rhode Island is that we have old
infrastructure, we are a State that has been around a long
time, so we have some very old infrastructure. In my lifetime,
we were still pulling out wooden water piping. We have some
nodding heads there from other urban areas that have been
around a while and have seen that.
We have a combination of factors that are piling up here.
The first is we haven't taken adequate care of the
infrastructure that is there. Financial pressures have caused
us to put off maintenance and adequate expenditure and all of
this. And so we are seeing the infrastructure degraded a bit
already.
Then we are seeing the end of its useful life in many
cases, just because these things are built for 50 years, 100
years. But it has been around that long, so there it is. And
then, when we rebuild, we tend to build for the projected uses
that the old world supported.
And what we are seeing in Rhode Island is, our sea levels,
like Maryland, I think Senator Boozman is fortunate that he
doesn't have this problem, because he is in Arkansas, but for
those of us who are coastal States, my sea level is up 10
inches at the Newport Naval Station tide gauge. That means a
lot for our low-lying wastewater treatment facilities. We have
14 water treatment facilities that are at risk now in Rhode
Island. We are a small State. In Florida, it is something like
570 that are at risk because of the sea level rise that is
coming up.
And then you see these rain bursts, which are highly
associated with climate change, that are new. We had a big on
in March 2010, dropped 12 inches in 4 days. And England
Wastewater Treatment Facility in Warwick, Rhode Island, got
blown out by all of that and people downstream of it had a foot
or more of sewage-contaminated water in their homes.
The budget for fixing that comes out of elsewhere, like
FEMA and emergency response. So it doesn't get really factored
into the cost of what you would be avoiding by having adequate
infrastructure in the first place.
So I see us in a situation in which this problem is not
just a constant but is going to be coming at us in an
accelerating fashion. And I see a bunch of heads nodding. I
wonder if you would be willing to say on the record what you
think the threat of infrastructure collapse or under-
performance looks like as you look forward. Is it a steady ramp
upwards, or do you think we are kind of coming at a wall?
Mr. Kricun. Thank you, Senator Whitehouse. Climate change
and climate projections are pessimistic. But in New Jersey, we
can speak of climate history. We had Hurricane Sandy in
December 2012.
Senator Whitehouse. Camden is close enough to be tidal,
isn't it?
Mr. Kricun. Yes, we have the Delaware. We were lucky the
storm was 50 miles to the west. If it had been 50 miles inland,
Philadelphia and Camden's plants would have been inundated. But
Newark's plant, for example, a 300 million per day plant, was
out of service for 6 weeks. That is billions of gallons of raw
sewage ultimately into the Atlantic Ocean from a storm that
already happened. So even if climate stays the same, our
infrastructure is inadequate.
Senator Whitehouse. Your point is that climate change is
actually making it worse.
Mr. Kricun. Right. So even if it stays the same we don't
have enough infrastructure. They are projecting an 18 inch rise
in the Delaware River by 2050, which is at the level of our
plant. So we have to plan for not only what has already
occurred but also what is to occur. So there is a very
significant infrastructure gap.
In addition, as you said, the aging infrastructure, even if
climate wasn't a problem, is enough to get us to work quickly
to try to improve our infrastructure.
Senator Whitehouse. And the fact that when the river rises
that far and it floods your plant, that creates disaster for
the community around you, that is not a cost that you get to
front load now in order to do the fix. You still have to do it
out of rates and out of WIFIA and Federal support. So it is up
to us to be the ones who can look ahead and see that problem
and help all of our communities through it, correct?
Mr. Kricun. That is correct, Senator. The thing is that
emergency expenses are far more expensive than doing and
planning in advance. Also, of course, the events themselves are
an adverse for our environment, for public health and also for
commerce, because nothing can go on without clean water
Services.
Senator Whitehouse. My time is up. I thank all the
witnesses and note for the record there was a lot of nodding of
many heads during my questioning.
Senator Cardin. We will put that in the record, Senator
Whitehouse.
Senator Boozman's initial observation I think is correct
and follows up on Senator Whitehouse's comments. There has been
strong bipartisan support for water infrastructure
improvements. We recognize that. I visited the Baltimore water
facility not too long ago with Senator Mikulski. It was state-
of-the-art when it was constructed 100 years ago. But it needs
major improvements.
We discovered in Baltimore not too long ago a pipe that
still was a wood pipe. So it goes back some way. Mr. Kricun,
you mentioned Hurricane Sandy. We will need to talk about
adaptation. It is not only modernizing, but how do we adapt to
new realities of the storms that we are confronting. That
requires us to work, Democrats and Republicans, to how we can
give you the resources to deal with this. We know that the
customer base, fee-generating, is certainly a major source. But
it needs to be supplemented. I am very interested in the
private-public partnerships and how we can do this, whether
WIFIA is going to be adequate or not under the WRDA Act. But we
need to look at ways that we can leverage more public-private
partnerships in dealing with this.
Mr. Longsworth, I agree with you completely, we have to
look at more local flexibility. I fully agree that we want to
take a look at what has happened at the national level that
prevents the creative activities at the local level. I think
there are areas where Democrats and Republicans can agree to
give more local flexibility.
I do want to at least challenge Mr. Hall here in one
respect, and that is, and I want to give Mr. Kelly a chance to
respond also, if time permits. I understand blending. Blending,
if you meet the permit levels, I understand your frustration.
But we are challenged in the Chesapeake Bay, we are challenged
in the San Francisco Bay, we are challenged in the Great Lakes
to deal with overall water quality. When you do blending, the
nutrient level is not improved. We have dead zones, and dead
zones are devastating to the progress that we are making in the
Chesapeake Bay. Mr. Johnson, your efforts have been very
sensitive to deal with being a good steward of the Chesapeake
Bay.
So we need to look at the overall objective here too, which
is to improve the water qualities of our waters. Nutrient
levels are critically important, and what you do on wastewater
is very much a part of the partnerships. We are getting
complaints from our farmers that we not doing enough on
sediment control on the Susquehanna.
So you might hit a permit level, but if you are not hitting
the overall objectives on our strategies to deal with our great
water bodies, you are creating some challenges. So Mr. Hall,
let me give you 1 minute and then I will give Mr. Kelly 1
minute to respond.
Mr. Hall. Certainly, Senator Cardin, and thank you for that
question. In fact, the permit limits are set to protect the
water quality objectives of the receiving water. In all the
cases that I am involved with where we have utilized blending,
it is done to protect the performance of the treatment plant.
And something like a nutrient reduction plant. If you expose it
to frequent changes in its influent wastewater strength and
flow, you decrease its performance. So by instituting blending,
you actually improve the plant performance. You don't decrease
it. You get an overall better end product because of the way
the plant is designed.
So my experience is not that it is a question of, if you
blend, you have an impact that you don't want to have. Of
course, if that were the case, it shouldn't be allowed. But
that is actually not the case, it actually protects the
wastewater plant so it can properly operate. Not the other way
around.
Senator Cardin. Thank you. Mr. Kelly.
Mr. Kelly. So in San Francisco, we are planning for climate
change. In fact, we have seen over the last 5 years two 5-year
storms, a 25-year storm and a 100-year storm. And we are in a
drought. So we recognize that we are approaching a change in
climate.
What is really significant about our system, we have a
combined sewer system. So we actually collect and treat all our
stormwater and sanitary flow. But what is really unique about
our system is we have a large amount of storage for stormwater.
And when the storm event exceeds the capacity of the plant and
the storage, our box sewers are equivalent to primary treated.
So one of the things that we really wanted to talk about is
the State Revolving Fund and some of the flexibilities. One of
it is that we are excited to see that you increased the term to
30 years. Because a lot of our large utilities are able to get
municipal bonds, which you get a 30-year at a very low interest
rate. So we are excited to see that and we would like to see
that on the clean water side as well.
Senator Cardin. Senator Boozman.
Senator Boozman. Thank you.
Mr. Sigmund, in regard to the criteria that you are going
to have to meet, you are at 1. Will you still have to go down
to .1, even with the flexibility of the other things that you
are doing?
Mr. Sigmund. Eventually, and then eventually it could be
10, 20 years. But in that interim 20-year period, it will be a
combination of the imrpovemetns that we are able to make at a
low cost in our facility to get ourselves, currently we
discharge at a phosphorus level of about .3 milligrams per
liter. We can do a little better but not much.
So the difference between the .3 for our flow and the .1,
we need to be out in the watershed working with agricultural
producers to get that improvement.
Senator Boozman. And I understand. My followup is going to
be, you get down to .5, .4, .3, you can do that fairly easily.
It takes effort and it takes expense. But to go from .3 to .1
is a huge jump.
The other thing that I have heard from so many of you is
that EPA consumes resources that could be used for positive
things. I think that is a good example, going from .3, .4, down
to .1 as opposed to taking those dollars, those limited
dollars, because of aging infracture and all the other things
that we discussed, and then use that on the low-hanging fruit,
like you all have done, Mr. Kricum. We have limited resources
doing a really good job, of taking those and taking the low-
hanging fruit and getting some things done.
Mr. Longsworth, or whoever wants to jump in, can you give
us some other examples of using perhaps resources that are
being used for perhaps over-zealous rulemaking or whatever in
the sense, as opposed to using it for things that could be
better spent?
Mr. Longsworth. Well, again, based on my reading of the
proposed waters of the U.S. proposal and what EPA has said
publicly, that in fact there can be waters of the U.S. within
an MS4, I am not sure how you work with that from a legal
perspective. Because it seems to me as soon as we have a water
of the U.S., that any discharge into that water of the U.S.
requires its own separate permit. So if in fact you have waters
of the U.S. within this larger MS4 system, you are going to
break up that single permit into a lot of other smaller permits
for each water of the U.S., which results in a lot of added
costs and redundancy.
Senator Boozman. Has anybody done some sort of a study
regarding the increased cost?
Mr. Longsworth. I have not seen a study on that yet. These
are all fairly new issues. These are issues, actually, that I
have raised in the comments that some groups that I work with
have submitted to EPA but we have not done an economic
analysis. But you can follow the chain all the way through as
to the fact that, if you get one permit for an entire large MS4
system or series of systems, based on a single or multiple
point sources, then you break that up and now you have ditches
that might be waters of the U.S., depending, and then the State
has to come in and create designated uses for those. The
regulatory system just continues on adding cost and energy.
Senator Boozman. Thank you.
Mr. Kricum, tell me again, you all have been aggressive and
have had limited resources and seem to be doing a good job,
what is the one thing that you got the most bang for the buck
out of?
Mr. Kricum. I think one thing that is really helpful is the
State Revolving Fund. Because if you have, if you are improving
your equipment, you have reduced your O&M savings. But if the
debt service is up here, there is a rate increase. But if the
debt service is reduced, then you can accomplish both.
The one thing that the State Revolving Fund has done in New
Jersey and could do more broadly is expand it to include green
infrastructure and green energy. They just did add
infrastructure and also they offer principal forgiveness for
green infrastructure, so it encourages innovation. So by
expanding the SRF to include green infrastructure, green energy
and maybe even offer some principal forgiveness as an incentive
to try innovative processes, that would encourage more cost-
effective utilization of limited resources.
Senator Boozman. Thank you. Thank you, Mr. Chairman.
Senator Cardin. Thank you. I would point out that we did
provide for green infrastructure within the State Revolving
Funds, particularly during the Recovery Act. And it is still
available, although it is not separately funded today. So it is
available.
In regard to your comments, Mr. Longsworth, on the waters
of the U.S., we are in the comment period. So I hope that you
will make those points clear. I don't think any of us would
like to see separate permitting in regard to the issues you
referred to.
So I think there is probably more agreement here than
disagreement. We should make sure these issues are clarified
during the rulemaking process.
I want to thank all the witnesses here today. I found this
hearing to be extremely helpful in how we can try to be a
partner with locals in the federalism provisions to make it
easier for you to perform your responsibilities. In these days,
it is much more complicated, because of the volume issues. You
have a lot more population and you have old infrastructure. So
how can we work together to make our systems work better to
protect public health, to deal with the energy challenges, deal
with the water challenges. I think this testimony today will
help us in that regard.
Again, I thank my Republican ranking member for his
cooperation over the last 2 years, Senator Boozman, and thank
you all for your testimony today.
[Whereupon, at 10:45 a.m., the subcommittee was adjourned.]
[Additional material submitted for the record follows.]
Statement of Hon. David Vitter, U.S. Senator
from the State of Louisiana
Hearing on ``Innovation and the Utilities of the Future:
How Local Water Treatment Facilities Are Leading the Way to
Better Manage Wastewater and Water Supplies''
Mr. Chairman, I would like to thank you for calling today's
hearing. I would also like to thank our witnesses for
testifying before the Subcommittee on Water and Wildlife.
The title of today's hearing invokes concepts with which
few would disagree. There's no question that the Federal
Government should foster innovative wastewater and water
management practices, and that local treatment facilities are
and should be leaders in ensuring safe water supplies.
Unfortunately, as in so many other areas, the Environmental
Protection Agency (EPA) is acting as an impediment to
innovation in the water utility sector.
In fact, EPA's hindering of effective water and wastewater
treatment is symbolic of a larger, systemic problem throughout
the agency. Many Americans view EPA as a rogue agency that
imposes its regulatory will in a manner that harms local
communities and is contrary to law. Too often creating
unnecessary obstacles to technological improvements and
progress, EPA's policies serve as a disincentive for innovation
throughout the public and private sectors. Water and wastewater
management are routinely frustrated by such challenges.
For example, EPA has improperly restricted many wastewater
utilities from engaging in a treatment practice known as
blending. Blending combines biological, chemical, and physical
treatment processes and is used by wastewater facilities to
manage large flow variations during major rainfall events.
Blending is sometimes necessary during major wet-weather events
that would otherwise overwhelm treatment systems, and
historically the practice has received support from EPA.
In recent years, however, EPA has enforced a new policy
that declares wastewater plant blending operations to be
illegal. According to John Hall, a minority witness, the cost
of this new prohibition was projected by EPA itself to exceed
$200 billion, and the blending ban has ``slowed down the
ability of communities to safely eliminate untreated overflows,
by eliminating a viable, cost-effective option that provided
treatment and met permit limits.''
Worse yet, EPA's blending ban is an unlawful attempt to
circumvent Congress and the agency's own, previously
established rules. As the Eighth Circuit Court of Appeals
determined in March 2013, EPA violated the Administrative
Procedure Act by promulgating blending rules without using the
statute's notice and comment procedures. The court also
determined EPA's ``legislative rule'' exceeded the agency's
statutory authority under the Clean Water Act.
EPA's illegal blending policy was a demonstrable failure by
EPA to work with local communities to manage important water
treatment issues, underscoring several fundamental problems
with the agency. First, the blending case confirms EPA's
disdain for transparency, having attempted to regulate in a
manner that directly contradicted the Clean Water Act and
established policies. Second, the case illustrates the red-tape
and bureaucracy the agency seeks to impose on local
communities, which rarely have the financial resources to take
on the agency as the sewer systems did here. Third, it is worth
noting that EPA has taken the position that this case only
applies in the Eighth Circuit, and that the agency has
authority to restrict blending on a ``case-by-case basis.'' In
other words, through its illegal blending regulation, EPA is
now thumbing its nose at the courts, in addition to Congress
and local communities.
It should also come as no surprise that EPA's deeply flawed
proposal to revise the definition of ``waters of the United
States'' under the Clean Water Act will make it even more
difficult to effectively manage local water resources. The
proposed rule would automatically designate ``tributaries,''
impoundments of ``tributaries,'' and ``adjacent waters'' as
``waters of the United States,'' thereby forcing local
communities throughout the country to obtain costly permits
just so they can properly manage wastewater and stormwater
conveyances. Under the proposed rule, these same communities
will no doubt face increased and crippling citizen suit
litigation if their regulatory officials do not accede to the
relentless demands of hostile environmental NGO's. Notably, for
purposes of this hearing, waste treatment systems do not
constitute ``waters of the United States'' under current
regulations, but the proposed ``waters of the United States''
rule would create significant uncertainty about the scope of
this long-standing exemption. Minority witness Jeffrey
Longsworth indicated in his written testimony that ``EPA's
overly prescriptive and unjustified mandates and efforts to
expand its Clean Water Act jurisdiction to drainage features
within MS4s in contravention of the limitations set forth by
Congress in the Act significantly hamper and threaten MS4
operators' ability to efficiently protect local water
resources.''
EPA's blending policies and its proposed ``waters of the
United States'' rule both demonstrate why the agency's
credibility has diminished in recent years. Today's discussion
on innovation in water and wastewater management is important
and provides a needed opportunity to examine how EPA is
impeding local efforts. I appreciate the chairman holding this
hearing today, and I look forward to hearing from our
witnesses.
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