[Senate Hearing 115-98]
[From the U.S. Government Publishing Office]
S. Hrg. 115-98
INNOVATIVE FINANCING AND FUNDING: ADDRESSING AMERICA'S CRUMBLING WATER
INFRASTRUCTURE
=======================================================================
HEARING
before the
SUBCOMMITTEE ON FISHERIES,
WATER, AND WILDLIFE
of the
COMMITTEE ON
ENVIRONMENT AND PUBLIC WORKS
UNITED STATES SENATE
ONE HUNDRED FIFTEENTH CONGRESS
FIRST SESSION
__________
JULY 20, 2017
__________
Printed for the use of the Committee on Environment and Public Works
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Available via the World Wide Web: http://www.fdsys.gov
_________
U.S. GOVERNMENT PUBLISHING OFFICE
27-094 PDF WASHINGTON : 2017
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COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS
ONE HUNDRED FIFTEENTH CONGRESS
FIRST SESSION
JOHN BARRASSO, Wyoming, Chairman
JAMES M. INHOFE, Oklahoma THOMAS R. CARPER, Delaware
SHELLEY MOORE CAPITO, West Virginia BENJAMIN L. CARDIN, Maryland
JOHN BOOZMAN, Arkansas BERNARD SANDERS, Vermont
ROGER WICKER, Mississippi SHELDON WHITEHOUSE, Rhode Island
DEB FISCHER, Nebraska JEFF MERKLEY, Oregon
JERRY MORAN, Kansas KIRSTEN GILLIBRAND, New York
MIKE ROUNDS, South Dakota CORY A. BOOKER, New Jersey
JONI ERNST, Iowa EDWARD J. MARKEY, Massachusetts
DAN SULLIVAN, Alaska TAMMY DUCKWORTH, Illinois
RICHARD SHELBY, Alabama KAMALA HARRIS, California
Richard M. Russell, Majority Staff Director
Gabrielle Batkin, Minority Staff Director
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Subcommittee on Fisheries, Water, and Wildlife
JOHN BOOZMAN, Arkansas, Chairman
JAMES M. INHOFE, Oklahoma TAMMY DUCKWORTH, Illinois
SHELLEY MOORE CAPITO, West Virginia BENJAMIN L. CARDIN, Maryland
ROGER WICKER, Mississippi SHELDON WHITEHOUSE, Rhode Island
DEB FISCHER, Nebraska JEFF MERKLEY, Oregon
MIKE ROUNDS, South Dakota KIRSTEN GILLIBRAND, New York
DAN SULLIVAN, Alaska CORY A. BOOKER, New Jersey
RICHARD SHELBY, Alabama EDWARD J. MARKEY, Massachusetts
JOHN BARRASSO, Wyoming (ex officio) THOMAS R. CARPER, Delaware (ex
officio)
C O N T E N T S
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Page
JULY 20, 2017
OPENING STATEMENTS
Boozman, Hon. John, U.S. Senator from the State of Arkansas...... 1
Duckworth, Hon. Tammy, U.S. Senator from the State of Illinois... 3
WITNESSES
Frazee, Mike, recent participant in the Rural Drinking Water
Assistance Program, Rogers, Arkansas........................... 6
Prepared statement........................................... 8
Kricun, Andrew, Executive Director/Chief Engineer, Camden County
Municipal Utilities Authority, Camden, New Jersey.............. 13
Prepared statement........................................... 17
Ellis, Josh, Vice President, Metropolitan Planning Council,
Chicago, Illinois.............................................. 38
Prepared statement........................................... 41
ADDITIONAL MATERIAL
Statement from the American Society of Civil Engineers........... 80
INNOVATIVE FINANCING AND FUNDING: ADDRESSING AMERICA'S CRUMBLING WATER
INFRASTRUCTURE
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THURSDAY, JULY 20, 2017
U.S. Senate,
Committee on Environment and Public Works,
Subcommittee on Fisheries, Water, and Wildlife,
Washington, DC.
The Subcommittee met, pursuant to notice, at 10:02 a.m. in
room 406, Dirksen Senate Building, Hon. John Boozman (Chairman
of the Subcommittee) presiding.
Present: Senators Boozman, Inhofe, Fischer, Rounds,
Sullivan, Duckworth, Cardin, Whitehouse, Gillibrand, and
Booker.
OPENING STATEMENT OF HON. JOHN BOOZMAN,
U.S. SENATOR FROM THE STATE OF ARKANSAS
Senator Boozman. I call this hearing of the Subcommittee on
Fisheries, Water, and Wildlife to order.
We are here today to discuss innovative financing and
funding to address America's deficient water infrastructure.
The purpose of this hearing is simple. Today we will be
discussing America's current approach toward drinking water and
wastewater infrastructure investment.
Many members of this Committee, including myself, often
reference the American Society of Civil Engineers'
Infrastructure Report Card. Currently, the ASCE grades
America's drinking water infrastructure with a D. Wastewater
has a slightly better grade, a D+. That reminds some of us of
our grades in school.
This is not a rural or big city problem. It is not a
Republican or Democrat problem. This is a national emergency,
and we need to find solutions before it is too late. It is one
thing to see these terrible grades on paper, but what does this
actually mean for people in their day to day lives?
Usually, when we imagine life without clean and efficient
drinking water and wastewater, we picture communities that do
not resemble our own. We picture far off countries that do not
have all the blessings of America. Sadly, this could not be
further from the truth.
Currently, an estimated 1.7 million Americans live without
access to clean, running drinking water in their homes. There
are tremendous infrastructure needs in rural America. The
estimated cost to provide improved rural drinking water
facilities totals more than $60 billion, with the needs of
water systems in American Indian and Alaska native villages
accounting for $3.3 billion alone.
We are in a position to address this problem. We have an
Administration that has made infrastructure investment a top
priority. Coupled with the bipartisan support in both the
Senate and the House, we have an incredible opportunity to work
across the aisle and get back on track to making America's
water infrastructure the best in the world.
While we all agree that infrastructure investment is a
necessity, this hearing will look at common sense approaches,
along with new ideas, to fund these important projects so we
can give the American people that basic service they
desperately need and deserve.
A popular funding strategy at the moment is the public-
private partnership or the P3. P3s are a crucial component of
the Administration's proposal and are necessary to get to the
$1 trillion investment in infrastructure that the plan
promises.
While P3s are a great way to fund certain projects, it is
not a magic cure for all. P3s are a great tool in our toolbox,
however, it is important to realize that P3s do not always work
in small, rural States such as Arkansas.
That being said, a combination of innovative financing,
private investment, along with State and Federal funding, such
as loans and grants, is a good way to address the problem. The
problem will not be solved with a one size fits all approach.
We will have to use every funding and financing mechanism at
our disposal, while giving communities the tools to help
themselves to fix the problem.
For a moment, let us picture a small community in rural
Arkansas that is actively trying to update an aging and
deficient wastewater system. This community has a small tax
base, meaning any infrastructure improvements needed would make
the cost of the utility simply unaffordable.
A community like the one I have described has few options
to fund such a project. They could look to the Water
Infrastructure Finance and Innovation Act, the WIFIA Program,
which provides low interest treasury rates to finance water
projects, but this project is not likely large enough to
receive any assistance.
Larger communities using WIFIA to fund large scale projects
will free up the State Revolving Fund, the SRF, for smaller
communities. The Clean Water State Revolving Fund and the
Drinking Water State Revolving Fund provide funding assistance
to repair, replace, or expand wastewater and drinking water
treatment systems consistent with the requirements of the Clean
Water Act and the Safe Drinking Water Act.
This community could also fund the project with tax-free
municipal bonds. Since 1913 bond interest earnings have been
exempt from Federal income tax leading investors to offer low
borrowing rates to communities. In 2016 alone communities
issued nearly $38 billion in municipal bonds to pay for water
infrastructure projects, translating into millions of dollars
in savings for local water rate payers.
Last, the small community I am describing could look to the
Federal Government, along with their State government, for
assistance. There are a multitude of grants available to
communities to help them help themselves.
As you can see, we have many tools at our disposal. The
trick is finding what works for each community rather than a
one size fits all. What works in Rogers, Arkansas, might not
work in Chicago, Illinois. Nonetheless, we have the ability to
fund important projects across the country.
The time to act is now. We have an incredible opportunity
to develop an infrastructure bill that directly addresses
America's drinking water and wastewater infrastructure
challenges.
I want to thank our witnesses today for attending today's
hearing. I look forward to hearing real world examples of the
problems average Americans are facing. I am interested in
seeing what kind of common sense solutions we can all agree
upon.
Now, I will turn to our Ranking Member, Senator Duckworth.
OPENING STATEMENT OF HON. TAMMY DUCKWORTH,
U.S. SENATOR FROM THE STATE OF ILLINOIS
Senator Duckworth. Thank you, Mr. Chairman.
I want to apologize; I have a terrible cold. Yesterday, I
sounded like Chewbacca. Today, I sound like a boy going through
puberty. My voice continues to crack. I am hoping to get to
Kathleen Turner tomorrow. Today it is not so sexy.
I want to thank the Chairman for convening today's hearing.
I want to thank all of our witnesses for participating in this
very important conversation.
Last week Ranking Member Carper and I organized a
roundtable discussion to highlight some of our most pressing
drinking water and wastewater challenges. We discussed 90+
contaminants that EPA currently monitors, including toxins like
lead, mercury and arsenic.
We discussed our most vulnerable populations like young
children, pregnant mothers, and the elderly, whose exposure to
toxins in our water systems can alter the trajectory of their
lives.
We also talked about our nation's water infrastructure,
mostly built in the early to mid-twentieth century with an
average life span of 75 years and the growing backlog of need
in communities across Illinois and elsewhere.
According to the American Water Works Association,
replacing failing or outdated drinking water systems and
expanding capacity to match population growth will cost at
least $1 trillion over the next 25 years.
The American Society of Civil Engineers, as my Chairman
mentioned, highlights $271 billion in wastewater infrastructure
needs with $56 million more people connecting to treatment
plants by 2032.
We are now a full 6 months into the Trump administration,
and we still have not seen any meaningful details about the
President's infrastructure plan. Despite a lot of Campion-style
rhetoric about the need to invest in our infrastructure, the
President's fiscal year 2018 budget provides a net loss--a
loss--of roughly $144 billion across all modes.
The President maintains funding for the State revolving
funds but eliminates USDA Rural Development Program and slashes
EPA's budget by 31 percent.
Just last night the White House announced the establishment
of a Presidential Advisory Council on Infrastructure housed in
the Department of Commerce to make recommendations to the
President regarding funding, support, and delivery of
infrastructure projects across all modes. A report on the
advisory council's findings is due sometime before December 31,
2018. If confusion and delay is the President's goal, mission
accomplished.
Our goal is to enhance safety, protect public health, and
create jobs. Personally, I would like to advance those goals
and put people back to work sooner than later. Our
infrastructure needs are massive, and our communities face
daunting investment challenges to guarantee that what most of
us take for granted--clean, safe, healthy water when we turn on
the tap.
We are here today to better understand the funding and
financing challenges and to work to identify bipartisan
solutions. Whether it be tax exempt municipal bonds, public-
private partnerships, WIFIA, or State revolving funds, I am
firm believer in having the right tools for the job.
Today's hearing focuses on the efficacy of the tools
available to our communities and to identify the gaps where new
tools may be needed or existing tools need to be modified. Each
provides communities with opportunities to address their water
infrastructure needs and each need to be thoughtfully
considered in their context.
Again, I thank the witnesses for their participation in
this conversation. I look forward to listening to your
testimony.
Thank you, Mr. Chairman.
Senator Boozman. Thank you very much, Senator Duckworth.
I am going to introduce Mr. Frazee, who is from Arkansas,
and then go to Senator Booker. He will make an introduction
also.
Mr. Frazee moved in 1990 to be closer to his family and was
in a situation where he did not have running water. In 2014 Mr.
Frazee's mother contacted my office, and we discussed the
problems the family was facing. After talking to Mrs. Frazee, I
put her in touch with the Water Systems Council which was able
to drill wells that brought fresh, reliable drinking water
directly to the home as well as the homes of their neighbors.
As many of you know, this Subcommittee hearing was
originally supposed to take place on June 20, but due to
scheduling conflicts we had to cancel at the last minute.
Unfortunately for Mr. and Mrs. Frazee, they were already on a
plane flying to DC by the time the hearing was officially
canceled. Luckily for me--and I think luckily for us--I had the
opportunity to speak with Mr. Frazee in my office about what
his family and community went through and how their lives had
changed since receiving running water.
Most people who had just gotten reliable and affordable
drinking water would forget about the problem and go on with
their lives, but not Mr. Frazee. To this day Mr. Frazee is
still getting the word out to everyone who is hauling water in
their community. He told me whenever he sees someone hauling
water, he stops and tells them about the available options for
assistance.
Mr. Frazee, I would personally like to thank you and your
family for everything you have done for the area. I would like
to especially thank your wife, Jenny, who was nice enough to
travel to DC again to watch you testify.
Given your personal experience, these are the kinds of
stories we need to get out. There is simply no substitute for
it. Thank you very much for being here.
Senator Booker.
Senator Booker. First of all, I want to thank the Chairman
and Ranking Member for holding this urgently needed hearing.
Most people do not understand the crisis we have in the United
States of America when it comes to the quality of our drinking
water.
The recent Reuters article talked about over 1,000
jurisdictions in the United States of America that have more
lead in their water and more lead in the blood of our children
than Flint, Michigan. We are in a crisis in this country. It is
affecting the next generation, affecting our economic
competitiveness, and affecting the greatest natural treasure we
have, which is not oil or gas, but the genius of our kids.
I am very blessed to have a guy here who is one of the
champions in our State who is doing extraordinary work in a
difficult environment, in a city and county which have had a
lot of challenges with drinking water.
Andy, I want to thank you for coming here. For the record,
Andy is currently the Executive Director and Chief Engineer of
the Camden County Municipal Utilities Authority. Before
becoming the Executive Director and Chief Engineer of the
Camden County Municipal Utilities Authority in 2011 he was the
Deputy Executive Director from 1996 to 2011.
For over two decades Andy has been just an incredible
public servant. He has made a reputation for himself even up to
the northern counties like Essex. He is renown in his field. He
has worked to rebuild and upgrade Camden County's water
treatment plant, implementing really cutting edge changes
including focusing on green infrastructure solutions.
He has utilized green infrastructure solutions in order to
help address the other issues, including Camden's combined
sewer overflow challenges. Andy and his team were able to make
these impressive improvements--I think this is good news to all
of us--while holding user rates steady for 17 years.
Andy currently serves on the Board of the National
Association of Clean Water Agencies as the chair of the Clean
Water Industry of the Future Committee and Environmental
Justice and Community Service Committee. He also serves on the
New Jersey Environmental Justice Advisory Council.
I am grateful that he is here now to contribute to this
Committee. I always say that Washington would be a better place
if more Jersey came down here.
Thank you.
Senator Boozman. Very good. Thank you.
Senator Duckworth.
Senator Duckworth. Thank you, Mr. Chairman.
I am pleased to welcome Josh Ellis, Vice President of the
Metropolitan Planning Council in Chicago.
Since 1934 the Metropolitan Planning Council has worked to
shape a more equitable, sustainable, and prosperous Chicago
land region by developing, promoting, and implementing
solutions for sound regional growth.
For more than a decade Josh has been at the forefront of
the MPC's urban and regional planning efforts through
initiatives like Green Rivers Chicago and Transform Illinois.
Josh is the leading voice in the regional conversations about
storm water management and water supply management, as well as
advancing meaningful surface and water infrastructure
investment policy.
I greatly appreciate his willingness to join us today. I
very much look forward to his testimony.
Thank you.
Senator Boozman. Mr. Frazee, you are welcome to proceed and
present your testimony.
STATEMENT OF MIKE FRAZEE, RECENT PARTICIPANT IN THE RURAL
DRINKING WATER ASSISTANCE PROGRAM, ROGERS, ARKANSAS
Mr. Frazee. Thank you, Senator Boozman.
Good morning, Chairman Boozman, Ranking Member Duckworth,
and members of the Subcommittee.
I would like to express mine and my mother's gratitude for
the opportunity to share our story. My name is Mike Frazee, and
for most of my life, my family lived without access to safe and
reliable drinking water.
It is my hope that through telling my story and struggles
to secure safe, reliable drinking water that Congress will put
in place policies that will bring affordable drinking water to
millions of Americans who live in our nation's rural areas.
Providing rural communities with the resources to install
wells and well systems may be the single most important form of
assistance our Government can provide.
I live in rural, northwest Arkansas, an area of great
natural beauty but where access to basic services like drinking
water can be extremely difficult. Life without drinking water
can be strenuous and stressful. You are constantly worried
about how much water you have and how much water will be
consumed in simple day to day activities.
In my part of the world, people drive every day and
thousands of miles a year to haul water from a coin operated
water machine to their homes. If the water station is broken or
there are bad weather conditions, you might have to go several
days without water. Hauling water consumes many hours a week,
plus tremendous wear and tear on vehicles, and has resulted in
a number of deadly accidents.
My dad, who is a disabled veteran, spent much of his life
hauling water to our home. My mother was constantly stressed
about how much water we had. Many people in our area, veterans,
disabled, single parents, are down on their luck, just trying
to do right and survive. These folks cannot go to a bank and
ask for loan to pay for a well. We do not have the opportunity
to tap into city or rural water systems.
Many of our neighbors struggle to have water. We have seen
single moms taking their children to haul water in buckets. One
also worries about the quality of the water being hauled. The
water station uses a sign that states, ``We cannot ensure the
quality of the water.'' How awful is that?
In 2014 our prayers for a reliable, affordable source of
drinking water were answered. My mother contacted Senator
Boozman, who listened to our story and took action to help our
family and families like ours get drinking water. Senator
Boozman arranged meetings between my mom and the Water Systems
Council that resulted in the drilling of wells that brought
fresh reliable drinking water directly into my mother's home
and eventually into my home and our neighbors' homes.
Wells and well systems are a godsend to rural communities
like mine. We were never going have the resources to pay for a
drinking water treatment facility or run water lines many
miles. However, wells proved to be a very cost effective
alternative for me and my neighbors. The Water Systems Council,
through its Water Well Trust, has provided my parents, myself,
and families across Arkansas quality drinking water at a
reasonable price, through wells.
Last year Senator Boozman worked with Senator Cardin--thank
you, Senator Cardin--to have the Water Supply Cost Savings Act
enacted into law, legislation requiring the USDA and the EPA to
set up clearinghouses with information on the use of wells and
well systems to meet rural drinking water challenges. The Water
Systems Council has proven that wells can reduce the cost of
providing drinking water to many rural communities by over 75
percent.
The 2011 EPA Needs Survey estimated the shortfall in
drinking water funding for small communities at $64.5 billion.
We have seen in Arkansas that wells can significantly reduce
the cost of providing drinking water in many small rural
communities, and Congress should do everything it can to
promote the use of wells in these rural areas. I know first-
hand the importance of safe, affordable drinking water, and
wells are a part of the solution.
Thanks again to Senator Boozman and Senator Cardin for your
work to bring the promise of wells and well systems to
communities across rural America.
I would now like to show you a brief video documenting the
role that safe, affordable drinking water played in
transforming the lives of my neighbors in Arkansas. [The video
is available online at
https://www.youtube.com/watch?v=_GkV4kD7Zyc. The video also is
available in the Committee files.]
[The prepared statement of Mr. Frazee follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Boozman. Very good.
Mr. Kricun.
STATEMENT OF ANDREW KRICUN, EXECUTIVE DIRECTOR/CHIEF ENGINEER,
CAMDEN COUNTY MUNICIPAL UTILITIES AUTHORITY, CAMDEN, NEW JERSEY
Mr. Kricun. Thank you, Senator Boozman.
Chairman Boozman, Ranking Member Duckworth, and members of
the Subcommittee, thank you very much for the opportunity to
appear before you today.
My name is Andy Kricun, and I am the Executive Director and
Chief Engineer of the Camden County Municipal Utilities
Authority in Camden, New Jersey. I also serve on the Board of
Directors of the National Association of Clean Water Agencies,
NACWA, which is a not-for-profit trade association that
represents the interests of public clean water agencies
nationwide.
I sincerely thank the Subcommittee for holding this
important hearing on America's funding shortfall for water
infrastructure. As all the Senators said in their remarks, this
is a very important issue for our country.
Our agency, Camden County MUA, operates an 80 million
gallon per day wastewater treatment plant in Camden City that
services over 500,000 people in Camden and 36 suburban towns in
southern New Jersey. We are deeply committed to our
responsibility to protect the public health and the
environment, as well as to being responsible stewards of our
ratepayers' dollars.
Funding our extensive infrastructure is one of our greatest
challenges as a utility. All clean water agencies around the
country have the same missions which are as follows. One is to
protect the public health, both safe drinking water and freedom
from sewage overflows and backups. Children should not have to
walk through puddles of combined sewage to get to their bus
stops and should not have lead in their drinking water.
Second is to protect our environment and keep America open
for business because without water infrastructure, there is no
opportunity for growth. Infrastructure construction and
maintenance result in jobs. There are challenges but also
opportunities.
In order to do this and meet our mission of protecting the
environment and the public health, we have to reinvest in aging
infrastructure. As Senator Duckworth said, our infrastructure
is old. In Camden City, our utilities are as old as the late
19th century, over 100 years. The average life is only about 70
years, as you said.
We also need to comply with Clean Water Act rules and
regulations and help support a high quality of life in our
community. Our goal as a drinking water utility is not only to
meet our mission of meeting our permit but also to be an anchor
institution in our neighborhoods. That is an opportunity for
clean water utilities. Many utilities across the country are
stepping up to do that.
The need for greater investment in our nation's
infrastructure has already been discussed today. It is very
well known. I agree with Senators Boozman and Duckworth
regarding the D+ grade from the American Society of Civil
Engineers. It is a very serious challenge. There is a
significant infrastructure gap right now.
In addition, we in New Jersey can speak about climate
history. Hurricane Sandy took place in 2012. As a result,
billions of gallons of raw sewage went into the waterways of
New Jersey. There is an infrastructure gap as things stand
today even if the climate does not worsen.
However, as time goes on, this gap will widen because
infrastructure is only aging, only getting worse, and many
predict the climate will worsen. Therefore, there is a
significant gap today, and that gap will only widen. There is a
lot we have to do.
However, on the good news side, there are solutions. I will
propose five solutions that clean water utilities can and want
to be a part of.
First, we have to take it on ourselves and increase
efficiency for our own utilities. We have to be as efficient as
possible. We need to harness the private sector notion of
efficiency and harness that to the public good.
Second, the State Revolving Fund has been so crucial for us
in New Jersey. We are very lucky to have a robust SRF program,
the New Jersey Environmental Infrastructure Trust, that has
helped us with financing.
Third would be additional funding, if possible, above and
beyond the existing SRF appropriation. Fourth would be
additional regulatory flexibility for innovation. Last is that
an affordability program for low income customers would be
really helpful. Those are the five things: increased efficiency
for us, additional funding, additional regulatory flexibility
and affordability programs.
In our agency, we have been working very hard with regard
to efficiency. We implemented an environmental management
system and a very aggressive management program to improve our
efficiency. We also used the State Revolving Fund to rebuild
our entire wastewater treatment plant and ERDA control systems
to make sure we were not having an adverse impact on the
residential community which is only 100 yards away.
We did all this, built our entire plan through improved
efficiency and the State Revolving Fund and were able to hold
our user fee for 17 years. Our user fee in 1996 was $337 per
household per year. Today, it is $352, only $15 a year higher
in 21 years. That shows if we are given the tools, the funding
from the State Revolving Fund plus our own efficiency, we can
do the job and do it in a way without adversely affecting the
rates of our customers and making a positive difference for our
community as well.
This could never have happened without judicious use of New
Jersey's State Revolving Fund which was really critical. We
could not have done it on our own. We could not have done it
with only SRF. We were inefficient; we would not have been able
to do it either. It is the combination of internal efficiency,
plus the State Revolving Fund Program which enabled us to
improve our performance and hold our rates.
Through my role as a NACWA board member, I know our
situation is not unique. Clean water utilities across the
country rely very heavily on the State Revolving Fund. It is
essential for us to do our mission.
We know the era of grants has passed. Federal grants would
always be welcomed. The low interest State Revolving Fund is
very, very helpful. In New Jersey, we are able to get interest
rates at less than 1 percent.
The way this works is that if we are making improvements to
our wastewater treatment plant, we are lowering our operation
and maintenance cost because new equipment uses lower
maintenance cost and lower electricity because of newer
technology. We are lowering our O&M costs, but our annual debt
service is not so great because of the low interest rates and
the 30-year timeframe to pay back the loan.
By borrowing the money, we are able to actually have an
annual debt service that is lower than the O&M savings from the
improvements. That is how we were able to improve our
environmental performance, protect the public health and hold
our rate steady. The help of the Federal Government and the
State Revolving Funds has been essential to helping us meet our
environmental and public service missions.
In addition, we are hoping there will be other
opportunities for funding. As you all mentioned, the
infrastructure issue is really a crisis. More financing and
more funding are needed. Again, I think the State Revolving
Fund is a terrific way other utilities can follow the approach
we took to improve their performance and reduce their costs.
We are also very supportive of other opportunities like
EPA's Water Infrastructure Financing and Innovation Act, the
WIFIA Program. Tax exempt municipal bonds are important.
Leveraging private investment, where appropriate, through
public-private partnerships is important.
We utilized a public-private partnership to build a solar
panel system array that enabled us to reduce our annual
electricity costs by $350,000 per year but also lowered our
carbon footprint significantly. It provides 10 percent of our
plant's electricity.
We were able to do that at no cost. The solar panels were
paid for by the private investor, and we pay 4.8 cents per
kilowatt hour whereas before we were paying 12 cents. It is a
win for the ratepayer, has more resiliency because we have the
solar panels instead of relying on public electricity, and also
reduces our carbon footprint.
Public-private partnerships really can be a win-win where
larger utilities can share resources and financing capabilities
with the private sector and also within our own sector. NACWA,
the National Association of Clean Water Agencies, is working on
a peer to peer initiative in which larger utilities with
greater resources can assist utilities with lower resources and
work together in a peer to peer effort.
We want to not only have efficiency within our own
utilities individually but also within our sector to try to
leverage as much as possible our own resources. In fact, the
utility of Chicago is really a great leader in that peer to
peer effort, Senator Duckworth.
Senator Booker. Andy, before the Chairman interrupts you, I
do not want you to be interrupted by a non-New Jerseyan. You
might want to wrap up your testimony.
Mr. Kricun. Thank you, Senator Booker.
In closing, I want to thank the Subcommittee and Congress
for holding this important hearing. Our clean water industry
must close our infrastructure gap for the sake of our children
and future generations. We can do this work but we do need some
help.
Thank you very much for holding the hearing and for the
opportunity to speak before you. I look forward to any
questions you may have.
[The prepared statement of Mr. Kricun follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Inhofe [presiding]. Thank you, Mr. Kricun.
So people will know what is going on, Senator Boozman had
to do an emergency thing at the Appropriations Committee. He
will be right back. We will see people rotating, and our staffs
are here.
We very much appreciate your testimony.
Mr. Ellis.
STATEMENT OF JOSH ELLIS, VICE PRESIDENT, METROPOLITAN PLANNING
COUNCIL, CHICAGO, ILLINOIS
Mr. Ellis. Thanks for having me today. I am the Vice
President of the Metropolitan Planning Council which, since
1934, has been working on urban and regional development issues
in the greater Chicago region.
The greater Chicago region is certainly the city of Chicago
but also seven other counties with a total of about 280
independent municipalities. The State of Illinois leads the
nation in units of government. We have about 8,000 in the
State. We are not real proud to lead the nation in that, but we
have a lot.
Within those municipalities in northeastern Illinois, we
actually have about 400 independent water utilities. You can
imagine the issues Andy and Mike described playing out in 400
different communities, some with very different demographics,
very different income and economic strata. That is at the heart
of several issues I will discuss today.
As Senator Boozman pointed out, we have lots of tools in
the toolbox for water infrastructure financing. A lot of them
work very well. Like any tool, if you use the wrong tool at the
wrong time, you try to put in a screw with a tape measure, it
does not work very well. The reality is instead of focusing on
innovative financing, we need to figure out effective financing
first to make sure these communities are getting the tools they
need.
We did a statewide survey several years ago of water
utilities and their experience using the SRF. Actually, 30
percent of the respondents told us they had never heard of the
SRF. That could be problem No. 1. Those survey responses were
also very short to read. They did not know the program existed.
Just awareness that the tools even exist particularly in lower
income suburban communities as well as rural communities is a
big issue.
There are plenty of improvements we can make to existing
tools, but there is huge diversion between communities, not
just in the suburbs of Chicago, but throughout the United
States in practices on rate setting, how communities deal with
affordability issues, financial management, accounting, and
asset management.
Communities like Chicago with the staff capacity and
technical know-how to employ best practices largely are doing
so. Right in the city of Chicago right now, we are replacing
water mains that were installed when President Roosevelt was in
office, Theodore Roosevelt. In my office, I have sections of
wooden pipe taken out of the ground in the last couple of
years. It served us well, those trees did.
Many other communities, if they do not have the capacity
and technical know-how to use programs like SRF, are not doing
these sorts of things and are falling further and further
behind. It is not uncommon in our region for communities to
lose 25, 30, or 40 percent of their water through leaks in
their pipe system.
If every time you went home from the grocery store, 40
percent of your groceries blew out the window, if every time
Mike went to fill up a tank of water, 40 percent of the water
poured out on the way home, you would realize you had a
problem. But that is common in our region, communities losing
tremendous amounts of water from leaky pipes.
A lot of communities have no dedicated revenue stream for
storm water management. In addition to water supply issues, a
lot of communities fail to update their rates on any sort of
regular schedule, so they fall further and further behind.
The Federal Government can do many things, whether through
incentives built into SRF scoring, through grants made
available through some of the SRF set aside programs, even
through the basic requirements of the program to encourage full
cost pricing, encourage asset management plans, and consistency
in reporting and budgeting.
In my estimation, the SRF works pretty well. It is just
that a lot of communities do not have access to it. Communities
struggle to do some of the pre-engineering planning that you
have to do. In order to get a loan, you have to submit your
infrastructure plan, your engineering plan. If you do not have
the resources to do that, then you cannot get reimbursed for it
and cannot do some of the preliminary work you need to do in
order to apply for the program.
I am fully cognizant of the need for differences from State
to State. I have lived in five different States in this
country, and I get the differences between them, but there are
best practices being played out in many different States, yet
we have not figured out how to put them all together in one
package in any one State. It might be time for some greater
consistency between State to State use of the SRF programs now
that we have figured out some things that work in these
different States.
At the heart of it, with the SRF and the experience we saw
in the survey that went out statewide, the SRF program, at
least in Illinois, is very slow and cumbersome to use, very
different than trying to go for a bond or even to a private
bank for a loan.
Application times are very long and can screw up
construction schedules. If you are a low income community and
have to retain a private engineering consultant for 18 to 24
months over multiple construction schedules because you are not
getting a response from the State on the SRF, that drives up
costs and can delay your projects. This is not just an Illinois
issue.
However, for all the things we could do just to make the
funding tools work better and have better access to them, I do
not think the money is necessarily the fix to all of these
things. An infusion of funding for cities like Chicago,
Oklahoma City, Little Rock, and some of the bigger places that
have the capacity to take that money in and use it for
infrastructure projects, makes a lot of sense.
The point I mentioned about having 400 independent water
utilities, some of which are very small, many of those
communities do not have the technical capacity, the staffing or
whatever to be able to receive Federal funding, to be able to
apply for it. The issue is governments and the fragmentation of
the system. We have a handful of water sources in northeast
Illinois, Lake Michigan, groundwater, river water, and yet we
have 400 utilities managing these different systems. Many areas
of the country are just like this.
When every municipality has its own utility and that
utility operates essentially as the public works department, a
lot of the decisions that are made are wrapped up in the other
political decisions that municipality has to make. If you are
looking at adjusting water rates but also providing fire
service, schooling, and things, you have to make these
decisions with all these other calculations in mind. As result,
hard choices like rate increases get delayed, infrastructure
projects get delayed, and you end up having 25 to 40 percent of
your water dripping out your pipes.
The fragmentation compounds underlying environmental,
economic, and equity issues if a community--like we have in
many of our suburbs across the country--has lost the population
or lost 10,000 people over the last 20, 30, or 40 years. When
people move to the suburbs, they do not take pipes and pumps
with them when they exit town, so you have a smaller community,
often with a smaller industrial base paying for the same
infrastructure system, the same amount of pipes, the same
amount of pumps, and you are having to squeeze water from a
stone to even pay for it.
Often rates will have to increase to pay for the system
while incomes are decreasing. We have communities in Illinois,
a place like Dixmoor, a small suburban community in the south
side, where the median household income for the year is about
$13,000. Dixmoor clearly has some other problems going on too.
They pay $12.50 per 1,000 gallons of water, which is what a
family of four would consume in about 3 days. In Lake Forest,
where Michael Jordan used to live, the median household income
is closer to $80,000 and they pay $5 per 1,000 gallons.
Senator Inhofe. Mr. Ellis, I would ask that you try to wrap
up.
Mr. Ellis. Absolutely.
There are these disparities occurring here. A lot of it is
the size and scale of these water utilities. As we think about
new funding, the funding is great but getting to the structural
issues of encouraging through different ways these utilities to
start to consider consolidation, to start to consider area so
we can get to some bigger economies of scale and to think
differently about how the money goes out so we are not just
putting it into the ground and fixing some pipes in a handful
of communities but are solving some of these underlying,
fundamental issues.
I am happy to talk more about it in the question and answer
section.
Thank you.
[The prepared statement of Mr. Ellis follows:]
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Senator Inhofe. Thank you, Mr. Ellis.
We will now begin 5 minute rounds of questioning starting
with Senator Duckworth.
Senator Duckworth. Thank you, Senator Inhofe.
Mr. Ellis, I will give you a little bit more time to speak,
but I just want to say that we have indeed come a long way. I
served on the House Oversight Committee during the Flint water
crisis. There, the issue was that they switched the water
source to using the Flint River where the water was of a
different composition.
I remember the first time I took a Chicago architectural
book tour. It is a wonderful tour. If you are ever in Chicago,
take it. It is run by the Architectural Society, and it goes on
the Chicago River.
They very proudly said to me on that boat tour about 25
years ago, we are really proud. This river used to be labeled
toxic; we are just polluted now. That is the source of water
for many communities. That was an improvement, and I thought,
oh, my goodness.
Mr. Ellis, many of us would agree that when addressing
infrastructure needs, we must do our best to tackle our most
pressing challenges full steam ahead. There is also something
to be said about low hanging fruit.
To me, compounding an inventory of SRF best practices and
establishing meaningful asset management policies and fiscal
sustainability plans are common sense approaches to improving
the critical relationship between taxpayers and State
decisionmakers in making the case for infrastructure
investments.
Hard working families in Illinois want to know that before
a single dollar of their money is spent, everything is being
done to maximum the effectiveness of those dollars. I just want
to follow up on what you just talked about. What else can we do
to improve the relationship between decisionmakers and
taxpayers as related to funding opportunities?
Mr. Ellis. Increasing awareness through all communication
channels about the tools that are out there. With all of these
municipals we have, I know one mayor in a suburban area who
actually has a water infrastructure background. A lot of folks
who come to our office are running at the municipal level and
do not have a background in these sorts of things and need to
learn on the job, which is a tough way to do it if you have a
massive water infrastructure system. Increasing awareness of
the tools that are out there and how they can be used is step
one.
One of the other issues is this is not water infrastructure
until we get to a crisis like we see in Flint. It is not
something a whole lot of the average citizens pay a lot of
attention to. If they see rate increases being proposed, if
they see it, maybe then they pay attention.
While we have environmental commissions at the local level
and things like that, you do not have too many public works
commissions of citizens participating in some of the
decisionmaking. That seems like a best practice that also could
be encouraged through the SRF just so people are paying more
attention to it.
The other I think is starting to find ways to decouple
local political decisions from rate setting and somehow make it
more comfortable for people to adjust water rates on a more
frequent basis so they can keep up with infrastructure
backloads so you are not getting a 30 or 40 percent rate
increase every 10 years but see more modest increases, or in
some cases, decreases on a more regular basis so it is not so
inflammatory when this big rate deal happens.
It might improve trust. It might improve the ability to get
things done. A lot of it is just communication because frankly,
this is not an issue that we talk about very much.
Senator Duckworth. Given that, touching on what you just
said about many municipal leaders, especially mayors, coming in
without this water background, many small communities in
Illinois and elsewhere may not have that capacity, expertise,
or resources to deal with the technical challenges and
financing challenges associated with reliably providing good,
clean drinking water and water services.
What suggestions do you have to address the resource issue
whether it is technical expertise or even just resources to try
to apply for an SRF?
Mr. Ellis. Within the SRF program, there is something
called set aside programs that each State is allowed to use
that can take some of the capitalization money that goes in
every year and use it for different kinds of grants. Some
States use those to fund grants specifically for looking at
things like consolidation. Some use them for sort of technical
assistance and staff building at the local level. The States
are using these set asides in very different ways.
The reality is in one State, there might be a program to
encourage consolidation and in another there might not be. It
might be time to start getting greater consistency across the
SRF programs.
The point I was trying to make about starting to consider
consolidation and lumping some of these utilities together so
that they can do things on a larger economy of scale, afford
larger infrastructure projects, and maybe get better bond
ratings, finding ways to incentivize people to just think
differently about the governing structure, the water utility,
would be very helpful. That is not necessarily a rural or urban
thing. That could apply throughout the spectrum.
Senator Duckworth. Thank you.
Mr. Kricun, I just have 10 seconds. Do you want to add
anything to that from your experience, especially with SRF?
Mr. Kricun. Yes. One thing I would say is a peer to peer
initiative is really important. There are clean water utilities
that have experience and are willing to share it with other
utilities. Lining up utilities willing to share the information
with utilities that need resources and information would really
be important.
EPA and NACWA are working on a peer to peer program to try
to connect people with resources with those that need it. I
think that would be of great help, to see that advanced.
Senator Inhofe. Thank you very much, Senator Duckworth.
Let me ask you a question. You seemed to spend a lot of
time talking about the SRF program, Mr. Ellis.
What do you think we could do from here that could change
this program to make it work more efficiently? You both agreed
there are some obstacles out there. Maybe we can overcome
those. Do you have any thoughts about that?
Mr. Ellis. One of the big differences between States--Andy
actually mentioned it, I think--is some States have decoupled
management of the SRF program from whoever their State
regulatory agency is. The loan program is managed by someone
more like a finance authority, someone who is in the business
of issuing loans and is able to operate faster, further, or
whatever. Each State has a different one.
Some States still have the SRF program in their equivalent
of the EPA. In my estimation, that can slow things down. Having
professional financial management staff working on these loan
programs and probably other loan programs not related to water
infrastructure is one of the things that can speed up things.
Again, establishing some best practices and encouraging
States to look at transitioning the program over to being what
it should be, which is a loan program first and foremost, would
be one of the ways you could start to encourage some greater
speed and get these loan programs to function more like going
to the bank to get a loan for a project at your house.
Faster review times and faster times to get the money out
the door would be huge for some of these communities because if
you are applying for a loan and have to retain engineering
consultants or whatever, the costs build up and you are paying
for someone to wait while the other folks review application
times.
Again, the best practices are known in State revolving loan
funds. Maryland has a couple, South Dakota has a couple, and
Texas has a couple. We have not yet put it together into a
perfect package where everyone is more or less doing things
recognized as best practices.
Senator Inhofe. You know, the different States are
represented here. My State of Oklahoma is not unlike Mr. Frazee
and the State of Arkansas. Way back when I was in the State
legislature, before most of you were born, at that time the big
problem was transferring water from one part of the State to
the other part of the State. The eastern part of the State has
plenty of water; the western part of the State has no water.
I have lived with this problem for a long time because my
wife and I have been married 57 years. Her father was chairman
of the Water Resources Board. We have addressed these problems
for a long period of time.
Mr. Frazee, I was fascinated and I am very familiar with
your area. Of course I am in eastern Oklahoma, pretty close to
your home area. I was fascinated by the fact that you took the
time to go out and locate people and help them because you
needed help at one time. You were fortunate in having Senator
Boozman come and be of assistance to you.
Do you want to give us any live examples of what you have
been able to do, just one man out helping other neighbors
resolve these problems?
Mr. Frazee. Anytime I see somebody hauling water, I take my
time to stop, talk to them, and explain my story, give them
some insight to what they need to do, how they need to speak
with Senator Boozman and get the word out.
I think pushing the saving act forward and getting the
financing to get people help is important.
Senator Inhofe. I am familiar with Rogers. Rogers is a
major city.
Mr. Frazee. I know.
Senator Inhofe. It does not take more than 5 minutes
outside of Rogers to be in some pretty remote areas. Those are
the people who have problems. I was shocked to find out that
you did not have a water system when you are within how many
miles of Rogers?
Mr. Frazee. We are probably 5 minutes from downtown Rogers.
It is ridiculous that I drive past the water treatment plant
every day going into town to go to work, to shop, or whatever.
On the sign where they treat the water, they are shipping it to
Washington County, which is the county south of us that has no
impact on our little community there.
Senator Inhofe. Yet, you live in a part of the State of
Arkansas that has an abundance of water.
Mr. Frazee. I live right by Beaver Lake. It has over 1,200
miles of shore front.
Senator Inhofe. I am very familiar with that.
Senator Booker.
Senator Booker. Thank you very much, Mr. Chairman.
Mr. Frazee, I want to thank you. Really, your story is
heroic, and you are frankly showing what it means to be an
American, what it means for citizens to be there for each
other. I am really moved by that.
Folks are not just in communities in Arkansas, but in many
parts of this country, including my State of New Jersey, but I
know we are all in this fight together. As much as I make jokes
about being a Jerseyan, this is the United States of America.
I recently decided to go outside of our State to try to
draw attention to some of these urgent crises because according
to the Census, we have half a million homes around this country
that lack access to hot and cold running water. Most people do
not even realize that. They do not have water running to a
bathtub or a shower or a working flushing toilet. This includes
11,000 homes in New Jersey, but again, this is a national
problem we are all in together.
We formed the Federal Government for the common defense and
for the common security. For us to be a developing nation and
not have this is astonishing to me.
A few weekends ago, I went to rural Alabama to visit low
income African American communities. I found that less than
half the population is connected to a municipal water system.
In famous counties like Lowndes County, where marchers marched
across Edmund Pettus Bridge, it was stunning to me that many of
the families there had no septic systems, no sewage systems,
and had septic systems that failed because of the type of soil
they had, so they just had raw sewage. I was stunned to see
just raw sewage running behind people's homes.
I am the Ranking Member on the Subcommittee on Africa. I
discovered this when I sat down with folks to talk about
neglected tropical diseases. The scientists told me, did you
know that we still have these diseases in the United States of
America? I said, no, that cannot be.
You see parasites that we think of in developing nations
such as hookworm in the United States in poor communities. It
is stunning to me because of our lack of water infrastructure.
This is an outrageous environmental injustice that no child
should be growing up in this situation.
It is disproportionately affecting poor communities. I saw
it in Alabama, so many historically African American
communities.
Mike, your advocacy is profoundly important, and I just
want to thank you. It is important to your community but really
what you are doing is bringing light to a problem of critical
importance to our nation as a whole.
Mr. Kricun, Andy, you are a friend. I want your comment on
something we almost got to the finish line. I am sorry Chairman
Inhofe left because I was going to heap praise upon him for
being such a good partner of mine on so many issues. Many
people confuse us because we look so much alike in the Senate
because I am the Robin to his Batman.
Last year I was able to get the Water Infrastructure
Investment Trust Fund bill and the Water Utility Workforce
Development Program into the Senate-passed WRDA bill, something
I was very proud of. It was done thanks to the leadership of
Senator Inhofe and some of my Republican partners. There was
strong bipartisan support. Unfortunately, those provisions were
stripped out of the final bill by House Republicans.
As I continue to work with my colleagues to continue to
move these important programs across the finish line, I was
wondering if you could describe very briefly how the trust fund
initiative and the work force development programs could have
helped Camden County and frankly, could have helped our
country.
Mr. Kricun. Thank you, Senator.
First of all, in our industry there is a thing called a
Silver Tsunami. People are ready to retire and leave the
industry. In our utility, for example, 50 to 60 percent are
eligible for retirement in 2 to 3 years. We need to look for
replacements. That is the case all across the country with
utilities as baby boomers retire.
Most of our wastewater treatment plants are in economically
distressed communities. That is why the treatment plant was put
there or the plant was put there, and it became that way. No
one wants to live next to the wastewater treatment plant.
We often have to look beyond our communities, our
neighboring communities to find replacement workers because
they do not have the skills or the training.
If we could develop the work force training program, that
would be a tremendous opportunity to actually have people who
live in our neighborhoods work at our water treatment plants,
be the replacement workers and also bring up their
neighborhoods and communities.
I think it is a tremendous opportunity, urban or rural. I
think it is a tremendous opportunity because water treatment
jobs, wastewater and water treatment are good, solid jobs.
There is a real scarcity of replacement workers. Yet, we are
often in communities where people need jobs the most.
The Infrastructure Trust Program is absolutely necessary as
well. Our D+ grade is unacceptable. It is only going to get
worse with time. I strongly support your efforts and the
bipartisan efforts. I hope you are successful this time,
Senator.
Senator Booker. Thank you.
Mr. Kricun. Last, I wanted to say with regard to the poor
communities across the country, rural and urban, you are
absolutely right. That is why the peer to peer effort is really
important. There are utilities willing to share their knowledge
and resources.
The help we need is to identify the small towns or cities
that lack capacity so that we can be matched with them and
assist them. That is help we could really use from the Federal
Government.
Senator Booker. I appreciate that.
Mr. Chairman, this is one of those perfect examples where
we in the United States, whether you live in a rural community
or urban community, we have a common pain, and we must join in
a common purpose. This is the United States of America. This is
a shame on our nation that we have children growing up in these
rural and urban poor communities with such unconscionable
realities.
I am thankful again for the bipartisan work on rectifying
this. Thank you.
Senator Rounds [presiding]. Thank you, Senator Booker.
As you notice, the Chair has moved again. Senator Inhofe
has had to leave to go to another committee. Senator Boozman
should be back shortly.
I have to agree that Senator Booker is correct. He and
Senator Inhofe look an awful lot alike with the exception that
Senator Inhofe's age shows a little bit more occasionally, but
we notice the likeness there.
I am from South Dakota. We have the same challenges
everyone else does when it comes to water and water systems. We
have nine separate Native American tribes on reservations
there. Water quality is critical there. Yet, they are in rural
areas. We still struggle to provide high quality water there.
We have a couple of projects we call rural water systems.
It sounds a lot like what you have been looking at in Arkansas
in terms of well water and so forth. In our particular case, we
have the Missouri River which runs down through the center of
the State with great, high quality water, and we have a very
efficient way of being able to deliver quality water if we can
get it to locations.
I agree it is very, very important. We have seen the
ability of States when they have the resources to coordinate
with rural water systems and provide individuals and local
areas who really want to improve the quality of life, the
opportunity to do so.
Right now we are at time where we have very low interest
rates, long-term low interest rates. It is probably a real
opportunity to look at the ability to bring assets together and
extend, in a long-term payback period, the opportunity to
invest in infrastructure. I most certainly agree that with
rural water systems and the rehabilitation of existing
municipal water systems, this is a real opportunity to look at
it.
Mr. Frazee, thinking in terms of the story you told, I am
just going to begin this by saying when I first met my wife,
Jean, she lived in a rural area near Lake Preston, South
Dakota. They hauled water at that time. They hauled it in once
a week into a cistern and back out again.
That also meant the quality of the water was not the best.
It meant that everything was stained. The pipes would fill up
and get clogged and everything else. I remember her dad, now in
his early 90s, was the first president of a rural water system
there. They coordinated in that group to put together over a
period of years a rural water system called Kingbrook, which is
still in existence today and rapidly growing.
They could not have done it if there was not an
organization of local people willing to put in some money and
revenue and lay out the plans, but then also to go to local
lenders to borrow some money and then go back in through
Federal and State resources in order to borrow long-term to
improve the quality of life.
It meant you could actually have pipes that worked, you had
high quality drinking water, you had livestock that had high
quality water, and also you could have a thing like a
dishwasher in your house besides the husband after dinner. It
meant dishwashers would actually work with the quality of the
water.
I think it is real important that we talk about the need
for this type of infrastructure on the top. It is right along
with highways, roads, and bridges.
I am just curious. I would really like to know, Mr. Frazee,
in terms of how they helped to finance your part of Arkansas,
was it the case where they were able to come in and help with
assistance? Did the recipients of the water systems you had
have a monthly water bill they would pay as well at that stage
of the game? Was that the way it worked?
Mr. Frazee. Yes, Senator Rounds. They funded all the
projects. You have to pay back. Veterans were discounted. I
just have a payment like everybody else, very minimal, no
interest. It is great.
Senator Rounds. Was it organized through the State or a
local district, do you know?
Mr. Frazee. I want to say it was organized through the
Water Well Trust. They found all the lending or supported all
the lending.
Senator Rounds. Thank you.
Mr. Kricun, I am just curious. With regard to the financing
and so forth you have used in the past, can you share a bit
about this particular case? I like the idea of the States
really being in charge of the operations, and if we need the
financial backing and so forth, we look at the Federal level. I
like the idea of block grants, and I like the idea of having
access to guaranteed loans, revenue bonds, and so forth.
Can you talk a bit about the kind of financing you guys
have seen, the success you have had and what the challenges
were?
Mr. Kricun. Yes, thank you, Senator Rounds.
We basically were able to optimize our entire wastewater
treatment plant and install new equipment expressly through the
State Revolving Fund in New Jersey, the New Jersey Environment
Infrastructure Trust.
Because the operation and maintenance costs of the new
equipment were lower than the old equipment because of less
maintenance, because it is newer, and lower electricity costs
because it is more innovative, a newer generation.
Our operation and maintenance cost savings were greater
than the annual debt service cost. The Infrastructure Trust,
the SRF, was the difference between a go and a no go. Instead
of interest rates at 5 or 6 percent, we were less than 1
percent, so our annual debt service costs were lower than the
O&M savings.
As a result, we built our entire wastewater treatment plant
plus also helped the city of Camden's combined sewer system,
Camden is one of the poorest cities in the nation, while
holding our rate. Our rate was $337 in 1996. It is $352 today
in 2017. It was through some internal efficiency but mainly
through the SRF.
The grants were great, but the State Revolving Fund Program
really is a very successful and helpful way to help us with our
mission.
Senator Rounds. I could not agree more. I think it is a
very important tool for us to make sure it is maintained into
the future. Thank you.
Mr. Kricun. Thank you, Senator.
Senator Rounds. My time has expired.
Senator Whitehouse.
Senator Whitehouse. Thank you, Chairman.
Thank you to all the witnesses for being here.
I was struck by Mr. Ellis' comment that he can remember
wooden piping coming out of the ground. I represent Rhode
Island, and I have the same memories from my days doing water
utility rate cases.
It is still not so great. Here is a piece of pipe that came
out of the Kingston Water District. The manager, Henry Meyer,
sent me that to remind me of what was going on. That site goes
back to about the 1920s. As you can see, it is filled in pretty
good. This is from old Kingston Village.
This piece of pipe comes from the Kingstown Road. As you
can see from the side, this is plastic piping. This is much
more recent. Check it out end on, look at the size of the
remaining aperture in that pipe.
These pieces of pipe are kind of touchable evidence of the
problems we have and the scope of the possible infrastructure
solution that we could have. I wanted to flag that particular
situation.
I also wanted to flag another situation that is more a
problem in our coastal States than in other States. Let me show
you a map of Rhode Island. This is the northern part of Rhode
Island and upper Narragansett Bay. Our capital city,
Providence, is right here. This is Warwick Neck; this is
Bristol and Warren.
What we have here is the latest information from our
Coastal Resources Management Council about sea level rise
happening along our coasts. Here is the existing bay. Light
blue is actually land now. Right now that is land.
What we are looking at in the light blue is all these areas
are expected to be flooded and under water by 2100 if we do not
get ahead of what is happening with sea level rise. The State
of Rhode Island turns into a Rhode Island archipelago. Warwick
Neck becomes Warwick Neck Island. Warren and Bristol become
Warren and Bristol Island and on and on you go.
Behind all of this blue of flooded land there will be a
zone of potential storm flood zones and velocity zones that
interfere with property ownership there as well. We are looking
at a potential economic catastrophe if we do not get ahead of
this.
For the purpose of this hearing, the point is right about
here, the Town of Warren has its sewage treatment facility. If
you live near the coast, if you are building sewage treatment
facilities, you are building them right along the coastline
because you want that gravity assist bringing the water and
sewage down to the treatment plant.
When you start to look at flooding exposure like this, you
are starting to look at significant replacement requirements or
hardening and protection requirements for our infrastructure.
We are not really even talking about that. I know we are
not even talking about that because sea level rise is driven by
climate change, and we are not allowed to talk about climate
change here in the Congress in any effective or meaningful way,
but this is coming. The infrastructure along these coastal
areas needs to be part of our conversation.
If Mr. Kricun or Mr. Ellis would like to comment, we have
about a minute of time for you to respond either to my good
old, nearly filled in pipes or to the coastal predicament for
water infrastructure.
Mr. Kricun. Thank you very much, Senator. I will try to
reply to both.
With regard to the infrastructure issue, as you know the
ASC has a D+ grade for wastewater and a D grade for water
infrastructure. An emergency repair after a failure costs 5 to
7 times more than a planned replacement. It is not as though
you can make the pipe last longer. Once it fails, it will fail,
but it will be much more costly not to mention the damage and
the risk to people if it happens in an emergency.
Senator Whitehouse. If you had a responsible program, you
would get 5 times as much done rather than waiting around for
it to fail.
Mr. Kricun. Thank you, Senator. That is exactly right.
With regard to the coastal issue, in New Jersey we speak of
climate history. In 2012 our treatment plants on the coast were
already inundated, billions of raw sewage into the river, the
Atlantic Ocean, and the Passaic River. That is how the climate
was 5 years ago.
Even if it does not work, Senator, there is a big
infrastructure gap right now that we have to meet. We are
trying to use green infrastructure to capture storm water,
green energy to improve our resiliency against power outages,
and also hardening of our plant itself to make us less
vulnerable to the climate as it is.
I know climate change is controversial. I do believe the
climate will worsen.
Senator Whitehouse. It is not really controversial. It is
just politically controversial.
Mr. Kricun. Even if it does not work Senator, we have a gap
right now that we should be working to correct. If we are
correcting that now, then we can also look at projections like
our Delaware River is supposed by 18 inches in the next 30
years. We should be looking to catch up the gap right now but
also looking for projections ahead to be safe and protect us
for the future.
Senator Whitehouse. Thank you.
My time has expired, so I suppose I should leave it there.
Senator Rounds. Thank you, Senator Whitehouse.
I will turn this back over to Senator Boozman, but I would
ask for one moment of privilege. That is with Senator
Whitehouse. He has been a champion for the issues surrounding
the changes occurring in Rhode Island and around Rhode Island.
I would suggest if there is one area of agreement among
everyone, whether or not we think the current plans for how we
slow down changes in the climate are right, the one thing we
recognize is these changes are occurring.
I think that brings about a very important discussion point
which is how do we go about addressing the needs which he has
continuously and eloquently spoken to in terms of what it does
to his State, in particular, along with a lot of other places
along the coast. I think that is an area of agreement that we
will find among all of us.
Senator Whitehouse. Thank you, sir. I look forward to
exploring that.
Senator Rounds. Absolutely. Thank you.
Senator Boozman, you are up and chairing.
Senator Boozman [presiding]. Thank you, and thank you for
sitting in. I apologize. I am in a situation where we
desperately wanted to get this hearing done, and we had to
reschedule. Then all of a sudden they decided to have a vote on
the Appropriations Committee. I have been having the vote on
agriculture, energy, and water.
There are not very many things I have to do, but those are
things you simply have to do. In fact, the reason we have had
mixed attendance on both sides is there is a Commerce hearing
going on as we speak. Also a number of people on this Committee
are also on the Appropriations Committee.
It is what it is, but we do appreciate you being here.
I have a couple questions of you, Mike. In your testimony,
you discussed the hardships of having to haul water and check
water quality every day. I think the film was excellent. It
really summed it up. Tell us a little bit about how that has
made your life a little easier on a day to day basis.
Mr. Frazee. It gives me a lot of time to spend with my
family, free time to do other things than having to worry about
hauling water. It has freed up a bunch of time. I cannot thank
you enough or the Water Well Trust for helping out my area.
Senator Boozman. Just a final follow up to that, you were
able to get help in the sense of finding out who to contact.
How do we do a better job, and what would you suggest as far as
outreach for other people in your situation and making it
easier for them to know there is help available?
Mr. Frazee. I think the Savings Act needs to be pushed by
the USDA and the EPA. Word needs to be out, and we need to get
the financing to help out areas like the area I live in. There
is no funding there, and we are kind of looked past.
Senator Boozman. Very good.
I will now turn to Senator Cardin who has been a great
champion on the water issues. I was his Ranking Member a couple
Congresses ago. He has done a tremendous job in this area.
Senator Cardin. Mr. Chairman, I wanted to come by and
compliment your leadership and chairmanship of this
Subcommittee. One of the most productive sessions in Congress
is when the two of us on this Subcommittee work together. I
really do appreciate your commitment to water infrastructure.
My staff has told me that most of the points I wanted
responses from witnesses on have already been made. Thank you.
Our Chairman has taken the leadership on additional tools to
modernize our water infrastructure.
In Maryland, I can tell you about major water main breaks
every day. I could tell you about one on River Road in
Montgomery County which was a river and people had to be
rescued by helicopters. I can tell you about the Washington
Beltway being closed as a result of water main breaks. I can
talk to you about Dundalk, Maryland, having to be evacuated
because of a water main break. Downtown Baltimore had detours
because of water main breaks.
That is all since I have been in the Senate. We have major,
major problems. I can also tell you about one day finding out
from Public Works in Baltimore they discovered a pipe still
being used made out of wood. We have some really old systems in
Maryland that need tremendous attention.
One of the great challenges with water infrastructure is
that it is hidden until there is a break. We are wasting so
much water every day and so much energy every day. There are
public health risks, no question, about safe drinking water and
the manner in which we deal with this.
Yes, we have existing tools, we have municipal financing,
we have tax exempt bonds, we have revolving funds, and we have
the initiative the Chairman has taken the leadership on for
additional ways we can deal with the planning. All these are
important programs.
We have also joined together as the sense of Congress to
try to increase the amount of moneys made available under these
tools. We recognize the budgets are tough, but we also
recognize there is a bipartisan desire to increase the amount
of money we put into infrastructure in this country, including
water infrastructure. All those are extremely positive signs. I
just wanted to come by to tell you we are going to look for
every creative way we can to give you additional opportunities
and tools in order to deal with it.
The last point I would make is this also involves another
one of my passions which is the Chesapeake Bay and our
environment because as we deal with water infrastructure, how
we deal with a lot of the issues also involves the environment.
There are many, many reasons why we need to look for
creative ways. There are several initiatives, none of which are
partisan, and we really need to continue to make that progress.
The Water Resources Development Act of last year made
significant progress in that regard. A lot of the bills that
members of this Committee worked on were incorporated in the
final WRDA bill.
Some were pulled out in the House. I thank our Chairman
because we are working together to try to get those provisions
that deal with water infrastructure moving now in this Congress
that we were not able to get done in the last Congress.
I thank the witnesses. I would let you know this is an
extremely high priority for all of us on this Committee. It is
great to be on this Committee for many reasons. One of the
principal reasons is that we have some incredible members I
work with, including the Chairman and the Ranking Member of
this Subcommittee.
I thank them both for their leadership on this issue.
Senator Boozman. Thank you so much. We do appreciate your
leadership.
As you pointed out, we really do have a good Committee that
works in a very bipartisan way to sort out these things. The
road that Mike lives on, that area, it is Republicans and
Democrats and who cares. It is just the idea of providing the
service people desperately need.
Senator Cardin. Mr. Chairman, I just want to point out my
reason for popping in and out is that the Senate Foreign
Relations Committee, where I am Ranking, is holding hearings on
important nominations. I apologize for not being here for the
testimony.
Senator Boozman. I appreciate your pointing that out. I
have not been here most of the time either because of
Appropriations. I am told that Senator Gillibrand is on the
way, so we will wait just a few minutes for her.
Do you all have any comments?
Mr. Ellis. I would like to actually respond to one of the
questions Senator Whitehouse mentioned when he held up his prop
of the full pipe.
One thing to note is that when those pipes fill with
sediment or whatever, you lose the original design capacity of
that pipe. As we think about infrastructure, we are often
talking about building new things but just the basic
maintenance of going in and cleaning out the pipes is also
something a lot of communities cannot afford or are not doing,
so they are losing design capacity. The solution is actually
just to repair the existing system.
That same phenomenon is also occurring on private property.
A lot of what we have talked about today is public
infrastructure, with the exception of Mike's situation and
needing to build wells for private homes.
In an urban environment, the biggest issue on private
property is the lateral lines that connect your home to the
municipal pipeline. It is actually in those lines where we have
lots and lots of older pipes either full like that or pipes
with lead in them from bygone days when we used to do that.
You have about 30 feet for every private property out
there, and who knows what is going on in some of these homes,
whether that pipe is cracked or whether lead is leaching out of
that private pipe.
There have been a couple communities, I can think of
Madison, Wisconsin, and Galesburg, Illinois, that have used the
SRF Program to put money into the hands of private property
owners to take out those pipes. That project of tearing up your
lawn, taking out that old pipe, putting in a new pipe, can be
$20,000 to $30,000 per home. In a low income community, you
cannot really ask a homeowner to do that. They probably do not
have the money, and if they do, they are saving it for
something else.
Finding a way to use the SRF to tackle projects on private
property is something we are only starting to grapple with,
whether that is well installation or fixing these lateral line
issues going into the house, and then issues coming back out of
cracks in the sewage and storm water pipe where you have stuff
leaching out into lawns and things like that.
Figuring out how to use these public resources or public-
private partnerships to work on private properties is, I think,
one of our next big challenges because a lot of the
infrastructure out there is not publicly owned.
Senator Boozman. Thank you very much.
Mr. Kricun.
Mr. Kricun. As you discussed, infrastructure needs to be
improved in order to protect the public health and the
environment for safe drinking water and to protect against
combined sewage overflows and flooding.
Doing so will not only be necessary to protect the public
health and the environment, but also result in job creation,
not only for the construction but also for the maintenance of
the new system. It is definitely a win-win.
I also agree with what Josh said about the efficacy of the
maintenance of the existing collection systems. We did a study
where by cleaning the pipes on a regular basis, we improved
their collection capacity by 30 to 35 percent. That is a huge
win.
The problem is the economics of such communities, whether
urban or rural, sometimes lack the capacity. That is why I
think in addition to public-private partnerships, public-public
partnerships where utilities assist each other with resources
would really be helpful in getting the most from our industry
and infrastructure.
Thank you.
Senator Boozman. Very good.
Senator Gillibrand, thank you so much on this very, very
busy day. I have had to miss a good part of the hearing because
of other committee duties. I know you are in the same
situation. Thank you for coming by.
Senator Gillibrand. Thank you so much, Mr. Chairman and
Madam Ranking Member.
Mr. Kricun, in your testimony, you talk about how after
Super Storm Sandy, over 10 billion gallons of raw and partially
treated sewage flooded streets and ruined homes. This raises an
important point about the need to think about resilience to the
impacts of climate change and extreme weather when making
investments to repair or replace aging water pipes.
We need to be thinking ahead. For example, we have water
pipes in New York that are over 100 years old. Nearly half of
New York City's water pipes were built before World War II. We
should be thinking about the next 50 to 100 years from now when
we design projects today.
What should we be doing to improve how we make decisions
about water infrastructure investments to take into account
extreme weather, sea level rise, and other climate related
impacts?
Mr. Kricun. One thing we need to do is make sure we are
more resilient and less vulnerable to severe events. Hurricane
Sandy occurred 5 years ago, so that is already climate history.
Our infrastructure was already proven to be inadequate for how
the climate was and how it is now. If the climate does worsen,
that gap will only widen.
One of the things we are doing is trying to implement green
energy programs so that we are 100 percent off the grid. We are
installing solar panels, installing a combined heat and power
system to capture gas and turn it into electricity. Our goal is
to be off the grid by 2020. Reducing reliance on the electric
grid would be very important.
No. 2, green infrastructure in combined sewer communities
is very important because you are sucking up the storm water
and preventing it getting into the combined sewer.
In addition, as we discussed, the infrastructure is rated
D+, so it needs to be replaced. When it is being replaced, it
ought to be replaced with the notion of the possibility of
climate worsen and therefore being sized appropriately to make
sure that it is properly designed not only for today's
conditions but the future.
Senator Gillibrand. Over the past several years, we have
seen drinking water emergencies across the United States where
many lives have been put at risk because of contamination from
toxic chemicals.
The most visible of these was obviously in Flint, Michigan,
but closer to home for me were people of Hoosick Falls and
upstate New York who have been experiencing nothing short of a
tragedy because their drinking water has been tainted with the
chemical PFOA. We have seen it across my State in places like
Newburgh and on Long Island.
When we talk about water infrastructure, we need to also be
talking about how we are going to keep our drinking water safe.
This is a real challenge for small communities like Hoosick
Falls that have limited resources.
This question is for the entire panel. How can we do a
better job of helping small communities test for and address
contaminants like PFOA in their drinking water systems?
Mr. Frazee.
Mr. Frazee. I think the USDA and EPA need to address those
issues in small communities like where I am from and help from
our Federal Government.
Senator Gillibrand. Thank you.
Mr. Kricun.
Mr. Kricun. For example, in the instance of lead, I think
lead awareness is very important. We not only need to make sure
we are treating water at the source, the drinking water
treatment plants themselves, but making sure the conduits from
the plant to the home and also the internal plumbing within the
home are also subject to lead plumbing.
Most homes built prior to 1980 could have lead solder. Even
if the water coming from the water treatment plant is safe, for
children using the water, it may be contaminated with lead just
by sitting overnight in lead plumbing. Lead awareness and
making sure they are aware of filters or running the water 30
to 45 seconds to reduce the risk could mitigate a significant
portion of that lead issue.
With regard to contaminants and chemicals, I agree with Mr.
Frazee that it is important to have Federal and State
assistance and maybe even hub utilities nearby, if there is one
larger sitting nearby that might be able to lend resources to
smaller communities and leverage that. I think we need to give
small communities, be they urban or rural, as much assistance
as possible.
Senator Gillibrand. Thank you.
Mr. Ellis.
Mr. Ellis. In terms of testing, the testing that needs to
occur is both at source water, rives, ponds, and streams, but
also as it is coming out of the tap. It is such a distributed
system, and you need lots of people out doing it.
I think the issue of water testing, point based testing, is
a great opportunity for schools and citizen scientists. That
could be through programs at NOAA or somewhere else to get
resources to school programs or other organizations that can go
out on a consistent basis with established protocols for
testing, collect that data, and send it in to the proper water
management officials.
Referring to your previous question, one of the issues we
have with planning infrastructure to be more resilient, this is
not a coastal issue or an inland issue, is we have great
divergence between States but also within States about the
actual data they are using to project how much rainfall we
might have or what climate conditions might be.
I know in Illinois, we have some communities using data
from the 1960s that was projecting out weather events. All of
that was based on information they had collected before the
1960s. As precipitation patterns change, if you are using data
from the 1960s, 1970s, 1980s, or 1990s, you are not able to
size infrastructure appropriately for what we predict to be
weather events. We are always looking backward when we size the
infrastructure because that is the precipitation that we are
using.
Getting greater consistency to get everyone to update and
use the latest data on precipitation projections, in
particular, would be helpful and greater consistency across
communities so we can get better best practices out there on
how we size and build this infrastructure across States. We
cannot be building stuff for 2060 using data from 1960, but we
are.
Senator Gillibrand. Thank you, Mr. Chairman.
Senator Boozman. Thanks so much.
Senator Duckworth.
Senator Duckworth. I just want to thank the Chairman for
having this hearing. This is incredibly useful, and I think eye
opening for many people.
One of the things we have not touched on and bears further
looking into is the public infrastructure system, especially
when it comes to public schools. There are many, many public
schools in this country that were built well before the 1980s.
As you talk about the water that sits in the schools
overnight, you can actually go into a school and test the
water. This happened in Chicago, where you have one drinking
fountain that fails the lead test and one that passes. Until
you replace the entire piping system within the school itself,
you are never going to resolve the problem.
This is going to be a problem for rural communities and
communities that do not have the resources and the high tax
base. It just reinforces the need for real infrastructure
investment.
I really want to thank the Chairman for bringing this to
everyone's attention.
Thank you.
Senator Boozman. Thank you. Thank you for pointing this out
as witnesses have, even the witnesses here, that you have an
urban area or very rural area essentially with the same
problems.
We appreciate you very much, Senator Duckworth, and your
staff for the job they have done in helping us get ready for
this. I appreciate my staff.
Thank you all for coming and testifying. This has been a
very helpful hearing as we go forward.
With that, the record will be open for 2 weeks for any
additions. The meeting is adjourned.
[Whereupon, at 11:34 a.m., the Subcommittee was adjourned.]
[Additional material submitted for the record follows:]
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