[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]


   FIELD HEARING: WHEELING, IL: FLOODED OUT: VANISHING ENVIRONMENTAL 
              REVIEWS AND THE SBA'S DISASTER LOAN PROGRAM

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

                                HEARING

                               BEFORE THE

                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED SIXTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              HEARING HELD
                             JULY 19, 2019

                               __________

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
                               

            Small Business Committee Document Number 116-036
             Available via the GPO Website: www.govinfo.gov
             
                                __________
                               

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
37-066                  WASHINGTON : 2019                     
          
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                   HOUSE COMMITTEE ON SMALL BUSINESS

                 NYDIA VELAZQUEZ, New York, Chairwoman
                         ABBY FINKENAUER, Iowa
                          JARED GOLDEN, Maine
                          ANDY KIM, New Jersey
                          JASON CROW, Colorado
                         SHARICE DAVIDS, Kansas
                          JUDY CHU, California
                           MARC VEASEY, Texas
                       DWIGHT EVANS, Pennsylvania
                        BRAD SCHNEIDER, Illinois
                      ADRIANO ESPAILLAT, New York
                       ANTONIO DELGADO, New York
                     CHRISSY HOULAHAN, Pennsylvania
                         ANGIE CRAIG, Minnesota
                   STEVE CHABOT, Ohio, Ranking Member
   AUMUA AMATA COLEMAN RADEWAGEN, American Samoa, Vice Ranking Member
                        TRENT KELLY, Mississippi
                          TROY BALDERSON, Ohio
                          KEVIN HERN, Oklahoma
                        JIM HAGEDORN, Minnesota
                        PETE STAUBER, Minnesota
                        TIM BURCHETT, Tennessee
                          ROSS SPANO, Florida
                        JOHN JOYCE, Pennsylvania

                Adam Minehardt, Majority Staff Director
     Melissa Jung, Majority Deputy Staff Director and Chief Counsel
                   Kevin Fitzpatrick, Staff Director
                           
                           
                           C O N T E N T S

                           OPENING STATEMENTS

                                                                   Page
Hon. Brad Schneider..............................................     1

                               WITNESSES

Mr. Mike Warner, Executive Director, Lake County Stormwater 
  Management Commission, Libertyville, IL........................     5
Mr. Howard Learner, Executive Director, The Environmental Law & 
  Policy Center, Chicago, IL.....................................     7
Mr. John Durning, Owner, Pizzeria Deville, Libertyville, IL......     9

                                APPENDIX

Prepared Statements:
    Mr. Mike Warner, Executive Director, Lake County Stormwater 
      Management Commission, Libertyville, IL....................    25
    Mr. Howard Learner, Executive Director, The Environmental Law 
      & Policy Center, Chicago, IL...............................    48
    Mr. John Durning, Owner, Pizzeria Deville, Libertyville, IL..    52
Questions for the Record:
    None.
Answers for the Record:
    None.
Additional Material for the Record:
    James L. Anderson, Director Natural Resources, Lake County 
      Forest Preserve District...................................    60
    Christopher Johnson..........................................    66
    Joe Massarelli, Owner, Liberty Auto City.....................    68
    Stacy Meyers, Senior Council & Molly Kordas, Staff Attorney, 
      Openlands..................................................    70
    Quin O'Brien.................................................    75
    Daniel M. Pierce, President, North Shore Water Reclamation 
      District...................................................    76
    David Shimberg, Riverwoods Preservation Council, President...    79
    John F. Wasik, Journalist, Lake County Board and Forest 
      Preserve Commissioner......................................    81
    Terry L. Weppler, Mayor, Libertyville Spirit Independence....    82

 
  FLOODED OUT: VANISHING ENVIRONMENTAL REVIEWS AND THE SBA'S DISASTER 
                              LOAN PROGRAM

                              ----------                              


                         FRIDAY, JULY 19, 2019

                  House of Representatives,
               Committee on Small Business,
                                                    Washington, DC.
    The Committee met, pursuant to call, at 10:30 a.m., at 
Wheeling Village Hall, 2 Community Blvd., Wheeling, IL, Hon. 
Brad Schneider presiding.
    Present: Representative Schneider.
    Mr. SCHNEIDER. The Committee will come to order.
    Welcome. I want to thank everyone for joining us here this 
morning.
    Let me first thank the House Small Business Committee and 
Chairwoman Nydia Velazquez for allowing us to host today's 
field hearing here in Wheeling.
    I also want to thank the staff, the Committee staff, 
Melissa Jung and Naveen Parmar, who are in the corner, who are 
here today to help facilitate today's event.
    As we sit here in Village Hall, let me thank the Village of 
Wheeling for graciously providing today's location and for the 
local elected officials, who are in the front row, who have 
joined us here today.
    Can I ask the elected officials just to raise your hand? 
Thank you guys for joining us today.
    And finally I want to take the prerogative of thanking my 
team. It is impossible to overstate the amount of hard work 
that went into making this event today possible, everything 
from arranging witnesses to logistics to making sure people 
know about the event. Clearly, by the audience we have today, 
they effectively got the word out, so thank you all for joining 
us as well.
    I will say as far as logistics, yesterday O'Hare was kind 
of socked in because of the rains. More than 700 flights were 
cancelled; more were delayed. We can vouch for this because it 
affected every one of us, including staff. I got to fly into 
Milwaukee and drive down, but it did give me the chance to show 
the Committee staff where Foxconn is, where our district is, 
and they got to drive the length of the Des Plaines River. So 
again, thank you for that.
    For everyone in attendance today here, I do want to share 
some background on how the proceedings are going to work. This 
is a formal hearing, a field hearing of the House Committee on 
Small Business. Due to that format, there is not an opportunity 
for questions or public comments from the audience. I thank 
everyone for your attendance and interest in the issue.
    We do have in the back flyers, in the back of the room with 
instructions so that you can share your thoughts and concerns 
about the issues today. When we say back of the room, do we 
mean on the side? In the back of the room.
    Field hearings play an important role in the work of our 
Committee. Traveling to Washington and testifying before 
Congress presents a lot of barriers and costs in time that can 
oftentimes prevent important voices from being heard. Field 
hearings like this serve to bring the work of the Committee 
closer to our districts and offer our communities The 
Opportunity (2:42Video 1) to share their views on issues that 
matter. They are relatively rare, so we are very fortunate to 
have this hearing here today.
    One of the important local issues is the problem of 
flooding and the impact on our communities, on people, 
property, local governments, and of particular interest today, 
small business. As we will focus on today, the threat of floods 
has been compounded for our communities here in Illinois and in 
the 10th District by the massive Foxconn development just over 
the state line in Wisconsin. This project and its still 
unfulfilled promises of job creation will push through with 
great fanfare, including participation by President Trump in 
the groundbreaking.
    But missing was any serious environmental review of the 
consequences of this project. The administration of former 
Wisconsin Governor Scott Walker dispensed with the extremely 
critical environmental review requirements in their haste to 
please foreign investors.
    Foxconn is a local issue, but it is emblematic of a 
national problem of vanishing environmental enforcement 
exacerbating damaging impacts of climate change. We need to 
address this deficit not just to protect the affected 
communities but also to ensure the longevity of critical 
programs such as the Small Business Administration disaster 
recovery programs that are designed to help people who own, 
work at, and are served by local businesses.
    Our communities along the Des Plaines and Fox River 
Watersheds have long faced flooding issues during significant 
rain events. Coupled with the effects of global climate change, 
which is increasing the frequency and intensity of extreme 
weather events, this threat is growing.
    Since 2013, Lake County has experienced two 100-year 
floods, and six of our district's 10 largest storm events on 
record have occurred since 1994.
    In July 2017, storms and flooding damaged more than 3,200 
homes, resulting in a state of emergency declaration for the 
region and causing millions of dollars of damage to the 
community. Today we'll (4:50) Video 1) hear from a small 
business owner who dealt personally with the flooding.
    Though the Federal Emergency Management Agency, FEMA, 
declined to declare a Federal emergency for the region, the 
Small Business Administration did declare an emergency, making 
local businesses eligible for disaster loans. For small 
businesses in the aftermath of a disaster, access to affordable 
credit can make the difference between remaining in business or 
closing their doors and putting hard-working Americans out of 
work. In fact, FEMA estimates that 40 to 60 percent of 
businesses impacted by natural disasters never reopen their 
doors.
    That is why one of the foremost priorities of this 
Committee is to ensure the Small Business Administration's 
Disaster Loan Program, which provides direct loans to help 
businesses, homeowners, and renters rebuild following a 
federally declared or certified disaster, is functioning 
efficiently and effectively and that it is prepared to meet the 
challenges of the future, and in particular climate change.
    A key part of strengthening the foundation of the program 
is making sure new development does not make flooding worse. 
Yet, that is exactly the situation our communities face after 
important environmental considerations were cast aside in the 
Foxconn development. Environmental reviews are necessary to 
understand the potential impacts of a development, and they 
give the public and government officials the ability to make 
informed decisions prior to construction and the opportunity to 
mitigate adverse impacts. Unfortunately, environmental reviews 
are too often skipped for expediency or as leverage, and that 
has the potential to exacerbate flooding in places like the Des 
Plaines River Watershed.
    When corners are cut on environmental reviews, our local 
communities pay the price. It puts strain on government 
programs and resources, and small businesses and homeowners 
that need vital assistance in the days after a disaster might 
not be able to access policies or programs enacted for their 
benefit.
    This is the case we are facing in Lake County. Foxconn 
Technology, a Taiwanese electronics manufacturer, worked with 
former Wisconsin governor Scott Walker's administration on a 
proposed manufacturing development site outside Mt. Pleasant in 
the state's southeast corner. In order to entice the company to 
invest in the state, and based on the promise of up to 13,000 
direct jobs in the region, Governor Walker and the Wisconsin 
state legislature passed the largest incentive package for a 
foreign company in U.S. history.
    Included in the package were billions of dollars in public 
investment through tax breaks and government incentives. But 
the incentives also included waiving important environmental 
requirements related to water management and flooding, first by 
refusing to consider the 3.3 square mile Electronics and 
Information Technology Manufacturing Zone, the EITM Zone (7:40) 
Video 1, and associated development within the Des Plaines 
River Watershed, a major action that the state effectively 
waived the requirement for a state environmental impact 
statement.
    Second, the Wisconsin legislature exempted the development 
from standard wetland permitting requirements, allowing Foxconn 
to discharge fill material into non-Federal wetlands. This 
affects and raises serious concerns about the area's ability to 
sufficiently absorb rainfall. Storm water that is not retained 
in local wetlands naturally runs downstream, and thus threatens 
to cause increased flooding here in Illinois.
    As well, the state waived certifications on water quality. 
Several downstream communities in Lake County responded to the 
development by passing resolutions of disapproval on the 
Foxconn development. The Lake County Board passed its own 
resolution of disapproval, and the Illinois state senate 
adopted a resolution urging Wisconsin to give more rigorous 
consideration to the environmental impact the Foxconn 
development would have.
    Personally, I have written a letter to the new Wisconsin 
governor, Tony Evers, joined by my colleagues Dick Durbin and 
Tammy Duckworth, and Congresswoman Lauren Underwood, urging the 
governor to submit the development to thorough environmental 
review, especially aspects that threaten storm water 
management. In response to local concerns, the Lake County 
Storm Water Management Commission contracted an engineering 
report to evaluate the potential downstream impact the 
development could have on local communities.
    The report raised significant concerns about Foxconn's 
treatment of wetlands and concluded that just the Phase 1 
development would result in storm water and flood plain storage 
deficit of 30 million gallons. This means that the area around 
Foxconn will be less able to absorb the deluge, like we saw in 
2017, with rainfall running downstream rather than being 
contained locally. We will hear directly from the Commission on 
that report later in the hearing, and I thank Lake County for 
its leadership on this issue.
    By exempting the Foxconn development from critical 
environmental review requirements, Wisconsin increased the 
likelihood of flooding along the Des Plaines River and passed 
the consequences downstream to our communities. Wisconsin 
taxpayers may be paying the price for the Walker 
Administration's exorbitant economic incentives, but it is 
Illinois residents and small businesses who will be under 
water, literally, due to our neighboring state's irresponsible 
decision to ignore environmental reviews, and Wisconsin's 
missteps will have a direct effect on Federal resources like 
the SBA Disaster Loan Program meant to help our community.
    I look forward to exploring the importance of environmental 
reviews with our panelists today and the consequences of 
waiving them to expedite development.
    On a final note, we invited the Secretary of the Wisconsin 
Department of Natural Resources, Preston Cole, as well as Dr. 
Lewis Woo, the chief negotiator for Foxconn, to testify at this 
hearing. Unfortunately, both declined.
    Again, I want to thank our witnesses for being here today. 
I will just take a moment to explain how this hearing will 
work. I will introduce each of our witnesses. Each will be 
given 5 minutes approximately to make an opening statement that 
summarizes their written testimony. We will then have time for 
questions that I hope will help illuminate the concerns that I 
have mentioned so far.
    I would like to now introduce our witnesses.
    Our first witness is Mr. Mike Warner. Mike is the Executive 
Director of the Lake County Stormwater Management Commission, 
where he has worked since 1994. He started there as the Chief 
Engineer for four years and has served as Executive Director 
for 13 years. He has overseen several significant flooding 
events and has helped coordinate the country's response. I want 
to welcome Mr. Warner, as well as his daughter Charlotte.
    Our second witness is Mr. Howard Learner, the Executive 
Director of the Environmental Law and Policy Center. Howard 
founded ELPC in 1993, and the organization served as the 
preeminent Great Lakes environmental advocacy group. Prior to 
founding ELPC, he served as General Counsel to business and 
professional People for the Public Interest and practiced civil 
rights law focused on housing and economic issues. ELPC has 
seven offices throughout the Midwest, as well as an office in 
Washington, D.C., and advocates on a wide array of critical 
environmental issues.
    Welcome, Mr. Learner.
    Our final witness is Mr. John Durning. John is the owner of 
Pizzeria Deville in Libertyville, a local favorite. John opened 
his pizzeria in 2014 after more than a dozen years working at 
Wintrust as a Managing Director focused on commercial real 
estate. Since opening his small business, John has experienced 
several major flooding events that cost thousands of dollars in 
damages to equipment and his property.
    Welcome, Mr. Durning.
    Now I will let the witnesses make their opening statements, 
starting with Mr. Warner.

  STATEMENTS OF MIKE WARNER, EXECUTIVE DIRECTOR, LAKE COUNTY 
  STORMWATER MANAGEMENT COMMISSION, LIBERTYVILLE, IL; HOWARD 
   LEARNER, EXECUTIVE DIRECTOR, ENVIRONMENTAL LAW AND POLICY 
  CENTER, CHICAGO, IL; JOHN DURNING, OWNER, PIZZERIA DEVILLE, 
                        LIBERTYVILLE, IL

                    STATEMENT OF MIKE WARNER

    Mr. WARNER. Thank you, Congressman Schneider, for arranging 
this hearing and the opportunity to comment regarding these 
important issues.
    Lake County has seen record-setting flooding over the last 
three years. The July 2017 flood, which you mentioned, set 
record high water levels on all nine river gauges throughout 
the county that cost millions of dollars of damage and 
threatened the lives of many residents and visitors.
    In 2018, the Des Plaines River gauge set a record by 
exceeding flood stage six times, which is more than triple the 
average. And in 2019, a new record rainfall was set for the 
month of May, and flood stage has been topped four times 
already this year.
    The Illinois State Water Survey Research shows this trend 
of higher rainfall and corresponding flood events is continuing 
in the region. We recently released a study on the Upper Des 
Plaines Watershed. The study was done in response to 
Wisconsin's waiver of environmental regulations for development 
upstream within the Electronics Information Technology 
Manufacturing Zone and the impacts of that development to Lake 
County.
    The study found significant deficiencies for mitigation of 
flood plain, storm water, and wetland impacts that is worsening 
the flood risk within the watershed. The study describes four 
main conclusions. The current flood plain study for the Des 
Plaines River in Wisconsin, both the flood plain mapping and 
flood flows, are grossly underestimating flood risk to existing 
and new businesses and residential buildings. The flood plain 
study methodology removed the largest storm event of record and 
does not include the most recent six of the largest ten strorm 
events, with the result being an underestimation of the flood 
plain.
    The Wisconsin DNR provided similar comment on the 
Kinnickinnic flood plain study just to the north, and when 
updated the resulting flood plain, flow increased by up to 86 
percent. A study quote states that higher flow results in 
higher flood profiles and an increase in the computed flood 
risk in the watershed.
    Through the development process in Wisconsin, there is a 
deficit of stormwater storage created by filling existing 
natural depressions, too large of a retention pond release 
rate, and uncompensated flood plain fill. Lake County has 
similar landscape to Wisconsin, with a significant amount of 
natural depression storage. Whereas Lake County requires 
preservation of this natural storage, Wisconsin does not. Our 
estimate of the natural storage to be lost in the EITM zone is 
156 acre feet. The detention pond release rate is double that 
of Lake County, which will further reduce surface runoff stored 
and allows more impervious cover per acre of development. 
Additionally, any fill in the flood plain does not require 
compensation because the Des Plaines River is not a defined 
flood storage district even though it meets the technical 
requirements to become one.
    Wetlands are being lost within the Des Plaines Watershed in 
Wisconsin due to development. All Wisconsin Department of 
Transportation impacts are being mitigated outside the Des 
Plaines Watershed. That ignores Army Corps wetland regulatory 
criteria regarding mitigating in the same watershed as the 
impact site and the ``no net loss'' principle, as this is 
resulting in a significant net loss in the Des Plaines.
    The private development wetland impacts have yet to be 
mitigated anywhere, and there is doubt that the mitigation fee 
assessed can compensate for the higher land value within this 
highly active development corridor, which further guarantees a 
net loss of wetland function in the Des Plaines River. There 
are hundreds more wetland acres at risk of loss in the Des 
Plaines.
    And lastly, inadequate soil erosion and sediment control 
practices are being utilized by both WisDot and private 
developers. These unremedied violations of the Clean Water Act 
are choking waterways with sediment and contributing to non-
attainment of EPA water quality standards. SMC performed 
independent inspections of the road work and development site 
and documented significant soil erosion occurring as late as 
yesterday, during yesterday's storm event.
    The Foxconn site also received an erosion violation 
citation from the Wisconsin DNR. The Des Plaines River at the 
state line is listed by the Illinois EPA as impaired for 
sedimentation and siltation due in part to land development 
activities.
    With every acre of new impervious surface and shovelful of 
dirt, all four of the issues raised in our conclusions are 
resulting in an increased flood risk to businesses and homes, 
along with negative water quality impacts within the Des 
Plaines Watershed. It is critical that these concerns are 
addressed as soon as possible to compensate for future 
development that will occur.
    Thank you for this opportunity to provide testimony.
    Mr. SCHNEIDER. Thank you, and we will now go to Mr. 
Learner.

                  STATEMENT OF HOWARD LEARNER

    Mr. LEARNER. Thank you, Representative Schneider, for the 
Committee's and your invitation to testify today. I will 
summarize my longer written testimony that will be submitted to 
the Committee. We appreciate your thoughtful attention to what 
is a serious problem and your focus on solutions to the 
problems.
    Like many, the Environmental Law and Policy Center was very 
concerned when, under the Walker Administration, the State of 
Wisconsin rolled back necessary environmental protections and 
undercut what we view as essential environmental reviews in 
order to entice private development by a single party here, 
Foxconn.
    The harmful impacts of the Foxconn development and the 
effects of vanishing environmental reviews are not limited to 
Wisconsin. Air pollution crosses state lines, and the impacts 
on water also affect Illinois and the other Great Lakes states 
as well. The Foxconn project could potentially increase 
flooding in the Des Plaines River Watershed in Illinois, and 
Foxconn's need for water has already led to a request to 
withdraw some to outside the Great Lakes Basin.
    The purpose of environmental reviews, whether it is the 
National Environmental Policy Act or the Wisconsin 
Environmental Policy Act, is, first of all, to make sure that 
all the potentially harmful and adverse environmental impacts 
are fully considered by decision-makers before they have 
reached the ultimate decision; second, to conduct a rigorous 
and objective evaluation of all reasonable alternatives, 
including a no-action alternative; third, to fairly and fully 
consider what are called cumulative environmental impacts, so 
that decisionsmakers are not just looking at one project alone, 
but what are the effect of multiple activities, and that is 
important particularly in this case; and finally, engage 
meaningful public participation, along with some other factors.
    When Wisconsin weakened its environmental protection laws 
and limited the environmental review for this project and 
others, that is unfortunate for Wisconsin residents and its 
environment and, also, for Illinois and our state's residents. 
These harmful impacts play out very significantly when it comes 
to the Foxconn development and the water and flooding issues 
here in Lake County. And, that, in turn, implicates the Small 
Business Administration's Disaster Loan Program.
    Representative Schneider, you recently commented: ``When 
corners are cut on environmental reviews, our local communities 
pay the price.'' I agree. Under Governor Walker's 
Administration in Wisconsin, in 2017, Wisconsin policymakers 
indeed cut corners when they eliminated or weakened meaningful 
environmental rules and reviews in several ways. Let me 
highlight three of the specific problems.
    First, Wisconsin exempted this Foxconn project from the 
Wisconsin Environmental Policy Act's requirement that an 
Environmental Impact Statement be prepared for a major project 
like this that clearly has major environmental impacts.
    Second, the Wisconsin legislation exempted this Foxconn 
project from state regulatory requirements that restrict the 
filling of wetlands and waterways. In effect, Foxconn can fill 
in wetlands without a permit. Wetlands, as others have pointed 
out, act as natural sponges. They prevent flooding, and it also 
provides valuable wildlife habitat.
    Third, as you know, the United States Environmental 
Protection Agency weakened air quality protections in Racine 
County in southeast Wisconsin, in Kenosha, in a highly 
criticized decision that is now on appeal to the United States 
Court of Appeals for the D.C. Circuit, and the Environmental 
Law and Policy Center is a party in that case. That misguided 
decision has been the focus of newspaper articles and others 
that have asserted there was undue political influence on what 
should be, under the environmental protection laws, and 
especially under the Clean Air Act, technical scientific 
decisions. That, too, has an impact both on Wisconsin and on 
Illinois.
    So, turning to the first point, the Wisconsin Environmental 
Protection Act requires an Environmental Impact Statement, and 
that is part of the process for the public to engage, to 
comment, and for alternatives and impacts to be fully and 
fairly considered. For Foxconn, that was avoided. The 
consequences are not confined to Wisconsin's boundaries when it 
comes to air pollution and water impacts, as Mr. Warner just 
testified.
    Second, on the wetlands, Foxconn was exempted from the 
permitting process and instead pays into a wetlands fund. That 
is not sufficient, as the Chris Burke Engineering study for 
Lake County has explained. When wetlands are filled in, their 
absorption capacity is reduced and, in some cases, eliminated. 
If there is going to be a fund, the place to begin spending at 
least some of the funds is in the places that are affected, 
namely the Des Plaines River Watershed, both in Wisconsin and 
here in Illinois.
    Finally, you noted in your earlier comments that all of 
this is exacerbated by climate change, and sadly indeed it is. 
The Environmental Law and Policy Center recently commissioned 
18 leading Midwest university scientists to prepare a state-of-
the-science report of the impacts of climate change on the 
Great Lakes region, and their findings are disturbing, 
chilling, and realistic.
    The fact of the matter is that we are looking at much more 
extreme weather, according to the scientists and sound science, 
more intense rain storms. That is exactly the sort of stuff 
that leads to more flooding, and that needs to be taken into 
account by the Committee when it comes to the SBA's Disaster 
Loan Program.
    There are solutions that we are advocating, but 
unfortunately we are looking at more extreme weather, more 
intense rain storms, and the real-world impact of that is more 
flooding. So when you look at what has been done on the Foxconn 
situation, other factors, like climate change, tend to make it 
worse rather than better.
    So let me just wrap up with a couple of points. First of 
all, as the Foxconn experience underscores, Environmental 
Impact Statements and proper reviews serve an essential 
purpose, and they shouldn't be cast aside simply because a 
particular developer is insisting upon a very lucrative package 
in order to locate in a particular place. At the Environmental 
Law and Policy Center, we do believe the evidence shows job 
creation, economic growth, and environmental progress can be 
achieved together. That is a win-win-win, and there are 
examples of that here in Illinois, in Wisconsin, and throughout 
the Midwest.
    Second, choosing to exempt particular development projects 
from important regulations and oversight has consequences. 
Other people in other jurisdictions, such as here in Illinois 
can be harmed, and the recourse is difficult. That is the 
Foxconn situation here, with the potential flooding impacts it 
creates for Illinois.
    Third, our environment is fragile. Changing air quality and 
water protections can affect the health and safety of thousands 
of people and indeed hundreds of thousands of people downwind, 
downstream, the people in Lake County, and businesses in Lake 
County, as I know you will hear in a couple of minutes. That, 
in turn, impairs the already stretched SBA Disaster Loan 
Program.
    Thank you for convening this field hearing and for your 
consideration of my and the other witnesses' testimony today. 
We would be pleased to address any questions or suggestions you 
have.
    Mr. SCHNEIDER. Thank you, and now we will go to Mr. 
Durning. John, thanks for joining us.

                   STATEMENT OF JOHN DURNING

    Mr. DURNING. Thank you, Congressman, and the rest of the 
Committee, for having me in today and sharing our events during 
this flood.
    On the night of July 11 and into July 12, 2017, the Lake 
County and Libertyville, Illinois area received approximately 
seven inches of rainfall, causing widespread flooding in the 
area and specifically at my restaurant, Pizzeria DeVille. The 
cause of the flooding from our research and understanding 
initially was that it was the result of a freak storm and a 
local municipal water and sewer system that was antiquated and 
unable to handle the deluge. Water entered through the sewer 
line and up through the basement bathroom drains at our place. 
Through follow-up meetings and discussions, the water/sewer 
system was only part of the issue, and apparently some of the 
issue is that the system has not kept up with the ever-
expanding development of lot-filling McMansions and other heavy 
development along the Des Plaines River. While I am no expert 
on why it flooded, I can share its impact on me and my 
business.
    When the flood occurred, my family pizzeria was nearing its 
third anniversary. To that point I had not ever experienced any 
real flooding in my business. We had a mop sink back up a 
couple of times, but that was because of debris that we had 
left in the drain, no real consequences.
    What we experienced on July 12, 2017 was four to six inches 
of black water tainted with human waste and grease from our 
grease trap floating around my basement kitchen, party room, 
and into all floor and near-floor equipment and products. I 
have submitted a video of what I walked into that morning, and 
I was literally heartbroken. I knew we would be shut down, at 
least in our basement and prep area, for a few days but didn't 
fully comprehend what a hassle this was going to be.
    We acted fast and were able to engage a flood remediation 
company at a great price to get going on our flood mitigation. 
Our insurance company, Society Insurance, was also quick to 
respond. While we were able to get the space mostly cleaned up 
in two days, my party room was shut down because we needed to 
remove and replace doors and drywall, among other things, and 
ensure the space was ready for food preparation. Everyone 
pitched in and got this done in a timely fashion and we were 
able to reopen for limited service on my main floor in a few 
days.
    Then on August 28th, 2017, it happened again, albeit less 
water. We still needed to bring in another flood remediation 
company and pay another insurance deductible. As a small 
business with sales of about $1,100,000 annually at the time, 
we lived and operated paycheck to paycheck. Having to absorb 
the loss of business, pay two insurance deductibles, and have 
to do so without 60 seats of our private party room and prep 
kitchen left me feeling helpless. When it happened again six 
weeks later, you can imagine my thoughts. Obviously, my 
insurance premiums went up as well. Staff retention was a 
challenge as we had to scale back for a bit, and nothing was 
quite right operationally for a few weeks as our mixer was down 
and we had to make our pizza dough two doors down at a 
neighboring restaurant. You can imagine how difficult my 
monthly loan payments to the SBA became during this period, 
though we never missed or were ever late with our payment.
    However, the lasting effect of this is also debilitating as 
there has not been a major rainstorm since that I have not sat 
awake in bed or driven directly to the restaurant to see if it 
is happening again. We have seen a few more minor incidents and 
have come to learn that much of this is caused by an age and 
capacity issue within our municipal sewer system. Moreover, 
some of the capacity issues relate directly to new development 
in the area.
    Our local municipality has been quick to act and address 
these issues as best they can, but this does little to ease my 
mind every time I see big storms on the radar. Many in our 
community were hit harder than my business, and my heart truly 
goes out to them. In fact, we subsequently did a fundraising 
effort for a family that lives near the Des Plaines River in 
the Vernon Hills/Mettawa area whose home was inundated by the 
floods.
    Since that time, new development seems to be moving ahead 
full steam both up and down the river and around Libertyville 
and its surrounding towns. Having worked in residential and 
commercial real estate development in the past and now owning 
my own small business, I understand the many sides to this 
complex issue. With that said, I think for the good of all 
involved, including local businesses, homeowners and renters 
currently in place and those who would hope to live in new 
developments, it is imperative that local, state, and Federal 
officials figure out how to mitigate the larger issues of 
wetland protection, over-development and sprawl so that those 
of us who are left to live, work, and raise our families in the 
area can do so with confidence that the homes and businesses we 
have invested our life savings into are able to operate and 
thrive without the threat of catastrophic flooding that nearly 
eliminated my favorite place, Pizzeria DeVille.
    Thank you again for letting me come in. I would just add, 
hearing the experts talk, it makes me more scared, not less, 
and so I sure hope we can get our arms around this.
    Mr. SCHNEIDER. John, I couldn't agree more with all that 
you said, but in particular with the need to address this issue 
and not just the issue of flooding in the Des Plaines River, 
which we are focused on today, and the ability to mitigate 
that, but focus on long-term climate change. I thank everyone 
for all that you guys do.
    We will move now into the question and answer. Typically in 
a hearing, each member on the dais gets 5 minutes, and the 
Chairman gets the prerogative of taking more time. I am every 
member and the Chairman----
    [Laughter.]
    So I will ask all the questions.
    John, I am going to start with you, and we will be a little 
bit informal. Thank you for sharing the impact on your 
business. How long were you down in 2017 from the time you had 
the flood overnight? How long were you out of----
    Mr. DURNING. Well, fully down, we were down for a couple of 
days, because the upstairs wasn't really impacted. What that 
meant was we had to go through prepping in other restaurants 
and off site, and it really was quite taxing and expensive for 
our business to do those things. So we were able to open up 
partially within a couple of days. But fully, my party room was 
down for six weeks after that.
    Mr. SCHNEIDER. Essentially (33:10) Video 1 One of the 
things that the national data shows (33:13) Video 1 is that 
businesses are down for a while. The full recovery can often 
cost not just tens but into the hundreds of thousands of 
dollars for a business, and it makes it a real challenge.
    As Mike touched on, we had last year six above-flood-stage 
events. Over the course of the year, that was a record. This 
year, as of July 19th, we have had four already, on track for a 
record.
    John, back to you. You touched on that every time there is 
a rainstorm you lie awake at night, and I appreciate that. We 
have that with our own home. But how does it affect your 
business decision-making when you think about the implications 
of the likelihood of another flood? Does it affect your 
decision-making at all?
    Mr. DURNING. Absolutely. We have added new racks and new 
stanchions to put all of our mixing equipment and anything that 
really sits on the ground up above what the health department 
requires because we just don't want to go through that again 
and have to call the guy in Italy to send us a new mixer. It is 
expensive, it is time-consuming, and it hurts my consistency. 
So, yes, we have added equipment to address that, and the 
number of things that go through my head when I see a big 
storm, it runs the gamut.
    Mr. SCHNEIDER. And you can just multiply that to every 
business in the area.
    Mr. DURNING. Every business, so many of my neighbors, their 
personal items and personal effects in their homes. I mean, you 
know, like I said, I feel like we got out of it very easily 
compared to so many others in the community.
    Mr. SCHNEIDER. And last question, then we will move to the 
next topic. Were you aware of the SBA loan program in 2017? Did 
you apply for a loan?
    Mr. DURNING. I confess I was not aware of it, I did not 
apply, and the only comment I would make is that if it is going 
to be effective, it needs to be very quick to act.
    Mr. SCHNEIDER. And we are working that.
    Mike, let me turn to you. We talked about last year was a 
record at flood level, this year we are on track. But what is 
the history of flooding in the region, particularly over the 
last couple of decades?
    Mr. WARNER. Since 1986, we have gotten a Federal disaster 
declaration seven times. Ironically, though, the 2017 flood 
that set the record, we did not get the Federal declaration, 
but Wisconsin, Kenosha County did, and it is based on 
population and the impacts. So unfortunately, I think we got 
about $12 million of damage in 2017, and we needed to get to 
$18 before we got that declaration.
    The Des Plaines River has a long history of flooding. The 
severity and frequency of that has increased, unfortunately.
    Mr. SCHNEIDER. Thank you. How have local communities 
responded? The river runs, obviously, from the Wisconsin border 
through all of Lake County, down through Cook County. How have 
local communities responded?
    Mr. WARNER. There has been a significant investment over 
the years. The Stormwater Management Commission has purchased 
over 200 flood-prone properties county-wide, and over the next 
year-and-a-half we have planned another 30. About half of those 
planned are on the Des Plaines main stem. So we do recognize 
that because of the amount of water that is coming downstream, 
buyouts or elevations are really the only or the best tool, I 
would say, to mitigate the flooding of those homes.
    Besides the removal of the homes, we have done a lot of 
work with regard to wetlands. So there is a private-sector 
wetland bank that just opened on Mill Creek, right at the Des 
Plaines River main stem, that is only three miles south of the 
Wisconsin border. There are 80 new acres of wetlands that are 
available there for sale, and the first credit release was sold 
exclusively to IDOT and the tollway for impacts in the Des 
Plaines River Watershed. So our road agencies in Illinois are 
keeping to that Army Corps criteria of mitigating in the same 
watershed.
    I would also like to mention the Forest Preserve District 
has purchased 8,500 acres of land that they have preserved and 
protected in the Des Plaines Watershed, and they have also done 
a significant amount of wetland restoration. They did a 1,200-
acre restoration at Rollins Savannah. They are planning another 
1,000-acre restoration on the Des Plaines at the Dutch Gap 
Canal preserve right at the Wisconsin border. And they also did 
a 300-acre restoration at the Pine Dunes Preserve, and that was 
in conjunction with the tollway wetland impacts at O'Hare 
Airport.
    So we are--there are hundreds and literally thousands of 
acres of wetlands that we are preserving, protecting, and 
restoring along the Des Plaines corridor. So it is tough to see 
all that advancement and then kind of have to see a couple of 
steps backward that is happening upstream.
    Mr. SCHNEIDER. I will come back to it later, but part of it 
is during the assessment, the environmental impact studies, 
tell us what the impact will be so we can make the adjustments 
and maintain it. Thank you.
    I want to just emphasize a point. We are talking about the 
Des Plaines River Basin because we are talking about Foxconn, 
but this affects the Fox River in our community as well. We 
have the mayor of Fox Lake here. So it is not just the Des 
Plaines River. It affects our entire community, so thank you 
(5:43) Video 2.
    Howard, when we are talking about climate change in 
general, we are talking about global climate change, and we see 
the effects all over the world, not just here, and it is a 
global issue. But there are local effects. What are the effects 
of climate change here in the local region?
    Mr. LEARNER. This is exactly why the Environmental Law and 
Policy Center reached out to 18 leading scientists at the 
University of Illinois, Northwestern, Michigan, Michigan State, 
University of Wisconsin, Ohio State, the Big 10, and Canadian 
scientists. The Great Lakes is bi-national.
    Sorry, I am old school. Rutgers and Maryland, that is not 
really the Big 10.
    [Laughter.]
    Mr. SCHNEIDER. It is the coast to coast conference.
    Mr. LEARNER. What they have put together this March was a 
state-of-the-science report on the impacts of climate change on 
the Great Lakes, and the fact is you are quite right, 
Congressman, global climate change is global. It is across the 
planet. Its impacts are felt everywhere, and pollution that 
comes from Indiana or carbon pollution from Indonesia has 
largely the same effect on the atmosphere.
    But the effects are felt differently in different areas. 
One of the commonalities according to the scientists is the 
increased intensity of rainstorms. Not only are we going to 
have more extreme weather events, more tornados, hurricanes, 
and more flooding, but the intensity of the storms will be 
more.
    So when we look at issues involving flooding in Lake 
County, exacerbated perhaps by the Foxconn development, that 
comes at a time when the best scientists in our region are 
telling us we are going to see more rainstorms with more water 
and more intensity. So this is taking an already challenging 
problem and making a bad problem worse when it comes to the 
real world, on the ground, on the water, in the businesses, in 
the communities, regarding the impacts of climate change, and 
here the Foxconn development.
    Mr. SCHNEIDER. Just to put an exclamation point on that 
issue, two years ago we saw Hurricane Harvey, 50 inches of rain 
in one location. Houston is still recovering. The 2017 flood 
here in Lake County, we had seven inches of rain here 
overnight. That is what caused much of the flooding in the 
community. And to add insult to injury, you watched the river 
flooding, and communities like Fox Lake, like Gurney, like 
Wheeling, just having recovered from a torrential rainstorm and 
the flood effects of that, watched the rivers rise over the 
next several days as more water came down. So I think that 
intensity, we are seeing it consistently across the nation.
    Mr. LEARNER. Here is what you can deal with; here is what 
you can't. There are certain things in terms of global climate 
change here in Lake County, here in your district, 
Representative Schneider, you can't make a big difference on. 
But what you can do is, recognizing those changes in weather 
patterns, is to determine what steps can be taken to help 
mitigate the impacts on flooding, as you are describing, what 
steps can be taken to adapt to some of what we know is coming? 
That is where the Foxconn issue comes in. If you know that 
global climate change is going to lead to more torrential 
rainstorms and flooding, as you are describing, then let's do 
everything that we can at the local level, at the county level, 
at the district level, to try to avoid making bad problems 
worse. Let's try to mitigate those problems. Let's try to adapt 
around it, and let's not do things in terms of waiving 
environmental regulations as Wisconsin did under Governor 
Walker for the Foxconn development, to take what we know to be 
problematic and make it worse.
    Mr. SCHNEIDER. So that may be a good transition, Mike, 
locally. What steps can our local communities take to mitigate 
the damaging effects of these increased frequency and intensity 
of storms? How do state and local governments' compliance with 
environmental reviews affect that?
    Mr. WARNER. Well, the state water survey did just release 
in March new rainfall analysis for Illinois, and it shows 
exactly what we have been talking about today, that the 
rainfall amounts and intensities of the storms are increasing, 
and it is a trend. So it doesn't stop here, so to speak. They 
are showing that our rainfall amount for the, so to speak, 100-
year storm is increasing up to 45 percent.
    It is ironic, though, since it is the Illinois water 
survey, that their study stopped at the Wisconsin boundary. But 
there is interest from NOAA to pick up their study criteria and 
apply it on a more regional basis, because we know that that 
rainfall isn't going to stop at the state boundary.
    As far as the environmental impacts, I think that if there 
were proper reviews that were done, I think just the opposite 
of what happened during that review process. Typically they 
look at avoidance and minimization of wetland impacts, and I 
think that is probably a preconceived understanding as to why 
they waived those regulations, because they wanted to just 
basically fill all the wetlands that were there and create this 
development corridor, and that is what has happened. So there 
is no mitigation that has been done for all the wetlands that 
have been filled to date within the same river corridor. It is 
pretty impactful.
    I would also comment that the amount of depressional 
storage that is lost--so the landscape up in Wisconsin is very 
similar to Illinois where the landscape was kind of dotted with 
these depressional wetland pockets before, now it is a hard 
surface all the way across, a flat, hard surface, and all that 
rainfall is just going to wash right off and come downstream.
    Mr. SCHNEIDER. Thank you. That lays out what we are doing 
here. But as you said, there is a process that should have been 
followed.
    Howard, I will shift to you. What is the purpose of NEPA, 
the National Environmental Policy Act, and other environmental 
safeguards? How is it supposed to work?
    Mr. LEARNER. Let me talk and address your question with 
regard to NEPA, and then with regard to specific permitting; 
for example, what the Army Corps of Engineers does in terms of 
wetlands.
    NEPA is designed to influence decisions and the decision-
making process by requiring the decision-makers to conduct a 
thorough environmental review before decisions are made, not 
afterwards in order to post hoc justify a decision already 
made. The purpose is to make sure that the decision-makers who 
are involved consider all the relevant environmental factors, 
including the adverse impacts.
    Second, rigorously explore and objectively evaluate the 
alternatives and other actions that can be taken.
    Third, look at the cumulative impacts of multiple projects, 
because one project may create a problem, but when there are 
several projects in combination, it becomes a much larger 
problem, to the decision-makers have to look at the whole, not 
just the separate parts in a segmented way.
    And then finally, engage the public, because as you are 
conducting this hearing today, decision-makers learn from the 
public. It is a good exchange of ideas.
    That is the purpose of the National Environmental Policy 
Act, and it likewise is the purpose, with some tweaks, of what 
the Wisconsin Environmental Policy Act provides. So when that 
process is circumvented, or in this case eliminated, the 
benefits of that advanced environmental review process in which 
the impacts can really be fully considered get truncated.
    Some of that may get done anyway. Somebody may say, well, 
we looked at some things, but not with the thoroughness, the 
rigor, the thoughtfulness that NEPA, the National Environmental 
Policy Act, review process requires.
    Likewise when it comes to wetlands permitting, there is a 
set of rules and standards that apply under Wisconsin state law 
that generally apply under Federal law as well, and that is 
designed to really look at, when you are filling wetlands: do 
you have to do it, is there any other reasonable alternative; 
or if you have to do it, then what do you have to do in order 
to fully offset, replace, and remedy what you have done?
    When you circumvent, that can avoid, if you will, wetlands 
acting as a sponge, soaking up water. By and large, if you fill 
wetlands, that means water has to go somewhere downstream, and 
downstream here is northern Illinois.
    Mr. SCHNEIDER. If I can summarize, I am thinking of my 
background in business. It is assessment, it is analysis, and 
then it is decision-making.
    Mr. LEARNER. That is right. You don't put the cart before 
the horse, to use a more street term on it.
    Mr. SCHNEIDER. The metaphor I was going to use is instead 
of ready, aim, fire, it seems like we did ready, fire, aim.
    Mr. LEARNER. That would be another good way of putting it, 
yes.
    Mr. SCHNEIDER. You can miss it.
    Mike, at a local level, how do we understand the importance 
of following the policy rather than the other way around, the 
consideration for water displacement for large developments 
like the manufacturing hub we see in Wisconsin, or 
transportation infrastructure we see with roads up north but 
also through our own communities? Why is it so important to 
have that understanding?
    Mr. WARNER. I would say that our knowledge of wetlands and 
the functions that they provide have grown over the past few 
decades to the point where it is a matter of business now, at 
least in Illinois, that it is understood that if you impact a 
wetland in this area, in Lake County, Cook County, in an area 
that is under the regulations of the Army Corps Chicago 
District, that you are going to have to mitigate for those.
    So that has driven the private sector mitigation banking 
community, to the point where we have been able to recapture 
all of those wetlands that are impacted, within the same 
watershed as where they are impacted. So I think that is one of 
the things, one of the big items that is missing in this 
equation, and possibly a solution is the way the Wisconsin 
banking instrument is set up and their mitigation policy is----
    Mr. SCHNEIDER. Let me pause you for a second just to make 
sure, this is for me as much (17:24) Video 2 as for everyone 
else here. When we are talking about the banking instrument, it 
is not like the bank where we cash a check. We are talking 
about the ability to bank land that will provide wetlands. Is 
that what you are talking about?
    Mr. WARNER. Correct, yes. I should explain that. So the way 
wetlands are impacted and then filled and credited in other 
locations is there will be a landowner that creates a huge 
wetland restoration area, and they can actually sell those 
credits to someone that impacts them in another location in the 
watershed.
    What we are recommending to Wisconsin is that they consider 
the Des Plaines as its own watershed. Right now they have it 
grouped in with another watershed so that if you impact in the 
Des Plaines, you can mitigate for it somewhere else, and that 
is exactly what Wisconsin DOT did when they created all the new 
roadways up there. They took jurisdiction over the local 
roadways where in some cases there is a two-lane country road 
and they are expanding them to a six-lane road section with 
pathways on both sides, so essentially almost a seven-lane road 
section. So it is a huge increase in impervious surface.
    All of that wetland, all of those streams that were filled 
are banked or replaced, so to speak, outside the Des Plaines 
Watershed. So all of that benefit that we had of that wetland 
to absorb any of that surface water is now gone. That is really 
the local impact in a different way of how it has looked across 
the border here in Illinois.
    Mr. SCHNEIDER. So in very simple terms, we have talked 
about increased frequency and intensity of storms. We have more 
water coming from the sky. By filling in land, reducing the 
impressions, by covering land, making it more impervious, that 
water volume coming down and going up does fall on the ground. 
It all has to go somewhere. I will ask the obvious question: 
Where does it go?
    Mr. WARNER. It is going into the Wisconsin floodplain and 
then the Illinois floodplain.
    Mr. SCHNEIDER. Which is here.
    Mr. WARNER. Right, which is right next door, just down the 
street from here. That is one of our biggest--another comment 
was it is not just harming Lake County and Cook County 
downstream in the Des Plaines, but they are really putting more 
businesses and homes at risk in Wisconsin as well, because 
their floodplain definition up there is very small and very 
underestimated, in our analysis.
    Mr. SCHNEIDER. I am going to go to Howard, and then John in 
a second.
    Foxconn is a big development. It is huge. You touched on 
cumulative, a lot of small developments can add up to a big 
development. But with a development like the Foxconn facility, 
how should NEPA restrictions apply, and how do we extend that? 
What should happen in a situation like that?
    Mr. LEARNER. The cumulative impacts standard under NEPA, 
the National Environmental Policy Act, requires the decision-
makers to not look at the impacts of one project in isolation, 
albeit a big project in this case, Foxconn, but look at it in 
the context of other surrounding developments and other 
activities.
    So, for example, on the air quality side where the region 
is teetering on being a non-attainment area for ozone, which it 
has been in the past, when you add the Foxconn development, a 
bad problem gets worse.
    Now, it is not just Foxconn itself. You have to look at the 
cumulative impacts not just of Foxconn but of other projects 
that are proposed going forward that both add air pollution 
problems; or, in the particular case you are raising, also 
affect wetlands, also affect flooding, also affect downstream 
communities when it comes to water flowing here in the Des 
Plaines River Watershed and the Fox River as well. That is what 
NEPA requires.
    Mr. SCHNEIDER. So that is the requirement. It is not 
necessarily what happened.
    So, John, I turn to you. You talked in your testimony about 
development going on around our communities. On the one hand, 
that is good. As a small business, you want more people to buy 
your pizza. On the other hand, you look to the skies with every 
rainstorm and say, literally, can I weather this storm?
    As we are talking about all this, what goes through your 
head? As you are thinking about planning for your business, I 
would love to get your take at this point in the conversation.
    Mr. DURNING. I can't help but think, as I listen, I was 
just thinking about this, this whole river and pushing the 
problem down the river is an amazing allegory for so many 
things impacting our country right now, and time really is that 
river, and all the problems are getting pushed down to our 
kids.
    For me, forget about Pizzeria DeVille and anything uptown 
and anything else I am involved in. We need to fix this for our 
kids. That is why we need to get in front of this and do 
something meaningful for our children. That is my only takeaway 
from this, and I appreciate you letting me voice my opinion.
    Mr. SCHNEIDER. Thank you. I appreciate that.
    Let me go back to Foxconn. We talked a little bit about 
what should have happened. You may have assessed this, 
Foxconn's general track record for abiding by environmental 
regulations, where it is here or--they are a global company.
    Mr. LEARNER. I think, Congressman, you are aware that there 
has been a fair amount of media criticism on Foxconn, really in 
two principal respects: first, Foxconn's environmental 
performance record; and second, concerns that Foxconn promises 
a palace and they come back with a bungalow.
    We have already seen in Wisconsin that when the deal was 
cut with Governor Walker's administration, Foxconn was 
asserting, and President Trump was reflecting, many thousands 
of jobs that would supposedly be created, particular types of 
video screens that would be made, a lot of manufacturing jobs 
and so forth. If I understand what is going on presently in 
Wisconsin with regard to Foxconn, the company is not living up 
to the promise when it comes to actual performance. Some of the 
incentives they didn't receive at the end of 2018 because they 
hadn't delivered on the number of promised jobs. Apparently, 
Foxconn is now talking about a relatively different facility, 
more technical jobs than manufacturing jobs, less jobs, and so 
forth.
    I was not in the middle of the negotiations with what 
exactly did Foxconn promise in detail, the documents, and is 
Foxconn living up to the spirit or the letter of the 
commitments that were made. Suffice it to say, there is a fair 
amount of skepticism and concern over whether Foxconn is 
delivering on what it promised; and second, on its 
environmental performance and reputation.
    Certain companies, as you know, develop a track record of 
strong environmental performance, and when they are dealing 
with the public and they are dealing with decision-makers, they 
stand on their track record and they deliver on that 
performance. Others don't quite have that reputation.
    Mr. SCHNEIDER. But there were a lot of promises made--this 
is for both Howard and Mike--a lot of promises made and 
questions about how now are they being delivered. But in return 
for those promises, there were shortcuts, waivers, all kinds of 
things. What decisions, what shortcuts, what was done that is 
going to have an impact on environmental--or have environmental 
consequences going forward? Do you have any insights on that?
    Mr. LEARNER. I think that is what I was summarizing in my 
testimony. The written testimony goes into far more detail. I 
didn't think you wanted that much this morning; the 20-minute 
version as opposed to the 5-minute version. The Committee has 
the more detailed testimony.
    But to tick it off in very rapid fashion, number one, 
Foxconn apparently requested, and the Walker Administration 
agreed, to waive environmental review under the Wisconsin 
Environmental Policy Act, and that is the conversation we just 
had about why you should have those sorts of reviews in 
advance, and why do you, as you put it, ready and aim before 
you fire.
    Second, the various state permitting requirements, when it 
comes to wetlands as part of the negotiations between Foxconn 
and Governor Walker's administration, were truncated--that is 
probably a polite word--at the very least, truncated.
    Then finally, there have been a lot of concerns raised on 
how the U.S. EPA did its ozone non-attainment evaluation and 
certain changes that were made in which FOIA requests showed 
that certain politicians, in effect, overrode the science 
technical staff recommendations, and that at least has some 
linkage, it appears, to Foxconn as well from the added 
pollution that would come from the plant.
    So those are three examples. There are others, as well.
    Mr. SCHNEIDER. Mike, these were decisions, shortcuts that 
were made, like the county decision to study assessing the 
likely consequences that might follow.
    So, a two-part question. Can you summarize again--I know 
you talked about it in your opening statement--the conclusions 
from that study? But also I would welcome your opinion, and 
anyone else, Howard, of had the proper steps been taken in 
authorizing the Foxconn project, would the outcomes, would the 
projections of the study have been different?
    Mr. WARNER. Absolutely. Again, going back to the stormwater 
storage aspect, the wetlands aspect, and the floodplain issue, 
we believe that if those processes had been followed, more 
mitigation would have occurred to offset the increases in 
surface water. So really, that is what our study focused on, 
was what kind of flows are we going to see coming downstream 
from Wisconsin, and how are those going to be increased as 
development progresses in Wisconsin.
    So there was a mention that there is a cumulative effect 
and Foxconn isn't the only development that is occurring 
upstream. They are a very large one, though, and they do have 
an effect all on their own. But if you combine that with what 
is happening in the development pattern that is occurring, what 
we are estimating right now is that the 100-year flood is going 
to be where the 500-year flood is right now.
    That is a rough estimation, but our numbers have been 
verified by an independent computer model that we have run on 
those numbers as well. I don't know if I can say it is a good 
thing, but at least we know where the 500-year flood is at 
within Lake County, so it is a mapped larger floodplain. But it 
is significantly higher, and there is more flow, and it is 
something to be concerned about.
    As far as one of the waivers that Foxconn was given, they 
were immediately allowed to fill all their wetlands. We have 
mentioned that. But they were told they had to mitigate at a 2-
to-1 ratio. So they filled in 17 acres of wetlands, and the 
intent is, and we hope it comes to fruition, that they do 
mitigate 34 acres somewhere. There is no mitigation that has 
been done at all for those fills as of now, and we don't think 
that the fee assessed will really allow them to mitigate a full 
34 acres.
    So right now they are just paper wetlands. They have paid 
into the fund. They are on paper.
    Mr. SCHNEIDER. Are those effective at collecting water?
    [Laughter.]
    Mr. WARNER. No, not much. Only what you spill on them. So 
we are missing that resource that has been impacted.
    Mr. SCHNEIDER. So I just want to, again, confirm my 
understanding. The 100-year flood doesn't mean that you are 
going to have this flood once every 100 years. What it means is 
you have basically a 1 percent chance each year of having a 
flood at that level. Is that fair?
    Mr. WARNER. That is correct.
    Mr. SCHNEIDER. So saying that the 500-year flood is now at 
the level of the 100-year flood, it means that a flood that had 
a .2 percent probability of occurring in any given year is now 
five times more likely to occur.
    Mr. WARNER. That is exactly right.
    Mr. SCHNEIDER. So it is not, oh, we had a horrible flood 
last year, we won't have another one like this again for 100 
years. We could have one like this, or five times worse, this 
year, at a greater percentage.
    Mr. WARNER. Correct.
    Mr. SCHNEIDER. And that is the impact. Again, not being 
lied about, the less capacity the land has to absorb that or to 
hold that, to retain that upstream from us, means those of us 
downstream are going to have the impact of that and have to 
absorb the water we get in our own rainstorms, but also the 
water that rains on our neighbors as well.
    Mr. LEARNER. I might sharpen the point just a little bit.
    Mr. SCHNEIDER. Please.
    Mr. LEARNER. First of all, the prior assumptions of what is 
an area with a 100-year flood possibility, a 100-year 
floodplain, is sort of antiquated at this point. What we are 
finding in Illinois and around the Midwest, and everywhere, is 
that those assessments made on the basis of prior weather 
patterns, for all the reasons we have just discussed with 
regard to climate change, show far more flooding occurring 
within short periods of time than one would expect in a true 
100-year floodplain.
    Unfortunately, the Trump Administration actually cut the 
budget for the evaluations to be done of remapping what 
floodplains actually are: whether it is a 20-year or 10-year or 
50-year or 100-year floodplain. But the old assumptions of 
something being a 100-year floodplain in many cases are up for 
question under the new weather patterns.
    Second, as Mike put it in addressing your question, it is 
akin to going to a slot machine. If you happen to pull down the 
arm and get three cherries and you get a jackpot, that has no 
predictive value on whether the next time you pull that will be 
the 1 in 1,000, or whether you will go another 999 and you 
still won't even get to 1,000. Any year is a prediction, and 
any year can be 1 in 100, or can be 2 in 100.
    On the other hand, when you start seeing 3 in 100 within a 
relatively short period of time, that tells you that the 
assumption that this is a 100-year floodplain is probably no 
longer valid.
    Mr. SCHNEIDER. Extending that to floods, I will make the 
observation--I mentioned Hurricane Harvey. Three of the five 
most devastating hurricanes on record in the United States 
occurred in 2017.
    Mr. LEARNER. That is correct.
    Mr. SCHNEIDER. So that is, I think, the emphasis, that we 
are seeing increased frequency and intensity in our storms.
    So, Howard, Wisconsin, by failing to categorize the Foxconn 
development as a major action, it allowed the development to 
effectively skirt the need for an Environmental Impact Study 
(1:05) Video 3.
    My question to you is in your view, do you believe (1:07) 
Video 3 Foxconn should be required to have an Environmental 
Impact Statement, and can you walk us through the process that 
would follow from that?
    Mr. LEARNER. We believe that, yes, Foxconn should have been 
required to do an Environmental Impact Statement, or that an 
Environmental Impact Statement, to be more precise, should have 
been done by the Federal and state decision-makers with regard 
to the Foxconn development. It is a little bit more complicated 
today because, in effect, the purpose, as we have been 
discussing, of the environmental review process is to analyze 
and examine before you make the decision rather than make the 
decision and try to somehow fit it in. So it is sort of an 
interesting question today of if there were to be an 
Environmental Impact Statement required, how do you go back and 
seriously reexamine?
    That said, doing a careful environmental review, albeit 
late, would be a very positive action here.
    Mr. SCHNEIDER. Thank you.
    I am going to wrap up. I have one last question, but I will 
say this. What we are hearing is an egregious example of 
shortcuts and skirting responsibilities with Foxconn. As I said 
in my opening remarks, that is not unique to Foxconn, but this 
is something that is happening here.
    Our purpose is, in effect, to discuss the impact and the 
importance of the SBA Disaster Loan Program in that context, 
because as this Administration has cut funding for doing 
environmental studies, as it has cut funding for NOAA to 
understand weather patterns--I mean, we have seen egregious 
cuts of funds, and even where Congress has intervened and said, 
no, you are not cutting those funds, an effort to diminish the 
capacity of the agencies to do the work they have to do.
    I will start with you, Howard, but I would like to get 
everyone's view. Howard, Mike, and John, I will give you the 
last word on this.
    How important is the SBA Disaster Recovery Program? It 
seems to me--I will show you my bias and call the question. I 
guess it is a leading question. I am not a lawyer, so I can do 
this.
    [Laughter.]
    Mr. SCHNEIDER. It seems that it is going to be increasingly 
important because businesses are facing a greater probability, 
an increasing risk not just of a chance of a flood but the 
significance of a flood.
    Howard?
    Mr. LEARNER. You have to look at it, I think, Congressman, 
in the following way. The SBA Disaster Loan Program is now more 
essential than ever, both for it to be well funded and for the 
funds to be deployed in a thoughtful, effective manner. For all 
the reasons we have been discussing, we are looking at flooding 
issues and others becoming worse rather than better, and 
because of climate change, the reliance upon what used to be 
viewed as a 100-year floodplain in many instances is going to 
experience more flooding than that might indicate.
    Of course, the best solution is better planning at the 
front end so that to the extent that we can have an influence 
on mitigating, adapting, and avoiding flooding, we are 
therefore reducing the demands upon the SBA program.
    So in the case, for example, of global climate change, we 
should do what we can to mitigate climate change, but we are 
certainly going to see some impacts of it. But what we can 
really do is, in situations like the Foxconn situation, is 
really think about how in advance do you mitigate the impact 
of, say, the Foxconn development by having good environmental 
review processes, by having good permitting processes so you 
reduce the amount of flooding, and by other such actions. And 
if you do that, then you are reducing some of the pressure on 
the SBA Disaster Loan Program.
    So, do what you can at the front end to reduce the pressure 
on the program. Second, realistically recognize that there are 
going to be far more demands on the program, and that the 
program needs full and adequate funding, and that it needs the 
ability to respond to the very changing situations that climate 
change is bringing upon us.
    Mr. SCHNEIDER. Excellent.
    Mike?
    Mr. WARNER. I would agree 100 percent that the loan program 
is essential, and I would say, consistent with our other 
comments with regard to FEMA disaster assistance programs, I am 
not aware exactly how SBA takes into account environmental 
justice areas. So the circumstance that is happening within 
economically disadvantaged areas is that if they do get 
impacted by flood, FEMA will come in and at the Federal level 
will require a cost match typically to do mitigation in those 
areas. Our comments have been consistent that in economically 
disadvantaged areas, either that cost match should go away or 
there should be some type of forgiveness program so they can 
actually rebuild those areas and not have to come up with a 
local match that is unattainable.
    Similarly, on the small business loan situation, if you are 
in economically disadvantaged areas, there may be more 
difficulty in being able to pay back those loans and actually 
recover in those areas.
    So those are the comments that we have made as Congress has 
looked at the flood disaster assistance, redoing those 
programs, and we would make a similar comment with regard to 
SBA. It is a critical program, but in order to make sure 
everybody is whole and to actually recover in those 
economically disadvantaged areas, some indication or some 
consideration of that should take place.
    Mr. SCHNEIDER. Great. I appreciate that.
    John, give me your last word.
    Mr. DURNING. Yes, sir. I think that is actually a great 
lead-in, because having spent a lot of time in banking, I think 
the availability of SBA emergency money is critical, but only 
if it is hand-in-hand with addressing what causes these 
problems.
    When I opened my restaurant, I wasn't able to cut any 
corners. I had to do exactly what the municipalities told me. I 
installed state-of-the-art plumbing equipment that was brand 
new and was going to take care of this problem, and yet I 
suffer the consequences because someone upstream who is bigger 
and stronger and mightier didn't have to do any of that stuff. 
So I think it goes hand in hand.
    My million-dollar-plus business isn't equipped to be a debt 
servicing machine. It is just not. I have an SBA loan. I am not 
real fired up about taking on more debt because I have a family 
I have to take care of as well. I think it is critical that it 
is available. It is going to happen more. But we need to go fix 
some of the other stuff, too.
    Mr. SCHNEIDER. Absolutely.
    Well, with that, let me say thank you again to our 
witnesses for sharing your perspectives during today's hearing.
    Mr. Warner, I would like to thank you for explaining the 
threat of flooding in our district and how Foxconn development 
is poised to make the situation worse. Thank you.
    Mr. Learner, thank you for illuminating the permitting 
process of the Foxconn project and laying out the shortcuts 
taken in environmental review in order to push this development 
through.
    And finally, thank you, John Durning, for sharing your 
perspective as a small business owner dealing with flooding. 
Your situation is the one that the SBA Disaster Loan Program 
was created to help, specifically your situation. We need to 
ensure that environmental reviews are done so that the program 
is not over-stretched, and we also need to perform outreach so 
that businesses like yours and others who are dealing with the 
consequences of flooding know that we have these resources 
available to help.
    While there are dozens of hearings each week in Congress 
while it is in session, field hearings like this are much, much 
rarer. It is significant that we are bringing the intention of 
the House Small Business Committee to our district to focus on 
the issue of flooding and how the waived environmental reviews 
of the Foxconn project are making flooding in our communities 
worse.
    Powerful interests, including as high as the White House, 
align to support the Foxconn project, but that does not mean 
the impact on the environment for our communities can be 
discounted or ignored. We have a right to speak out and ensure 
the interests of our district are taken into consideration 
through the environmental review process. More broadly, we need 
to address this problem of waived environmental reviews to 
ensure the downstream communities do not fall victim to this 
reckless development, and that the tools we have created to 
help, like the SBA Disaster Loan Program, can continue serving 
our communities.
    Finally, I want to thank the Committee and my team for 
their assistance in facilitating this hearing and helping to 
bring the voices of our community to the United States 
Congress.
    Observing that when I am in Washington I get 5 minutes to 
ask a question, I will also say for the record that I like this 
format where I get to ask all the questions.
    [Laughter.]
    I would ask unanimous consent that members have 5 
legislative days to submit statements and supporting materials 
for the record.
    Without objection, it is so ordered.
    And if there is no further business to come before the 
Committee, we are adjourned.
    Thank you very much.
    [Applause.]
    [Whereupon, at 11:48 a.m., the Committee was adjourned.]
                           
                           A P P E N D I X

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Statement of John Wasik, Member, Lake County Board and Forest Preserve 
Commission, Member, Lake County Stormwater Management Commission, Lake 
  County Board Energy and Environment and Public Works, Planning and 
                       Transportation Committees


    Tommy:

    Here is my written testimony for Friday's Congressional 
subcommittee hearing sponsored by Rep. Schneider in Wheeling. 
If I find any other businesses who were impacted by the 2017 
flooding, I will send them your way.

    In July 2017, Grayslake and Hainesville businesses and 
residents experienced catastrophic flooding, causing millions 
of dollars in damage. It caused disruption and anguish to 
thousands of people who had never experienced that kind of rain 
event--more than seven inches in a 24-hour period. It hit all 
of Lake County hard.

    While we have no way to predict if such a catastrophic rain 
event will occur again, we know that climate change is leading 
to an increase in precipitation--some 20% to 40% more than 
historical averages. That will lead to severe damage and 
disruption of countless businesses and residents.

    Worse yet, since little meaningful flood mitigation was 
done in Wisconsin when the Foxconn complex was approved, the 
flooding in Lake County will likely get worse, since we are 
downstream from that site, which sits on the headwaters of the 
Des Plaines River. Watersheds respect no state or federal 
boundaries.

    As a member of the Lake County Stormwater Management 
Commission and Energy and Environment Committee, I call upon 
the federal government to take--and enforce--meaningful 
measures to prevent future flooding.

    We also call upon our neighbors to the north to not only 
undertake meaningful stormwater retention measures, but to do 
so in the entire I-94 corridor, which is under intense 
development. In doing so, they will not only be doing the right 
thing, they will be good neighbors.

    John Wasik

    Member, Lake County Board and Forest Preserve Commission, 
Member, Lake County Stormwater Management Commission, Lake 
County Board Energy and Environment and Public Works, Planning, 
and Transportation Committees

    [email protected]
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