[Senate Hearing 114-348]
[From the U.S. Government Publishing Office]
S. Hrg. 114-348
THE FEDERAL ROLE IN KEEPING WATER AND WASTEWATER INFRASTRUCTURE
AFFORDABLE
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON
ENVIRONMENT AND PUBLIC WORKS
UNITED STATES SENATE
ONE HUNDRED FOURTEENTH CONGRESS
SECOND SESSION
__________
APRIL 7, 2016
__________
Printed for the use of the Committee on Environment and Public Works
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COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS
ONE HUNDRED FOURTEENTH CONGRESS
SECOND SESSION
JAMES M. INHOFE, Oklahoma, Chairman
DAVID VITTER, Louisiana BARBARA BOXER, California
JOHN BARRASSO, Wyoming THOMAS R. CARPER, Delaware
SHELLEY MOORE CAPITO, West Virginia BENJAMIN L. CARDIN, Maryland
MIKE CRAPO, Idaho BERNARD SANDERS, Vermont
JOHN BOOZMAN, Arkansas SHELDON WHITEHOUSE, Rhode Island
JEFF SESSIONS, Alabama JEFF MERKLEY, Oregon
ROGER WICKER, Mississippi KIRSTEN GILLIBRAND, New York
DEB FISCHER, Nebraska CORY A. BOOKER, New Jersey
MIKE ROUNDS, South Dakota EDWARD J. MARKEY, Massachusetts
DAN SULLIVAN, Alaska
Ryan Jackson, Majority Staff Director
Bettina Poirier, Democratic Staff Director
C O N T E N T S
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Page
APRIL 7, 2016
OPENING STATEMENTS
Inhofe, Hon. James M., U.S. Senator from the State of Oklahoma... 1
Boxer, Hon. Barbara, U.S. Senator from the State of California... 4
WITNESSES
Berger, David, Mayor, Lima, Ohio, on behalf of the U.S.
Conference of Mayors........................................... 6
Prepared statement........................................... 8
Chow, Rudolph S., P.E., Director, Department of Public Works,
Baltimore, Maryland, on behalf of the Water Environment
Federation..................................................... 85
Prepared statement........................................... 87
Moore, Robert, General Manager, Marshall County Water
Corporation, Madill, Oklahoma, on behalf of the National Rural
Water Association.............................................. 105
Prepared statement........................................... 107
Arndt, Aurel, former Executive Officer, Lehigh County Authority,
Pennsylvania, on behalf of the American Water Works Association 136
Prepared statement........................................... 139
Gysel, Joe, President, Epcor Water (USA), Inc., Phoenix, Arizona,
on behalf of the National Association of Water Companies....... 145
Prepared statement........................................... 147
Olson, Erik, Director, Health Program, Natural Resources Defense
Council........................................................ 159
Prepared statement........................................... 161
ADDITIONAL MATERIAL
Statement of the Associated General Contractors of America....... 198
Letter to Senators Inhofe and Boxer from the Association of
Metropolitan Water Agencies, April 7, 2016..................... 203
Statement of the National Association of Clean Water Agencies.... 207
Testimony of Commissioner Todd Portune, Board of County
Commissioners, Hamilton County, Ohio, on behalf of the
``Perfect Storm'' Communities Coalition........................ 211
Statement by the Unitarian Universalist Service Committee........ 217
THE FEDERAL ROLE IN KEEPING WATER AND WASTEWATER INFRASTRUCTURE
AFFORDABLE
----------
THURSDAY, APRIL 7, 2016
U.S. Senate,
Committee on Environment and Public Works,
Washington, DC.
The committee met, pursuant to notice, at 10:01 a.m. in
room 406, Dirksen Senate Office Building, Hon. James M. Inhofe
(chairman of the committee) presiding.
Present: Senators Inhofe, Boxer, Barrasso, Capito, Crapo,
Boozman, Wicker, Fischer, Sullivan, Carper, Cardin, Whitehouse,
Gillibrand, Booker, and Markey.
OPENING STATEMENT OF HON. JAMES M. INHOFE,
U.S. SENATOR FROM THE STATE OF OKLAHOMA
Senator Inhofe. Well, the EPA has identified $384 billion
in drinking water needs and $271 billion in wastewater needs
over the next 20 years based on capital improvement plans
developed by local utilities. According to the U.S. Conference
of Mayors, which I really enjoyed visiting with the U.S.
Conference of Mayors, and I am glad to have you here to
represent them. That was, what, 3 weeks ago or so. Anyway, it
is your meeting. It is nice to see some of the people are still
in the U.S. Conference of Mayors that were there when I was a
Mayor, a long time ago.
But according to the U.S. Conference of Mayors, through
2013, local governments have invested over $2 trillion in water
and sewer infrastructure and continue to spend $17 billion a
year. Now, these local expenditures represent over 98 percent,
98 percent of the cost of providing services and investing in
infrastructure. These costs are paid by you and by me and by
our ratepayers, and as a general rule this is an appropriate
thing to have users pay.
But water and wastewater is funded by the taxpayers who
receive these services. That is fine. Unfortunately, however,
we are no longer just paying for services; we are also paying
for unfunded Federal mandates, as I mentioned. And as Federal
mandates pile up, the bills paid by individual homeowners get
bigger and are becoming unaffordable for many Americans.
Federal mandates also force local communities to change
their priorities. In the water and sewer world, this pushes
basic repair and replacement to the bottom of the list. When we
force communities to chase mandates that may have very small
incremental health and environmental benefits, we risk losing
both basic public health protections and the economic
foundations of our communities.
There is a Federal interest in maintaining these health
protections and economic benefits, and there are a variety of
ways we can help. I want to list four here.
First, we have to continue to support the clean water and
drinking water State revolving funds that provide low cost
loans for infrastructure improvements. The President's fiscal
year 2017 budget proposed cutting the clean water fund by $414
million and providing a $197 million increase in the drinking
water fund. Now, this is robbing Peter to pay Paul, so it
really doesn't make that difference; the net is a loss.
Second, we have to find new ways to increase investment in
infrastructure. In 2014, we took action by adding the Water
Infrastructure Financing and Innovation Act, WIFIA, to the WRDA
bill. EPA is finally requesting funding to startup the WIFIA
program, although they are only requesting $15 million. In our
proposal to help Flint and other communities around the
country, we are planning to provide around $70 million, not $15
million, but $70 million to capitalize WIFIA.
Third, we need to look for ways to encourage even more
private investment in water and wastewater infrastructure.
WIFIA loans provide only 49 percent of the project costs, so
where does the funding for the other 51 percent? So it is a 50-
50 thing. If we can't be raised through municipal bonds, where
is it going to come from?
Fourth, we need to increase support for small rural
communities who simply can't afford the investment that EPA
wants them to make and need technical support to keep up with
all the Federal mandates. Mr. Robert Moore of Madill, Oklahoma,
will offer testimony on this.
Finally, we have to make sure that Federal mandates don't
force communities to spend hundreds of millions of dollars for
projects that may have little impact on water quality while
delaying other critical programs. The U.S. Conference of Mayors
has spent a lot of time trying to work with the EPA on this
issue. Despite the EPA's rhetoric on integrated planning and
flexibility, communities are still being threatened with
penalties even as they are trying to negotiate with the EPA.
I strongly believe that investment in infrastructure
expands our economy. The U.S. Conference of Mayors reports that
each public dollar invested in water infrastructure increases
private long-term gross domestic product by $6.35. To date, the
Joint Tax Committee has not been persuaded by these numbers.
The Joint Tax Committee assumes that these programs increase
the use of tax-exempt bonds, creating a loss to the Treasury
that we need to offset.
This is exactly a barrier to increasing funding authority
for the State revolving funds and loan programs, and WIFIA
also. The Water Environment Federation, represented here today,
has conducted a new study to measure the increases in personal
and corporate income taxes paid into the U.S. Treasury
attributable to water infrastructure investment. In other
words, more money is coming into the Treasury as a result of
this type of investment.
This hearing is laying the foundation for legislation on
water and wastewater infrastructure, and I hope to be ready to
move it at the same time our Water Resources Development Act,
or WRDA, is taking place.
Senator Boxer.
[The prepared statement of Senator Inhofe follows:]
Statement of Hon. James M. Inhofe,
U.S. Senator from the State of Oklahoma
EPA has identified $384 billion in drinking water needs and
$271 billion in wastewater needs over the next 20 years based
on capital improvement plans developed by local utilities.
According to the U.S. Conference of Mayors, through 2013 local
governments have invested over $2 trillion in water and sewer
infrastructure, including $117 billion in 2013 alone.
These local expenditures represent over 98 percent of the
cost of providing services and investing in infrastructure.
These costs are paid by you, me and our neighbors when we pay
our water and sewer bills.
As a general rule, this is appropriate. Water and
wastewater are funded by the ratepayers who receive these
services. Unfortunately, however, we are no longer just paying
for services. We also are paying for unfunded Federal mandates.
And as Federal mandates pile up the bills paid by individual
homeowners get bigger and are becoming unaffordable for many
Americans.
Federal mandates also force local communities to change
their priorities. In the water and sewer world, this pushes
basic repair and replacement to the bottom of the list. When we
force communities to chase mandates that may have very small
incremental health or environmental benefits, we risk losing
both basic public health protections and the economic
foundation of our communities.
There is a Federal interest in maintaining these health
protections and economic benefits, and there are a variety of
ways we can help.
First, we have to continue to support the clean water and
drinking water State revolving loan funds that provide low cost
loans for infrastructure improvements. The President's fiscal
year 2017 budget proposed cutting the clean water fund by $414
million and provided a $197 million increase in the drinking
water fund.
Second, we have to find new ways to increase investment in
infrastructure. In 2014 we took action by adding the Water
Infrastructure Financing and Innovation Act to the WRDA bill.
EPA is finally requesting funding to start up the WIFIA
program, although they are only requesting $15 million. In our
proposal to help Flint and other communities around the
country, we are planning to provide $70 million to capitalize
WIFIA.
Third, we need to look for ways to encourage even more
private investment in water and wastewater infrastructure.
WIFIA loans provide only 49 percent of project costs, so where
does the funding come from if the remaining 51 percent cannot
be raised through municipal bonds?
Fourth, we need increased support for small rural
communities who simply can't afford the investments that EPA
wants them to make and need technical support to keep up with
all the Federal mandates. Mr. Robert Moore of Madill, Oklahoma,
will offer testimony on this.
Finally, we have to make sure that Federal mandates don't
force communities to spend hundreds of millions of dollars for
projects that may have little impact on water quality, while
delaying other critical programs. The U.S. Conference of Mayors
has spent a lot of time trying to work with EPA on this last
issue. Despite EPA's rhetoric on integrated planning and
flexibility, communities are still being threatened with
penalties even as they are trying to negotiate with EPA.
I strongly believe that investment in infrastructure
expands our economy. The U.S. Conference of Mayors reports that
each public dollar invested in water infrastructure increases
private long-term gross domestic product output by $6.35. To
date, the Joint Tax Committee has not been persuaded by these
numbers. The Joint Tax Committee assumes that these programs
increase the use of tax exempt bonds, creating a loss to the
Treasury that we need to offset. This is actually a barrier to
increasing funding authority for the SRF loan programs and
WIFIA. So the Water Environment Federation has conducted a new
study to measure the increases in personal and corporate income
taxes paid into the U.S. Treasury attributable to water
infrastructure investment.
This hearing is laying the foundation for legislation on
water and wastewater infrastructure, which I hope to be ready
to move at the same time as we move our Water Resources
Development Act legislation later this month.
OPENING STATEMENT OF HON. BARBARA BOXER,
U.S. SENATOR FROM THE STATE OF CALIFORNIA
Senator Boxer. Thank you so much.
I am very pleased that we are having this hearing, and I
think it is important to look at this issue of mandates, where
the parties do have some significant differences.
To me, useless mandates are ridiculous. They make zero
sense. But common sense mandates based on science are critical.
For example, yesterday we had a hearing on nuclear power
plants. We could say, let's not spend any money worrying about
the safety, but then we would have more problems, like we had
at Three Mile Island or God forbid, Fukushima. Well, we are not
going to have that because we have a law that says we are going
to set standards and regulate these power plants.
Now, Senator Inhofe and I may have a disagreement on how
far that should go. That is fair. But the fact is we do
something important for the American people, it is called
protecting them, and that is critical. So as we discuss the
Federal role in supporting our water infrastructure, safety
should be prominent in our minds. Aging drinking water pipes
and waste treatment systems are a nationwide problem, and the
Society of Civil Engineers--and they are not Republicans or
Democrats, they are everything--they give us a D, a D for our
drinking water and wastewater infrastructure. It is
unacceptable.
Now, it doesn't mean that throwing a ton of money at it is
going to change it. We have to be very smart the way we do it,
but we have to do it, and I believe it is a national problem. I
don't think it is fair that in one city in the country, you
know, our kids are getting poisoned water, and we have that,
examples of that all over, including in my State, because we
have had some disposal of dangerous lead. We have it in
Mississippi in a certain part; we have it in Flint, Michigan;
we have it in Ohio. It is not fair that the child born there,
just by circumstances of their birth, has less of a right to
clean water. So the American people have a right.
Now, these minimum standards also extend to, of course, our
water infrastructure. I was so proud to join with my colleague,
Senator Inhofe, in a rare moment of comity on the environment
where we said there is too much lead in faucets and those
facilities that deliver our water, and we changed that lead
requirement based on science.
Now, millions of homes across America receive water from
pipes that date to an era before scientists and public health
officials understood the harm caused by lead exposure. I am so
happy to see Eric Olson, who used to be on my staff, Senator. I
don't know if you recall, but Eric is an expert in protecting
kids from dangerous toxins, and we worked on these. And we know
now, from the American Water Works Association, that 7 percent
of homes, this is a new study, 7 percent of homes, that is 15
million to 22 million Americans, have lead service lines. Now,
it doesn't mean that that lead is leaching, but some of it
could be, and a lot of it could be in the future.
As parents in Flint know, there is no safe level of lead in
children. It affects their brains, their nervous systems in the
fetuses. The children poisoned in Flint will be dealing with
these harmful consequences all their lives. So we have a long
way to go.
We also have cities across the U.S. with sewer systems that
discharge raw, untreated sewage to waterways where our children
swim. Despite enormous successes since the passage of the Clean
Water Act, there is much more to do. So we know the tragedy in
Flint was due in part to the decision to switch to the polluted
and highly corrosive Flint River as a source of drinking water,
but the Flint River is not alone. Just last month EPA released
a report showing nearly half of U.S. waterways are in poor
condition, and one in four have levels of bacteria that fail to
meet human health standards.
Now, I know some testifying today have expressed concerns
about the affordability of meeting the standards for protecting
their own people. I understand the concerns. I was a county
supervisor. Like many of us, I started there, and I dealt with
those mandates.
But what we have to do is hear you. If you think something
is totally useless and won't have a benefit, tell us. But if it
is going to have a benefit, we have to work together and make
it easier for you to protect your people. You want to do that
as much as any one of us.
So we need increased investment. It is very, very clear. We
should fund existing financing programs such as the State
Revolving Fund. And I think there is broad agreement on that
one, at least there used to be. We should update these programs
to target those investments where it is needed most, which you
will help us with. When we invest in water infrastructure, we
support jobs and the economy. The Clean Water Council estimates
that $1 billion invested in water and wastewater infrastructure
can create up to 27,000 jobs, and jobs are important to all of
us.
Mr. Chairman, I will finish in 15 seconds.
So I believe there is broad bipartisan support for the need
for Federal investment in water infrastructure, and the next
WRDA, which I am very excited about working with my colleagues
on both sides, we have an opportunity to address our aging
drinking water infrastructure and our wastewater
infrastructure. The health and safety of our children and
families depend on a modern infrastructure that provides safe
drinking water and assures clean rivers and streams.
I certainly looking forward to our panel.
And Mr. Chairman, can I put my full statement in the
record?
Senator Inhofe. Sure. Without objection.
[The prepared statement of Senator Boxer was not received
at time of print.]
Senator Inhofe. Thank you, Senator Boxer.
Now, what we are going to do, we normally don't have this
many people on a panel, so we are going to be trying to keep
within the 5-minute limit that we have. We will start with
David Berger, who is the Mayor of the city of Lima, Ohio.
Mr. Berger.
STATEMENT OF DAVID BERGER, MAYOR, LIMA, OHIO,
ON BEHALF OF THE U.S. CONFERENCE OF MAYORS
Mr. Berger. Well, good morning, Chairman Inhofe and Ranking
Member Boxer and members of the committee. Thank you for the
invitation to give mine and the Conference of Mayors'
perspective on the Nation's water and wastewater issues.
My name is David Berger, and I am in my 27th year as the
Mayor of Lima, Ohio. I spent nearly 20 years in negotiations
with Ohio EPA and U.S. EPA over long-term control plans and
also participated in over 5 years of discussions with EPA
concerning integrated planning, green infrastructure, and
affordability. This, I believe, makes me a reluctant expert in
the field.
Local government, not the Federal Government, is where the
job of providing water and wastewater services gets done and is
paid for. Local government has invested over $2 trillion in
water and sewer infrastructure and services since the early
1970s, and $117 billion in 2013 alone.
At the Conference we have unanimously adopted policies
dealing with this issue. One is a simple message to the
Congress and the Administration: give us money or give us
relief. The Mayors of this Nation would be happy to implement
any rule or regulation you or EPA comes up with, but you have
to provide at least half the resources. And I am talking real
money, not authorization levels that never get funded. I am
talking about grants, not loans that must be paid back.
The cost for unfunded Federal mandates are ultimately paid
for by our customers, our citizens, many of whom are
residential households. And the cumulative costs of these
mandates have now reached or exceeded thresholds of clear
economic burden on low- and fixed-income households. Let me
give you a few examples.
In Lima, more than a third of my residents live under the
poverty threshold. EPA demanded that I spend $150 million to
fix combined sewer overflows for a community which has only
38,000 residents. The projected average annual sewer bill will
be over $870 a year. This means that 46 percent of Lima
households will be spending more than 4 percent of their
household incomes on just their sewer bills, with nearly 14
percent of my residents spending nearly 9 percent of their
household income on their sewer bill.
In the Conference of Mayors study of just 33 California
cities, 24 cities report that more than 10 percent of their
households are now paying more than 4.5 percent of their income
on water, sewer, and flood control costs, with 10 of those
cities having more than 20 percent of their households spending
4.5 percent.
Please keep in mind that many of these cities have not yet
factored in the cost for TMDLs, which now are estimated to put
just the cities in Los Angeles County up to $140 billion. One
county--$140 billion.
How did we get here? When the Clean Water Act and the Safe
Drinking Water Act were first established, Congress set lofty
aspirational goals. Congress put skin in the game and provided
grants to local communities, and that investment fostered a
reasonable attitude about how to accomplish those goals
together.
That is not the case now. Congress retreated from the grant
program primarily because of the high costs. But the
implementation of the water policies by successive
administrations did not retreat with Congress's retreat from
funding. Quite the contrary, the administrations transformed
the aspirational goals into unfunded mandates involving
hundreds of billions of dollars of costs imposed on local
communities. Let me give you some examples.
In CSO consent decrees, cities are held by EPA policy to an
arbitrary number of no more than four overflows per year.
However, there is no science substantiating the need for that.
So in some cases cities are allowed 14, while in other cases
zero overflows. Engineering a system that could handle any type
of storm event with zero overflows is almost impossible,
needlessly expensive, and wasteful of local resources.
In my own city, I have a river that is labeled as fishable
and swimmable. That river dries up in the summer to only 4-
inch-deep pools of stagnant water. I can safely say that no one
is ever going to swim in that river. Yet, we are held to that
standard of compliance.
Bottom line, EPA is dictating our priorities and where our
taxpayer money is spent. I do not want to give any impression
that Mayors do not care about clean water. We do. We care
passionately, and our actions and investments speak loudly. But
we need Federal and State government to once again be our
partners. We fundamentally believe that change must take place,
and we are asking Congress to act on the following: codify
integrated planning, define affordability, develop reasonable
and sustainable goals, allow for additional time, and establish
a review process to appeal decisions made at the regional
level.
I thank you for the opportunity to speak here today.
[The prepared statement of Mr. Berger follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Senator Inhofe. Thank you, Mayor.
Mr. Chow is the Director of the Department of Public Works
for the city of Baltimore.
Mr. Chow.
STATEMENT OF RUDOLPH S. CHOW, P.E., DIRECTOR, DEPARTMENT OF
PUBLIC WORKS, BALTIMORE, MARYLAND, ON BEHALF OF THE WATER
ENVIRONMENT FEDERATION
Mr. Chow. Good morning, Chairman Inhofe, Ranking Member
Boxer, and members of the Committee. My name is Rudy Chow. I am
the Director of the Department of Public Works for Baltimore
City. It is my honor to be here today on behalf of the city of
Baltimore, the Water Environment Federation, and the WateReuse
Association to discuss the importance of the Federal role in
keeping water and wastewater infrastructure affordable. I have
over 30 years' experience working in the water and wastewater
field.
Today you are examining a very important national issue
that is near to my heart--how we can address the burgeoning
need for investment in our water infrastructure. My boss, Mayor
Rawlings-Blake, appeared before this committee's subcommittee
back in 2012 to testify on the challenges of financing water
infrastructure using Baltimore experiences.
Baltimore is faced with the massive cost of more than over
$3 billion of regulatory mandates, including wet weather
consent decree, or ENR, enhanced nutrient removal at our
wastewater treatment plants as well as our stormwater
improvements, and covering up our open finished water
reservoirs.
This is just a snapshot of the project that we must
undertake to upgrade and to meet today's standard. We consider
ourselves to be good stewards of the environment and public
health of our community and the Chesapeake Bay Watershed, and
take these obligations seriously. We are also tasked with
maintaining and improving a large and aging infrastructure
system.
So how do we pay for all of these? To say that Baltimore is
not a wealthy city is a gross understatement. The median
household income, 40 percent of our population in Baltimore
falls below the national median household income level, and 25
percent falls below the poverty line. It is that population
base that will be disproportionately impacted by water bill
rate increases to pay for the infrastructure investment that we
must take.
My written testimony highlights a number of efforts to WEF
and other water organizations are undertaking to identify
policy changes and programs that will assist communities and
ratepayers dealing with affordability issues. I urge you to
review these items in the testimony.
Senator Cardin's legislation to reauthorize and increase
funding in the Clean Water and Drinking Water SRF program is an
important first step. Congress should reauthorize both SRF
programs and increase the funding for them. In Baltimore, we
have direct experiences with SRF programs and know they work
well. We have gotten, in the last 3 years, over $168 million in
low interest loans from the Maryland SRF program and $4.5
million of principal forgiveness loans.
Additionally, Congress should support increased funding
from other existing financing grant programs such as WIFIA,
USDA Raw Development programs. All these programs are vital to
help communities make needed and wise investments in their
infrastructure.
Note when I speak about the water infrastructure, I use the
word investment. Those of us that are familiar with our Federal
infrastructure funding programs have long known that the
Congressional Budget Office scoring for the program does not
fully reflect the complete economic benefits of these programs.
For this hearing, WEF and WateReuse Association contracted a
team of economists to conduct the quick analysis of the
economic benefits. Though the analysis has not been completed,
upon completion we will submit that for the record.
The analysis estimated that economic impact of SRF spending
in four example States, namely California, Maryland, Ohio, and
Oklahoma, which represent a good cross-section of States across
the Nation, representative of geographic size, population size,
cost of living, as well as rural versus urban population, and
general age of infrastructure.
The model of analysis was based upon the IMPLAN economic
model to estimate the impact of SRF spending on output, labor
income, jobs, and Federal tax revenues in the four States.
IMPLAN captures the effects of spending as it ripples through
the economy. So, for example, utility spending of SRF will
result in what we call direct impact effect, which is the
construction contractor. When the construction contractor
reuses that money to buy goods and services, that is what we
call an indirect effect. And then the fact that the indirect
spending generates employment, creating additional income for
households, which result in what we call induced effect. So the
total economic impact is the sum of the direct, indirect, and
induced effects.
The results of the analysis show that Federal investment in
water and wastewater infrastructure through the SRF programs
has meaningful benefits to the economy, U.S. Treasury, and
households across the Nation.
For starters, the analysis found that SRF spending
generates Federal tax revenues. Total State and Federal annual
SRF spending in the four States average about $1.46 million----
Senator Inhofe. [Remarks made off microphone.]
Mr. Chow. Thank you.
So, in other words, every million dollars of SRF spending
is estimated to generate about what we call $2.25 million in
total output for the State economy, on average.
I urge the committee and Congress to continue to support
our efforts in the local levels to invest in water
infrastructure. The investment we make, with your support,
delivers environmental, public health, and economic benefits to
our country. Thank you very much.
[The prepared statement of Mr. Chow follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Senator Inhofe. Thank you, Mr. Chow.
Robert Moore, from Madill, Oklahoma, is representing the
National Rural Water Association.
Robert.
STATEMENT OF ROBERT MOORE, GENERAL MANAGER, MARSHALL COUNTY
WATER CORPORATION, MADILL, OKLAHOMA, ON BEHALF OF THE NATIONAL
RURAL WATER ASSOCIATION
Mr. Moore. Good morning, Senator Inhofe and members of the
committee. I am Robert Moore from rural Oklahoma. I am a
General Manger of the Marshall County Water Corporation. I am
representing all small and rural community water and wastewater
suppliers today through my association with both Oklahoma and
the National Rural Water Associations.
Our member communities have the very important public
responsibility of complying with all Federal regulations and
for supplying the public with safe drinking water and
sanitation every second of every day. Most all water supplies
in the U.S. are small. Ninety-four percent of the country's
51,000 drinking water supplies serve fewer than 10,000 people.
I want to acknowledge that rural America is very
appreciative of you, Senator Inhofe, for standing up for rural
communities on environmental issues. Your actions have improved
the lives of all rural families, and the environment and the
public health in rural USA.
Small and rural communities often have more difficulty
providing safe, affordable water due to our limited economies
of scale. While we have fewer resources, we are regulated to
the exact same manner as large communities. In 2016, there are
rural communities in the country--and even in my county--that
still do not have access to safe drinking water or sanitation
due to the lack of density or the lack of funding.
I am what you would call a working general manager. Much of
my day is spent in the field repairing water lines, operating
backhoe dump truck, helping conduct routine maintenance on our
distribution system. If someone in the community loses water in
the middle of the night, the emergency call gets forwarded to
my cell phone at home.
But Marshall County Water has a similar story to tell, such
as many other rural and small water suppliers. We were started
to provide the first water service to rural communities that
had limited access to water or marginal water wells. In 1972,
we began operations to supply water to about 800 farms and
ranches. The Federal Government provided that funding to begin
and later expand our water service through low interest loans
from USDA. We now serve approximately 15,000 customers through
a little over 6,000 taps.
In crafting water infrastructure funding policy, we urge
Congress to consider the following. First, local communities
have an obligation to pay for their water infrastructure, and
Federal Government should only subsidize water infrastructure
when the local community can't afford it and there is a
compelling Federal interest, such as public health, compliance,
or economic development.
We have recently been denied a $3 million USDA low interest
loan for a 15-mile raw water line. USDA determined that we
could afford a commercial loan from a bank and did not need the
Federal taxpayer to subsidize our water infrastructure.
The USDA and EPA SRF funding programs achieve this
principal objective by requiring that Federal subsidies be
targeted to communities most in need. One of our concerns with
the new WIFIA program is that it lacks any needs-based
targeting, credit elsewhere means-testing, or focus on
compliance issues. This year's EPA budget request decreased
funding for SRFs and substantially increased funding request
for the WIFIA program. This gives the appearance that limited
Federal water subsidies are being moved from programs targeted
to the neediest communities to the communities with less need.
Second, all EPA water funding programs should primarily be
dedicated to the compliance issues with EPA Federal mandates
and standards.
Third, profit-generating water companies should not be
eligible for Federal taxpayer subsidies.
In closing, please know that the SFRs have no limitation on
size or scope of a water project and can currently leverage
Federal dollars to create a much larger loan portfolio.
Oklahoma currently operates a water fund which leverages
dollars at a 1 to 10 ratio. According to EPA, most SRF funding
is allotted to large communities. A simple review or projects
funded by the SFRs included in my testimony show numerous
projects funded that cost over $50 million, and some over $1
billion.
Thank you all for your assistance and for this opportunity.
I would be happy to answer questions.
[The prepared statement of Mr. Moore follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Senator Inhofe. Well, thank you very much, Mr. Moore.
Mr. Arndt is from Pennsylvania and here representing the
American Water Works Association.
Mr. Arndt.
STATEMENT OF AUREL ARNDT, FORMER EXECUTIVE OFFICER, LEHIGH
COUNTY AUTHORITY, PENNSYLVANIA, ON BEHALF OF THE AMERICAN WATER
WORKS ASSOCIATION
Mr. Arndt. Good morning, Mr. Chairman, Ranking Member
Boxer, and members of the committee. I want to thank you on
behalf of the 50,000-plus water professionals that make up the
membership of the American Water Works Association, or AWWA,
for this opportunity to provide comments on the critical issue
of affordable financing for our water infrastructure, and in
particular what the Federal role should be.
AWWA has had two longstanding policies which bear on
infrastructure financing: first, that water service should be
provided by utilities that are self-sustaining from local rates
and other charges, and second, that water infrastructure can
best be financed with a multifaceted toolbox, recognizing that
there is significant diversity among water systems in our
country and their infrastructure needs also differ widely.
I would like to provide some context for the suggestions
that I will make in a few minutes, because I think they are
important to set the stage for the circumstances that we face.
There are many studies and reports out there which attempt
to analyze or estimate what our country spends on average
annually for water infrastructure, and those results vary
widely. However, most of the results seem to home in in the
vicinity of $30 billion to $50 billion per year, and it is
important to recognize that that number fluctuates widely from
year to year based on circumstances such as the general
economy, interest rates, the regulatory requirements that are
imposed, and also competing local demands in many of our
communities.
What is very clear, however, is that the annual need for
investment in our water infrastructure is going to grow
dramatically in the coming decades. By most estimates, it will
at least triple--and possibly even quadruple--by 2040.
In 2012, AWWA produced a report that is called ``Buried No
Longer: Confronting America's Water Infrastructure Challenge.''
That report addressed one narrow area of our water
infrastructure. Specifically, it looked at our aging water
mains. And what that report concluded is that we will require
an investment of $1 trillion over the next 25 years just to
replace the water mains that will become obsolete during that
timeframe. That number includes nothing for other growing
drinking water needs, nor for CSO or SSO or other wastewater
types of issues. Clearly significant numbers when you compare
to what we are currently spending.
Another important feature to recognize, that water services
are the most capital intensive of all the utility services that
we provide in our country. What this means is when we invest
bigger dollars, more dollars in that water infrastructure, it
is going to have a big impact on rate, and in turn will have a
big impact on the affordability of those water rates to the
consumers.
We believe, given these circumstances, that we have to do
two things, and we have to pursue these efforts relentlessly.
First, we need to preserve existing sources of water
infrastructure capital and add new sources to the toolbox to
address those needs that are unmet by current tools. We also
need to find ways to reduce the cost of the capital that is
available for water infrastructure.
In our written testimony, we identify four areas where we
believe that the Federal Government has an important role.
Specifically, they include tax-exempt bonds, the Water
Infrastructure Finance and Innovation Act, the State Revolving
Loan Funds, and private activity bonds.
In my remaining comments, I am going to address the first
two--not because the other two are unimportant, but I believe
those other two will be addressed by other panelists here
today.
With regard to tax-exempt bonds, it is important to
recognize that tax-exempt bonds are currently the largest
source of funding for water infrastructure. Between 75 and 80
percent of our annual investment is currently funded via that
vehicle, and tax-exempt bonds are used by approximately 70
percent of the utilities across the country.
We acknowledge the concerns and the scrutiny on tax-exempt
bonds that is currently under discussion, but we believe that
concern is wholly inappropriate considering that they are used,
in the case of water infrastructure, to finance essential
public services. As water utilities, we need billions of
dollars annually for water infrastructure, and we need to have
lenders who can provide those billions of dollars. Recognizing
the tax treatment, the steady stream of revenue, and the
security of the investment, investors willingly accept a below
market interest rate, and that interest rate is passed along to
the utilities who use those tax-exempt bonds. In turn, those
savings on the financing are used to reduce the rates to
customers or maintain the rates to customers and improve the
affordability of rates.
If we take away this financing, the cost of capital and the
customer rates that follow will rise to unprecedented levels
and create unprecedented difficulties for affordability,
particularly in our older cities.
With regard to WIFIA, first of all, I want to thank the
committee for their role in enacting WIFIA as part of the WRDA
bill in 2014 and more recently removing the ban on using tax-
exempt bonds to provide the local match for WIFIA loans. We
think that is a great step forward.
WIFIA is clearly one of those tools that can expand the
pool of----
Senator Inhofe. Mr. Arndt, you are quite a ways over your
time. Please wrap up.
Mr. Arndt. OK.
Senator Boxer. But I like what he is saying.
Senator Inhofe. I am listening to what he is saying.
Mr. Arndt. I will wrap up very quickly.
Senator Inhofe. That has been another one of our mutual
projects, by the way.
Senator Boxer. Yes. Very proud of that.
Mr. Arndt. We have four recommendations with regard to
WIFIA and they are in our testimony, but most importantly we
need an appropriation so that program can be launched and that
money can be put to work for water systems across the country.
Thank you for your attention.
[The prepared statement of Mr. Arndt follows:]
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Senator Inhofe. Thank you. That was excellent.
Mr. Gysel is here from Phoenix, Arizona, representing the
National Association of Water Companies.
Mr. Gysel.
STATEMENT OF JOE GYSEL, PRESIDENT, EPCOR WATER (USA), INC.,
PHOENIX, ARIZONA, ON BEHALF OF THE NATIONAL ASSOCIATION OF
WATER COMPANIES
Mr. Gysel. Good morning, Chairman Inhofe, Ranking Member
Boxer, and members of the committee. My name is Joe Gysel, and
I am the President of EPCOR Water and serve as the current
President of the National Association of Water Companies
representing the regulated private water industry. I am pleased
to join you today to talk about water infrastructure actions
the Federal Government can take to advance innovative and
sustainable solutions in meeting the Nation's needs.
NAWC members span the Nation and range in size from large
national and regional companies serving millions of customers
to individual utilities serving less than a few hundred
connections. Private utilities have existed in the United
States for well over 100 years. We are regulated by State
utility commissions and have one of the best compliance track
records in the industry. Collectively, we serve more than 73
million Americans.
NAWC believes that by embracing the powerful combination of
public service and private enterprise we can improve water
infrastructure by investing in plant, improving customer
service and reliability, and creating jobs. We applaud this
committee for bringing water infrastructure issues to the
forefront and your leadership in advancing necessary changes to
preserve and enhance water infrastructure.
This morning I would like to emphasize a few points
regarding private water's role as part of the solution to our
infrastructure and resource needs.
It is unfortunate that our aging and deteriorating public
water systems threaten the economic viability and public
health. Communities nationwide are faced with massive fiscal
challenges and competing priorities to replace critical
infrastructure, as was evidenced in Flint, Michigan.
The American Society of Civil Engineers gives U.S. water
infrastructure a failing grade of D, with a current funding gap
estimated to be as high as $1 trillion. Addressing these needs
requires innovative funding solutions to include the private
sector, as Federal funding alone will not be able to bridge the
growing investment gap. This will require Congress to examine
all future related funding policies to ensure that the private
water industry is part of the solution.
The private water sector continues to help communities with
significant capital investment. NAWC's six largest members,
which service about 6 percent of the U.S. population, are
collectively investing approximately $2 billion annually in
their systems. This is significant when compared to the latest
annual Federal water appropriation funding of only $2.25
billion. Clearly, the private sector has the financial
capacity, resources, and expertise to assist in the Nation's
water infrastructure challenges that plague many of our cities.
Sustainable water management also requires innovative
technologies and strategies for long-term resource planning.
NAWC members operate in multiple jurisdictions and are uniquely
qualified to deliver strategies and solutions for long-term
resource development and security. These range from water
conservation programs to developing wastewater recycling and
recharge facilities, or long-term public-private regional water
agreements such as the one EPCOR recently signed to utilize
renewable resources when shifting from ag to municipal
applications.
Further support in funding the Nation's water challenges
can also be achieved through public-private partnerships. Our
member companies have experience with P3s, which have benefited
communities in delivering superior water service while freeing
up scarce municipal funds for competing priority projects.
These same models can also be applied to broader water
augmentation and infrastructure projects to serve large,
multijurisdictional or State water projects to address growing
water scarcity requirements.
Unfortunately, current rules and regulations create
impediments that restrict many municipalities from entering
into cost saving partnerships with private water companies.
Federal policy plays an important role in establishing
incentives for water investment. Congress and the
Administration can act to remove barriers to access the vast
potential of private capital in much-needed water
infrastructure projects.
To succeed, NAWC recommends the following actions: removal
of State volume caps on private activity bonds for water
projects, allowing for increased private investment in water
systems and the alignment of our critical infrastructure with
airports, high speed rail, and solid waste disposal; second,
clarify the Internal Revenue Code to avoid defeasance of
beneficial P3s so that long-term concession agreements are no
longer penalized; third, expansion of State Revolving Funds and
their eligibility so private water utilities are no longer
limited in their use of clean water funding; in addition, fully
implement the WIFIA program to facilitate private investment in
water infrastructure and ensure private companies have equal
opportunity to participate and fully leverage those same
programs; finally, establish a centralized office to navigate
the complex P3 terrain, providing professional services to
assist all municipalities with this model.
Mr. Chairman and committee members, thank you again for the
opportunity for the NAWC to address you today. We are committed
to work with you, our industry colleagues and stakeholders to
meet the challenges of sustainable water infrastructure, and I
am happy to answer questions after.
[The prepared statement of Mr. Gysel follows:]
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Senator Inhofe. Very good. Thank you.
Mr. Olson is the Director of the Health Program for the
Natural Resources Defense Council.
Mr. Olson.
STATEMENT OF ERIK OLSON, DIRECTOR, HEALTH PROGRAM, NATURAL
RESOURCES DEFENSE COUNCIL
Mr. Olson. Thank you, Chairman Inhofe, and thank you,
Senator Boxer and other members of the committee. It is an
honor to testify this morning on behalf of the 2 million
members and activists at the Natural Resources Defense Council,
and I wanted to summarize. It has been more than 30 years I
have been working on drinking water and water infrastructure
issues, and we have been talking about deferred maintenance,
about the failure to upgrade treatment and upgrade technology,
steady deterioration of our water supply for many, many years;
and I find myself in agreement, actually, with several of the
points that have been made earlier, that we really need to be
making these investments.
We have long known that wastewater and drinking water
infrastructure are deteriorating, and frankly the chickens are
coming home to roost. Where we are now is that what we have all
taken for granted, which is safe drinking water, we can't
really consider a given any longer. Flint really does remind us
that the penny wise and pound foolish decisions to save a few
bucks by not investing in our water infrastructure can really
come home and harm public health, as well as harming the
economy, and really erode public trust.
I think in these debates sometimes it is easy to forget the
impacts of these decisions on real people, and this really came
home to me a week or so ago when we were working on behalf of
some of the citizens in Flint, and we were working with one
mom, her name is Miriam. Her husband and her two kids live in
Flint, and she has lived there most of her life, and when the
water was switched in 2014 in Flint, she noticed that the water
started to smell like rotten eggs, that it tasted awful, that
it was brown. She wondered about it. They switched over to
bottled water, but public officials kept saying, no, it is
perfectly safe, don't worry about it, so they went back to tap
water. It was really expensive. They are not wealthy people,
and they switched back to tap water.
Unfortunately, Miriam's family started to suffer from some
adverse health effects. In June 2014, Miriam had a miscarriage.
She had never had a miscarriage before. She started getting
skin rashes. Clumps of her hair started to fall out. A doctor
prescribed treatments for her hair loss, which helped a little
bit, but her skin rash continued. Her husband also had skin
rashes and hair loss. Her son, who is 13, had a bad outbreak of
eczema sores all across his back, and this happened after the
water change, and it got far worse than it had ever been. They
stopped using the Flint water for bathing and his skin rashes
disappeared.
Miriam read that lead contamination can be linked to
miscarriages and to complications in pregnancy, and she told
us, ``Just not knowing whether lead exposure may have caused my
miscarriage is really painful.'' She worried about the possible
health effects on IQ of her children and on their ability to
learn, and she's really worried about continuing to have to use
bottled water for all of their purposes, for cooking and
drinking. She takes her kids to her parents, who are on a
different water supply, just to go bathing, which is quite an
inconvenience. She says it has really taken an emotional toll
on her family.
So the reason I mention this is that it is really easy in
these policy debates to forget that we are really dealing with
real people who are adversely affected. And unfortunately, we
have a widespread problem with lack of investment in water
infrastructure.
I think a lot of water utilities have done a fantastic job
in improving our water infrastructure, but we have huge
challenges. We do not want a two-tiered water system where
wealthy people get good water that is clean and safe, and poor
people get crummy water that is threatening their health. We
have a real backlog, as we have heard, of investment in water
infrastructure. We really need to fix this problem fast.
Infrastructure investments, the good news is, create a lot
of good jobs, and we strongly support, as our testimony
highlights, investments in this area.
I wanted to also point out that there are ways we can
reduce the cost for citizens that are paying for water bills. I
lay out several of them in the testimony, including protecting
the water before it gets contaminated so polluters are paying
to clean up, rather than consumers paying to take those
contaminants out of their water. The National Drinking Water
Advisory Council and Affordability Group, which I served on,
had several recommendations, including low income water
assistance program, affordable rates for low income consumers,
targeted compliance assistance, and increased funding.
I realize my time is almost out, so I will just highlight
the seven recommendations very briefly that we have in the
testimony.
First, we need to fix Flint's infrastructure. We support
Senator Stabenow et al.'s bill, 2579; second, we need to really
invest in our water infrastructure. We support Senator Cardin's
bill that would increase State Revolving Fund funding. We need
to fix our source water protections; we need to address small
system regionalization to cut costs; fix the lead and copper
rule; and, finally, let citizens act immediately when there is
an imminent and substantial endangerment to their health.
Thank you very much for the opportunity to testify. It is
an honor.
[The prepared statement of Mr. Olson follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Senator Inhofe. Thank you, Mr. Olson.
Mayor Berger, 27 years, is that right?
Mr. Berger. Yes, sir. I am a slow learner.
[Laughter.]
Senator Inhofe. Well, there have been a lot of ideas here,
a lot of testimony here, but the thing that seems to be missing
is affordability and flexibility.
Now, you are here representing the U.S. Conference of
Mayors, as well as a Mayor yourself. Can you tell us why the
U.S. Conference of Mayors believes that the EPA's integrated
planning policy isn't sufficient to address the Mayors'
concerns about the affordability that we talked about?
Mr. Berger. Thank you.
Senator Inhofe. It is meant to do that, but is it doing it?
Mr. Berger. First of all, I can say for a fact that because
Lima was the first city to actually negotiate successfully a
consent decree involving integrated planning, that we would
never have gotten to that point of actual agreement without the
integrated planning policy. It does give us the flexibility
that we need to proceed and move forward, and we actually are
grateful for the fact that there were champions in headquarters
at U.S. EPA that created the policy and actually worked through
with us the negotiations with the regional office.
Our concern is the fact that it is a policy; it is not the
law. Our concern is that it should be codified so that cities
all across the country in fact have the opportunity to use it
to do their long range planning and priority setting for their
own systems.
We are coming up on a process--we are already in this
process of actually electing a new President. Who knows what
happens to that policy under the next Administration? So there
is that transitional change that we are concerned about. But
second, I can also tell you that the experience of cities
around the country is that there is enormous resistance in the
regional offices to actually implementing the integrated plan
with cities.
As of this point, we know of really only four communities
that have been able to successfully put in place integrated
plans, that being Lima, Ohio, Evansville, Indiana, Springfield,
Massachusetts, and Spokane, Washington. So our concern is that
this is an opportunity that cities have but aren't able to
successfully implement. It needs to be part of the law.
Senator Inhofe. Thank you. It was someplace in the U.S.
Conference of Mayors that the word was used as prosecutors,
that the EPA treats some of the small communities like
prosecutors.
Mr. Berger. Oh, I think that is a widespread experience for
cities. We are treated as polluters; we are not treated as
stewards, along with the State, for the public environment, for
our systems. And it was very clearly the case that regional
staff was dismissive. It took us 10 years to get to an
agreement. And I believe that that attitude of, frankly, an
arrogant, dictatorial attitude out of the agency is very real
for most cities.
Senator Inhofe. Do you agree with that, Mr. Chow?
Mr. Chow. Yes, sir, I do. First of all, Baltimore City, we
also use integrated planning and basically try to manage our $4
billion worth of capital projects.
Senator Inhofe. OK.
Mr. Chow. But yes, we do experience that as we negotiate
with our consent decree, SSO consent decree. We do get more
favorable comments or support from the headquarters rather than
from the region.
Senator Inhofe. Mr. Moore, this is Senator Wicker over
here. He introduced S. 611, I think it was, and they passed his
bill, and it is now law, and that establishes technical
assistance under the Safe Drinking Water Act for small and
rural communities, which you are representing. Do you think
that bill should include also communities meeting wastewater
mandates?
Mr. Moore. Yes. The technical assistance end of this we
certainly support a certain percentage of, you know, whether it
is SRF or the WIFIA, to go to technical assistance to supply
that assistance to the smaller systems that cannot go out, you
know, and afford the engineers, or it puts a burden on them.
Senator Inhofe. You know, I understand that, because in our
State of Oklahoma there are a lot of Madills around. We have a
lot of communities that would say that you are representing
them well. And I think these are some of the things that we can
do in our committee.
Senator Boxer.
Senator Boxer. Thanks, Mr. Chairman.
Many say that in addition to bread, water is the staff of
life, so you are dealing with something that is critical, and I
thank you for all your passion about it, I really do, and
dedicating your life to it. Everybody takes it for granted, we
all do, until a kid gets violently ill or a woman has a
miscarriage or there is rashes all over our body. Then we go
what have we done wrong, all of us together. We are in this
together; this isn't an us-versus-them situation. As Eric said,
it is all about our families.
So when something goes wrong like that or when a child
swims in a lake that has untreated sewage in it, Mr. Berger,
and they get very ill because of it, everyone focuses on it. So
today we are focusing on it. We are focusing on other things
that I believe are secondary, because let me tell you
something. We have spent, so far, $2 trillion in the war in
Iraq, OK? I care about this country. I care about our kids
being safe. And to say, oh, we can't afford it, baloney. We
could afford the war. Thank God not with my vote, but we could
afford the war. So we can afford this.
I mean, I really appreciate all of you coming here today to
help us figure out how we can do this and not harm our people
physically, mentally from this problem, and also in their
pocketbooks.
So I want to talk about a few of those things, but first I
wanted to ask Mr. Olson are frequent discharges of combined
sewage overflows and sanitary sewer overflows, are they a
concern? Because we are focused on lead, as we should be. What
about these overflows, with the bacteria?
Mr. Olson. Yes, these are definitely a concern. These are
definitely a public health concern, as well as an environmental
concern. From a public health standpoint, very often raw sewage
is actually dumped into lakes and streams, and that can cause
massive contamination. We see beaches being closed; we see
people getting sick, waterborne disease from swimming in it,
from being exposed to it.
Senator Boxer. So it is a problem that should be addressed,
in your opinion?
Mr. Olson. It is definitely a big problem in hundreds of
communities across the country.
Senator Boxer. Because that is what the studies are now
showing. It is disgusting, and we have to fix it. And we can
argue over everything. We have to fix it.
Now, Mr. Berger, I want to be your partner. The first part
of your testimony I agreed with it, but the rest of it I found
very disturbing. First of all, you mentioned my State, and you
talk about what it costs. I want you to know that my State has
tougher environmental laws than the Federal Government, A. That
is what the people there want. OK? B, no one in L.A. ever
called me to complain, so who is it you talked to specifically
that I can contact and say what are the problems?
Mr. Berger. Well, the Conference of Mayors published a
study of 33 cities----
Senator Boxer. You mentioned Los Angeles.
Mr. Berger. That is correct.
Senator Boxer. Who told you they are upset about this?
Because I want to contact them.
Mr. Berger. We will give you the published study with those
names.
Senator Boxer. I am not asking for a study. You talked
about L.A. Because you do not represent L.A., I do. So you tell
me who is complaining. And I would really appreciate it if you
present it in writing.
Now, Mr. Berger, in your testimony you complain that EPA
resists flexibility. This could be true. We want to make sure
they don't. We want to get it done just as much as you do, with
maximum flexibility. And insists on unrealistic timetables for
meeting water quality requirements. Yet, your consent decree
provides the city 24 years to come into----
Mr. Berger. Yes, ma'am.
Senator Boxer. Let me ask my question.--to come into
compliance with the Clean Water Act. This consent decree comes
after years of the city failing to comply with water quality
requirements. And it is also my understanding that you have one
of the longest consent decrees in the country.
Is 24 years an unreasonable timetable?
Mr. Berger. That is why we agreed to it, because it is not.
Senator Boxer. So it isn't. So then why, on the other
hand----
Mr. Berger. But it took us 10 years of negotiation in order
to be able to deal with the agency.
Senator Boxer. Well, you didn't mention the fact that your
efforts paid off. And let the record show you got a 24-year
consent decree.
Now, let me ask you, Mr. Berger, do you think it is
appropriate for cities to make improvements to stop the
discharges of raw sewage into waterways that are used by our
kids?
Mr. Berger. I believe that it is appropriate for us to take
reasonable measures, whether it is with combined sewer
overflows or sanitary sewer overflows, to minimize those kinds
of problems.
Senator Boxer. Good.
Mr. Berger. But there are also instances, and many
instances, where the requirements are not realistic.
Senator Boxer. I understand. You said that.
Mr. Chow, would increased funding of the programs that you
say are helping you, will increased funding help the
communities facing affordability issues? We all care about
that.
Mr. Chow. Yes, it definitely would. With the fact that we
are forced to use local money to pay for the rehabilitation of
our infrastructures.
Senator Boxer. Thank you.
Mr. Chow. So Federal dollars certainly would be very
helpful.
Senator Boxer. OK. Well, I will close because I know my
Chairman wants me to. I will. But I want to thank Mr. Arndt for
your kind statements about WIFIA, because we are excited about
it. We have to fix it to meet some of the real needs, and we
will, but we are very excited about it. We think it is a new
tool, and we think the leverage is going to be fantastic for
you.
Thank you, Mr. Chairman.
Senator Inhofe. Thank you, Senator.
Senator Wicker, now that I have teed you up with your
legislation, you are recognized.
Senator Wicker. Thank you, Mr. Chairman. I have so much to
say, and 5 minutes is inadequate, but I will do my part.
It is a fact that EPA has used its discretion to actually
reduce the availability of technical assistance to small
communities by 75 percent. This has eliminated two full-time
circuit riders in my State of Mississippi. And I do appreciate
the Chair mentioning the legislation which Senator Heitkamp and
I championed last year, the Grassroots Rural and Small
Community Water Systems Assistance Act. This was signed into
law by the President on December 11, 2015.
Let me just tell you what we are facing in Mississippi. The
town of New Hebron has 400 people. They are being told they
have to spend $3 million to comply with the EPA. How are they
going to do that? Lawrence County Water system, with
approximately 2,000 persons, needs half a million for a new
well. The Town of Como, population 1,200, is facing
overwhelming water challenges and failing to meet the current
EPA permit. They just finished paying approximately $1 million
loan. Now they have to spend another $1 million. The town of
Utica, with a population of 850 persons, is facing $1 million
compliance upgrade.
I don't know why anybody runs for city councilman or Mayor
in these small towns. My hat is off to them for trying to make
small town and local government better.
The small town of Shaw, 1,900 people, was under a boil
water order because of a broken chlorinator that they couldn't
afford to fix. The city of Mound Bayou has approximately 2,300
persons; $87 million to pay for a new sewer treatment facility
that EPA is mandating on them because of nitrogen and
phosphorus discharges.
Senator Heitkamp and I had hoped that, at a very minimum,
the legislation that the President signed would result in a
return of circuit riders in rural areas instead of increasing
regulatory requirements. Sadly, the circuit riders have not
returned to my State with the assistance that they have so
capably provided to us.
Mr. Moore, we see the burden of Federal unfunded mandates
increasing and EPA assistance decreasing. Is EPA insisting on a
Cadillac for these communities when actually a used Chevrolet
would do all right? Is there a middle ground there? I am very
concerned about the horror stories that Senator Boxer
mentioned. I think we all are. Lead in the water, completely
unacceptable; children swimming in lakes polluted by raw
sewage, absolutely unacceptable anywhere, particularly in the
United States of America in the 21st century. But is there a
balance there that the regulators who come in and treat you
like they are prosecutors, rather than partners, is there a
balance there that we are missing? And what can you tell us in
that regard? What do you say to these small towns?
Mr. Moore. Well, first, I would say that even as a small
community or a small rural water system, it is our top priority
to put out safe water. We will not put out water that is in any
way unsafe.
Senator Wicker. Absolutely.
Mr. Moore. Talking about comparing a Cadillac system or
something that a big municipality would need, you know,
compared to us, we have to have the facilities that create that
safe water, and there is only so much, you might say, bells and
whistles that go on some of the bigger water treatment plants
that maybe we don't need.
What was the other part of your question?
Senator Wicker. Mr. Berger, how can these small
communities, these small towns and municipalities, pay for
these mandates?
Mr. Berger. Well, Senator, I think that part of it has to
do with what the requirements are, and I think the opportunity
for technical assistance is essential to be able to make
certain that they have proper technical advice about what is
appropriate. When it comes to the actual affordability issue,
there is no question that the Federal Government needs to
become a major funder in the form of grants. Grants are now
made to States, and States turn around and loan those moneys to
cities. That impacts the affordability and makes it
unaffordable. So I think that the Federal Government needs to
look back at the time of the Clean Water Act first being
implemented and the Safe Drinking Water Act and look at the
successes that were achieved when the Federal Government had
skin in the game in the form of direct assistance to
localities.
Senator Wicker. Thank you very much.
Senator Inhofe. Thank you, Senator Wicker.
Senator Cardin.
Senator Cardin. Thank you, Mr. Chairman.
I want to thank the entire panel.
My good friend, Senator Wicker, I want you to know that I
visited the water treatment facility plants in my State. I was
just at the Ashburton facility in Baltimore City this past
Monday, I was at the WSSC plant also on Monday, and I am very
proud of the commitment that the local governments of Maryland
have made to make sure that we have safe drinking water, and we
do. But it is not a Cadillac; it is not a used Chevy. We are
rebuilding the Model T. They are 100 years old. The plant in
Baltimore was first built 100 years ago. It was state of the
art, state of the art, and we are modernizing it, but it is
still the 100-year-old facility. So it is a struggle.
And obviously we all want to make sure that regulations are
done as efficiently as possible, but the bottom line is we must
make sure that there is safe drinking water for the people of
our country.
What happened in Flint was absolutely outrageous, and I
think we all understand that. There were some conscientious
decisions made there that should not have been made. But we
have problems throughout this country, let's make no mistake
about it. In Washington, DC, in the early part of the last
decade, lead leached into water of possibly 42,000 children;
and nearly a decade ago, in my city of Baltimore, we have
closed the drinking water fountains in all of our public
schools, and the reason is not that the water isn't safe coming
into the community, it is the connections into the facilities
that contain lead that can't be used.
So we have serious modernization. Mr. Arndt, you indicated
that your organization's studies showed in 2012, I think it
was, that there is $1 trillion of backed up water
infrastructure improvements over a 25-year period that could be
spent. The EPA did a study showing there is over $600 billion
in the next 20 years in order to modernize.
I was listening to each one of you, and you all said the
capacity here just isn't there to do that. The ratepayers can't
burden that type of amount. And when you look at the Federal
tools, and there are several, including the tax-exempt
authorities that you all would like to see and WIFIA, but if
you look at the State Revolving Funds, it is one-third the
level it was in 2009.
And I want to thank the Chairman, and I want to thank the
Ranking Member, because they are trying to do something about
that. We are going to try to reauthorize the State Revolving
Fund, and that would be at a level, I hope, that reflects at
least what the Federal partnership should be, and I thank our
leadership on our committee because this committee, in a
bipartisan manner, has tried to make more predictable water
infrastructure Federal partnerships and a reasonable amount to
deal with the needs that are out there. So we are going to
continue to try to make those investments, and I have
introduced some legislation, and I thank the leadership of this
committee for their encouragement of the legislation that we
are pursuing.
Mr. Chow, I want to give you an opportunity to respond to a
point that you made in your statement, and that is recent
findings of economic benefit analysis on the State Federal
Revolving Fund. You indicate that the way this is scored
doesn't always reflect the true economic cost and benefit of
the Federal investment. Could you elaborate on that a little
bit more?
Mr. Chow. Sure, Senator. So, traditionally, when we are
looking at the State Revolving Fund, we are looking at the
money coming from the Federal Government and/or from the State,
which is looking from that end, sort of one-sided. So, for
example, the four States in the study showed that the total
State and Federal investment for the years 2012 to 2014
amounted to about $1.46 billion. So as a result, that study
actually showed that combined investment generated about
$160,000 in terms of the Federal tax from that investment.
But if we are just looking at the Federal portion of SRF,
which only amounts to about 23 percent of that total combined
Federal and State, that every million dollars actually
generates $695,000 in terms of the Federal tax from those
States.
So, in other words, $695,000 in Federal tax revenue is
generated by a Federal investment of 23 percent of $1 million,
so that is quite awesome.
Senator Cardin. Thank you for underscoring that. Obviously,
we are interested in clean, safe drinking water, but there is
also an economic impact here, and I think the committee
understands that, and I appreciate your testimony.
Senator Inhofe. Thank you, Senator Cardin.
Senator Fischer. Thank you, Mr. Chairman.
And I thank the witnesses for being here today.
We need to discuss the real world implications of these
unfunded Federal mandates, as well as the lack of flexibility
and the fair penalties that many of our communities are facing.
The affordability of water and wastewater infrastructure is a
critical concern around the country. In my home State of
Nebraska, the city of Omaha is faced with the challenge of
addressing a $2 billion unfunded combined sewer overflow
mandated from the EPA, and the cost to the 600,000 residents in
Omaha's sewer service area is a burden, and it is particularly
hard on our low- and fixed-income residents.
So, Mr. Mayor, I would like to ask you a question. In your
testimony you discuss the extensive and the costly process that
your city endured to reach an agreement with the EPA's required
CSO mandate. In your experience, what are the necessary tools
that Congress can provide municipalities and communities to
better equip themselves to comply with those mandates with the
CSO?
Mr. Berger. Thank you, Senator. I believe that, first of
all, one of the critical elements of integrated planning is the
opportunity to prioritize. For an example, we have SSOs in our
communities that we demonstrated had no public health impact or
environmental impact but which will cost us $30 million to
eliminate. We were able to push those off to a later time while
we took on much more serious issues relating to the CSOs. That
ability to prioritize is part of integrated planning. It needs
to be part of the law. It shouldn't just be a policy.
The second issue really is around affordability, and the
Conference of Mayors has developed proposals for how to, in
fact, define affordability based upon not MHI, because median
household income really masks the impact that these costs will
have on low-income households. We believe that a definition of
affordability, which absolutely respects the need to do
something, but to do it within the affordable limits of a
community's resources, is important to ultimately getting to
solutions. And we think that additional time.
You know, the Clean Water Act just had, I think, its 42nd
birthday, and what we have accomplished didn't happen
overnight. What has been accomplished to the Nation's waters in
fact took 40 years to get to this point, and we are still
making advances. So any expectations, which are there in the
regional offices, that things must be accomplished in 10 or 15
years as the norm really are not realistic. So part of the
challenge of dealing with affordability is allowing for the
kind of time that communities need to accomplish it within
their budgetary means.
Senator Fischer. Right. Could you speak a little more on
the necessity to address those high priority control measures
and specifically what impact does that prioritization have on
public health and water quality? How can we have Omaha be able
to benefit from that prioritization flexibility?
Mr. Berger. Well, I think that comes back to the technical
assessment of where, in any system, there are places where
things are happening at higher levels, more frequency events,
and then there are places and systems which do not have that
kind of frequency or impact. And I think assessments of the
entirety of the solution and then plotting that over time for
implementation is the key to ultimately getting to something
that is reasonable for any given community.
Senator Fischer. Thank you.
Mr. Chow, the Mayor just spoke about the median household
income, and in your testimony you spoke about the impact on EPA
when the agency looks at the community's affordability to cover
the unfunded mandates, and you specifically mentioned the
benchmark that is used there. Could you explain why that median
household income benchmark is harmful to our low- and fixed-
income families?
Mr. Chow. Sure. Of course, as I mentioned, Baltimore, 40
percent of our populations in the city are below median
household income at this level, and 25 percent of the
population is below the poverty line. So when you are looking
at just the median household income, the curve is skewed; you
are sort of looking at----
Senator Fischer. So what should they look at?
Mr. Chow. They should be looking at the low end, meaning
the folks who are most vulnerable, because that is the greatest
economic impact, is to that population. As we raise water
rates, for example, we raise water rates across the board. So,
in essence, what the local end up having to do is that we have
to come up with programs that will assist senior citizens as
well as low-income citizens to help offset. So looking at the
low end would be more practical and more reasonable for us.
Senator Fischer. Thank you.
You know, Mr. Chairman, we have a lot of low-income
residents in Omaha, and people on fixed incomes who are being
hit right now with their water and sewer bills, so anything we
can do to provide that flexibility to help those folks, I would
really appreciate it. Thank you.
Senator Inhofe. Senator Whitehouse.
Senator Whitehouse. Thanks, Chairman.
Three quick points I would like to make. One is that when
you are talking about wastewater, it is like talking about real
estate: location, location, and location are the three keys,
and very often what is reasonable is in the eye of the
beholder; and there is a conflict, inevitably, between the
upstream and the downstream. And I would say to Mayor Berger
there are a whole bunch of municipalities up in Massachusetts
who are up the Blackstone River from Rhode Island who probably
think that they are doing what is reasonable for getting rid of
their wastewater and their overflow into the Blackstone River,
and they push back pretty hard against EPA trying to get them
to clean it up, but the Blackstone River leaves their
municipalities, and it comes down and flows through our
municipalities in Rhode Island, and we have to deal with water
that isn't clean because they haven't bothered to do the steps
that we have undertaken actually in Rhode Island to protect our
bay that they haven't done themselves.
So I hope we all remember that there is an eye-of-the-
beholder issue here, and the downstreamers very often have a
different opinion about what a good job the upstreamers are
doing.
The second point that I would like to make is that for all
of the mockery and scorn that conversations about climate
change generate from that side of the committee, in Rhode
Island the wolf is already at the door. This is not a
hypothetical for us. And what we are seeing is the things that
are most clearly connected with climate change, from a water
point of view it is rain bursts, and from a general point of
view it is sea level rise. Unless somebody wants to repeal the
law of thermal expansion, the sea level is going to rise, and
our coastal States are going to get it, and we are already
seeing that. We had, in 2010, back-to-back 100-year storms. We
had more than 10 feet above flood level flooding. Our towns of
West Warwick and Cranston and Warwick all had their sewage
facilities flooded out by the rising river. I remember stopping
on a highway overpass near where 95 was flooded and looking
down into the Warwick sewage treatment facility, and all you
could see was the tops of the fences and the roofs of the
buildings, and everything else, all the sewage was off and down
and out into people's yards.
So if you are talking about how individual communities
should pay for that, pretty tough to tell Warwick, by the way,
you have to rebuild your thing entirely because suddenly rain
bursts that you had no cause in, that 15, 20 years ago, when
this was built, weren't anticipated, are suddenly drowning out
your system.
And on our coasts it is actually even worse. Our sea grant
program and our University of Rhode Island have identified 10
at-risk coastal wastewater facilities. Ten in little Rhode
Island, where sea level rise plus stronger offshore storms mean
that velocity zones and flood zones, treatment plants are now
there. So who is going to pay to move that? You are going to
ask little Narragansett, little North Kingstown to pay to
completely build a new--I don't think they are capable of doing
that. And again, they didn't cause the sea level rise; it
wasn't something that years and years ago was anticipated. Now
it is very, very clear.
So I urge my colleagues say what you want about sea level
rise, enjoy your jokes and your mockery, but remember that for
States like mine it is very, very real. It hits home.
And the last thing that I want to say is, to Senator
Cardin's point, we are dealing with a lot of pretty old Model T
stuff. You guys have seen these before, but I love to bring
these out. Here is a pipe from a water repair that was done in
Rhode Island. You can see how big the pipe is. You know, I can
barely get my finger through the little hole in the middle of
it because it has been so filled up with sediments over the
years. Here is a bigger version of the same thing. This was a
nice big pipe at one point, but now you can see it got pretty
clotted up.
In my lifetime, we have actually been removing wooden water
infrastructure out of older Rhode Island communities.
So we have a big, big catch-up gap just in terms of this
being this ain't a Chevy, this ain't a Cadillac, this is horse
and buggy stuff, and we need to invest in building it so that
we don't get the public health concerns that we have
experienced.
And I thank the Chairman for his attention to this. I think
that working with Chairman Inhofe on these infrastructure
issues is a very positive thing, and I appreciate his interest
in it, and of course the Ranking Member as well, who is
terrific on these things. So thank you both very much for this
hearing.
Senator Inhofe. Thank you, Senator Whitehouse.
Senator Sullivan.
Senator Sullivan. Thank you, Mr. Chairman. I want to thank
you and the Ranking Member for calling this hearing; it is a
really important one.
And I want to commend the witnesses today. I have read
through your testimony and really appreciate the diverse views
and a lot of the insights that you are bringing to this
hearing. I wanted to ask a couple questions that relate more
to--and I appreciate the focus on the small communities,
because that is one of the things that we struggle with in
Alaska.
You know, a number of those Senators have been talking
about the challenges of old infrastructure. I actually, in my
State, have the challenge of no infrastructure. There is a big
difference. So I am sympathetic with communities that have to
get rid of pipes and deal with old aging infrastructure, but we
are kind of unique in that we have entire communities with no
infrastructure. So in rural Alaska there are over 30
communities, thousands of my constituents that have no running
water, no flush toilets. They use what we call in Alaska honey
buckets. And trust me, the honey buckets don't smell good. That
is a euphemism.
So I am going to be looking forward to working with the
committee. I have talked to the Ranking Member about this a
little bit and trying to address some of these urgent issues.
As I mentioned, one in four rural homes in Alaska lacks
running water or flush toilets. And as you know, particularly
those from the rural communities, that can actually lead to
very high levels of disease, third-world disease levels in some
of these communities in America--in America. I think most
Americans would be surprised. Yes, we have old infrastructure,
but we have third-world conditions, and it is unacceptable.
I wanted to ask, Mr. Moore, you were talking about the
small community paradox. I think it is a really important point
that even if we did have infrastructure, or tried to get it or
tried to upgrade it, in a lot of small communities, like you
were talking about, there is no ability to bond, there is no
ability to amortize financing on future projects just because
of the lack of a population base that hits critical mass. How
do we address that? And I will start with you on that issue,
then I really want to open it up to anyone else.
Mr. Moore. Well, we address trying to reach out our water
system to those around us, you know, that does not have, like
you said, even access to water at this point, or they have
wells that are marginal water quality.
Senator Sullivan. But I mean in terms of financing, should
it be grant programs? I mean, if your community doesn't even
have the ability to bond, there is kind of a different step you
need to take. Anyone else see what I am talking about? It just
seems like you are kind of stuck if you are not like L.A.,
where you can do a bond, or any big city. It is different for
the small communities.
Mr. Moore. The low interest loans, you know, combined with
a grant is our best option.
Senator Sullivan. So you think the Federal grant program
also has to be part of that option.
Mr. Moore. Yes.
Senator Sullivan. Does everybody else agree on that?
Mr. Arndt. Senator Sullivan, I think one of the things that
we need to look at closely as it relates to small systems are
the State Revolving Loan Funds. At least in my State in
Pennsylvania, they have used a substantial part of their
funding for the small system needs in the State of
Pennsylvania, and certainly, given the volume of dollars that
are available through the State Revolving Loan Funds, it is not
like they can fund these major CSO and SSO issues and needs
that are out there. So I think there is a direct linkage there,
so robust funding for the SRFs is clearly something that is
important.
The other thing I would say to you, like many, many
problems, there is no silver bullet, but my authority over the
last 40 years has acquired approximately 40 systems in
Pennsylvania. Of those systems, all but two or three of them
were small systems, and what we were able to do is leverage the
presence of our core system to solve problems in those smaller
systems, whether it is replacing supplies, upgrading mains. The
fact that you have the ability to spread the cost over a
broader customer base is an advantage. I recognize that may not
be practical in Alaska.
Senator Sullivan. Let me just ask one final question. Mayor
Berger, you raised it, and it has been in testimony. I think it
is a really important issue. According to the U.S. Conference
of Mayors, the EPA, with regard to these water issues, has
moved from being no longer a ``partner to local government that
it once was. The agency has, instead, assumed the role of a
prosecutor.'' And I couldn't agree more with that assessment.
That is from the U.S. Conference of Mayors.
But Mayor Berger, you were alluding to this issue of moving
from partner to prosecutor to one-size-fits-all to extremely
onerous regs even for small towns like you mentioned Lima,
Ohio. Can you go into that a little bit more? And is there
anything we should be able to do from a statutory standpoint if
the EPA has turned into a prosecutor, not a partner, which I
fully agree with? They also don't abide by their own regs and
law a lot of the time. What should we do in the Congress in
terms of trying to change that attitude which you articulated
so well?
Mr. Berger. Well, in the consent decree process you have
not just the agency, EPA, you also have the Department of
Justice. This is a hostile setup. So the principal fix that can
change that is to take it and transform it to a permitted
process. This set of arrangements made between the State and
Federal Government and locals doesn't have to be enforced
through consent decrees; it can be built into permits that get
renewed with a set of obligations that get attached to it over
time. So changing it from a consent decree process to a
permitted process would change that.
Senator Sullivan. Thank you.
Thank you, Mr. Chairman.
Senator Inhofe. Thank you.
Senator Capito.
Senator Capito. Thank you, Mr. Chairman, and thank the
Ranking Member as well.
And I want to thank all of you for being here today.
I wanted to talk to you, Mr. Moore, about rural America. We
heard our Senator from Alaska, some of the issues. Obviously,
he has a much greater land mass and fewer people than anybody
else in the United States, so those are particular challenges.
But I think we found in rural West Virginia, at least, that the
places that have the least amount of resources are still asked
to comply at the same kinds of levels, and it is difficult
because you have to go to the ratepayer first to try to see if
you can--we have a public service commission, that is how ours
is regulated--to see if the ratepayer can bear some of the
burden, and a lot of times in these rural areas is where we are
economically challenged at the same time.
So what kind of solutions do you see to be able to
alleviate--maybe not alleviate the burden because we want clean
water everywhere, of course, but to help rural areas get over
this hump?
Mr. Moore. Our Oklahoma Rural Water Association, through
EPA funding, has circuit riders.
Senator Capito. Right. We have those too.
Mr. Moore. And they are instrumental in our State at
helping with compliance and getting the ideas there that
hopefully can solve a problem, rather than bringing in millions
of dollars of new equipment, because we just can't afford that.
Senator Capito. So when you are putting into an expansion
or doing a replacement, what other resources are you looking at
besides the ratepayer? I don't know if Oklahoma has a State
infrastructure bank or anything of that nature.
Mr. Moore. Yes.
Senator Capito. What other? If you could just enumerate
them kind of quickly. Small cities block grant?
Mr. Moore. Yes, we do have that, and the SFRs are
administrated through the Oklahoma Water Resources Board, and
then the USDA rural development.
Senator Capito. Right.
Mr. Moore. That is normally where----
Senator Capito. Where your resources are. OK.
Mr. Gysel, I would like to talk about public-private
partnerships, because in the last bill we passed, the WIFIA,
which we think has some promise in terms of being able to
access public and private dollars to maximize the availability
of resources, how do you see that and are you familiar with it,
No. 1? It hasn't actually been funded yet, so as soon as we
have it funded maybe you would have a better answer, but what
kind of promise do you think that has?
Mr. Gysel. Thank you, Senator. We think it has a lot of
promise in the fact that WIFIA--and we are assuming it is going
to go ahead, hopefully--allows for both the blending of Federal
funding as well as private money to come together and leverage
that out properly. As we said in our testimony, the
infrastructure gap is so great right now we don't think that
Federal funding will be able to bridge that gap, and we have to
bring in these other funding resources through public-private
partnerships to do that.
A big part of public-private partnerships is not just the
funding component, but is also the risk transference that
happens between the municipality or the customer and the
company taking on that risk. And we feel that through what we
have accomplished through public-private partnerships, that
risk transfer can generate incremental value to that customer
as a definitive delivery of a model for fixed price and for
fixed delivery over the life of the project. The infrastructure
initially is very important, but the life of the project, the
next 30 years of operations, before you turn that
infrastructure back to the client, is very important as well.
Senator Capito. Right. I know on TIFIA, which is the
transportation that has allowed a lot of PPPs to move forward,
one of the things we are doing in our State through the
creativity, I think, of our Governor and others is to have the
company come in and sort of forward-fund the project, and then
have the State reimburse over a longer period of time. So you
cut not just the initial dollar that is needed at the public,
but you also cut the timing, and you can front-end load it. Do
you see that as having the same possibilities in these kinds of
projects?
Mr. Gysel. Very much so. Very much so.
Senator Capito. Your dollars are going to go farther.
Mr. Gysel. They will. And our company is in the process of
building the largest P3 project in Regina, Saskatchewan in
Canada. It is a $200 million wastewater treatment plant for
compliance reasons, and they have a 30-year ongoing operation
maintenance program for another $600 million, and then they
turn it back to the city at the end of the time.
Senator Capito. OK.
Mr. Gysel. But the timeline, you are very correct, the
timeline to crunch this down, to turn the financing and deliver
the project is critical in these value generations.
Senator Capito. I am a big supporter of WIFIA. Thank you.
Mr. Gysel. Thank you.
Senator Inhofe. Thank you, Senator Capito.
Senator Markey.
Senator Markey. Thank you, Mr. Chairman, very much.
You know, clearly Flint is the perfect example of how water
policy can just go completely wrong. They had the highest bills
and the worst water in times of quality simultaneously, and in
a very poor community. And we know that communities that are
poor are disproportionately harmed by this issue, and other
environmental issues as well. So I have a group of questions I
would like to ask, because as we saw in Flint, Michigan, the
timeliness of reporting water quality issues to the residents
exacerbated the problem. It took too long for the proper
agencies to receive notification of the extent of the problem
and too long for the information to be relayed to the citizens
of Flint.
Does anyone disagree that one way to get EPA the
information would be to require States to inform the EPA about
persistent violators or systems who have serious violations?
Does anyone disagree with that?
Mr. Berger. Senator, I believe they already are required to
do that.
Senator Markey. They are already required?
Mr. Berger. Yes, sir.
Senator Markey. OK. So none of you disagree with that it is
already a requirement.
Does anyone disagree that public awareness of drinking
water quality in their communities would be increased if it was
online and reported electronically, instead of through annual
paper reports?
Mr. Gysel. We agree. In fact, our utilities are moving to
that very online reporting as well.
Senator Markey. So would that be a reasonable requirement
for communities to do it online, rather than paper reports?
Mr. Gysel. That is what we are doing, yes.
Senator Markey. Does anyone disagree with that?
Mr. Arndt. The only difficulty with going exclusively to an
electronic-based report is that there are still elements of the
community that are not accessible to that kind of information,
surprisingly. So I think really the best way is to do it in
both fashions.
Senator Markey. So you are saying that a Flint, Michigan,
wouldn't have the capacity to be able to report that? A poor
community would not have the capacity to be able to do it
electronically, as opposed to on paper?
Mr. Gysel. Not to speak for him. I think what he was saying
is that the customers may not have the ability to receive that
electronic information.
Senator Markey. But ultimately should a community have that
capacity, even if individuals do not within it? Because even in
a minority community you would have well over 50 percent who
would have digital access that would make it possible for them
to report.
Mr. Arndt. I would think you would find general agreement
in the water works industry that the electronic distribution is
a preferred approach. But you also have to be careful so that
you can reach every one of your customers.
Senator Markey. So there were clear communications issues
between agencies with the Flint crisis. Does anyone disagree
that the CDC and State and local public health agencies should
be immediately notified if drinking water violations are found
that could have an adverse effect on public health so that
those public agencies can help to detect and respond to the
illness or evidence of exposure?
Mr. Chow. I think we are pretty much doing that as a part
of our water quality permit requirement already, as is.
Senator Markey. Does anyone disagree that encouraging real-
time monitoring of drinking water quality can ensure that
potential concerns which may have adverse effects on human
health are handled in a timelier manner? Obviously, that was
not the case in this situation.
Mr. Berger.
Mr. Berger. Senator, real-time implies huge, sophisticated
system for testing and evaluation. Again, I think that what is
now required is a timely report, and I think Flint broke down
not because of reporting but because there were some pretty bad
decisions made, deliberate human decisions made, with a variety
of circumstances that just built on itself. So my sense is that
the regime in most places allows for the kind of notification
and timeliness that you are seeking.
Senator Markey. Yes, sir.
Mr. Olson. Senator, I think that there was a combination of
problems in Flint. Some of it was a lack of swift reporting and
adequate testing, and we certainly would strongly support
immediately reporting of violations and providing that to
public health authorities, particularly in cases of significant
health threats. Frankly, blood lead levels aren't even
automatically reported to CDC, and I know there is legislation
Senator Cardin and others have proposed to address that.
Senator Markey. Thank you.
Thank you, Mr. Chairman.
Senator Inhofe. Thank you, Senator.
Senator Barrasso.
Senator Barrasso. Thank you, Mr. Chairman.
Mr. Moore, shortly after they passed the Clean Water Act in
1971, continuing to today, Congress has appropriated money to
the EPA to provide nonprofit organizations with experience and
with expertise in the water and wastewater industry to assist
rural communities, to assist them in operations, in training,
management, regulatory compliance for their water and their
wastewater systems. But it seems to me that the EPA, over the
last several years, has shifted a portion of that funding
provided for this initiative away from this previous on-the-
ground technical assistance in training to other methods that
included funding entities with very little or no experience in
the water industry with no established relationships with
utilities that are being served. Things like Webinars were used
as a primary tools to provide outreach and training rather than
people on the ground.
Do we want communities and utilities to use a Web site or
Webinar, or call some university automated help line to get
help, or is it better to have them rely on experienced boots-
on-the-ground technicians who can provide onsite training and
technical assistance, especially during an emergency? I would
just appreciate your thoughts on that.
Mr. Moore. I do know that the circuit rider program has
taken cuts in the last few years, and a lot of States have lost
circuit riders. There is nothing wrong with Webinars, but in
the State of Oklahoma we have many small rural water systems
that may have 100 users. They operate out of an office in
someone's home. They do not have access to the Webinars. Where
the circuit riders can come in and they do a job, they are
there face-to-face and they see the infrastructure, they see
the problem, and they normally have immediate response that
they can implement.
Senator Barrasso. And you think they have knowledge of what
the system situation is on the ground?
Mr. Moore. Yes.
Senator Barrasso. Just because they live there, they are
part of the community.
Mr. Moore. Yes. And the circuit riders, they are there for
that reason, and they have seen other systems, the neighboring
systems, the systems across the State, and they have gathered
that information, and they can bring that information that
applies to your system and give it to you.
Senator Barrasso. In your testimony you talked about the
onsite technical assistance that allows communities to comply
with the EPA rules. I just ask how valuable it is, this onsite
technical assistance, especially to utilities that lack the
capacity or the financial ability to have the expertise to
comply with the EPA.
Mr. Moore. It is critical that we fund these circuit rider
programs. Like I said, on the very small rural water systems in
the small cities, they rely very heavily on that technical
assistance.
Senator Barrasso. Thank you.
Mayor Berger, if I could ask you about a question that you
might have some insight into. We have several small communities
in Wyoming, Bridger Valley, Southwest Wyoming. They were in
compliance with the EPA's arsenic maximum contaminant level
standard until that level was changed from 50 parts per billion
to 10 parts per billion a number of years ago. You know, these
communities had arsenic levels in the mid to low 20s, but the
EPA lowered the level from 50 to 10, so for decades the 50
parts per billion was an acceptable health level. Suddenly it
has changed, and then it becomes very expensive, very cost
prohibitive to implement the technology to get down to that 10
parts per billion. Some engineering quotes in the first years
were in the millions to get that number down.
So the costs may have come down maybe $100,000, but for a
community of 200 to 400 people, that money is still out of
reach when you think about the other issues that our Mayor has
to deal with; other people clamoring for that same money, and
you are seeing more bang for the buck with other things. So
shouldn't we just be reducing the regulatory burden on
communities to allow them to have the funds to address the
immediate health and safety challenges of an aging
infrastructure and give them the authority to make these
decisions?
Mr. Berger. Well, there is no question that the technology
of measurement has changed dramatically over the last 40 years.
Who could have imagined that we would ultimately be measuring
things down to the nano level? And following the measurement,
the regulations have become mandates to treatment levels. So
the question becomes, for any given circumstance, when you are
looking at a single regulation, how does that compare to the
other public health challenges that a community has. And I
think that often the regulators come in in a very siloed kind
of way. They are charged with this particular mandate and
ignore the rest of the mandates that a community might have. So
I think, again, integrated planning allows folks to be able to
look at all the challenges in front of them and make choices
and set priorities, and I think that is why it has to become a
part of the law.
Senator Barrasso. Thank you, Mayor Berger.
Thank you, Mr. Chairman.
Senator Inhofe. Thank you, Senator Barrasso.
Senator Carper.
Senator Carper. Thanks so much. I apologize for arriving
late. We had a classified briefing on another subject, and I
needed to stay there through its conclusion. So thank you for
still being here, and thank you for attending and giving us
your thoughts and responding to our questions.
I would like to ask a series of questions, and I am going
to ask these for each of you, and just yes or no answers,
initially. Except I am not going to ask, Mr. Olson, you to
respond to these questions, they are really more for folks that
are representing a utility or maybe a city that provides water
for its residents.
Here is the first question: Do you charge more for water
when supplies are tight?
Mr. Berger. No, sir.
Mr. Moore. No.
Mr. Chow. No, sir.
Mr. Arndt. No, sir.
Mr. Gysel. No, sir.
Senator Carper. OK. Do you charge more for water used for,
say, watering lawns or washing cars than for essential
functions like drinking and bathing?
Mr. Chow. No, sir.
Mr. Berger. No, sir.
Mr. Arndt. No, sir.
Mr. Gysel. No, sir.
Mr. Moore. We do have a tiered system that the water rights
began at $5 per thousand, and then when it gets over 10,000 it
is $7 per thousand.
Senator Carper. OK. I think you may have just answered this
question for yourself, Mr. Moore. Do you charge more per person
for water use as people use more water?
Mr. Moore. Yes, it is a tiered system.
Senator Carper. That is for each of you.
Mr. Berger. We do not.
Senator Carper. OK.
Mr. Chow. Actually, ours is a declining rate, so the more
you use, the lower the unit rates become.
Senator Carper. OK.
All right, go ahead, Mr. Moore.
Mr. Moore. No, I was just saying ours is an escalating
tiered system; the water cost goes up.
Senator Carper. Just the opposite of Mr. Chow. OK.
Mr. Gysel. Inclining.
Senator Carper. Mr. Arndt, same question.
Mr. Arndt. Lehigh County Authority has multiple different
rate schedules depending on a service area, but in some cases
we have a flat rate where the same rate is charged no matter
what the use; in some cases there is actually a declining block
rate where there are lower rates as consumption increases.
Senator Carper. OK.
Mr. Gysel. We have an inclining block rates that are
accelerated, so the largest tier is that much more of your bill
as well. So not only increasing, but increasing it
dramatically.
Senator Carper. OK. Thank you.
Let me just ask, and this would be for all of you,
including Mr. Olson, why can't or shouldn't we embrace time of
use rates or price increases, when prices increase, demand
increases, or similar to what we do, say, with electricity? And
if you would just lead off, Mr. Berger. Why shouldn't we
embrace time of use rates where prices increases, demand
increases, like we do with electricity?
Mr. Berger. I think it depends upon the stress of the
system. If your system has plenty of water, then there is no
need to impose those kinds of restrictions. We do have the
authority under city ordinance that at the point of drought or
other kinds of stress, shortages, we do and can impose limits
on consumption.
Senator Carper. OK, thanks.
Mr. Chow, just very briefly, please.
Mr. Chow. No, we do not have restrictions set; however, we
do get into that drought situation that Mayor Berger just spoke
about.
Senator Carper. OK.
OK, very briefly, why couldn't we or why shouldn't we not
just do, but the rationale?
Mr. Chow. Well, I think, first of all, water usage is
really individual, so individual household, individual
residents within the household, the usage pattern is different
and so on. To sort of set a standard per person, how many
gallons you can use per day, that may not be practical.
Senator Carper. All right, thank you.
Mr. Moore. Real briefly.
Mr. Moore. Especially on a residential rate, I have no
problem escalating that rate because they use a certain amount
for domestic use, and then everything above that goes on a lawn
or something, that type of use.
Senator Carper. Mr. Arndt.
Mr. Arndt. I think one of the issues that relates to the
technology, the availability of the metering capability to do
this in a practical way. The other part of it is in our State
we have what we call a uniformity clause that you have to
charge the customer the same rate within a collect, so every
residential customer needs to be treated the same. So if you
have a customer who works night shift, and therefore perhaps
uses water differently than someone who works day shift, you
are actually creating a disadvantage or discrimination with a
rate structure.
Senator Carper. All right, thank you.
Mr. Gysel. Very briefly, same question.
Mr. Gysel. I am sorry?
Senator Carper. Very briefly, same question, please.
Mr. Gysel. Yes. It is all about technology. We have
metering that is just going from fixed full metering to AMR
technology. We are now moving to AMI technology. We haven't
advanced as far on the technology side to measure the time of
use, never mind to do the repository of all the data that would
be required for----
Senator Carper. OK, thank you.
Mr. Chairman, I have just one more yes or no question, if
you would give me the opportunity.
Last question: Should water utilities consider inverted
block pricing where prices increase with consumption? Again,
should water utilities consider inverted block pricing where
prices increase with consumption, yes or no?
Mr. Berger. No.
Senator Carper. OK.
Mr. Chow.
Mr. Chow. It really depends on the driver in terms of are
you trying to stimulate economy and/or are you looking at
industry versus residential. So every municipality community
might be different.
Senator Carper. OK. Thank you.
Mr. Moore.
Mr. Moore. I do recognize the difference, you know, in
municipal water and rural water, but yes, I do think we have
the right to set those rates.
Senator Carper. Mr. Arndt.
Mr. Arndt. It should be an option, but I think it is very
much driven by the specific circumstances of each system
whether it is workable or not.
Senator Carper. OK.
Mr. Gysel and Mr. Olson, then I am done.
Mr. Gysel. I would agree with the caveat that the cost
structures of utilities are usually inversely related to the
revenue structures, and by that I mean that 70 percent of our
costs are fixed, but usually 70 percent of the revenues are a
risk on consumption. If you have inclining or increasing block
rates, that last blocks, and it is large enough, represents a
real threat to the utility recovering the true cost of
delivering the water service.
Senator Carper. OK, last witness, Mr. Olson.
Mr. Olson. And I would agree that generally it makes sense
to increase the rate with more use; it encourages conservation
and helps low-income people pay a lower rate.
Senator Carper. Thank you all. Thanks very much.
Thanks, Mr. Chairman.
Senator Inhofe. Thank you, Senator Carper.
We have had good participation today, and I just would like
to conclude by, first of all, recognizing that there is a very
significant thing that came from Madill, Oklahoma. It is the
wife of the Speaker of the House. So we want to recognize that.
I would like to also just make a comment. You get mixed
reports from the media as to what is going to happen with the
WRDA bill. I have every conference. I am in the leadership; I
have talked to the leadership on our side, Barbara has done the
same thing on her side, and I am anticipating that we will be
able to do this, get this out of committee, on the floor during
this work period.
And I also acknowledge that there are a lot of problems
that we have, but there are a lot of solutions just from
members of this committee. Senator Cardin's SRF legislation and
his proposal for grants to replace lead service lines, Senator
Booker's trust fund ideas, Senator Boozman's alternative water
supply bill, rural water ideas. So we are working on ideas, and
it has been very helpful to have you folks coming in from your
different perspectives and levels to give us a better idea from
hometown what the problems are.
Senator Boxer.
Senator Boxer. Thanks, Senator, so much.
Let me be brief but take a couple of minutes to thank each
and every one of you. I want to thank Senator Carper. Those
questions were fascinating to the Senator from California,
where we have such a terrible drought. So for us to hear, well,
you pay less when you use more, it is like culture shock. But I
completely understand that every district and every State is
quite different from the next, and I think that is a critical
part of the discussion.
But as we move to the WRDA bill, which I am following the
leadership of my great Chairman here, you don't know how bad it
gets until you have a severe drought and then you don't have
enough water. So I am going to be looking at desalination and
other kinds of ways we can help.
Very briefly, all of you want to see more grants rather
than loans, and I completely get it, and I will work toward
that as best we can, given resources. If you look at the
history of Federal grants on water, it is very interesting, Mr.
Berger, because when the program started it was 100 percent
grants, until 1987, and Ronald Reagan worked with the Congress
because they were putting pressure on Federal spending, and it
changed to the State Revolving Fund, where now there was more
of a partnership in terms of funding.
But what is important is, and we have the SRF, it was added
to drinking water later. The States can come in to pick up the
matching, too. So your States could really help you as well. I
want to make that point. And I think as we look at public-
private partnerships, if it is done right, that is another
level of funding we can count on.
But I want to close with this, and hope that you will
answer this in writing, all of you. We heard some pretty harsh
words about the EPA and the EPA being a prosecutor. What is
interesting to me is I look at Flint. I wish to heck they had
been. They were very soft. They wrote little notes behind the
scenes: problems, problems. They were quiet. They weren't
aggressive enough.
So I still don't dismiss the point that you feel like they
are prosecutors, but I hate that broad brush comment. And I
think what is very important is that you write to us and tell
us the cases of specifically, specifically where they were.
Now, some of you may not agree that they are prosecutors,
but I know a couple of you do. So please give me that in
writing, because if that is going on, that isn't good.
So I will say to all of you thank you very much, thank you
to my Chairman, and I am so looking forward to another WRDA
bill. Mr. Chairman, we have just dwindling time on our
partnership here. You will be here forever, but I won't. So as
long as we are a team and we have proven we can do it, I am
counting on you. Do you have any words of advice?
Senator Inhofe. We are going to be doing it. You know, it
is funny, because we don't agree on a lot of things.
Senator Boxer. Really?
Senator Inhofe. For example, I think one of the reasons
that I disagree with her last statement was that I sat on that
side of the table for a long period of time and I know what
bureaucratic intimidation can mean, and I have been suffering
from that.
But on things I really believe Government is supposed to be
doing, our highway bill, we wouldn't have had a highway bill if
she and I hadn't worked together to make this happen. And I
would say the same thing with the WRDA bill. It is very
significant what is coming up. So we are going to be working
together.
And we are adjourned.
Senator Boxer. Thank you, everybody.
[Whereupon, at 12 p.m. the committee was adjourned.]
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