[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

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

                                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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               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
                              ----------                              

                   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

                              ----------                              


                       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:]
    
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    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:]
    
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    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:]
    
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    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:]
    
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    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:]
    
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    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:]
    
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    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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