[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]




 
  REINVESTMENT AND REHABILITATION OF OUR NATION'S SAFE DRINKING WATER 
                            DELIVERY SYSTEMS

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

                                HEARING

                               BEFORE THE

                      SUBCOMMITTEE ON ENVIRONMENT

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 16, 2017

                               __________

                           Serial No. 115-13
                           
                           
                           
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]                          
                           


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                    COMMITTEE ON ENERGY AND COMMERCE

                          GREG WALDEN, Oregon
                                 Chairman
JOE BARTON, Texas                    FRANK PALLONE, Jr., New Jersey
  Vice Chairman                        Ranking Member
FRED UPTON, Michigan                 BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois               ANNA G. ESHOO, California
TIM MURPHY, Pennsylvania             ELIOT L. ENGEL, New York
MICHAEL C. BURGESS, Texas            GENE GREEN, Texas
MARSHA BLACKBURN, Tennessee          DIANA DeGETTE, Colorado
STEVE SCALISE, Louisiana             MICHAEL F. DOYLE, Pennsylvania
ROBERT E. LATTA, Ohio                JANICE D. SCHAKOWSKY, Illinois
CATHY McMORRIS RODGERS, Washington   G.K. BUTTERFIELD, North Carolina
GREGG HARPER, Mississippi            DORIS O. MATSUI, California
LEONARD LANCE, New Jersey            KATHY CASTOR, Florida
BRETT GUTHRIE, Kentucky              JOHN P. SARBANES, Maryland
PETE OLSON, Texas                    JERRY McNERNEY, California
DAVID B. McKINLEY, West Virginia     PETER WELCH, Vermont
ADAM KINZINGER, Illinois             BEN RAY LUJAN, New Mexico
H. MORGAN GRIFFITH, Virginia         PAUL TONKO, New York
GUS M. BILIRAKIS, Florida            YVETTE D. CLARKE, New York
BILL JOHNSON, Ohio                   DAVID LOEBSACK, Iowa
BILLY LONG, Missouri                 KURT SCHRADER, Oregon
LARRY BUCSHON, Indiana               JOSEPH P. KENNEDY, III, 
BILL FLORES, Texas                       Massachusetts
SUSAN W. BROOKS, Indiana             TONY CARDENAS, CaliforniaL RUIZ, 
MARKWAYNE MULLIN, Oklahoma               California
RICHARD HUDSON, North Carolina       SCOTT H. PETERS, California
CHRIS COLLINS, New York              DEBBIE DINGELL, Michigan
KEVIN CRAMER, North Dakota
TIM WALBERG, Michigan
MIMI WALTERS, California
RYAN A. COSTELLO, Pennsylvania
EARL L. ``BUDDY'' CARTER, Georgia


                      Subcommittee on Environment

                         JOHN SHIMKUS, Illinois
                                 Chairman
DAVID B. McKINLEY, West Virginia     PAUL TONKO, New York
  Vice Chairman                        Ranking Member
JOE BARTON, Texas                    RAUL RUIZ, California
TIM MURPHY, Pennsylvania             SCOTT H. PETERS, California
MARSHA BLACKBURN, Tennessee          GENE GREEN, Texas
GREGG HARPER, Mississippi            DIANA DeGETTE, Colorado
PETE OLSON, Texas                    JERRY McNERNEY, California
BILL JOHNSON, Ohio                   TONY CARDENAS, California
BILL FLORES, Texas                   DEBBIE DINGELL, Michigan
RICHARD HUDSON, North Carolina       DORIS O. MATSUI, California
KEVIN CRAMER, North Dakota           FRANK PALLONE, Jr., New Jersey (ex 
TIM WALBERG, Michigan                    officio)
EARL L. ``BUDDY'' CARTER, Georgia
GREG WALDEN, Oregon (ex officio)
  
                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. John Shimkus, a Representative in Congress from the State of 
  Illinois, opening statement....................................     1
    Prepared statement...........................................     3
Hon. Paul Tonko, a Representative in Congress from the State of 
  New York, opening statement....................................     4
    Prepared statement...........................................     6
Hon. Greg Walden, a Representative in Congress from the State of 
  Oregon, prepared statement.....................................   120

                               Witnesses

Randy Ellingboe, Minnesota Department of Health, on behalf of the 
  Association of State Drinking Water Administrators.............     8
    Prepared statement...........................................    11
    Answers to submitted questions...............................   143
John J. Donahue, CEO, North Park Public Water District in 
  Machesney Park, Il, on behalf of the American Water Works 
  Association....................................................    17
    Prepared statement...........................................    20
    Answers to submitted questions...............................   149
Rudolph S. Chow, P.E., Director, Baltimore, MD Department of 
  Public Works, on behalf of the American Municipal Water 
  Association....................................................    32
    Prepared statement...........................................    34
    Answers to submitted questions...............................   165
Gregory E. DiLoreto, Chairman, Committee for America's 
  Infrastructure, American Society of Civil Engineers............    45
    Prepared statement...........................................    47
    Answers to submitted questions...............................   171
Martin A. Kropelnicki, President and CEO, California Water 
  Service Group, on behalf of the National Association of Water 
  Companies......................................................    53
    Prepared statement...........................................    55
    Answers to submitted questions...............................   175
Erik Olson, Director, Health & Environment Program, Natural 
  Resources Defense Council......................................    65
    Prepared statement...........................................    68

                           Submitted Material

Report entitled, ``2017 Infrastructure Report Card,'' from the 
  American Society of Civil Engineers, submitted by Mr. DiLoreto.   121
Statement of the National Ground Water Association, submitted by 
  Mr. Shimkus....................................................   127
Statement of Stephanie A. Miner, Mayor of Syracuse, New York, 
  submitted by Mr. Tonko.........................................   128
Statement of American Rivers, submitted by Mr. Tonko.............   131
Article entitled, ``In American Towns, Private Profits from 
  Public Works, March 16, 2017, New York Times, submitted by Mr. 
  Tonko..........................................................   133


  REINVESTMENT AND REHABILITATION OF OUR NATION'S SAFE DRINKING WATER 
                            DELIVERY SYSTEMS

                              ----------                              


                        THURSDAY, MARCH 16, 2017

                  House of Representatives,
                       Subcommittee on Environment,
                           Committee on Energy and Commerce
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:00 a.m., in 
room 2322 Rayburn House Office Building, Hon. John Shimkus 
(chairman of the subcommittee) presiding.
    Present: Representatives Shimkus, McKinley, Barton, Murphy, 
Blackburn, Harper, Olson, Flores, Hudson, Walberg, Carter, 
Tonko, Ruiz, Peters, Green, DeGette, McNerney, Cardenas, 
Dingell, and Matsui.
    Staff present: Grace Appelbe, Legislative Clerk; Mike 
Bloomquist, Deputy Staff Director; Jerry Couri, Deputy Chief 
Environmental Advisor; Wyatt Ellertson, Research Associate, 
Energy/Environment; Adam Fromm, Director of Outreach and 
Coalitions; Giulia Giannangeli, Legislative Clerk, Digital 
Commerce and Consumer Protection/Environment; Tom 
Hassenboehler, Chief Counsel, Energy/Environment; A.T. 
Johnston, Senior Policy Advisor/Professional Staff, Energy/
Environment; Alex Miller, Video Production Aide and Press 
Assistant; Chris Sarley, Policy Coordinator, Environment; Dan 
Schneider, Press Secretary; Jacqueline Cohen, Minority Senior 
Counsel; David Cwiertney, Minority Energy/Environment Fellow; 
Rick Kessler, Minority Senior Advisor and Staff Director, 
Energy and Environment; Alexander Ratner, Minority Policy 
Analyst; and Tuley Wright, Minority Energy and Environment 
Policy Advisor.

  OPENING STATEMENT OF HON. JOHN SHIMKUS, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF ILLINOIS

    Mr. Shimkus. If I could ask all our guests today to please 
take their seats, and if we can get that door closed, the 
Committee on Environment will now come to order. The chair now 
recognizes himself for 5 minutes for an opening statement.
    Today's hearing gives our panel a chance to look broadly at 
our nation's drinking water infrastructure and examine 
questions about what is necessary for the federal government to 
do in the way of reinvestment and rehabilitation of these 
systems to meet future needs.
    Currently, more than 51,000 community water systems treat 
42 billion gallons of water for use by 299 million Americans 
daily.
    This water, which is used for anything from cooking and 
bathing in homes, factories, or offices to firefighting is 
delivered by publicly and privately-owned water utilities 
stretching over 1 million miles of pipe.
    It is really a remarkable feat of engineering that 
demonstrates our nation's commitment to public health and a 
high standard of living.
    For more than a decade, there have been concerns raised 
about this system and whether our nation is making the choices 
it needs to make in order to ensure effective and efficient 
delivery of safe drinking water in the future.
    Many of the pipes now in use were installed in the early 
and mid-20th century and have a projected lifespan of 75 to 100 
years.
    In 2013, the EPA announced that a bit more than $384 
million of investment was needed between 2010 and 2030 to 
improve drinking water infrastructure and ensure the provision 
of safe tap water.
    This report was not a suggestion that the federal 
government needed to provide all of that funding but it and 
other reports have served as a wake-up call to the threat 
facing these systems and begs the question as to whether 
Congress should be doing more.
    Before the Safe Drinking Water Act Amendments of 1996, to 
the extent that it was needed, Congress' role in financing 
drinking water infrastructure was confined to line items for 
specific projects, a practice that has been substantially 
curtailed.
    In 1996, Congress, realizing the biggest economic problem 
facing drinking water systems was the cost of unfunded 
mandates, created a State Revolving Loan Fund program to 
provide low-interest loans that helped address compliance and 
public health needs.
    Last year, the Water Infrastructure Improvements for the 
Nation Act authorized $600 million between two new programs 
dedicated to tackling lead pipe replacement and aiding 
economically disadvantaged and underserved communities.
    In addition, this law tried to further invigorate loans not 
related to Drinking Water Act compliance through the Water 
Infrastructure Finance and Innovation Act program.
    While I think these are solid steps, we must also 
reauthorize funding for the Drinking Water Revolving Loan Fund 
program. This has been a very successful and important program 
whose purpose is synergistic in view of other infrastructure 
programs, having provided more than $20 billion in funding to 
over 12,400 projects since 1997.
    We must also explore other avenues that not only leverage 
investments in these utility infrastructures but also do it in 
a way that promotes American workers and protect consumers' 
health and pocketbooks.
    We need to be smart about our investments. This is not 
going to be an easy discussion, but to be successful it is one 
we must have.
    I believe we must not be afraid to spend more federal money 
on this issue, but we must maintain local fees as the primary 
generator of funds for daily operation and maintenance of 
public water systems as well as their long-term capital 
investment needs.
    That said, we must acknowledge that not only as a 
percentage of household income, U.S. households pay less for 
water and wastewater than other developed countries and that 
water rates have dropped 3 percent more recently.
    We also must remember that some systems have taken the very 
unpopular step of raising rates.
    But not everyone can do that, whether due to population 
contraction or local economic condition, because their rate 
bases aren't able to handle capital improvements as well as 
others do.
    So long as we focus on trying to increase overall 
purchasing power for communities, our constituents can enjoy 
their drinking water for the next 75 to 100 years.
    Before I relinquish my time, I want to thank our witnesses 
for being here today, especially in view of the crazy weather 
and travel schedules that you and we have had.
    I also want to welcome the board members of the Association 
of State Drinking Water Administrators. We appreciate all the 
work you do and how important you are to the success of the 
Safe Drinking Water Act.
    [The prepared statement of Mr. Shimkus follows:]

                Prepared statement of Hon. John Shimkus

    The Subcommittee will come to order. I recognize myself for 
5 minutes for giving an opening statement.
    Today's hearing gives our panel a chance to look broadly at 
our nation's drinking water infrastructure and examine 
questions about what is necessary for the Federal government to 
do in the way of reinvestment and rehabilitation of these 
systems to meet future needs.
    Currently, more than 51,000 community water systems treat 
42 billion gallons of water for use by 299 million Americans 
daily. This water--which is used for anything from cooking and 
bathing in homes, factories, or offices, to firefighting is 
delivered by publicly and privately owned water utilities 
stretching over one million miles of pipe. It is really a 
remarkable feat of engineering that demonstrates our nation's 
commitment to public health and a higher standard of living.
    For more than a decade, there have been concerns raised 
about this system and whether our nation is making the choices 
it needs to make in order to ensure effective and efficient 
delivery of safe drinking water in the future. Many of the 
pipes now in use were installed in the early and mid-20th 
century and have a projected lifespan of 75 to 100 years.
    In 2013, the EPA announced that a bit more than $384 
million of investment was needed between 2010 and 2030 to 
improve drinking water infrastructure and ensure the provision 
of safe tap water. This report was not a suggestion that the 
Federal government needed to provide all of that funding, but 
it and other reports have served as wake up calls to the threat 
facing these systems and begs the question of whether Congress 
should be doing more.
    Before the Safe Drinking Water Act Amendments of 1996, to 
the extent that it was needed, Congress's role in financing 
drinking water infrastructure was confined to line items for 
specific projects--a practice that has been substantially 
curtailed. In 1996, Congress, realizing the biggest economic 
problem facing drinking water systems was the cost of unfunded 
mandates, created the State Revolving Loan Fund program to 
provide low-interest loans that helped address compliance and 
public health needs.
    Last year, the Water Infrastructure Improvements for the 
Nation Act authorized $600 million between two new programs 
dedicated to tackling lead pipe replacement and aiding 
economically disadvantaged and underserved communities. In 
addition, this law tried to further invigorate loans not 
related to drinking water act compliance through the Water 
Infrastructure Finance and Innovation Act (WIFIA) program.
    While I think these are solid steps, we must also 
reauthorize funding for the drinking water revolving loan fund 
program or DWSRF. The DWSRF has been a very successful and 
important program whose purpose is synergistic in view of other 
infrastructure programs--having provided more than $20 billion 
in funding to over 12,400 projects since 1997.
    We must also explore other avenues that not only leverage 
investments in these utilities' infrastructure, but also do it 
in a way that promotes American workers and protects consumers' 
health and pocketbooks. We need to be smart about our 
investments.
    This is not going to be an easy discussion, but to be 
successful; it is one we must have.
    I believe we must not be afraid to spend more Federal money 
on this issue, but we must maintain local fees as the primary 
generator of funds for daily operation and maintenance of 
public water systems, as well as their long-term capital 
investment needs.
    That said, we must acknowledge that not only as a 
percentage of household income, U.S. households pay less for 
water and wastewater than other developed countries and that 
water rates have dropped 3% more recently.
    We also must remember that some systems have taken the 
unpopular step of raising rates. But not everyone can do that, 
whether due to population contraction or local economic 
condition, because their rate bases aren't able to handle 
capital improvements as well as others do.
    So long as we focus on trying to increase overall 
purchasing power for communities, our constituents can enjoy 
their drinking water for the next 75 to 100 years.
    Before I relinquish my time, I want to thank our witnesses 
for being here today, especially in view of the crazy weather 
and travel schedules you have. I also want to welcome the Board 
members of the Association of State Drinking Water 
Administrators--we appreciate all the work you do and how 
important you are to the success of the Safe Drinking Water 
Act.
    With that, I yield back the balance of my remaining time 
and recognize the Ranking Member of the Subcommittee for 5 
minutes to give his opening statement.

    Mr. Shimkus. With that, I yield back the balance--well, I 
don't want to do that yet. I'd like to yield one minute to my 
colleague, Congresswoman Blackburn, for 1 minute.
    Mrs. Blackburn. Thank you. I think that one of the things 
we can all agree on is that we are for clean air and we are for 
clean water. And as the chairman has said, we know that there 
are accountabilities that need to be met.
    There is money that is going to have to be expended. We 
want it to be done in the right way and we know that 
contaminated water is not acceptable.
    Of course, sometimes it can hit close to home, as it did 
right here on our campus with the Cannon Office Building and 
anybody that has worked there knows those stories.
    So, I just want to welcome you all. I want to thank you for 
being here and I want to thank you for working with us on this 
important issue, and I will yield back.
    Mr. Shimkus. Gentlelady yields back her time and I yield 
back my time.
    The chair now recognizes the ranking member, Mr. Tonko, for 
5 minutes, who has an interest in this issue.

   OPENING STATEMENT OF HON. PAUL TONKO, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF NEW YORK

    Mr. Tonko. Thank you, Mr. Chair. Thank you, and Chair 
Walden for holding this hearing.
    I know I sound like a broken record requesting a drinking 
water hearing for the past 4 years but I am truly grateful to 
you for bringing us together today.
    I also want to thank our experts here for being in 
attendance. We will hear from all of them, from water utilities 
to engineers to environmental stakeholders that our national 
drinking water infrastructure needs are immense.
    I also understand that they will present formally their 
report card on infrastructure. I can tell you, if I received a 
report card like that my parents would have had a response 
immediately.
    They would have had an improvement plan in place 
immediately. So let's get going, nation.
    The facts are startling. We lose over 2 trillion gallons of 
treated water each year from leaking pipes. There are more than 
240,000 water main breaks each year, which causes service 
disruption and property damage.
    Nearly 100 mid-size cities across our great country are 
facing shrinking populations, meaning a smaller taxpayer base, 
to support repairs and to support maintenance.
    As Mr. DiLoreto will explain, the American Society of Civil 
Engineers recently released their report card and have given 
our systems a grade of D.
    It is clear we are not making the progress necessary to 
tackle this issue. If anything, we are going in the wrong 
direction. EPA has estimated some $384 billion is needed over 
the next 20 years to keep our systems running.
    And as we deal with aging systems, often with century-old 
pipes and an alarming number of unregulated and under regulated 
contaminants, this estimate can only be expected to grow.
    The bottom line is I do not see how the needs can be met 
without significantly greater federal investments. I feel the 
need to say that the proposed cuts to EPA outlined in President 
Trump's budget are not only senseless, they are dangerous.
    While funding levels for the SRFs appear to be maintained, 
the status quo is simply not good enough. We need additional 
funding.
    For example, in my home state of New York, we receive a 
generous allotment from the Drinking Water SRF--about $40 
annually. That money is leveraged with state funds which may 
allow for about $700 million in projects this year.
    The problem is there were over $4 billion worth of projects 
requested, according to this year's intended use plan. Projects 
that are not funded will continue to be deferred, putting more 
stress on already struggling systems.
    So even for a state that is committed to addressing this 
issue, there is still a tremendous gap between available funds 
and needs.
    We cannot fool ourselves into thinking local and state 
governments can do this on their own. There is a federal 
responsibility. This infrastructure is too important to 
continue to be neglected.
    And let us make no mistake, there are real consequences--
health and economic--when these systems fail. Flint should have 
been a wake-up call to Congress that we must do more.
    The investments we can make now are minuscule when compared 
to the cost of inaction. And Flint is not alone. These problems 
lurk below the surface throughout our country.
    Here are just a few headlines from this past week. From 
NPR: Kentucky community hopes Trump infrastructure plan will 
fix water systems. From the Clarion Ledger: Weekend water 
emergency ripples across Jackson. From the Associated Press: 
Six Madison schools test positive for lead in drinking water.
    This is a national issue, and had this hearing been delayed 
until next week I am sure we would have found plenty of new 
stories from different states.
    Last year's water resources bill, the WIND bill, took a few 
steps to address this issue. It created two great programs, 
grant programs, one for lead-lined replacement and one for 
small and disadvantaged communities.
    Congress should fully fund these programs, but that is only 
the start. Members of this subcommittee have good ideas on how 
to update the Safe Drinking Water Act, which has not been 
significantly changed for some 20 years.
    Many of these ideas are supported by stakeholders from 
labor and the environmental community. The AQUA Act would 
reauthorize the drinking water SRF for the first time since its 
inception at significantly higher levels.
    Ranking Member Pallone's bill, the SDWA amendments, 
incorporates a number of ideas from our members including 
mandating new standards for lead and other emerging 
contaminants while making it easier for EPA to set science and 
health-based limits and treatment techniques in the future.
    It also would give grants to schools to replace water 
fountains that contain lead. Mr. Peters is working on a bill to 
provide grants to systems for resiliency, security and source 
water protection in the face of hydraulic changes and other 
emerging threats.
    These are good bills that deserve consideration by this 
committee. Also, we must ensure water is included in any 
potential infrastructure package that will be considered by 
Congress.
    We can no longer ignore our hidden infrastructure. I would 
encourage all members of our committee to visit a water system 
in your district. Go speak to your mayors, your system 
managers, your departments of public works.
    It is likely you will hear what I heard in my district. 
This is a real and vastly overlooked issue and Congress can 
help provide relief for financially-burdened local governments 
and ratepayers.
    Every life in this country depends on access to safe 
drinking water. Every job in this country depends on access to 
safe drinking water. The needs are great and the cost of 
inaction is even greater. It's immensely high.
    So I look forward to hearing from our witnesses on the role 
that our federal government should play to rebuild, maintain 
and protect this infrastructure which is vital to our 
constituents' lives.
    With that, Mr. Chair, I yield back and again thank you for 
the opportunity of the hearing.
    [The prepared statement of Mr. Tonko follows:]

                 Prepared statement of Hon. Paul Tonko

    I want to thank Chairman Shimkus and Chairman Walden for 
holding this hearing. I know I have sounded like a broken 
record requesting a drinking water hearing for the past four 
years, but I am truly grateful to you for bringing us together 
today.
    I also want to thank our witnesses for being here. We will 
hear from all of them-water utilities, engineers, and 
environmental stakeholders- that our national drinking water 
infrastructure needs are immense.
    The facts are startling:
     We lose more than 2 trillion gallons of treated 
water each year from leaking pipes.
     There are more than 240,000 water main breaks each 
year, which cause servicedisruption and property damage.
     Nearly 100 mid-sized cities across the country are 
facing shrinking populations, meaning a smaller ratepayer base 
to support repairs and maintenance.
    As Mr. DiLoreto will explain, the American Society of Civil 
Engineer's recently released report card has given our systems 
a grade of D. It is clear we are not making the progress 
necessary to tackle this issue, if anything we are going the 
wrong way.
    EPA has estimated $384 billion is needed over the next 20 
years to keep our systems running.
    And as we deal with aging systems--often with century-old 
pipes--and an alarming number of unregulated and under 
regulated contaminants, this estimate can only be expected to 
grow.
    The bottom line is I do not see how the needs can be met 
without significantly greater federal investments.
    I feel the need to say that the proposed cuts to EPA 
outlined in President Trump's budget are not only senseless--
they are dangerous.
    While funding levels for the SRFs appear to be maintained, 
the status quo is simply not good enough. We need additional 
funding.
    For example, in my home state of New York, we receive a 
generous allotment from the Drinking Water SRF, about $40 
million annually. That money is leveraged with State funds, 
which may allow for about $700 million in projects this year. 
The problem is there were over $4 billion in projects requested 
according to this year's Intended Use Plan.
    Projects that are not funded will continue to be deferred, 
putting more stress on already struggling systems. So even for 
a state that is committed to addressing this issue, there is 
still a tremendous gap between available funds and needs.
    We cannot fool ourselves into thinking local and state 
governments can do this on their own. There is a federal 
responsibility. This infrastructure is too important to 
continue to be neglected.
    And let's make no mistake, there are real consequences--
health and economic--when these systems fail.
    Flint should have been a wakeup call to Congress that we 
must do more. The investments we can make now are miniscule 
when compared to the cost of inaction. And Flint is not alone. 
These problems lurk below the surface throughout the country. 
Here are just a few headlines from this past week:
     From NPR, ``Kentucky Community Hopes Trump 
Infrastructure Plan Will Fix Water System''
     From The Clarion-Ledger, ``Weekend water emergency 
ripples across Jackson''
     From the Associated Press, ``6 Madison schools 
test positive for lead in drinkingwater''
    This is a national issue. And had this hearing been delayed 
until next week, I am sure we would have found plenty of new 
stories from different cities.
    Last year's water resources bill, the WIIN Act, took a few 
steps to address this issue.
    It created two grant programs--one for lead line 
replacement and one for small and disadvantaged communities. 
Congress should fully fund these programs, but that is only the 
start.
    Members of this Subcommittee have good ideas on how to 
update the Safe Drinking Water Act, which has not been 
significantly changed for 20 years. Many of these ideas are 
supported by stakeholders from industry, labor, and the 
environmental community.
    The AQUA Act would reauthorize the Drinking Water SRF for 
the first time since its inception at significantly higher 
levels.
    Mr. Pallone's bill, the SDWA Amendments, incorporates a 
number of ideas from our Members, including mandating new 
standards for lead and other emerging contaminants while making 
it easier for EPA to set science- and health-based limits and 
treatment techniques in the future. It also would give grants 
to schools to replace water fountains that contain lead.
    Mr. Peters is working on a bill to provide grants to 
systems for resiliency, security, and source water protection 
in the face of hydraulic changes and other emerging threats.
    These are good bills that deserve consideration by this 
Committee.
    Also, we must ensure water is included in any potential 
infrastructure package considered by Congress. We can no longer 
ignore our hidden infrastructure.
    I would encourage all Members of this Committee to visit a 
water system in your district.
    Go speak to your mayors, system managers, or departments of 
public works. It is likely you will hear what I heard in my 
district--this is a real and overlooked issue. And Congress can 
help provide relief to financially burdened local governments 
and ratepayers.
    Every life and every job in this country depends on access 
to safe drinking water. The needs are great, and the cost of 
inaction is high.
    So I look forward to hearing from our witnesses on the role 
the federal government should play to rebuild, maintain, and 
protect this infrastructure, which is vital to our constituents 
lives.
    With that, I yield back.

    Mr. Shimkus. Gentleman yields back his time.
    Chair now looks to the majority side to see if anybody 
wished to make an opening statement. Seeing none, anyone on the 
minority side? Seeing none, we will turn to our panel.
    So we appreciate you all being here. I'll introduce you as 
you are prepared to make your statement. Otherwise, I'll go 
through it and then I have to go through it again.
    So we want to first recognize Randy Ellingboe from the 
Minnesota Department of Health on behalf of the Association of 
State Drinking Water Administrators. Your full testimony has 
been submitted to the committee. You are recognized for 5 
minutes.
    As you can see, this is an issue that we all find are very 
interested about and want to kind of move forward. So we are 
not going to be militant on time. But if I do hit the gavel, 
you have gone way over, OK.
    So you are recognized for 5 minutes. And I think you should 
press a button there in the middle and pull it, if you can, as 
close as you can. All right.

STATEMENTS OF RANDY ELLINGBOE, MINNESOTA DEPARTMENT OF HEALTH, 
     ON BEHALF OF THE ASSOCIATION OF STATE DRINKING WATER 
 ADMINISTRATORS; JOHN J. DONAHUE, CEO, NORTH PARK PUBLIC WATER 
DISTRICT IN MACHESNEY PARK, IL, ON BEHALF OF THE AMERICAN WATER 
 WORKS ASSOCIATION; RUDOLPH S. CHOW P.E., DIRECTOR, BALTIMORE, 
   MD DEPARTMENT OF PUBLIC WORKS, ON BEHALF OF THE AMERICAN 
  MUNICIPAL WATER ASSOCIATION; GREGORY E. DILORETO, CHAIRMAN, 
  COMMITTEE FOR AMERICA'S INFRASTRUCTURE, AMERICAN SOCIETY OF 
  CIVIL ENGINEERS; MARTIN A. KROPELNICKI, PRESIDENT AND CEO, 
   CALIFORNIA WATER SERVICE GROUP, ON BEHALF OF THE NATIONAL 
ASSOCIATION OF WATER COMPANIES; ERIK OLSON, DIRECTOR, HEALTH & 
     ENVIRONMENT PROGRAM, NATURAL RESOURCES DEFENSE COUNCIL

                  STATEMENT OF RANDY ELLINGBOE

    Mr. Ellingboe. Good morning, Chairman Shimkus, Ranking 
Member Tonko and members of the subcommittee.
    Thank you for the opportunity to talk about our nation's 
drinking water systems and how state drinking water systems 
support them.
    Again, my name is Randy Ellingboe and I am with the 
Minnesota Department of Health but I am also president of the 
Association of State Drinking Water Administrators whose 
members include the 50 state drinking water programs, five 
territorial programs, the District of Columbia and the Navajo 
Nation.
    Our members and their staff help all public water supply 
systems provide drinking water that meets all the Safe Drinking 
Water Act standards through monitoring of their water quality, 
financial and technical assistance to public water supply 
systems, and when needed, enforcement to help systems 
prioritize taking care of deficiencies and violations.
    Today I'd like to talk with you about how states play a 
role in public health protection and sustaining the economic 
health of communities by implementing three critical components 
of the Safe Drinking Water Act: the Public Water Systems 
Supervision, or PWSS program, the Drinking Water State 
Revolving Loan Fund program and the Revolving Loan Fund set 
asides.
    Sufficient federal funding for these components is 
essential for maintaining the safety of drinking water across 
the country. Under the Safe Drinking Water Act, states have 
accepted primary enforcement responsibility for federal 
drinking water standards and technical assistance efforts for 
over 151 public water systems.
    These regulations are for contaminants such as nitrate, 
bacteria, arsenic, lead, and many carcinogens. A person can go 
virtually anywhere in the country and drink water from a public 
water system and be confident that the water meets federal 
health standards because of the work that public water supply 
system operators do with the assistance and oversight of state 
and federal drinking water programs.
    However, since the Safe Drinking Water Act was passed in 
1974, we have come to understand much more about drinking water 
contaminants and what it takes to manage and treat drinking 
water to prevent illness.
    This has led to increased challenges for both public water 
supplies and state and federal drinking water programs. But 
safe water is crucial for protecting people's health and 
communities' and businesses' economic well-being.
    When we polled citizens in Minnesota about water resource 
issues, drinking water consistently rises to the top. Safe 
drinking water for all is one of the community conditions that 
supports health.
    However, state drinking water programs and many public 
water supplies are extremely hard pressed financially as costs 
and the funding gap continues to grow.
     With the advent of the Drinking Water State Revolving Fund 
in 1996, states could provide low-cost loans to utilities to 
help them upgrade their treatment plants and water mains, 
install more protective technologies and improve their aging 
infrastructure.
    Many states have also used no-interest loans and principal 
forgiveness to assist disadvantaged communities with their 
infrastructure needs.
    Approximately $18 billion federal capitalization grants 
since 1997 have been leveraged by states into over $29 billion 
infrastructure loans to communities across the country.
    Such investments are now being paid back and loaned out 
again and pay tremendous dividends both in supporting and 
growing our economy and in protecting our citizens' health.
    States have leveraged the federal dollars with state 
contributions to provide assistance to more than 10,000 
projects to enhance and sustain public health protection for 
millions of Americans.
     However, the most recent drinking water infrastructure 
needs survey identified $384 billion in investment needed 
across the country in the next 20 years, as already noted.
    With that great need we would recommend expanding the 
Revolving Fund to help increase infrastructure investment. It 
has a track record for successfully funding a wide range of 
drinking water infrastructure projects critical for the 
economic well-being of communities as well as protecting public 
health.
    Set asides are unique to the drinking water program. States 
are allowed to set aside a portion of the Revolving Loan Fund 
for source water protection, program administration, small 
system technical assistance and water operator training and 
certification.
    Set asides are an essential source of funding for states' 
core public health protection programs and these efforts work 
in tandem with infrastructure loans. These proactive strategies 
and initiatives increase the effectiveness of many state 
programs in their ability to support drinking water systems.
    In summary, sustaining or increasing the PWSS grants is 
critical, to protecting public health and our economy. 
Expanding the Revolving Fund will improve the nation's 
infrastructure and create jobs, and the set asides are key 
resource to ensuring safe drinking water.
    Thank you for the opportunity to provide this testimony 
about these critical drinking water issues.
    [The prepared statement of Randy Ellingboe follows:]
    
    
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    Mr. Shimkus. And the gentleman yields back his time and we 
appreciate those comments.
    Another thing I should have said the Chair would like to 
remind members that pursuant to committee rules all members' 
opening statements could be placed into the record.
    And I also wanted to mention that you all are on the front 
lines of these battles. We do really appreciate you being here 
and your testimony, and I think as the questions will follow up 
to show because you're really trying to deliver the goods.
    So I'd now like to recognize Mr. John Donahue, CEO of the 
North Park Public Water District in Machesney Park, Illinois, 
way far away from Collinsville, on behalf of the American Water 
Works Association.
    You're recognized for 5 minutes. Thanks for being here.

                  STATEMENT OF JOHN J. DONAHUE

    Mr. Donahue. Good morning, Chairman Shimkus, and members of 
the subcommittee. My name is John Donahue, the chief executive 
officer at North Park Public Water District in Machesney Park, 
Illinois, north of I-80.
    I am also the former president of the American Water Works 
Association on whose behalf I am speaking today. I appreciate 
this opportunity to offer AWWA's input on reinvesting and 
rehabilitating our nation's drinking water systems.
    As you will hear and see in my written testimony, building 
and maintaining sound water infrastructure includes addressing 
not only water infrastructure, which includes pipes and 
treatment plants, but addressing issues such as cybersecurity 
and the protection of source waters.
    One innovative tool to help address this is a new credit 
program known as a Water Infrastructure Finance and Innovation 
Act, or WIFIA.
    We are optimistic that once WIFIA really gets running and 
fully funded it could become a valuable tool for financing 
projects beyond the size and scope of those funded by other 
tools.
    Just as in the transportation program called TIFIA, 
Congress only has to appropriate funds for the risk factor to 
those loans. Based on calculations from OMB, WIFIA 
appropriations could be leveraged at a ratio of about 60 to 1.
    For example, if the WIFIA program were to receive the fully 
authorized $45 million for Fiscal Year 2018, it could provide 
more than $2 billion in loan money.
    Since a WIFIA loan will only support up to 49 percent of 
eligible project costs, this funding could result in more than 
$4 billion in infrastructure investment.
    Other key federal programs for infrastructure finance like 
the State Revolving Loan Fund programs, or SRFs, are also 
designed to provide water and wastewater systems access to 
lower cost financing for infrastructure projects, typically 
smaller than those that can be funded through WIFIA.
    While the SRFs are excellent programs, their efficiency 
could be improved by working with stakeholders to streamline 
those process.
    We realize that this next issue is outside the jurisdiction 
of this committee but we need to mention and need to preserve 
the tax-exempt status of municipal bonds as Congress considers 
comprehensive tax reform. More than 70 percent of U.S. water 
utilities use muni bonds to help finance infrastructure 
improvements.
    The decision to issue bonds is determined and approved by 
either the local residents, the referenda or by their elected 
officials. These bonds provide substantial savings for the cost 
of projects and consequently to the ratepayers.
    These are our recommendations to Congress regarding water 
infrastructure finance: provide fully authorized funding for 
WIFIA and at least $1.8 billion for the drinking water SRF 
program; preserve the tax-exempt status of muni bonds, 
reauthorize the safe drinking water SRF program and work with 
stakeholders to utilize the lessons learned since its creation 
to make it more efficient.
    Cybersecurity is an increasing component in upgrading and 
protecting infrastructure and our written testimony contains 
our thoughts on that issue. The protection of source waters are 
also critical to the mission of any drinking water utility.
    However, many drinking water systems have limited control 
over upstream activities that may present risks to water. The 
Revised Toxic Substances Control Act does contain provisions 
for requiring consideration of impacts on drinking water 
sources for certain substances.
    However, there are policy gaps in the form of inadequate 
information sharing policies and a lack of notification 
protocols to alert a utility of incidents that could impact a 
water supply.
    The chemical spill on the Elk River in West Virginia in 
2014 illustrates the need for such notification and alerts. In 
addition, improved collaboration between agriculture producers 
and water providers can have measurable results in reducing 
sediment and nutrient pollution.
    Nutrients from agricultural runoff do impact drinking water 
quality, as we saw in Toledo, Ohio, in 2014 when the water 
system had to be shut down.
    The federal farm bill is a key vehicle for agricultural 
land conservation efforts. We recommend that Congress support 
the designation of drinking water utilities as first responders 
in various state and federal emergency response laws in 
regulation to facilitate information sharing.
    We also recommend that Congress sustain and expand 
conservation programs in the farm bill that support 
collaboration between agriculture producers and community water 
systems to improve source water quality.
    EPA's 2012 integrated planning framework and related 
documents on affordability provided important new flexibilities 
for wastewater utilities to provide regulatory obligations and 
infrastructure investments.
    Representative Bob Gibbs' Water Quality Improvement Act 
would help put the integrated planning framework in statute for 
clean water mandates.
    However, this legislation only deals with wastewater 
projects and does not allow for integrated planning to fully 
acknowledge the cost implication of drinking water mandates.
    With that, I will conclude my remarks and look forward to 
your questions.
    [The prepared statement of John J. Donahue follows:]
    
    
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    Mr. Shimkus. Gentleman yields back his time.
    Chair now recognizes Mr. Rudolph Chow, Professional 
Engineer, Director of the Baltimore, Maryland Department of 
Public Works on behalf of the American Municipal Water 
Association.
    Welcome. You're recognized for 5 minutes.

               STATEMENT OF RUDOLPH S. CHOW, P.E.

    Mr. Chow. Good morning, Chairman Shimkus and Ranking Member 
Tonko and honorable members of the Energy and Commerce 
Committee Environment Subcommittee.
    My name is Rudy Chow and I am the director of the 
Department of Public Works with Baltimore City. It is my honor 
to appear before you this morning.
    As director of the Baltimore City Department of Public 
Works, I'm responsible for safe delivery of the highest quality 
drinking water to 1.8 million people living and working in our 
metropolitan region.
    I have over 30 years of experience in the public water 
industry from the operational, engineering and administrative 
perspectives. It is a field I both love and respect.
    I'm here today to speak on behalf of the Association of 
Metropolitan Water Agencies, AMWA, an organization representing 
the nation's largest public drinking water utilities which 
collectively serve more than 130 million Americans with quality 
drinking water. I serve on the AMWA board of directors with 
other dedicated professionals from all over the country.
    While our home jurisdiction may be different, I assure you 
that our challenges are not. We are all challenged by the 
effects of aging infrastructure and the costly capital projects 
that protect and improve the quality of water we deliver to our 
customers.
    It is a delicate balancing act we perform to prioritize and 
fund these expensive investments that are borne locally. But 
the time of kicking the can down the road is long over.
    Through organizations such as AMWA and serious discussion 
of these challenges in Congress through committees and 
subcommittees such as yours, we hope to seize the moment the 
momentum of this national conversation and forge a national 
commitment to protect our drinking water.
    The scale of this challenge cannot be done solely on our 
own. It is too important. We do not want communities forced to 
choose between investing in necessary infrastructure and the 
safety of their water. But here are the cold hard facts.
    The EPA's most recent drinking water and clean water needs 
surveys identify more than $655 billion of needed water and 
wastewater infrastructure investments over the next 20 years 
just to maintain the status quo.
    AMWA and the National Association of Clean Water Agencies 
project that water and wastewater utilities could spend a 
similar amount over 40 years just to adapt to extreme droughts, 
more frequent and intense storms and rising sea levels.
    In my own city of Baltimore, my annual capital program for 
water and wastewater project can comprise 80 percent of the 
city's total capital investments. My six-year capital program 
for just water infrastructure exceeds $2 billion.
    The work of this subcommittee and Congress make a 
difference between our success or failure as a nation to 
protect our most basic need: clean safe drinking water.
    Congress passed the Water Infrastructure Improvements of 
the Nation Act last year. It created a new program in funding 
to remove and replace outdated lead service lines and help low-
income customers absorb their share of replacement costs.
    We need more programs like this to help support affordable 
financing and assistance to communities in need. AMWA is asking 
to continue this momentum to support the following efforts in 
programming.
    We need to renew commitment in the Drinking Water State 
Revolving Fund, SRF. The Drinking Water SRF is an effective 
national funding mechanism providing critical funding 
assistance and that is a lifeline to many communities large or 
small struggling to fund their capital programs. We ask a 
doubling of SRF to $1.8 billion.
    The Water Infrastructure Innovation Act, or WIFIA, is a new 
federal pilot program that AMWA believes will provide 
innovative funding to help communities nationwide pay for 
large-scale water and wastewater projects.
    WIFIA will complement, not compete, with SRF funds and 
WIFIA can help communities with large-scale investment that 
some SRFs cannot provide. Support the use of tax exempt 
municipal bonds as they are the most prevalent water 
infrastructure financing mechanism with at least 70 percent of 
U.S. water utilities relying on them to pay for infrastructure 
improvements.
    By reauthorizing the Drinking Water SRF, Congress will have 
an opportunity to update and streamline the program. AMWA would 
like to codify water facility security enhancements as well as 
allowing a portion of the metropolitan service areas to qualify 
as a disadvantaged community use of these funds.
    AMWA also supports the framework of the Safe Drinking Water 
Act and its careful balance of public health protection and 
local cost and feasibility considerations. Congress should 
consider options for targeted low-income water rate assistance 
programs. They are greatly needed.
    Finally, AMWA believes water utilities should be recognized 
in providing preference under SRF for taking steps to improve 
efficiency and adopting best industry practices via sound water 
utility asset management plan or who formulate cooperative 
water utility partnerships.
    On behalf of AMWA, I appreciate the opportunity to testify 
on the importance of investing and rehabilitating our nation's 
drinking water infrastructure. Thank you again, and I am happy 
to answer any question you might have.
    [The prepared statement of Rudolph S. Chow, P.E. follows:]
    
    
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    Mr. Shimkus. Gentleman's time has expired. We thank you for 
your testimony.
    The chair now recognizes Mr. Greg DiLoreto, Chairman of the 
Committee for America's Infrastructure, American Society of 
Civil Engineers and nothing.
    So we will recognize you for 5 minutes.

                STATEMENT OF GREGORY E. DILORETO

    Mr. DiLoreto. Thank you very much, Chairman Shimkus, 
Ranking Member Tonko and members of the subcommittee.
    Good morning. My name is Greg DiLoreto and I'm a past 
president of the American Society of Civil Engineers and the 
current chair of the ASCE Committee for America's 
Infrastructure, responsible for the 2017 report card for 
infrastructure.
    Prior to my retirement, I served as the chief executive 
officer of the publicly-owned Tualatin Valley Water District in 
Portland, Oregon. It's the second largest water utility in 
Oregon.
    I am honored to be here today to testify on behalf of ASCE 
on the state of America's drinking water infrastructure as the 
subcommittee examines reinvestment and rehabilitation of our 
nation's safe drinking water delivery systems.
    You're hearing a recurring theme from the comments by the 
chair, by the comments from the ranking members as well as the 
four people that have testified before me.
    You're hearing this theme that we need to invest in our 
infrastructure. Every four years since 1998, ASCE has published 
the report card for America's infrastructure which grades the 
current state of 16 national infrastructure categories on a 
scale of A through F.
    Last week, we released our 2017 report card, which we'd 
like to have entered into the official record. In this report 
card----
    Mr. Shimkus. Without objection, so ordered.
    [The information appears at the conclusion of the hearing.]
    Mr. DiLoreto. Thank you. In this report card, we gave the 
nation's drinking water infrastructure systems a grade of D. 
Unfortunately, that is the same grade it received in our 2013 
report card.
    But the good news from this year's report card is that 
water conservation efforts through wise use of water seem to 
have paid off.
    Municipal water consumption in the United States has 
declined by 5 percent this decade, marking the first time in 
nearly 40 years that water use at home has decreased.
    Total freshwater withdrawals this decade continue to 
decline in almost every sector including agriculture, industry, 
domestic and thermal electric. This is primarily due to 
efficiencies and the reduction in withdrawals from retired 
coal-fired plants.
    The bad news is that every day nearly 6 billion gallons of 
treated drinking water are lost due to leaking pipes with an 
estimated 240,000 water main breaks per year occurring in this 
country.
    It's estimated that these leaky pipes are wasting 14 to 18 
percent of each day's treated water, the amount of clean 
drinking water that could support 15 million households.
    To address these programs and bring the grade up to a B--
good condition, which we recommend--EPA has estimated, as 
you've heard, we need to invest, at a minimum, $384 billion 
over the next 20 years from all levels of government.
    Importantly, EPA's numbers do not account for population 
growth and an estimate is limited in its scope of projects so 
it could be higher. While drinking water infrastructure is 
funded primarily through a rate-based user system, the 
investment has been inadequate for decades and will continue to 
be underfunded without significant changes as the revenue 
generated will fall short of the needs grow and as water 
utilities strive to meet safe drinking water standards.
    Additionally, many U.S. cities are losing population. This 
poses a significant challenge to utility managers. Fewer 
ratepayers--a declining tax base--make it difficult to raise 
funds for capital investment plans.
    To respond, utilities must raise rates often in cities 
where jobs and pay have not kept pace with the economy, putting 
a burden on those who can least afford rate increases.
    Conversely, in areas of the country that are growing, such 
as the West and Southwest, utility managers must respond to an 
increased overall demand.
    So we'd like to offer the following recommendations. First, 
as you've heard from my colleagues, reinvigorate State 
Revolving Loan Fund program under the Safe Drinking Water Act 
through permanent reauthorization. And we are going bold, 
tripling the amount of the annual appropriation. This is the 
amount that the president has called for.
    Second, fully fund the Water Infrastructure Finance and 
Innovation Act. Three, as with my colleagues, preserve tax-
exempt municipal bond financing. Low-cost access to capital 
keeps lending for water upgrades strong and accessible for 
communities large and small.
    And fourth, eliminate the state cap on private activity 
bonds for water infrastructure to bring an estimated $6 billion 
to $7 billion annually in new private investment.
    Finally, the federal government cannot be the bank of last 
resort. We understand and recognize that individual water 
utilities must consider the need to increase the price of water 
to local users.
    Water must be appropriately priced, however, to ensure 
investments to rebuild the infrastructure.
    Thank you, Mr. Chairman. That concludes our testimony and 
at the appropriate time I'd be happy to answer your questions.
    [The prepared statement of Gregory E. DiLoreto follows:]
    
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    Mr. Shimkus. Thank you very much, John.
    The chair now recognizes Mr. Martin Kropelnicki, President 
and CEO of the California Water Service Group on behalf of the 
National Association of Water Companies.
    You are recognized for 5 minutes. Thanks for being here.

               STATEMENT OF MARTIN A. KROPELNICKI

    Mr. Kropelnicki. Good morning, Chairman Shimkus and Ranking 
Member Tonko and members of the subcommittee.
    As the chairman mentioned, I'm Marty Kropelnicki, President 
and CEO of California Water Service Group. We provide water 
service to approximately 2 million in the State of California, 
Hawaii, New Mexico and the State of Washington.
    I'm also the current sitting president for the National 
Association of Water Companies, or NAWC, which represents 
private water companies across the U.S.
    NAWC members have provided water utility services for well 
over 100 years and today serve nearly a quarter of the 
population.
    Before discussing how private water sector can help address 
the nation's infrastructure challenges, I want to start with a 
story, a true story, of what happened in the state of 
California and what the possibilities can be.
    There are 400 residents in West Goshen, which is a small 
town in Tulare County. The residents of West Goshen had two 
small wells that had chronic water quality issues including 
nitrates and bacteria contamination.
    In 2012, the two wells failed. Then a portion of the their 
water system pipes actually collapsed and we had people in this 
small town that actually had sand flowing through their pipes 
instead of water.
    With the residents having to travel to nearby cities and 
towns to take showers in portable shower stands, a timely 
solution had to be found.
    CalWater worked with several nonprofits in the local area, 
the county and state to secure funding to connect the water 
system to our existing system, which was a mile down the road.
    Today, the residents are enjoying something they haven't 
had in a long, long time--a supply of safe, reliable and high-
quality water. This example illustrates how private water 
companies are already helping overcome water infrastructure 
challenges.
    NAWC estimates that its six largest members, of which we 
are one, will invest nearly $2.7 billion annually in our water 
systems. This is significant, given that the federal 
appropriations for the State Revolving Fund program is about $2 
billion annually. It illustrates the shortfall.
    Federal funds alone will not fix the nation's 
infrastructure problems, especially given that many are the 
result of poor decision making and not necessarily the absence 
of funding.
    Let me highlight for you several recommendations for 
Congress to consider. First, we must ensure that any federal 
dollars are effectively and efficiently deployed and used. NAWC 
and its members support EPA's 10 attributes of effective 
utility management, which include things such as financial 
viability, infrastructure stability, and operational 
optimization.
    Applicants for public dollars should demonstrate that they 
are managing their assets so that adequate repair, 
rehabilitation, and replacement are fully reflected in 
management decisions including water pricing.
    Second, failing systems that are seriously compliant with 
water quality standards must be held accountable. If a system 
is plagued with a history of serious noncompliance it should be 
given an option to pursue a partnership that will lead to 
compliance or to be consolidated with an operator or owner who 
can bring them into compliance.
    Finally, as Congress considers future funding of drinking 
water programs, NAWC recommends that the private water sector 
not only have equal access to federal funding but also that 
steps be taken to further enable and incentivize private water 
sectors' involvement in solving the nation's infrastructure 
problems.
    Apart from the obvious tax base measures, these incentives 
should include providing a safe harbor provision to shield 
would-be partners from legal and financial liabilities 
associated with serous noncompliant systems.
    Quite simply, private water companies like CalWater have 
the financial, managerial and technical expertise to help 
ensure that all Americans have safe, reliable and high-quality 
utility services.
    I sincerely appreciate your invitation to be here today. 
Along with my many colleagues in NAWC, I look forward to 
working with you to address the nation's water infrastructure 
challenges.
    Thank you, and I'd be happen to respond to any questions 
that the committee may have.
    [The prepared statement of Martin A. Kropelnicki follows:]
    
    
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    Mr. Shimkus. Thank you very much.
    Chair now recognizes Mr. Erik Olson, director of the Health 
and Environment Program with the Natural Resources Defense 
Council, NRDC. You're recognized for 5 minutes.

                   STATEMENT OF ERIK D. OLSON

    Mr. E. Olson. Thank you, Chairman Shimkus, and Ranking 
Member Tonko and members of the subcommittee.
    I think we all take for granted where this water that is 
sitting here comes from. It's, in many cases, comes through 
water systems that have been there for over a century.
    For example, I've seen the DC original plans for the water 
supply in Washington, DC signed by guess which president? 
Pierce. Started to be built during the Lincoln administration.
    Mr. Shimkus. One of my favorites.
    [Laughter.]
    Mr. E. Olson. We still get our water through lead pipes in 
much of the city through lead service lines. We still have a 
brick aqueduct that is used for some of the water that is 
delivered into the city.
    And DC is not unique. We have got I think a situation where 
we take for granted where our water is coming from and it is 
out of sight and out of mind.
    But I'd liken this very much to an old house that is 100-
plus years old. It's got a leaking roof. It's got termites. 
It's got a crumbling foundation. It's got broken windows. It 
sort of reminds me maybe of the house that Jimmy Stewart had in 
``It's a Wonderful Life'' that was falling apart and about to 
collapse, and without some tender loving care and real 
investment, unfortunately, in a lot of cities and small towns 
across the country we are really at risk of collapse.
    It's not just the small town in West Goshen, California. 
There are a lot of other cities and towns that have this 
problem. You know, and these have very real public health 
implications.
    So CDC estimated a few years back that about 19.5 million 
people per year get sick from drinking tap water from municipal 
water supplies in the U.S.
    Now, some of those people get really sick. There are deaths 
and some of them get over the illness. But if you're elderly, 
if you have an immune system problem, if you're on 
chemotherapy, they are very real, very serious health risks.
    And that is just from the microbiological risks. We are not 
talking about lead. We are not talking about some of the 
carcinogens and the other contaminants.
    I will say that the U.S. has made enormous strides in the 
last hundred years. Our water is a heck of a lot safer than it 
was before World War I.
    But, unfortunately, we haven't made the kind of progress we 
need and we haven't been investing to keep our water 
infrastructure up.
    I think we are sort of like ostriches with our head in the 
sand. We don't want to think about this problem. It's yet 
another problem to worry about.
    But this s the one infrastructure issue that touches every 
American and their--and their health every single day. We take 
a shower in the morning. Do we give it a second thought what's 
in that water?
    We drink it. We use it for our cooking. We use it for 
making our coffee in the morning. What's in that water? We need 
to really be thinking about this and the deferred maintenance 
that we continue to see across the country, unfortunately, 
because of resource constraints is a very real problem that is 
affecting communities all over the U.S.
    And this has real implications. I was recently in Flint, 
Michigan, where we are representing the citizens and I know you 
heard from Melissa Mays about a month ago. She's one of the 
citizens in Flint, and we visited with Melissa.
    We visited with other people in the community and you can 
imagine what it is like. What if you didn't feel like you could 
bathe your kids in the water?
    What if you felt like the water coming out of your tap was 
unsafe and that you were being told for a long time that it was 
perfectly safe--don't worry about it--and then it comes out 
that it wasn't safe and you find out your kids are lead 
poisoned? How does that make you feel?
    It certainly erodes your confidence in government. It also 
erodes your confidence in water systems and I will say that a 
lot of people in Flint that we are working with I don't they 
are ever going to feel confident about their water and I am 
very worried that as this problem escalates across the country 
we are going to see more and more of those kinds of situations 
where people are not confident in the water that is coming out 
of their tap. That's a very real risk.
    Another example that I cite in my testimony is East 
Chicago, Indiana. We just filed a petition similar to the 
petition we filed in Flint months before it became a big issue 
in Flint.
    We recently filed a petition for East Chicago, Indiana. 
They've got serious lead contamination problems in their 
drinking water as well as in their soil. I cite a woman named 
Crystal that is one of the people that is affected by this. 
She's got two kids under the age of 5 who are lead poisoned.
    What's going to happen to that community? How are we going 
to restore confidence in the water supply in East Chicago and a 
lot of other communities across the country?
    So where do these problems come from? Well, certainly, 
first of all, there is a lack of investment in our 
infrastructure. There has been for decades. I don't think this 
is a partisan issue. It's something where we haven't been 
putting the money we need to put into it and unless we take 
some action we have got a really serious problem.
    Secondly, we have had weak enforcement. We have 
deteriorating lead pipes in a lot of communities, a lack of 
source water protection, and I have to mention that the budget 
cuts that were announced last night I would call it a bloodbath 
budget.
    We are seeing huge cuts, although the state revolving fund 
is protected huge cuts in Superfund, huge cuts in enforcement, 
huge cuts in Great Lakes, Chesapeake Bay program, the water 
programs.
    We are very concerned that the effect of this is going to 
be more problems, more health risks and it is not just EPA. I 
noticed also that U.S. Department of Agriculture's entire 
program for rural drinking water and sewers is zeroed out--
almost $500 million zeroed out.
    The HUD programs, a lot of which pay for drinking water and 
sewer----
    Mr. Shimkus. I am being very kind.
    Mr. E. Olson. That's a serious problem. Thank you.
    [The prepared statement of Erik D. Olson follows:]
    
 [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]    
    
    
    Mr. Shimkus. Thank you very much. I think we were getting 
your point. I would just add that since you mentioned the 
budget it includes $2.3 billion for the State Revolving Funds, 
a $4 million increase over the 2017 annualized level, the 
budget also provides $20 million for Water Infrastructure 
Finance Innovation program equal to the funding provided in 
2017.
    So we will get to those points and we will have those 
debates. But let me now just recognize myself for 5 minutes for 
opening questions.
    And before I do that, Mr. DiLoreto, I was in Portland with 
Congressman Schrader two weekends ago and we were--all the cool 
things that this committee gets to do we were observing the 
Willamette Superfund site.
    So I was just interested, does the water systems there use 
the Willamette or they--they've got retaining ponds from the 
mountains or how do they----
    Mr. DiLoreto. The water system in Portland comes from the 
Bull Run. It was originated in 1895 under a grant by President 
Harrison and so it is up in the Mount Hood Forest. It has no 
human activities, no farmland activities. It's completely 
protected.
    But it used to be the Willamette River in the 1870s and 80s 
and, of course, it wasn't treated and people got sick. The joke 
is that the governor at the time, after they did Bull Run, 
said, ``I am not drinking any water that I can't see,'' and so 
he objected to it. But the Bull Run is their source, not the--
--
    Mr. Shimkus. Yes, it is interesting and I would encourage 
my colleagues--that is another issue I really look forward to 
working with in a bipartisan manner to start trying to bring 
some closure and movement on Superfund sites. So it was a great 
trip.
    Mr. Kropelnicki, you have mentioned the problem of 
fragmentation in the nation's water industry. What 
recommendations can you give to this committee to address that 
problem you've identified?
    Mr. Kropelnicki. Sure. There are approximately 52,000 to 
54,000 small rural water systems out there and just compare 
that to what you have on the electric and gas side.
    You have 4,000 electric producers in the U.S. You have 
1,600 natural gas producers in the U.S. and so enforcement with 
numbers of that size become very, very complicated.
    Mr. Shimkus. It's very hard. I represent rural America and 
actually USDA rural water grant program has been very helpful. 
But you really have to talk to the local communities who are so 
small that they really can't sustain their own water 
infrastructure and you have to really lovingly encourage them 
to get into a regional system and I think that is what you're 
addressing, right?
    Mr. Kropelnicki. Yes, absolutely, Chairman. One of the 
things we just did in the state of California is we have 
consolidated a couple districts where we took rural systems 
where you have a small number of people, where you have complex 
water supply issues and we merged them with larger districts.
    So essentially you spread that marginal cost over a larger 
base and the end result for the customers in the smaller 
district is a significant reduction in the water bill and our 
ability to go in and make and continue to make the capital 
improvements to keep them into compliance.
    Mr. Shimkus. Staying with you, what is one obstacle in the 
water industry the federal government could remove that would 
draw in more private engagement and investment into industry?
    Mr. Kropelnicki. Mr. Chairman, that is a great question. I 
mentioned the safe harbor provision. One of the problems being 
a private water company or an investor in a water company is 
when we fall out of compliance the fines we get are amazingly 
substantial, whether it is from the state health department, a 
local or regional water board or EPA.
    So we are held to a very, very high standard and I am very 
proud of the record. NAWC members have nearly a flawless record 
at compliance with water quality standards.
    However, when we take over a system that is challenged and 
out of compliance, we run the risk of getting fined right away.
    And so having a safe harbor provision or an amnesty period 
that allows us to ramp that system up to compliance would 
certainly go a long way in terms of incentivizing private water 
to come in and take over smaller systems.
    Mr. Shimkus. And I am sure this will be asked by my 
colleagues as we start talking about the Water Infrastructure 
Finance Innovation Act, which you've all testified about, and 
the Safe Drinking Water Act and how they may interact or how 
they may help or harm each other.
    So if we just go through the whole panel--should the Safe 
Drinking Water State Revolving Fund and the Water 
Infrastructure Finance Innovation Act--I hate acronyms so that 
is why--loan program not just coexist but also complement each 
other?
    And let's just go Mr. Ellingboe and then we will just go 
down real quickly.
    Mr. Ellingboe. Thank you, Mr. Chair, and members of the 
committee.
    Yes, I think having them complement each other would 
provide additional resources needed in order to be able to 
sustain this infrastructure and I think that is really 
important, given the need across the country. And so both 
programs are important.
    Mr. Shimkus. Mr. Donahue.
    Mr. Donahue. They do complement each other, Mr. Chairman. 
The main differences from our perspective----
    Mr. Shimkus. Someone might have--I think if you can turn 
your mic off once you're done.
    Mr. Donahue. The main differences between SRF and WIFIA--
sorry about the acronyms but WIFIA is designed to fund projects 
that are typically greater than $20 million where SRF is 
substantially less than that.
    And historically, when a large project needed low interest 
funding or desired low interest funding they might have to 
split that project into smaller pieces in order for it to fit 
into an SRF program, and that took away resources for the 
smaller projects.
    So low interest funding for large and small projects in the 
manner of SRF programs and WIFIA is a vital portion of our plan 
to move forward on infrastructure.
    The only other thing I would add is that with the larger 
projects through WIFIA the repayment opportunities for 
communities are up to 35 years where typically in the SRF 
program you're somewhere closer to 20.
     Mr. Shimkus. Thanks, and because of my colleagues and out 
of respect for them, we will just stop there. I am sure they 
will have questions and I'll turn to the ranking member, Mr. 
Tonko, for 5 minutes for his questions.
    Mr. Tonko. Thank you, Mr. Chair, and to the panelists 
again, thank you and thank you for reinforcing and 
strengthening the message of investment.
    Many of you discussed the needs estimates for the next few 
decades. Is it fair to say that there is agreement on this 
panel about the scale of need in this country?
    We can debate the precise remedy to meet that need--how 
much should come through the SRF, how much through tax-exempt 
bonds, how much through increased water rates and local 
government spending, et cetera.
    But does everyone agree that it is going to take more 
federal dollars to make any serious effort to bring down the 
national need if we that across the board? Need for new 
additional federal dollars?
     Mr. Ellingboe. Thank you, Ranking Member Tonko and members 
of the committee. Yes, we do need additional federal dollars.
    Mr. Tonko. OK. If I could just get a yes or no because I am 
on limited time here. So Mr. Donahue.
    Mr. Donahue. Yes.
    Mr. Chow. Yes.
    Mr. DiLoreto. Yes.
    Mr. Kropelnicki. Yes.
    Mr. E. Olson. Limited, yes.
    Mr. Tonko. OK. And Mr. Donahue, AWWA represents all types 
of water systems. Can you discuss the importance of the 
drinking water SRF for small and disadvantaged systems that may 
not have the credit rating, the ratepayer base or capacity to 
fix their systems or bring them into compliance with the law?
    Mr. Donahue. Thank you. That's a great question. Small 
systems in particular--and I have experience in that regard 
where I've used SRF program money for a number of capital 
financing projects--the main advantage to smaller systems using 
SRF is the cost of money is much less.
    They have to go through higher hoops to get that money so 
we are hoping that we can make that process a little bit more 
efficient for the--especially for the smaller systems who have 
fewer technical staff to help them. I think that would be 
advantageous.
    I also think that using SRF money for smaller systems who 
have a little bit of a tough time with their credit rating, 
normally the conventional bond market is very good at 
supporting credit ratings and municipalities that are AA or AAA 
rated and some of those smaller systems that may not 
necessarily have such a high credit limit or credit rating 
would benefit from a little bit of an easier process through 
SRF.
    Mr. Tonko. Thank you. And there are obvious problems when 
dealing with so many pipes at the end of their useful lives.
    In my district alone there are pipes that go back to 
Rutherford B. Hayes, if we are going to cite administrations. 
Water main breaks disrupt service and the local economy. We saw 
some of those coming at the worst weather moments of the year, 
the coldest weather.
    They also make the finances of these systems even more 
difficult. Mr. DiLoreto or any of our other witnesses, can you 
compare the cost of doing emergency repairs with planned 
replacement and how much more expensive is it to react? I know 
that a number of engineers have recommended or suggested it is 
10 times more expensive at times to do these after they break 
than to have some sort of mechanism that pinpoints weakness.
    So Mr. DiLoreto.
    Mr. DiLoreto. Well, I don't have an exact number. That 
sounds approximate. You're absolutely right. If we can do a 
maintenance program where we schedule it out, particularly 
using asset management, I know a number of colleagues here are 
introducing that into their water systems.
    We get all the data from all our water pipes we can then do 
a modeling that says here's where we ought to be at certain 
times so that we can avoid the break. The cost is important. 
More importantly is your business shuts down. People have to 
get sent home. You lose wages, and that is the real effect you 
have on the customers and people.
    Mr. Tonko. Anyone else on that issue?
    OK. Oh, we do? Oh, Mr. Chow. I am sorry.
    Mr. Chow. So I will comment on that. So running a city, a 
public works department, we often encounter emergencies rather 
than what we call the preventive maintenance work, and I would 
say the emergency calls is a heck of a lot more than if we 
program that out and go through a normal procurement process 
where we bid it and we certainly couldn't get a much better 
favorable pricing compared to emergency calls.
    Mr. Tonko. Yes. Thank you.
    The problem is that many systems don't have the necessary 
capital asset management practices to be proactive when 
operating on shoestring budgets.
    Therefore, a lot of that maintenance is reactive, which 
ends up costing local government and ratepayers more.
    Mr. Donahue, would you say that is a fair characterization 
for some of your AWWA members?
    Mr. Donahue. Absolutely, sir.
    Mr. Tonko. And the core mission of this statute is to 
protect public health. So Mr. Olson, I want to ask what it 
means for our country to achieve success with the safe drinking 
water law that talked about the lifelong impacts and I'd like 
to hear some of your assessments in that regard.
    Mr. E. Olson. Well, I would say that both on the 
microbiological side I mentioned that there are over 19 million 
people that get sick a year. Addressing these problems could 
reduce that.
    In addition, the lead contamination problem we did a report 
recently that found very widespread contamination with lead 
across the country, something in the neighborhood of 4 million 
served by water systems that exceeded the lead action level, 
for example, and there are plenty of other contaminants out 
there.
    Mr. Tonko. Thank you very much.
    I yield back, Mr. Chair.
    Mr. Shimkus. Gentleman yields back his time.
    Chair now recognizes the gentleman from Texas, Mr. Olson, 
for 5 minutes.
    Mr. P. Olson. I thank the chair for calling this very 
important hearing.
    Welcome to our witnesses, and a special welcome to you, Mr. 
Olson. You are one of the few, the proud, the rare Olson with 
two Os, not O-L-S-E-N. So get a welcome.
    Contaminated water has had national focus because of the 
tragedy that happened in Flint, Michigan. That was a failure of 
infrastructure. Lead leached out of the pipes and got in 
people's drinking water.
    It was in the water they drank, they bathed in, they 
prepared food with, and only years will tell us the damage that 
is been done to bodies with that lead exposure. It will take a 
long time.
    But infrastructure doesn't just fail over years. It can 
happen overnight in a flash. It happened in Corpus Christi, 
Texas, the week before Christmas this past year.
    They lost all their drinking water for 3 \1/2\ days because 
they had a spill. A chemical from an asphalt plant leaked into 
their water.
    Corpus Christi has a special place in my heart. I got my 
first hour flight time at Corpus Christi Naval Air Station. The 
first one was 1400 hours. I got my wings of gold there--a naval 
aviator. I know that town like the back of my hand.
    They have 320,000 residents. Flint had about 100,000. So 
three times bigger than Flint. The local grocery stores were 
swarmed buying bottles of water. Schools were shut down for the 
better part of a week.
    The mayor resigned after 37 days in office, just over one 
month. He beat a long-term mayor on the issue of water. During 
her reign, they had boiled water alerts three times in the last 
few years.
    Against that background, I'd like to open my questions and 
talk about my home, Fort Bend County, Texas 22. It's about two-
thirds suburban and one-third rural.
    It is exploding with growth. When a school opens, it is 
overcrowded on day one. They have trailers come in. That puts a 
huge burden on infrastructure and water.
    If you drive away from a house one mile, go on University 
Avenue, there is these big blue pipes probably 3 feet in 
diameter--water pipes, to try to get ahead of the growth we 
have to have.
    My first question is for you Mr. Chow. How with our 
existing resources can we help growing committees like Fort 
Bend County and Brazoria County and Harris County manage that 
growth and serve new customers in a cost-effective way with 
clean reliable drinking water?
    Mr. Chow. Yes. Any cities undergoing growth are going to be 
facing the challenges, first of all, with the infrastructure in 
the current state it is and you're talking about expansion and 
that is the reason why you got these above ground pipes trying 
to deliver the water the best they can.
    What I'll call the planning in terms of the growth of the 
city or the township and so on, all that, the planning exercise 
is a lot more important in terms of forecasting, projecting the 
population growth and that is where it really comes down to 
sound asset management that we mentioned earlier.
    Only through sound asset management you can project and 
from projection you can be one step ahead in terms of have the 
infrastructure in place in advance of the growth coming to your 
front door. I mean, that is something that you just have to 
anticipate through----
    Mr. P. Olson. Mr. Donahue, your comments on that issue, 
sir.
    Mr. Donahue. Certainly asset management is a key factor and 
when you're trying to balance growth with failing 
infrastructure that you might already have it is a very 
challenging process for water managers to try to deal with.
    One of the things that AWWA is supporting is allowing the 
SRF program to be used for growth related issues. Right now it 
is limited only to reinvesting in the existing infrastructure 
and primarily those communities who have experienced some type 
of a compliance issue and being able to expand those programs 
to allow for growth to accommodate some of those needs.
    And I've had experiences with schools as well that are 
bursting at the seams in trailers in the playground. So it is a 
very challenging process to have.
    Mr. P. Olson. Sounds like a job for Congress. I yield back.
    [Laughter.]
    Mr. Shimkus. Gentleman's time is expired.
    Chair now recognizes the gentleman from California, Mr. 
McNerney, for 5 minutes.
    Mr. McNerney. First, I want to thank the chairman and the 
ranking member for having this hearing.
    Mr. Shimkus. You're welcome.
    Mr. McNerney. It's a good time. And I want to thank the 
panelists. All your testimony was very good and you came in 
here so I really appreciate that.
    My first question goes to all of you. A simple yes or no 
would be appreciated.
    Do you believe that the State Revolving Fund increases are 
needed and we need to enhance the ability of cities to get 
municipal bonds done for this project?
    Mr. Donahue. Yes.
    Mr. McNerney. Starting with Mr. Ellingboe.
    Mr. Ellingboe. Yes.
    Mr. Chow. Yes, sir.
    Mr. DiLoreto. Yes, sir.
    Mr. Kropelnicki. Absolutely.
    Mr. E. Olson. Yes, sir.
    Mr. McNerney. Mr. Chairman, I think we have unanimity here.
    Mr. Shimkus. Amazing.
    Mr. McNerney. Mr. DiLoreto, you indicated improvements in 
water conservation. How can we continue to improve in that--in 
that way?
    Mr. DiLoreto. Well, the fact of the matter is we kind of 
reached a point now, if you look at the replacement of fixtures 
in your homes, most of them have been turned down now so we 
have reached that point where we've got low flow toilets, low 
flush showers.
    We have reached that point now where we have probably 
reached. There may be some little things we can do. Now we have 
got to move on to encouraging people in outdoor water 
conservation, as your state is well aware of--the kinds of 
materials we plant for our residence to make them natural to 
the area that we live in.
    Mr. McNerney. So there is more room that can be--thank you.
    Also, you mentioned leakage. Could you elaborate a little 
bit on the technology detecting leaks? Are you the right one to 
ask?
    Mr. Donahue. Water loss control is a significant part of 
the municipal utilities action plan. There are a variety of 
options. Acoustical leak detection is available and it is 
traditional and it has been around for probably a good 15 years 
or so and it is very accurate.
    They can come out and pinpoint a leak. But there is also 
new technology that I am just becoming aware of where there are 
companies that can view via satellite your geographical region 
and have some level of accuracy in the determination of where 
leaks might be so that it focuses your energy and your money in 
going in to find those leaks. So I am encouraged by the 
technology.
    Mr. McNerney. So we can invest more in developing that 
technology?
    Mr. Donahue. Absolutely.
    Mr. McNerney. I will bite on your cybersecurity remarks. 
Could you elaborate on that a little bit?
    Mr. Donahue. Certainly. Cybersecurity is a growing concern 
for municipal agencies. I can tell you, as an example in my own 
town we were attacked and our utility billing system was frozen 
out by a cyberthreat from outside the country.
    We had to pay a ransom basically to get our computer system 
back. So one of the things that AWWA promotes is working not 
only with agencies that develop those computer tools for 
utilities.
    But working with the agencies that developed the software 
programs that prevent those threats from coming in I think a 
tremendous amount of investment is needed in that regard.
    Mr. McNerney. That's horrifying that you would be ransomed.
    Mr. Donahue. Well, we were just glad we could buy it back.
    Mr. McNerney. Wow. Could you elaborate, Mr. Donahue, on 
some of the way the federal money is leveraged?
     Mr. Donahue. Oh, sure. So one of the things that has been 
spoken about quite a bit here this morning is the SRF programs 
and WIFIA as a new financing tool.
    And for every one dollar that is invested in the WIFIA 
program or is put in the president's budget or in the Congress 
budget you could get $60 in loans for those utilities.
    So using low-interest money from the treasury and being 
able to leverage that is something that will be very valuable 
to utilities going forward as we continue with our 
infrastructure investment.
    Mr. McNerney. Thank you.
    Mr. Olson, could you talk a little bit about the weak 
enforcement problem?
    Mr. E. Olson. Sure. We have been concerned about this for 
some time and, frankly, the budget cuts are going to make it 
worse. The problem is that there are literally tens of 
thousands of violations every year of the Drinking Water Act 
and a lot of those are not major violations but there are a lot 
of health standard violations, literally thousands of health 
standard violations ranging from lead to microbiological.
    And unfortunately a lot of those are never enforced 
against. There is no formal enforcement. We found that 3 
percent of the violations actually faced any penalties.
    And we are not saying that every single violation requires 
a penalty or something like that. But what we do need is a cop 
on the beat, a clear signal that if there is a violation that 
there will be consequences, especially if it is an ongoing 
serious one and EPA's own data shows that even the highest 
priority violations they are not getting around to enforcing 
nor are the states in many, many cases.
    Mr. McNerney. Simple yes or no: do you think it is a matter 
of over regulation?
    Mr. Donahue. I think it is a matter of under regulation and 
under enforcement.
    Mr. McNerney. Thank you.
    Mr. Chairman, I yield back.
    Mr. Shimkus. Gentleman yields back his time.
    Chair now recognizes the gentleman from West Virginia for 5 
minutes.
    Mr. McKinley. Thank you, Mr. Chairman and DiLoreto.
    I was there speaking--I am a fellow of the American Society 
of Civil Engineers. Fifty years now I've been a member and----
    Mr. Shimkus. How long? Can you say that again? How long?
    Mr. McKinley. That's 50 years.
    But anyway, having said all that, I am fascinated with a 
lot of this presentation and you all have done a great job on 
that.
    But I get into some other issues that I want to follow back 
up with the SRF program has been something that is been, you 
know, much dear to me and I know a few years ago, about three 
years ago the administration slashed that by half. They had to 
transfer that money to educational processes rather than--so I 
am glad we were able to get that restored.
    But the AGC is still putting out in its literature that 
Congress is still cutting back on the money to the SRF. So my 
question in part is if we can restore it and, Mr. Chow, I 
particularly like you saying double the amount of money goes to 
SRF.
    You don't get objection from me on that. But my concern I 
would have and voiced over the years has been how do we do a 
better job allocating the SRF money to rural communities?
    Because when I go back to my area, I hear that time and 
time again it is the larger cities getting the money and 
everything we have been able to do confirms that.
    So what would be the steps we should take here in Congress 
to put our foot down a little harder on getting this SRF money 
to rural communities?
    Mr. Chow. Well, certainly. The SRF fund, it's really more 
focused on the smaller municipalities and I will answer it this 
way--that many of these rural areas or small towns and all that 
they are lacking what I call the technical assistance. So that 
means, unlike Baltimore City where we have a good number of 
engineers that----
    Mr. McKinley. Isn't that what we did just a couple years 
ago? We provided more technical assistance but we didn't 
increase the budget. So all we did was put more people in the 
queue to get the same amount of money.
    Mr. Chow. Right. But the thing is that I think we as 
utilities, as colleagues, and then I think there is a 
responsibility of us, meaning utilities--large utilities 
providing assistance to those smaller municipalities and 
smaller communities from the technical assistance perspective 
for experience, lessons learned.
    I think that will go a long way. I mean, if you don't have 
a project plan designed, what good is SRF? You got to get to 
that stage so you can tap into that.
    Mr. McKinley. Let me see how it goes. I've got a couple 
other quick questions as well.
    We know they've had the problem in the West and it's been 
the lack of water in the West--the drought they've had for 4 to 
5 years out there.
    I know it's not quite your testimony that you all were 
talking about but is the AWWA or the ASCE--is anyone out there 
talking about ways that we could replenish the aquifers in the 
West?
    Is there anyone talking about that? Because I know there 
have been some reports in the past and we are ready to work on 
that if by putting some water lines out and just replenishing 
the aquifers in the West by using the Missouri or the 
Mississippi.
    Mr. Kropelnicki. Yes.
    Mr. McKinley. Thoughts, please.
    Mr. Kropelnicki. Good question, Congressman.
    A couple thoughts on that. One, we have had a lot of rain 
this last year. It's been actually one of the wettest and 
largest amount of snow possibly in the last four decades.
    The other thing I would say to when we talk about 
conservation, California's done a great job with conservation. 
I know for our customers we reduced consumption 27 percent in 
about a 3-month period and then we have been able to maintain 
that.
    The real problem in California is the fact that you have a 
population of almost 40 million people and a backbone that the 
state owns was put in place in the '50s and '60s when the 
population was about 11 million people.
    So the drought highlighted the need for more storage. Right 
now in California the reservoirs so you have a lot of runoff 
happening where that water is running off into the ocean.
    So it's really a long-term planning scenario. I think 
you've heard that theme about asset management. It's the same 
thing I think with the state.
    California has taken some big steps in terms of ground 
water adjudication. What you----
    Mr. McKinley. OK. I'd like you, if you could--again, 
running out of time here--if you could get back I'd like to 
know more about it because I think the idea of replenishing 
aquifers could be very good----
    Mr. Kropelnicki. Yes.
    Mr. McKinley [continuing]. For other than California. The 
less California can get to all of them--is the desalinization. 
I know we just had a hearing yesterday about graphene is a 
product that could very well be part of the solution in 
desalinization of water to give us more of a supply. Any of 
your associations dealing with the graphene as part of a 
filtration process? I am seeing no, it looks like, on that.
    I've got one more question. I'll put it in the record. 
Thank you all very much. I appreciate it.
    Mr. Shimkus. I thank my colleague. Gentleman's time has 
expired.
    Chair now recognizes the gentleman from California. I was 
looking at my list. We have got McNerney, Matsui, Peters, 
Ruiz--four Californians right in a row.
    So but it is Mr. Peters, and you're recognized for 5 
minutes.
    Mr. Peters. Thank you, Mr. Chairman.
    First, I'd like to say thanks for having the hearing today. 
We have heard from witnesses about aging infrastructure, wasted 
water due to leaking pipes and water main breaks, overall risks 
to the quality of drinking water.
    We have seen that in Flint. I had the opportunity to travel 
there last year and see it up close. Near my district in San 
Ysidro, California, we saw similar types of lead, copper, metal 
contamination in the drinking water and a lot of concern in our 
communities.
    Actually, to help community water systems be better 
prepared to protect drinking water from a variety of threats, 
aging infrastructure, industrial activity, the effects climate 
change or security threats, I introduced a bill today with some 
of my colleagues on the committee, the Secure and Resilient 
Water Systems Act, and that bill will direct water systems to 
assess these kinds of threats with guidance from the EPA, then 
establish grants to provide communities who are at risk and 
develop more innovative solutions to use water more efficiently 
and to support the need to keep our community safe.
    Parenthetically, my own community is involved in a 
aggressive recycling effort to keep water from going into the 
ocean from our households.
    I want to ask Mr. DiLoreto, because in all of this we think 
very much about how we measure success, and you did a report 
card and gave us a bad mark.
    And we would like to know how do you think we should frame 
our remediation plan? How do you think we should--is there some 
sorts of priorities you have, measurements you have that would 
tell us we are doing well and also that would help us with 
accountability to our constituents?
    Mr. DiLoreto. Right. Well, if you look at our report card 
we come out with these eight categories that we graded in. Part 
of it is funding and let's be real, the biggest area is that we 
are under investing in our water system at all levels.
    Mr. Peters. There seems to be a consensus about that here.
    Mr. DiLoreto. So the fact is we need to invest greater, at 
your level, to things that we are going to do as a nation----
    Mr. Peters. Right.
    Mr. DiLoreto [continuing]. That cover whether you're in 
Alaska or whether you're in Florida. At our level, we need to 
do things that take care of the pipe system.
    If you talk to one of our colleagues that runs the water 
system here, the first dollar he gets goes for water quality 
and if he has any money left over he replaces the pipes.
    Mr. Peters. So thinking about that from a national 
standpoint, do we have sufficient information from water 
testing to know where risks are that we would have to address 
first?
    Mr. DiLoreto. We have information from the contaminants 
that we know about through the EPA program. That's how we 
provide safe drinking water. Emerging contaminants continue to 
occur and then we work through a way to do that.
    Right now, we meet--our goal to meet the Safe Drinking 
Water Act from EPA.
    Mr. Peters. Do you believe that the testing part is 
sufficiently funded?
    Mr. DiLoreto. Well, we do that at our own agency. So I can 
only speak for my own.
    Mr. Peters. OK.
    Mr. DiLoreto. And we believe that it was sufficiently 
funded to do the testing we were required to do and then some 
above and beyond that so we can ensure our customers----
    Mr. Peters. When we think about under funding, we are 
thinking mostly about pipes, it seems like.
    Mr. DiLoreto. Well, yes, exactly. Our report card doesn't 
look at the source water. It looks strictly at the physical 
infrastructure. So the underfunding that we report talks about 
underfunding in pipes, underfunding in any physical assets at a 
water treatment plant, pumps and so forth.
    Mr. Shimkus. Would my colleague, can I----
    Mr. Peters. Yes, sir. I'll yield.
    Mr. Shimkus. Mr. DiLoreto is with the engineers. I think 
some of these questions are good questions to ask the 
operators--Mr. Donahue, Mr. Chow and Mr. Kropelnicki--because I 
think you're onto a point. What other things need to be used, 
and so I just want to throw that in there. I am sorry for 
interrupting you.
    Mr. Peters. Oh, no. Thank you, Mr. Chairman.
    I am thinking systemically from our perspective as a 
federal government. Suppose we gave these folks and their 
affiliates the money that they said they needed. I am not sure 
that will be easy. That only took two seconds to say.
    What would we expect to see? How would I measure in 5 years 
that the systems are doing the right things with the money? I 
am asking you, Mr. DiLoreto, because you're the teacher.
    Mr. DiLoreto. Well, clearly, what we would say is a grade 
of B means condition is good. OK. You don't see the 240,000 
water main breaks a year anymore. You're going to see some. 
That's inevitable.
    Mr. Peters. Yes.
    Mr. DiLoreto. But you're not going to see that anymore. We 
start seeing our water quality and our pipe systems are both in 
that good condition. Condition's good. Funding is good. 
Capacity is good.
    Mr. Peters. So you'd look at the number of water main 
breaks, maybe miles----
    Mr. DiLoreto. Or measurement.
    Mr. Peters [continuing]. Miles of pipes replaced?
    Mr. DiLoreto. That's right. We'd also be looking at the--we 
don't make this data up in the report. We get published data.
    Mr. Peters. Yes.
    Mr. DiLoreto. It's from somebody else. We analyze it. We 
would start seeing that number that EPA talks about going down. 
We know that we fund it. You'd see reports from these agencies 
that would say yes, I've got enough revenue.
    Mr. Peters. How about numbers of people exposed to metal 
contamination? That would would seem like a priority, too.
    Mr. DiLoreto. It would be, although we don't measure that 
in our report----
    Mr. Peters. Oh, OK.
    Mr. DiLoreto [continuing]. Because, again, we are looking 
strictly at physical assets.
    Mr. Peters. OK. So for me, we did a whole sewage and water 
replacement thing in San Diego when I was on the city council.
    We used miles of pipes. It seems to me that there has to be 
some sort of accounting for contamination and as a way to 
calculate where you'd start.
    I won't take much more time, Mr. Chairman, but I would just 
say that when I went to Flint I think the thing that amazed me 
was the level of indifference to it from the Congress--I've 
dealt with a lot of contamination issues and some are worse 
than others but about the worst is metals and children--heavy 
metals in children under six is about the worst contamination 
you can have because it's so deleterious and so permanent, and 
I would just suggest to my colleagues that starting with that 
kind of contamination would be the place where we'd start to 
focus on replacing pipes. And I thank you very much for being.
    Mr. Shimkus. Gentleman's time has expired. Chair now 
recognizes the gentleman from Michigan, Mr. Walberg, for 5 
minutes.
    Mr. Walberg. I thank the chairman and thank the panel for 
being here. Mr. Ellingboe, let me ask you for your thoughts on 
how we incentivize integrated asset management across roads, 
drinking water, sewer, storm water management, streamline 
investments and ensure proper planning investment and 
maintenance over the life of infrastructure.
    Mr. Ellingboe. Thank you, Mr. Chair and member, for that 
question. I think one of the most critical aspects is 
supporting training for water systems and for water operators 
and that really is a critical part of the job.
    In Minnesota where we see difficulties with asset 
management it's often the smallest systems, the medium-sized 
systems where water operators may have multiple duties even and 
having the time and attention to be able to think about asset 
management, think about what sorts of financial investments are 
needed, what sorts of technical changes might be needed to 
their system.
    OK. At any rate, that support for operators and systems to 
have the training needed to really identify and recognize what 
it takes to manage their systems adequately, financially and 
technically is crucial and that is where things like the set 
asides have been important for providing support to training 
efforts from rural water systems or associations for operators, 
et cetera, and where the states can have the opportunity also 
to work with operators and provide technical assistance to help 
them with that. So----
    Mr. Walberg. Would there be any reason to make integrated 
asset management a requirement to receive funding?
    Mr. Ellingboe. I think the merits--certainly, that would 
not only promote it and provide interest for operators in doing 
that but it would provide the states with the backing, so to 
speak, to require that of the systems as they develop these 
plans. And so, certainly, this asset management piece is so 
important for the long-term life of the systems that that could 
be part of support for seeing that done.
    Mr. Walberg. Thank you.
    Mr. Chow, how can we ensure transparency in rates and 
system needs in order to determine investments?
    Mr. Chow. Well, thank you for the question.
    First of all, maybe I'll circle back and address some of 
your first questions about integrated planning framework 
because that sort of threads into your second question.
    Mr. Walberg. You've got the mic. I'll take the answer.
    Mr. Chow. Well, I think the integrated planning framework, 
first of all it's understanding your assets to ensure that you 
are looking at things more holistically.
    You mentioned about water. You mentioned about the sewer. 
You mentioned about the storm water and so on, all that.
    And Baltimore is very fortunate. I am probably one of the 
first that actually came up with a EPA integrated planning 
framework document where we look across not only the sewer 
versus storm water under the current EPA, you know, integrated 
planning framework definition.
    We expanded that to water as well. So you got to look at 
things holistically. So when you talk about funding you got to 
make sure you provide the funding to the ones that yield the 
most benefits.
    And, clearly, you don't have enough money to do all of it. 
You have to start from somewhere and one of the things we talk 
about how do we reduce the water main breaks over time is that 
you can't just go out and start replacing water mains. You got 
to sort of identify where is the most vulnerable piece and then 
go after those.
    And through those sound asset management methodology and 
looking at things holistically you begin to have a good 
planning framework in terms of how do you attack this so-called 
infrastructure crisis that we are facing because you can't bite 
on this elephant all at one time. You got to take one bit at a 
time.
    Mr. Walberg. Thank you. Yield back.
    Mr. Shimkus. Gentleman yields back his time.
    The chair now recognizes the other gentleman from 
California, Dr. Ruiz, for 5 minutes.
    Mr. Ruiz. Thank you. Thank you, Chairman.
    I want to follow Mr. Peters and his concerns for the 
public's health. As a physician, I understand the direct link 
between our nation's drinking water quality and the health and 
well-being of the people that I serve and that we all serve.
    Water is a fundamental element that everyone regardless of 
political party, regardless of social status needs to survive. 
So improving our nation's water delivery infrastructure is 
crucial to improving our nation's health.
    In California, 85 percent of the community water systems 
tap groundwater sources to supplement their drinking water 
supply and deliver water to more than 30 million people.
    But many ground water basins throughout my state and across 
the country are contaminated, as we all know, by both naturally 
occurring toxins like arsenic and hexavalent chromium as well 
as human causes such as leaky septic systems.
    The State Revolving Fund, or SRF, is a critical tool that 
enables water agencies to build treatment systems or remove 
aging septic systems.
    In my district, the Mission Springs Water District has 
utilized more than $10 million in SRF funds for its groundwater 
protection project to remove more than 2,800 septic tanks and 
install more than 33 miles of sewer line.
    This project is critical to protecting the groundwater 
supplies across the Coachella Valley and may not have been 
possible without the SRF.
    But not all communities even have access to treated water 
systems. Families in many vulnerable and rural communities like 
Mecca and Thermal, which I represent, where I grew up, rely on 
private wells that can have levels of arsenic more than 10 
times the national legal limit.
    These families are forced to buy bottled water because they 
can't drink the water from the tap and this is simply 
unacceptable.
    So we owe the American people more than just debate on this 
critical issue. Clean drinkable water should be a priority for 
every community across America because it affects everyone 
regardless of your political party or politics.
    So we must act to ensure our water delivery infrastructure 
is not only up to date but also reaches every community in 
America. In terms of the public health, the septic tanks are 
above ground.
    With a little rain even in the desert where I live and 
represent and grow up, those septic tanks can overfill and 
overrun onto the unpaved dirt area where children and the 
elderly and everybody else play and walk and going to school. 
So you can imagine we have a lot of under developed areas in 
our nation all across rural America.
    This is for Mr. Olson. You mention in your testimony that 
deferred maintenance of our drinking water systems is a ticking 
time bomb that threatens the public's health.
    So what are the health impacts of drinking water 
contaminants such as arsenic and chromium and can you elaborate 
on the reduced treatment costs for people if we protect water 
sources?
    Mr. E. Olson. Yes. Well, there are several contaminants 
that are fairly common. You mentioned two of them--arsenic and 
chromium, especially chromium. Hexavalent chromium is one that 
we are worried about.
    Arsenic is fairly widespread. EPA reduced the standard down 
to 10 parts per billion a little over a decade ago, I guess it 
was.
    It's widespread in California and many other communities. 
The health impacts of a lot of these are cancer is one of the 
risks. We are, obviously, worried about lead being a widespread 
contaminant that is affecting a lot of communities. It's not 
just Flint or East Chicago, Indiana. There are many other 
communities that have a lead problem. And we believe that it's 
really important to invest in this.
    You mentioned rural communities. We are seeing very 
significant proposed cuts to deal with rural community water. 
For example, a $500 million cut was proposed in this budget for 
the USDA rural water program.
    Mr. Ruiz. So those residents in the central part of 
America, in rural America, are going to feel the biggest burden 
of this budget----
    Mr. E. Olson. Exactly, and----
    Mr. Ruiz [continuing]. In terms of their drinking water?
    Mr. E. Olson. That's right, and then obviously they are 
also proposing cuts in the Mexico border program to zero that 
out for water. Also, the Alaska native village program, zeroing 
that out and many other programs.
    Mr. Ruiz. So rural communities are going to get duped once 
again?
    Mr. E. Olson. We are very concerned.
    Mr. Ruiz. Yes.
    Mr. E. Olson. Those are where the health risks often are 
worse.
    Mr. Ruiz. Yes. It's unbelievable but it's true and I see it 
in my rural communities as well.
    I got 10 seconds so I'll refrain from asking another 
question and go ahead and give the mic back.
    Mr. Shimkus. I thank my colleague and Chair now recognizes 
the gentleman from Texas, Mr. Flores, for 5 minutes.
    Mr. Flores. Thank you, Mr. Chairman, and I thank the 
gentlemen for joining us for this important hearing today.
    I'd like to start with Mr. Chow. Mr. McNerney started with 
a question for the entire panel where each of you said that 
municipal financing tax exemptions were very important.
    And so, Mr. Chow, I'd like to dig into that a little bit. A 
lot of us, at least on this side of the aisle, would like to 
see a comprehensive tax reform package passed this year and 
what I'd like to ask you is what tax reform components are 
important to drinking water infrastructure financing and why.
    Mr. Chow. Well, I mean, certainly, maintaining the 
municipal bonds being tax exempt is going to go a long way. I 
mean, I mentioned in my testimony that our 6-year program is 
about $2 billion and most often is going to be funded by bond 
markets and we are going to have to go to the bond market and 
borrow that money.
    Now, we do get some SRF from our state. But in relatively 
comparing to the overall needs in the SRF it just doesn't go 
far enough.
    Now, certainly, with the complement of WIFIA, it's going to 
be another tool that we are exploring in terms of availability 
to us on larger projects. When we talk about the 1.8 million 
customers and so on all that, our projects generally are larger 
in nature and the WIFIA is going to go be very helpful from 
that perspective.
    Mr. Flores. Thinking outside the box for a minute, We 
talked about muni finance and WIFIA and SRF. Just think outside 
the box for a minute. Is there anything else that would help?
    Mr. Chow. Well, certainly, no one has mentioned P3, which 
is public-private partnership.
    Mr. Flores. I know where I am trying to go, yes.
    Mr. Chow. That is an area that is a tool in our toolbox. So 
in terms of financing our infrastructure, we go for state 
grants.
    Then we go for SRF. Now WIFIA is available to us and, 
ultimately, leveraging the private dollars in terms of our 
infrastructure needs because the fact that we can't continue to 
raise water rates at the pace that we have been raising water 
rates, particularly in Baltimore with the population 40 percent 
is under so-called the national meeting household income level.
    So leveraging the private dollars, negotiate terms more 
perhaps more favorable in terms of length of the payback 
periods, and so on and all that. Those are the out-of-the-box 
sort of thinking and has to be an avenue for us.
    Mr. Flores. Thank you. That's helpful.
    Mr. Kropelnicki--I hope I got close on that--ASCE has 
talked much about the true cost of water in past reports and we 
know that water rates generally not only pay for operation and 
maintenance but long-term upgrades and expansion of the water 
system, or at least they are intended to do that. How do you 
set your rates to cover all of those costs?
    Mr. Kropelnicki. Sure. That's a very good question, 
Congressman. Thank you.
    We practice full cost for service rate making. So our state 
regulator, the public utilities commission and our largest 
operations in California does a very good job where we 
basically put costs in the bucket.
    So you have operating costs--things that are expenses. You 
have investment costs--things that go into rate base. There is 
an authorized rate of return that we are allowed to earn those 
investments.
    So you add those things up. Cost of service plus your 
investment gives you a revenue requirement. That revenue 
requirement divided by your number of units sold gives you a 
price per unit.
    And the state regulator regulates those things that are in 
those buckets. So it allows us to forecast our costs and they 
come back and then check our costs.
    So all our capital is approved on a project by project 
basis. They review our health results. I am very proud to say 
our company for the last five years has met the primary 
standards, the secondary standards and all the UCMR, which is 
unrelated contaminants for the systems that we operate.
    And it's all under the purview of our regulator who does a 
very, very good job at climbing through our drawers and seeing 
how we operate as a company.
    Mr. Flores. How do your rates generally compare with others 
in your area?
    Mr. Kropelnicki. That's also a very good question and that 
is where it gets a little more complicated, and it does for the 
following reasons.
    One, each water source is different and each water source 
will have a different type of treatment requirement and the 
price of that treatment varies dramatically.
    So that'll cause variation in rates. The other thing that 
causes variation in rates are things like for a investor-owned 
utility we pay taxes. We don't really rely on tax-exempt 
financing.
    We are required, under generally-accepted accounting 
practices, to fund our health and welfare plans, including our 
pension. So it's really full absorption costing, wherein 
municipal systems they follow a government or a GASB standard 
for accounting, which is really different than ours.
    So when you normalize all those things out, our rates are 
very competitive. But when you don't have them normalized out, 
they could sway dramatically. But it all starts with that water 
source and looking at what's required for the treatment.
    Mr. Flores. Thank you. Sorry I've gone over, Mr. Chairman. 
I will say as a CPA, our government accounting standards leave 
much to be desired.
    Mr. Shimkus. Texas and California. So now we will turn to 
the other Texan, Mr. Green, for 5 minutes.
    Mr. Green. Thank you, Mr. Chairman, and I have a lot of 
questions. I won't have 5 minutes to do them all in but be glad 
to submit the questions.
    My first one is Mr. Olson. In your testimony you mentioned 
the need to pay special attention to the needs of lower income 
and disproportionately affected communities as part of your 
water infrastructure rebuilding program.
    I represent a district that has significant amount of 
unincorporated area. The city of Houston, we try to partner 
with these unincorporated areas. We have in Texas what we call 
municipal utility districts and this provides water to tax 
based on that.
    But we also have private water companies--I know someone on 
the panel represents those--who some of their rates are those 
in unincorporated are extremely high.
    So we try to partner with the state to pay the 
infrastructure costs and then they will hook up to the city of 
Houston's systems and pay the monthly bills. Could you describe 
the characteristics of a disproportionately affected community?
    Mr. E. Olson. Yes. It's a big issue because we are seeing 
this across the country. Flint is not the only place that has 
this problem. There are a lot of small towns and rural areas 
that have the problem as you're suggesting in your district, 
Mr. Green.
    There is a definition that is in the Safe Drinking Water 
Act for disadvantaged community. The states will then put a 
finer gloss on that as to what it means exactly.
    But, basically, if you've got a fairly low income community 
that is where you want to target those resources most because 
they can least afford it and as we have heard full cost 
accounting for water can cause rates to go up and that is 
where, I think, you want to make sure you're dealing with the 
lower income folks and making sure that you're targeting 
resources to them and to the infrastructure there.
    Mr. Green. Well, in this case, neighborhoods that are 
covered or maybe surrounded by the city of Houston and they 
will not annex them because, one, it would be such a drag 
because their property tax base is not near enough to pay for 
the infrastructure and that is one of our--and low income, 
which are throughout the country including Houston, Harris 
County, it's not as bad as some of the parts of Texas where we 
have colonias. People actually bought houses. There were no 
septic systems, no water systems and they ended up drilling 
their own wells and they become really a problem. South Texas 
and even parts of east Texas does that. Is the Safe Drinking 
Water Act something available for those type of communities?
    Mr. E. Olson. Well, I actually mention the colonias in my 
testimony. It's a serious concern in Texas and a lot of other 
areas but especially acute there.
    The Safe Drinking Water Act does actually have a colonias 
program that needs a lot more attention, a lot more resources.
    I think the cut in the rural utilities service budget of 
$500 million that was just proposed is really going to hurt 
efforts to try to deal with that as well the elimination of the 
Mexico border program that has been proposed in the EPA budget.
    Mr. Green. In your testimony you mention an idea of 
creating a low income water assistance program similar to 
LIHEAP, which also took a hit in the president's budget.
    Can you go into greater detail on how this program would 
work and do we need to do authorizing legislation to do that?
    Mr. E. Olson. A quick answer is--there are a couple ways 
you could do it. One is much like LIHEAP, which would be 
essentially federally funded with some state matching money.
    That would be a preferable way to do it. You would 
certainly need federal authorization for that.
    Local utilities have done this. EPA did a very interesting 
review of what some of the states and localities are doing. 
Some have been very progressive in dealing with these issues--
the affordability issues--and I can provide that for the record 
if that would be of interest.
    Mr. Green. But, again, it would be a partnership similar to 
federal government, state government, even the local community 
pay----
    Mr. E. Olson. Exactly.
    Mr. Green [continuing]. A share but pay something they can 
afford.
    Mr. E. Olson. That's right.
    Mr. Green. Mr. DiLoreto, I want to start with does your 
investment in drinking water infrastructure compare to the D? 
Is it safe to say that there are more projects in need of 
funding and what kinds of projects are these?
    Mr. DiLoreto. Well, it's absolutely true that there are 
more projects in need of funding. We look--it appears we have 
about one-third of the money that is needed to make--to bring 
our water system up to a grade of B.
    Now, we don't look at individual projects. We are looking 
at the state of the industry. But throughout the industry we 
find city--the special district like I used to work for, every 
one of them, having water infrastructure projects that are not 
getting built with us.
    Water mains being replaced and repaired, whether it's pump 
stations that aren't getting repaired and replaced. We have 
about a third of the money between what we are getting now in 
SRF, between money we are generating as utilities to make that 
happen.
    Mr. Green. Thank you, Mr. Chair, and thank you for holding 
these hearings.
    Mr. Shimkus. Yes, this hearing is making me thirsty so I 
have been drinking a lot of water.
    The chair now recognizes the gentleman from Georgia for 5 
minutes.
    Mr. Carter. Thank you, Mr. Chairman, and thank all of you 
for being here. I appreciate this very much.
    I have to share a personal story with you. I was a mayor of 
a city way back when and I was mayor from 1996 to 2004. I 
started when I was 10 years old.
    But anyway, fascinating. When I was in pharmacy school I 
never realized that I would know so much about water and sewer 
because when you're the mayor of a growing city like I was--I 
refer to this as the nuts and bolts of municipal government and 
it is.
    For most people, they turn on the faucet and the water 
flows. They flush the toilet and the water goes away and that 
is all they know.
    But when you're the mayor you got to know everything about 
it. In 1996, our population was 4,500. When I left in 2004, our 
population was 19,000.
    You can imagine the challenges that we had, and we did it--
in hindsight I think it may have been easier for us in a sense 
because we had, if you will, a private-public partnership with 
the developers.
    We said yes, we will extend water and sewer lines and we 
will go through the state revolving fund and we will get that 
loan on the city but we need letters of credit from you to 
cover that.
    It was a win-win situation because we were able to get low 
rates that they took advantage of. We were able, a 
municipality, to be able to be assured we were going to get a 
return on it. Otherwise, we'd call in those letters of credit.
    And I was just wondering, have you tried any innovative 
ways like that? I suspect it's going to be a lot different when 
you're talking about repairing water and sewer lines because we 
were growing and we had a different set of challenges that we 
had to deal with.
    But that, in some ways, I think, was advantageous to us. I 
mean, that we could do. But when you've got existing 
infrastructure that seems to me like it would be more 
difficult.
    I want to ask you, Mr. Donahue, you represent kind of a 
smaller municipality. What challenges do you face there in 
getting the funding that you need in order to do these kind of 
projects?
    Mr. Donahue. That's a very good question and thank you. 
It's a rather loaded question too, I might say. As a small 
utility manager, trying to keep rates so that they are 
affordable to our lower income, lower socioeconomic customers 
and still provide the type of resources that we need to provide 
to maintain our capital is a difficult balance to try to 
maintain.
    Back in the day when I had extensive growth we had 
developers and we would put the burden on building that capital 
on the back of the developer and then they would turn that 
capital over to us.
    But now, in trying to reinvest and rebuild that 
infrastructure, that falls solely on the backs of the 
ratepayers and trying to maintain rates so that they are 
manageable is a challenge.
    Now, water rates are still a bargain in most areas and I 
think most of us on the--on the dais here would be hard pressed 
to argue against that.
    But we can't leave the low income folks behind and we have 
to come up with strategies that will help support them while we 
are still growing our infrastructure or maintaining our 
infrastructure.
    Mr. Carter. OK. I've got limited time with so many 
questions.
    I've talked to some of the water managers, if you will, in 
my district and they are telling me a lot of their costs right 
there are with the unregulated contaminants, having to test for 
those.
    Are you all having that same experience?
    Mr. Donahue. We have a groundwater system where I am from 
and we test for unregulated contaminants every 2 or 3 years as 
required by our state agency.
    It's not a real burden for us. We manage that pretty 
easily. Now, we are fortunate that we have good ground water 
but if we had contamination issues then it would be a 
significant cost burden for us.
    Mr. Carter. I want to ask anyone who wants to jump on this 
and this is--I apologize, this may be off a little off of the 
beaten path. But one of the problems we have in my area is that 
we draw most of our water from the Florida aquifer.
    Well, we are right on the edge and we are having saltwater 
intrusions so we are having to use treated surface water. 
Aquifer storage and recovery--any opinions on that?
    Mr. DiLoreto. The agency that I ran for 14 years uses 
aquifer storage and recovery and we would take water in the 
winter time and we were able to inject it into the ground there 
and then we pulled it out in the summer time. So it became 
another reservoir, if you will, for water in the summer time.
    Mr. Carter. Any problems with it, though? It's tough to get 
them to take that step to do it because you feel like they are 
going to contaminate our pure system.
    Mr. DiLoreto. Right. It started out that way but I am from 
Oregon. So, we don't have some of those problems that you have 
perhaps in other parts of the country.
    Mr. Carter. Right.
    Mr. DiLoreto. And so after we worked with our Department of 
Environmental Quality and Health Division we were able to 
actually do a pilot project that showed that it worked quite 
well in----
    Mr. Carter. OK. Can I have one last question real quick?
    Mr. Shimkus. No.
    Mr. Carter. No.
    Mr. Shimkus. Yes. I mean----
    Mr. Carter. One last--seriously.
    Mr. Shimkus. Just a statement. We have got two colleagues 
that have been waiting for a long time. So why don't we just 
no? You can submit it for the record.
    Mr. Carter. OK. All right. I will.
    Mr. Shimkus. Chair now recognizes the very patient 
gentlelady from Michigan, Ms. Dingell, who I know had some 
questions for 5 minutes.
    Ms. Dingell. Thank you, Mr. Chairman, and I thank you for 
holding this hearing because as somebody who comes from 
Michigan, the Flint water crisis obviously stays in everybody's 
hearts and minds every single day.
    And I strongly support increased investment in our drinking 
water infrastructure. That should help our communities replace 
lead pipes and fixtures quickly and safely.
    I am actually even going to ask a question in a minute that 
is unscripted, God forbid we ever go unscripted in these 
hearings.
    But Mr. Olson, first, let me ask you how can federal 
infrastructure investments be used to protect communities from 
lead?
    Mr. E. Olson. Well, there are a couple of urgent needs. One 
is there are about 6 to 10 million lead service lines across 
the country, according to industry estimates, and we are going 
to need to replace those. American Water Works Association and 
others have said we need to replace those. So that is a huge 
need.
    There are also needs for treatment in many communities that 
corrosion control treatment is not up to snuff and we need to 
address that as well.
    Ms. Dingell. One of the issues that we really haven't 
talked about but I am really seeing in our communities, and I 
want to build on the tax question of my colleague from the 
Republican side, is because I had an idea that I am wondering 
if it's something we should pursue.
    Many homes still have lead pipes in my communities and 
nobody's talking about that, and that isn't the system's 
responsibility. But until we get rid of those lead pipes that 
is going to continue to be a crisis and we are trying to map.
    Mr. Chow, I'll ask you this. This is an unscripted question 
so staff's probably having a heart attack behind me. But is 
there something we should be doing to help homeowners be able 
to replace these pipes as well?
    Mr. Chow. Absolutely. On the public side we can have the 
best water bringing to the property lines and then once it gets 
into homes if they have contaminant pipes such as lead pipes 
and so on and all that it's not going to be helpful in terms of 
water quality.
    So we have to think outside of the box. So, for example, 
I'll just introduce an example that we have in Baltimore. So we 
have aging infrastructure just like everybody else and we 
recognize when we have aging infrastructure it's likely the 
homes who are tapping into our system are equally aged.
    So we are actually looking at our extended warranty 
companies out there. They are looking at replacement of pipes 
when there is a failure or something like that.
    Low cost--in our case, we pay--our residents pay about less 
than $10 for water and sewer protection on a monthly basis. 
Now, that is an avenue.
    But then, now, if you sign up a whole community, 
recognizing there is lead pipe in there, again, these private 
companies are going to have to take on the risk. So, again, 
it's become a business decision they are going to have to make. 
But we, on the government side, certainly can bridge that 
conversation.
    Ms. Dingell. And it's real. Take Flint, for example, where 
there are many homes that have lead pipes and there is no money 
for those homeowners to replace it.
    They are walking away from their homes because they simply 
can't afford to replace the pipes. So it's a community issue.
    As we are talking about Flint there is also an issue of 
confidence by consumers. So we just had an incident down river, 
which is part of my community, where the water was brown and 
smelled and a thousand other things. So you can imagine in 
Michigan what any discolorization and foul smelling does to 
people and confidence in their water.
    And, quite frankly, the official communication was poor 
that left many questions unanswered and I ended up calling the 
head of Great Lakes Authority with all the mayors and saying, 
this is unacceptable and what happened wasn't good enough.
    Mr. Ellingboe, what are states doing to provide more and 
better drinking water quality information to customers?
    Mr. Ellingboe. Thank you, Congresswoman. The communication 
part--I need to remember to sit back--the communication part is 
really----
    Ms. Dingell. I don't either. I am always in trouble.
    Mr. Ellingboe [continuing]. Is really a critical part of 
our job as state drinking water programs. And so----
    Mr. Shimkus. Yes, why don't we do this? Just turn yours off 
and use Mr. Donahue's.
    Mr. Ellingboe. OK. Thank you.
     Ms. Dingell. It's the mic. It's not you.
    Mr. Ellingboe. All right. So thanks again. The question is 
what are state drinking water programs doing to help people 
understand some of the aspects or risks associated with their 
drinking water.
    Well, first of all, what's really critical is that we work 
with our communities as they need information to provide to 
their citizens.
    For example, in the issue of lead, I think one of the major 
aspects is helping people understand what they might be able to 
do in their homes to avoid problems or provide filtration.
    We need to have the resources available that are important 
through the set asides from the State Revolving Fund in order 
to be able to provide that technical assistance to provide 
better information from the state level to have as a resource 
for utilities to be able to access.
    And so it's an ongoing challenge to provide effective 
communications.
    Ms. Dingell. And I am out of time. I would like to do more 
questions for the record because I think having just 
experiences there are a lot of issues.
    Mr. Shimkus. You are allowed to do that, without objection. 
So the chair now recognizes the gentlelady from Colorado, Ms. 
DeGette, for 5 minutes.
    Ms. DeGette. Thank you very much, Mr. Chairman.
    I am really pleased you are having this hearing and I hope 
we have more like this. Several of our colleagues on both sides 
of the aisle have pointed out that our constituents all just 
assume that when they turn on the faucet that the water will 
come out and it will be safe and that it will--and that there 
won't be a problem.
    And I think we all agree that you really can't have stable 
communities without safe drinking water. We saw this in Flint 
when the whole system collapsed, when the drinking water 
collapsed.
    And this committee has a long and cherished tradition of 
making sure that safe drinking water is a reality for most 
Americans.
    And while the Safe Drinking Water Act is not perfect and we 
have to update it, it really has been a tremendous success over 
the years because it established national drinking water 
regulations for toxic contaminants.
    It funded urgent drinking water infrastructure projects in 
all 50 states through the revolving fund and it set up a 
framework of federal-state collaboration to protect drinking 
water resources under the underground injection control 
program.
    So I think it's really been a success. It has been a model 
for collaboration with the state and federal government, which 
I think has really been helpful.
    And I have got this bill called FRAC Act and what my bill 
would be to ensure that when we do hydraulic fracturing, which 
is a big issue in Colorado and many other states--that we also 
comply with the Safe Drinking Water Act to make sure that 
fracking is not contaminating our drinking water. That was, for 
some reason, in the Energy Act of 2005 exempted and I think 
that the Safe Drinking Water Act should cover everything.
    Now, having said that, I just want to ask you folks about a 
few of the elements of the Safe Drinking Water Act as we start 
to think about how we are going to update and modernize it, and 
most of these should involve yes or no answers.
    Do you support preauthorizing the Drinking Water State 
Revolving Fund, Mr. Ellingboe?
    Mr. Ellingboe. Yes.
    Ms. DeGette. Mr. Donahue?
    Mr. Donahue. Yes.
    Mr. Chow. Yes.
    Mr. Kropelnicki. Yes.
    Mr. E. Olson. Yes.
    Ms. DeGette. Thanks. Do you think that, given what we have 
heard today at this hearing, do you think Congress should put 
greater focus on getting low income or small water systems into 
compliance?
    Mr. Ellingboe. Yes.
    Mr. Donahue. I agree with that as well.
    Mr. Chow. I agree.
    Mr. DiLoreto. Certainly.
    Mr. Kropelnicki. Absolutely.
    Mr. E. Olson. Yes.
    Ms. DeGette. Now, do you think Congress should provide more 
resources for water systems to improve resiliency and security 
from threats like climate change and terrorism?
    Mr. Ellingboe. Yes, absolutely.
    Mr. Donahue. Yes, ma'am.
    Mr. Chow. Yes.
    Mr. DiLoreto. Yes, it's one of our solutions.
    Mr. Kropelnicki. Congresswoman, I go back to cost of 
service rate making and making sure costs are fully reflected 
in the rates and to the extent it's an under privileged 
community that you use a rate support fund or other mechanism 
to help true that up but it----
    Ms. DeGette. So is that yes?
    Mr. Kropelnicki. It's a conditional or a qualified yes.
    Ms. DeGette. OK.
    Mr. E. Olson. Yes.
    Ms. DeGette. And do all of you support new financing 
options to leverage federal dollars and lower interest rates?
    Mr. Ellingboe. Yes.
    Mr. Donahue. Yes, I do.
    Mr. Chow. Absolutely.
    Mr. DiLoreto. Yes.
    Mr. Kropelnicki. Yes.
    Mr. E. Olson. Yes.
    Ms. DeGette. Thank you. Mr. Chairman, I know I could come 
up with some more provisions that we could all come to 
consensus around but I really think what this shows with this 
wonderful and diverse panel here is that we really can come to 
consensus around changes to the law so that the EPA can issue 
new and common sense standards for contaminants and we also 
need to work on ways to improve compliance versus effective 
enforcement.
    And so with that, I really want to thank all of you. I am 
cognizant that I am the last questioner so I'll yield back. 
Thank you.
    Mr. Shimkus. The gentlelady yields back her time and I 
appreciate her comments. I would just caution be careful not to 
ask for too much.
    I do think there is a lot of areas in which we can agree 
and I am pretty excited. Great hearing. Appreciate your 
testimony. We will be submitting some additional questions to 
you. If you'd get those back we'd appreciate it.
    I ask unanimous consent to the following items being 
inserted into the record: a letter from the National 
Groundwater Association, a statement from the mayor of 
Syracuse, New York, Stephanie Miner, a letter from American 
Rivers and an article from the New York Times dated December 
24th, 2016 on drinking water.
    Is there objection? Hearing none, so ordered.
    [The information appears at the conclusion of the hearing.]
    Mr. Tonko. Mr. Chair?
    Mr. Shimkus. Yes.
    Mr. Tonko. The letter submitted by the mayor of Syracuse is 
responding to some of the advice that was provided today by the 
panel including making use of predictive analytics models so as 
to best understand where the leaks may be, where the frequent 
reoccurrences have been so as to have a better master plan, and 
then sensors also that they are applying for their water 
leaks--a vibration system that then identifies.
    So I think they are doing innovative things in Syracuse and 
it's the kind of message I think I heard here today--to be able 
to use those innovative concepts to be able to stretch the 
dollars required and to best manage with most efficiency as the 
outcome.
    So I thank you for entering it into the record.
    Mr. Shimkus. Can the gentleman tell me whose congressional 
district that is in?
    Mr. Tonko. It is not mine.
    Mr. Shimkus. It is not?
    Mr. Tonko. No, it is in, I think, Mr. Katko's.
    Mr. Shimkus. What a good guy.
    All right. So we appreciate you all attending and I will 
call the hearing adjourned.
    [Whereupon, at 11:59 a.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]

                 Prepared statement of Hon. Greg Walden

    While last year's drinking water crisis in Flint, Michigan 
drew the country's attention to one community; we all have 
communities in our states that have discovered they, too, have 
issues with their water supply and distribution systems. Today, 
our committee begins a review of the financial needs of our 
entire nation's drinking water infrastructure. Of course, we 
need to learn from Flint to make sure the same mistakes are 
never repeated, but it is important that we don't simply 
confine our view to just a few solutions. We need to think 
broadly about all the things that can impact water 
affordability, reliability, and safety.
    The president strongly supports making newer and larger 
investments in our nation's infrastructure and I agree that we 
need to protect these assets. But we must ensure wise 
investments and diversified efforts make sense and make us 
better prepared for our future.
    It is not enough to look at the latest water needs 
assessment issued by EPA--or any other group for that matter--
and conclude the simple solution is directing more federal 
money at the problem. Moreover, the price of pipe or a new 
treatment facility is not the only cost driver--regulations are 
a significant cost and we know that poorly designed ones can 
contribute to cost problems. To the extent that existing and 
new regulations, as well as emerging contaminants are an issue, 
we should not diminish the importance of tools like the 
Drinking Water State Revolving Loan fund, which has helped many 
water utilities afford compliance with federal mandates.
    Obviously, these are serious issues and we must delve 
beneath the surface of these matters and ask hard questions, 
like where the line should be drawn between federal investment 
and local responsibility, what existing practices or resources 
can become used in new partnerships to solve these problems, 
and where can technology be applied in ways that make our 
systems smarter and not just newer.
    I know these are not easy questions, but I know together we 
can find the answers. I want to thank our witnesses for joining 
us today and I look forward to hearing their testimony.


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