    [Senate Hearing 117-498]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 117-498

                          OVERSIGHT OF THE CLEAN WATER
                       STATE REVOLVING LOAN FUND FORMULA

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

                                    HEARING

                                  BEFORE THE

                                  COMMITTEE ON
                          ENVIRONMENT AND PUBLIC WORKS
                              UNITED STATES SENATE

                        ONE HUNDRED SEVENTEENTH CONGRESS

                                 SECOND SESSION

                                   __________

                                 MARCH 16, 2022

                                   __________

      Printed for the use of the Committee on Environment and Public Works

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

            Available via the World Wide Web: http://www.govinfo.gov

                                  __________

                        U.S. GOVERNMENT PUBLISHING OFFICE
    49-716 PDF                  WASHINGTON : 2023

    -----------------------------------------------------------------------------------

                   COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

                        ONE HUNDRED SEVENTEENTH CONGRESS

                                 SECOND SESSION

                      THOMAS R. CARPER, Delaware, Chairman
    BENJAMIN L. CARDIN, Maryland         SHELLEY MOORE CAPITO, West
    BERNARD SANDERS, Vermont                 Virginia
    SHELDON WHITEHOUSE, Rhode Island         Ranking Member
    JEFF MERKLEY, Oregon                 JAMES M. INHOFE, Oklahoma
    EDWARD J. MARKEY, Massachusetts      KEVIN CRAMER, North Dakota
    TAMMY DUCKWORTH, Illinois            CYNTHIA M. LUMMIS, Wyoming
    DEBBIE STABENOW, Michigan            RICHARD SHELBY, Alabama
    MARK KELLY, Arizona                  JOHN BOOZMAN, Arkansas
    ALEX PADILLA, California             ROGER WICKER, Mississippi
                                         DAN SULLIVAN, Alaska
                                         JONI ERNST, Iowa
                                         LINDSEY O. GRAHAM, South Carolina

                 Mary Frances Repko, Democratic Staff Director
                   Adam Tomlinson, Republican Staff Director

                                C O N T E N T S

                                  ----------
                                                                       Page

                                 MARCH 16, 2022

                               OPENING STATEMENTS

    Carper, Hon. Thomas R., U.S. Senator from the State of Delaware..     1
    Capito, Hon. Shelley Moore, U.S. Senator from the State of West
      Virginia.......................................................     3

                                   WITNESSES

    Ramseur, Jonathan, Environmental Policy Specialist, Congressional
      Research Service...............................................     6
        Prepared statement...........................................     8
    Sigmund, Tom, Executive Director of New Water, National
      Association of Clean Water Agencies............................    30
        Prepared statement...........................................    33
    Dreyfuss-Wells, Kyle, Chief Executive Officer, Northeast Ohio
      Regional Sewer District........................................    39
        Prepared statement...........................................    42
    Watson, Laura, Director, Washington State Department of Ecology..    45
        Prepared statement...........................................    47

                              ADDITIONAL MATERIAL

    Statement of ASCE The American Society of Civil Engineers........    68

         OVERSIGHT OF THE CLEAN WATER STATE REVOLVING LOAN FUND FORMULA

                                  ----------

                           WEDNESDAY, MARCH 16, 2022

                                           U.S. Senate,
                     Committee on Environment and Public Works,
                                                        Washington, DC.
        U.S. Senate Committee on Environment and Public Works
    Washington, DC.
        The committee, met, pursuant to notice, at 10:05 a.m. in
    room 406, Dirksen Senate Office Building, Hon. Thomas R. Carper
    (chairman of the committee) presiding.
        Present: Senators Carper, Capito, Cardin, Kelly, Padilla,
    Boozman, Sullivan, Ernst.

              OPENING STATEMENT OF HON. THOMAS R. CARPER,
                U.S. SENATOR FROM THE STATE OF DELAWARE

        Senator Carper. Good morning. I am pleased to call this
    hearing to order.
        Before we take up the business of the day, Senator Capito
    and I and our colleagues have just listened to a live virtual
    address by the President of Ukraine, President Zelenskyy. We
    were shown a video of the utter carnage that is taking place in
    that Country. I think I would like to, I don't think I have
    ever done this. I would like to start with a moment of silence
    and prayer.
        [Pause.]
        Senator Carper. Thank you.
        Well, it is not a good morning in some places around the
    world as we watch the carnage that is taking place in Ukraine.
    But it is a good morning here in this hearing room. It is
    actually a beautiful day. I go back and forth to Delaware on
    the train. Today I had to get up early and we drove over. I
    came down Route 301 through Delaware and Maryland, and what a
    glorious, glorious day across the Chesapeake Bay.
        So for that, the fact that it is a glorious morning, and we
    are anxious to hear from all of you here discuss an important
    topic, one that Senator Capito and I care a great deal about,
    along with our colleagues.
        To those who may not be familiar, this is one of the
    primary programs in our Country for financing water
    infrastructure projects. Specifically, this program funds the
    construction of wastewater treatment facilities.
        To better inform our conversation, we have an excellent
    panel of witnesses joining us today in person. It is great to
    see you all.
        Ms. Dreyfuss-Wells, Mr. Sigmund, Mr. Ramseur, and Ms.
    Watson, welcome to the Environment and Public Works Committee.
    This is a committee that gets things done. We are a committee
    that works together. I am proud to be a part of this committee
    and have the opportunity to lead with Senator Capito.
        Before we dive into the topic of our hearing, I think it is
    important to recall how we got here. And I am not talking about
    the train or car or an airplane. But as you may recall, last
    year this committee worked in an overwhelmingly bipartisan way
    to draft the Drinking Water and Wastewater Infrastructure Act,
    legislation that included historic investments in our State
    Revolving Funds. That bill passed out of this committee
    unanimously, and later out of the full Senate by a vote of 89
    to 2. Those of us on this committee are no strangers to the
    fact that most legislation doesn't receive votes of 89 to 2 in
    the U.S. Senate. Our water infrastructure bill was an important
    exception.
        This bill, along with our committee's historic bipartisan
    highway legislation, served as the cornerstone of the
    Infrastructure Investment and Jobs Act, which President Biden
    signed into law right in front of us, right beside us, almost,
    last November, a special day for all of us, a couple of kids
    from West Virginia, celebrating the day with a president from
    Delaware.
        Thanks in large part to our committee's efforts, the
    Environmental Protection Agency is in the process of
    distributing some $55 billion to improve drinking water and
    wastewater systems in communities across this Country. This is
    the single largest investment in water infrastructure in our
    Nation's history. As President Biden likes to say, this is a
    big deal.
        [Laughter.]
        Senator Carper. During consideration of our Drinking Water
    and Wastewater bill in the Senate last year, Senator Capito and
    I made a commitment to a couple of our colleagues, Senator
    Kelly and Senator Capito, that we would hold a hearing
    examining the formula for the Clean Water State Revolving Loan
    Fund. Today's hearing is our opportunity to begin to better
    understand what changes, if any, should be made to improve the
    distribution of funds under this program. Specifically, I look
    forward to robust discussion on the current formula that EPA
    uses to distribute funding to States and to territories, and
    how that formula may be improved to strengthen equity and
    address unmet needs.
        For me, investing in clean water is personal. As Senator
    Capito knows, my sister and I were born in Beckley, West
    Virginia, a coal-mining town in the southern part of the State.
    For the first 6 years of my life and my sister's life in the
    Mountain State, we lived alongside a stream outside of Beckley,
    a stream called Beaver Creek.
        Sometimes my sister Sheila and I, along with other kids in
    our small community, would play on the banks of the creek, and
    try to catch small fish from it, an occasional frog. But we
    were never allowed to eat the fish or the frogs that we caught
    there. In part, that was because the nearby septic tanks were
    not well maintained. As a result, sometimes raw sewage and
    other pollution would seep into the creek.
        At the time, our situation was not too different from many
    other small communities across that State, the Mountain State,
    and across the Country. Several years later, after graduating
    from the Ohio State University, I deployed with my squadron to
    Southeast Asia as a naval flight officer. In 1969, shortly
    after I arrived there, I learned that the Cuyahoga River in
    Cleveland, Ohio had caught on fire. This fire heard around the
    world served as a wakeup call for our Nation to get serious
    about addressing pollution, particularly water pollution.
        Congress responded by enacting the Clean Water Act in 1972.
    In the years that followed, communities across our Country
    applied for grant funding to help build or upgrade wastewater
    treatment systems. Over time, grant requests greatly exceeded
    the funding available. During the Reagan administration, a new
    controversial approach emerged, creation of revolving loan
    funds administered and managed by each State. I was a
    Congressman, and had an opportunity to vote on that
    legislation.
        After become law in 1987, these funds were periodically
    modified in annual spending bills to meet changing needs and
    increased demand for resources. In more recent years, however,
    these programs have languished with the authorization for State
    revolving loan funds in dire need of updating.
        That is why, along with our Ranking Member Senator Capito,
    Senator Duckworth, Senator Lummis, Senator Cardin, and Senator
    Cramer, and all the members of this committee joined forces to
    address this need in the Drinking Water and Wastewater
    Infrastructure Act. There is an acronym for that act that I
    have never used. It is the Drinking Water and Wastewater
    Infrastructure Act. Our legislation reauthorized and increased
    the funding for a Clean Water State Revolving Loan Fund for the
    first time in nearly 35 years.
        With the recent passage of the Bipartisan Infrastructure
    Law, we have an opportunity to build on this work and to
    further improve the way we invest in our Nation's
    infrastructure. That includes having more in-depth
    conversations about the Clean Water State Revolving Loan Fund
    formula and what we might consider updating in the program.
        More could certainly be done to adapt the formula for
    changes in climate, changes in population, and changes simply
    because we are living in an infrastructure age. So as I said at
    the outset, let's use this hearing today to gain a deeper
    understanding of all the many factors, at least most of the
    many factors, in the current Clean Water State Revolving Fund
    formula. Let's take this time to examine and discuss
    opportunities for making that distribution more equitable as we
    go forward.
        With that, I am delighted to turn over the microphone to my
    wing woman, our senior Republican and just a great partner on
    this issue and a lot of others, Senator Capito.

            OPENING STATEMENT OF HON. SHELLY MOORE CAPITO,
              U.S. SENATOR FROM THE STATE OF WEST VIRGINIA

        Senator Capito. Thank you, Mr. Chairman. A great statement.
    I can't start without the images in the video that we saw and
    the powerful statements by President Zalenskyy. I think it has
    probably drained every American, just thinking of the pain. So
    we are pretty united in our thoughts and certainly in our
    prayers. Thank you for that moment of silence. I appreciate
    that.
        I want to thank you, Chairman, for calling the hearing, and
    thank all the witnesses for being with us today. I look froward
    to your remarks. The Chairman summarized this, but I do think
    this committee values hearing your perspective on the
    challenges facing the Nation's wastewater infrastructure as
    well as your thoughts on effective solutions to address those
    challenges through the Clean Water State Revolving Fund.
        We are all here today to discuss that important issue of
    updating, possibly, the Clean Water SRF formula itself, which
    came into sharp focus during our consideration as the Chair
    said of the Drinking Water and Wastewater Infrastructure Act,
    DWWIA, around this time last year.
        Senator Carper. I knew there was an acronym there
    somewhere.
        [Laughter.]
        Senator Capito. On that bill's way to enactment of the
    Infrastructure and Investment and Jobs Act, which I keep
    calling the BIF. So we are all into our acronyms.
        As we committed at that time to colleagues interested in
    this issue, we should consider updating the formula for the
    Clean Water SRF in the same bipartisan and thoughtful approach
    that we undertook in advancing DWWIA to an 89 to 2 vote on the
    Senate floor. I believe ensuring reliable, modern water
    infrastructure is a fundamental responsibility of government.
    Water is not a red or blue issue, it is not a big city or small
    town problem. It is everybody's and in everybody's best
    interest.
        The issues we are addressing today affect every single
    American, which is why I am committed to doing the appropriate
    due diligence and outreach to ensure we come up with a final
    product that does not leave anyone behind.
        Since its inception in 1987, when you voted for it, the
    Clean Water SRF has been an effective tool to provide much-
    needed Federal funding to improve our Nation's water and
    wastewater infrastructure, enjoying broad and consistent
    bipartisan support at the Federal and State levels. Through the
    Clean Water SRF, EPA provides funding to States which then
    issue loans to communities to facilitate infrastructure
    improvement projects. We know through much testimony and
    certainly talking to our local government officials and folks
    who run these systems, many of them are very, very old and
    antiquated.
        Interest on these loans then revolves, providing additional
    funding for future projects, and a greater investment return
    for taxpayer dollars. This program has been cost effective and
    well-utilized, certainly in our State, with EPA leveraging $45
    billion in Federal dollars into more than $145 billion and
    assistance to local communities to improve their wastewater
    treatment systems, protect human health, and reduce pollution.
        It is noteworthy to mention that the reason for the SRF's
    success has been the flexibility given to it in the State
    revolving fund. Recently, EPA released a SRF memo that takes
    away or potentially could take away some of that flexibility. I
    view that as I have other memos by this Administration as an
    overreach.
        In April 2021, Senators Rubio and Scott offered an
    amendment to the Drinking Water and Wastewater Infrastructure
    Act which would have changed the formula deployed for 34 years
    to allocate State Revolving Loan funding. As I mentioned,
    Chairman Carper and I pledged to Senators Rubio and Scott, and
    I know this is an issue for Senator Kelly as well, that we
    would continue to work with them on this issue which spurred
    today's hearing. I respectfully disagreed with the approach of
    their amendment, which was ultimately defeated, and would have
    converted the Clean Water SRF to a wholly population-based
    formula. This ignores the crucial issue of need, which was
    baked into the original formula and for States like Delaware
    and West Virginia, could have had some negative effects.
        Need varies across and within the States, based on
    population growth or reduction, the age or condition of
    existing infrastructure, and the unique public health
    environmental challenges and development needs of impacted
    communities. It is essential to me that rural communities are
    treated appropriately and that unique challenges in
    infrastructure deployment are accommodated in any revised Clean
    Water SRF formula.
        This committee and the Congress explicitly acknowledge that
    need must be assessed and documented in the Clean Water SRF.
    Section 50220--I know you knew that, you knew what section it
    was--of the IIJA carried over directly from DWWIA instructs the
    EPA within 2 years to conduct a clean watersheds needs
    assessment or survey, along the lines of what the agency
    already does for the Drinking Water SRF. This information will
    be essential to any revision of the formula.
        I acknowledge that formula allocations set back in 1987 may
    not adequately address today's needs and demographic shifts.
    But given the complexity of the issues, we have our work cut
    out for us. Major changes to the Clean Water SRF should not be
    rushed and must be the product of a deliberative process here
    in Congress that allows impacted stakeholders the opportunity
    to provide the input needed to assure that any legislative
    action works for all States and types of communities.
        It is one thing to draft a law here on Capitol Hill, but
    quite another to implement it back home. That is why this
    hearing with this panel of experts and the work that will
    follow is so very important. I remain committed to working on
    these clean water issues that are so important to me, the
    citizens of my State of West Virginia, and my fellow committee
    members.
        With that, Mr. Chairman, I yield back. Thank you.
        Senator Carper. Senator Capito, thank you for a wonderful
    opening statement.
        Now I get to introduce our witnesses. First, Jonathan
    Ramseur. Is that a French name?
        Mr. Ramseur. German.
        Senator Carper. German, OK. A specialist in environmental
    policy from the congressional Research Service. I understand
    you have worked there for over 16 years. In his role, Mr.
    Ramseur covers wastewater infrastructure funding issues. We are
    fortunate today to learn from his expertise in this area. Mr.
    Ramseur, please proceed and give your statement. We look
    forward to receiving it. Thank you.

    STATEMENT OF JONATHAN RAMSEUR, ENVIRONMENTAL POLICY SPECIALIST,
                     CONGRESSIONAL RESEARCH SERVICE

        Mr. Ramseur. Thank you. Good morning, Chairman Carper,
    Ranking Member Capito, and members of the committee. My name is
    Jonathan Ramseur, and I am a specialist in environmental policy
    at the congressional Research Service. I would like to thank
    the committee for inviting me to testify today on behalf of
    CRS.
        I have been asked by the committee to discuss the Clean
    Water Act's allotment formula for distributing funds under the
    Clean Water State Revolving Fund program. I will summarize my
    written testimony with these brief remarks.
        In 1987, amendments to the Clean Water Act established the
    Clean Water State Revolving Fund program, otherwise known as
    the SRF program. For the past 30 years, the SRF program has
    been the key Federal funding program for wastewater
    infrastructure projects throughout the Country. Each State and
    Puerto Rico administers its own SRF program. U.S. territories
    and Indian tribes receive grants directly from EPA rather than
    administering their own program.
        The SRF programs provide financial assistance to a range of
    recipients supporting a variety of projects and activities
    including construction of wastewater treatment facilities,
    stormwater systems, among others. The 1987 Clean Water Act
    amendments included SRF funding allocation percentages for each
    State and U.S. territory.
        Based on formulas in the House and Senate bills that
    evolved into the 1987 amendments, Congress likely based the
    State allotments on some combination of wastewater
    infrastructure needs and population, among other factors.
    However, the legislative history does not explicitly describe
    these factors or how they are weighted in the allotments. These
    allotments, which provide a minimum share of 0.5 percent to
    each State, have effectively been in place since the program's
    establishment.
        Since 1987, in coordination with the States, EPA has
    produced seven infrastructure needs surveys. EPA published its
    most recent survey in 2016. In addition, the Census Bureau has
    prepared four census reports. None of this more recent
    information is reflected in the current statutory funding
    allocation.
        The Water Resources Reform and Development Act of 2014
    directed EPA to report to Congress whether the current
    allotment adequately addresses water quality needs. EPA
    published this report in 2016. Based on the difference between
    the current allotments and revised needs surveys and State
    population estimates, EPA concluded that most States do not
    currently receive appropriate funds in proportion to their
    infrastructure needs estimates or population. For example, EPA
    found that the current formula is inadequate for 39 States and
    territories compared with the most recent needs survey.
        The SRF program is the primary Federal assistance program
    for wastewater infrastructure and the allotment formula has
    been one of the more debated issues during considerations of
    Clean Water Act authorization legislation. Considerations of
    States' potential allotment decreases or increases bear heavily
    on the discussion of policy choices reflected in alternative
    formulations.
        If Congress chooses to deliberate on amendments to the SRF
    program allotment to the States, policymakers would have a
    range of options including those provided in EPA's 2016 report.
    These options consist of different combinations of needs,
    population and other factors. For example, policymakers could
    include limitations similar to EPA's options, namely the
    constraints on the magnitude of decreases or increases a State
    would face under a revised formula.
        In addition, Congress may look to the allocation formula of
    other water infrastructure programs such as the Drinking Water
    State Revolving Fund program. Under this program, EPA allots
    funding to the States based on the results of the most recent
    needs survey for drinking water, which the Safe Drinking Water
    Act requires EPA to prepare every 4 years.
        This concludes my brief remarks. Thank you again for the
    invitation to appear today. I will be pleased to address any
    questions you may have.
        [The prepared statement of Mr. Ramseur follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Senator Carper. Mr. Ramseur, thank you very, very much for
    that statement.
        Mr. Sigmund, tell us where you are from, where do you live
    now?
        Mr. Sigmund. I live in Green Bay, Wisconsin.
        Senator Carper. I understand they have re-signed a
    quarterback.
        Mr. Sigmund. We did. It will be about 30 years of Hall of
    Fame quarterbacks leading Wisconsin.
        Senator Carper. That is pretty amazing.
        Mr. Sigmund. It is pretty amazing.
        Senator Carper. One of the members of my staff back in
    Delaware loves Aaron Rodgers. Worships the guy, watches him
    play all over the Country. So you are before us, and I presume
    like most folks in Green Bay, Wisconsin you share his passion.
        Mr. Sigmund. Yes.
        Senator Carper. In any event, aside from that, I would like
    to get into your bio, but you have great experience appropriate
    for today's hearing. We are anxious to hear from you. Thank you
    for coming.

      STATEMENT OF TOM SIGMUND, EXECUTIVE DIRECTOR OF NEW WATER,
              NATIONAL ASSOCIATION OF CLEAN WATER AGENCIES

        Mr. Sigmund. Thank you. Chairman Carper, Ranking Member
    Capito, and members of the committee, I appreciate the
    opportunity to appear today. My name is Tom Sigmund. I am the
    Executive Director at NEW Water, the brand of the Green Bay
    Metropolitan Sewerage District in Green Bay, Wisconsin. We are
    a regional clean water utility providing wholesale conveyance
    and treatment services to 238,000 people across 15
    municipalities in northeast Wisconsin with 101 employees and an
    annual budget of $45 million.
        I also serve as the Vice President of the National
    Association of Clean Water Agencies, for whom I appear before
    you today. For over 50 years, NACWA has represented public
    wastewater and stormwater agencies nationwide. Our network of
    330 public agency members is on the front lines of public
    health and environmental protection.
        The precursor to the current Clean Water State Revolving
    Fund was the Construction Grants Program established in the
    1970's to help communities fund capital investments to comply
    with the Clean Water Act. After considerable debate in the
    1980's, Congress phased out this grant program and created the
    Clean Water SRF to provide low-cost financing. It has since
    become the Federal Government's main tool to support local
    communities in water infrastructure investment.
        Congress provides appropriations to EPA to capitalize
    revolving funds administered by the States and those States
    provide a 20 percent match. The States then issue loans to
    publicly owned treatment works. As the POTWs assume the loans,
    build the infrastructure and repay the loans, the funds
    revolve, grow, and support other communities and additional
    projects.
        Over time, Congress has updated the Clean Water SRF such as
    by granting flexibility to the States to provide additional
    subsidization. I cannot overState how much of a lifeline the
    Clean Water SRF has been for clean water utilities across this
    Country, especially in Wisconsin. For many utilities, this is
    their only access to affordable financing.
        NEW Water has utilized these programs since they were first
    introduced. Converted to 2021 dollars, NEW Water has invested
    $1.2 billion in capital facilities over the past 45 years,
    utilizing $1 billion of loans and grants. Almost 50 percent of
    NEW Water's 2022 annual budget is devoted to capital projects,
    underscoring how capital-intensive our work is.
        This discussion underscores how the infusion of
    capitalization grants is critically important for clean water
    SRF sustainability. With funding to each State dependent on the
    allotment formula, it warrants continued attention.
        According to a review by EPA, as we just heard, it is not
    known how the weighting and the factors were selected, and how
    they were used to establish the formula. It is likely they were
    centered on population, capital needs, a hold-harmless
    provision, as well as we have heard, a minimum allotment.
    Stakeholders can likely agree that the allocation formula is
    dated and warrants new consideration and clarity.
        Since the 1980's, our Nation's population has shifted, and
    so have clean water infrastructure costs, assets and investment
    needs. Population increases can lead to new investment needs,
    but lower population growth does not necessarily lead to
    reduced demands. Policy makers have recognized the need to
    review the formula for well over a decade. Congress has
    directed EPA and GAO to perform audits of the formula and
    suggest policy options. Among the solutions proposed to reform
    the allocation a few themes emerge.
        It is important to consider clean water needs, including
    the types of investments and how they should be weighted in the
    allocation. Population is an important consideration but should
    not be the sole factor. NACWA urges no States see a reduction
    in funds. Clean water investment demands remain high and new
    challenges continue to emerge.
        The Clean Water Act envisioned a strong Federal-State
    partnership, and funding and financing are an important part of
    that partnership. The allocation process should also consider
    the historic per capita investment each State has made in
    funding wastewater projects, as these assets must eventually be
    replaced. EPA and the States must undertake a comprehensive
    needs survey. NACWA thanks this Congress for recognizing that
    an updated survey is needed by authorizing $5 million in the
    Bipartisan Infrastructure Law. We were relieved to see Congress
    direct $1.5 million for this survey last week in the omnibus.
        Finally, we encourage an update to the formula that
    represents an updated needs survey and an approach that can
    adapt more steadily to future changes. These updates will take
    time, but a smooth, transparent and apolitical process is
    important.
        NACWA and I appreciate the opportunity to share our views.
    I am proud of the work public clean water agencies have
    accomplished. Our Nation's complex water quality challenges and
    investment needs have grown. Additional Federal resources are
    critical to ensure utilities are prepared to meet the
    challenges of today and tomorrow, starting with the Bipartisan
    Infrastructure Law, which we stand ready to implement.
        When it is time, I will be happy to answer any questions.
        [The prepared statement of Mr. Sigmund follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Senator Carper. Mr. Sigmund, thank you so much.
        In reading your bio, Ms. Dreyfuss-Wells, I noted that you
    graduated summa cum laude from Ohio State University. I also
    graduated from Ohio State University, not summa cum laude.
        [Laughter.]
        Senator Carper. I have used this joke many times at
    commencements, but I won't tell you whose joke it really is.
    But I have addressed many graduating classes and said, some of
    you are graduating summa cum laude today, some of you are
    graduating magna cum laude, some of you are graduating cum
    laude, and some of you are graduating today by the graced of
    the Good Laude.
        [Laughter.]
        Senator Carper. I once used that at a graduating ceremony
    at Delaware State University, which is the No. 3 HBCU in the
    Country. It turned out the guy who was the keynote address
    followed me, and it was joke.
        [Laughter.]
        Senator Carper. I won't soon forget that, and frankly,
    neither will he.
        Ms. Dreyfuss-Wells, Chief Executive Officer of the
    Northeast Ohio Regional Sewer District in Cleveland. Where do
    you actually live?.
        Ms. Dreyfuss-Wells. I live in Shaker Heights.
        Senator Carper. Kyle, we look forward to hearing from you
    today. Please proceed. Thank you for joining us.

      STATEMENT OF KYLE DREYFUSS-WELLS, CHIEF EXECUTIVE OFFICER,
                 NORTHEAST OHIO REGIONAL SEWER DISTRICT

        Ms. Dreyfuss-Wells. Good morning, Chairman Carper, Ranking
    Member Capito, and members of the Senate Environment and Public
    Works Committee. Thank you for inviting us to testify this
    morning about the importance of adequately funding clean water
    infrastructure across the Country with the Clean Water State
    Revolving Fund.
        As the Senator said, I am Kyle Dreyfuss-Wells, CEO of the
    Northeast Ohio Regional Sewer District in Cleveland. I am also
    a NACWA board member and I am pleased to join my colleague, Tom
    Sigmund, here today.
        The sewer district is among the largest wastewater
    treatment and stormwater management utilities in Ohio. We serve
    the city of Cleveland and 61 communities across 355 square
    miles of the Lake Erie watershed. Our 750 employees manage
    three wastewater treatment plants, processing 90 billion
    gallons of flow annually, 475 miles of the regional stormwater
    system, and 350 miles of large, inter-community sewers.
        Our district serves a broad customer base, including
    households, our region's industrial base, and two of the
    largest hospital systems in the Nation. We do this with a $170
    million annual operating budget and an approximately $270
    million annual capital program. So this is what it takes to
    protect public health and water quality of northeast Ohio. And
    it is funded by the 1 million people that we serve.
        So while we are here today to talk about the SRF, I have
    found in conversations about clean water that it centers on
    three factors: rates, affordability, and ensuring access of all
    customers to clean, reliable sewer service. The SRF in Ohio is
    essential to us doing that as we rely on it to finance our
    critical work and to control the rates that our customers pay.
        The modern day environmental movement was born in
    Cleveland, starting with a spark that ignited the Cuyahoga
    River for the thirteenth time in 1969. That fire unleashed a
    relentless effort to care for the water of our region and gave
    way to the Clean Water Act, and more locally for us, the
    creation of the sewer district in 1972. For the first 20 years
    of our work, we received nearly $600 million in Federal
    construction grants. With this, we invested in reducing the
    amount of combined sewage to Lake Erie and making critical
    improvements to the region's wastewater collection system and
    treatment facilities.
        By the early 1990's, Federal construction grants were
    significantly reduced, but the need for continued clean water
    capital investments remained. So we looked to our ratepayers.
    For 30 years, the ratepayers have paid for nearly all of our
    clean water work through sustained rate increases. Every year,
    the people of northeast Ohio, including in Cleveland, where 30
    percent live below the Federal poverty line, have paid for
    clean water.
        Today, our customers pay an average of $70 per month. While
    none of us who live in northeast Ohio like paying these high
    rates, we do pay these high rates and have done so for many
    years, because they are necessary to do this work.
        So our customers have continued to have confidence in us,
    and we have continued to have the respect for them to focus on
    controlling their rates through reliance on the SRF and cost
    containment across our organization and through our project
    management. Today I am proud to say that the water quality
    improvement in our community underscores Cleveland's rebirth.
    But more work and more investment is needed.
        Recently, we accepted SRF funding for our shoreline storage
    tunnel, a $200 million effort under Project Clean Lake, our
    multi-billion dollar federally mandated program to further
    reduce combined sewage to Lake Erie. With SRF funding, we
    financed the project using very favorable borrowing terms, 40
    years at 1.57 percent interest. Based on our most recent bond
    refinancing and our credit rating, we estimate 3 percent if we
    were to bond finance this for 40 years.
        So over the length of this loan, this equates to roughly
    $50 million in savings. Using the SRF, we minimize costs and
    pass the savings to our customers. We have financed over 100
    projects with the SRF, and in a region with aging
    infrastructure, we plan to invest $1.2 billion over the next 5
    years. SRF funding will help us to continue to reduce the
    financial impact on our customers.
        So we acknowledge that communities across the Country face
    rising infrastructure expenses. But we cannot forget older
    communities like Cleveland with aging infrastructure, increased
    regulatory requirements, poverty and declining population. The
    issues in growing and older communities may be different, but
    the need for SRF funding is the same. Increased SRF funding can
    meet the needs of all communities across the Country, old and
    new, large and small.
        So in closing, I hold northeast Ohio to you as a model for
    doing clean water infrastructure right. We recognized our
    problems and have worked hard for the last 50 years to address
    them. The ability of utilities like mine to access SRF
    financing makes it possible for us to control costs and to
    protect clean water for all of our customers.
        Thank you for the opportunity to be with you today. I am
    happy to answer any questions.
        [The prepared statement of Ms. Dreyfuss-Wells follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Senator Carper. Ms. Dreyfuss-Wells, thank you for your
    statement. Great to meet you, and thank you for coming today,
    and for the work you do.
        Ms. Dreyfuss-Wells. Thank you.
        Senator Carper. Batting cleanup on our panel of four is
    Laura Watson, Director of the Washington State Department of
    Ecology. Prior to serving in this position, Director Watson
    spent over 20 years in the State Attorney General's office,
    working to protect the environment.
        Ms. Watson, we thank you for joining us. Go ahead and
    proceed with your testimony. Thank you.

         STATEMENT OF LAURA WATSON, DIRECTOR, WASHINGTON STATE
                         DEPARTMENT OF ECOLOGY

        Ms. Watson. Thank you, Chairman Carper, Ranking Member
    Capito, and members of the committee.
        My name is Laura Watson, as the Senator said. I am the
    Director of the Washington State Department of Ecology. I also
    chair the Water Committee for the Environmental Council of the
    States, also known as ECOS. It is an honor to be here today to
    be testifying on behalf of ECOS.
        ECOS was formed in 1993 to bring States and territories
    together across State boundaries and across party lines, to
    strengthen the work of our environmental agencies, to protect
    the environment and to protect public health. The Clean Water
    State Revolving Fund is a critical financial assistance tool
    for environmental agencies to protect water quality in our
    communities through investments in clean water infrastructure.
        The Federal investments in the Infrastructure Investment
    and Jobs Act marked an unprecedented opportunity to repair and
    expand essential infrastructure that will strengthen security
    and well-being for our communities. This is one of the most
    exciting times in history to be able to be leading this work
    and to be collaborating with our State and Federal partners to
    tackle some of our Nation's biggest challenges.
        With renewed investment, now is also the right time, we
    believe, to consider the Clean Water State Revolving Fund
    formula and assess if it is still working as it was intended
    when it was written 35 years ago. ECOS supports a robust, a
    balanced, a thorough and a thoughtful consideration of the
    allotment formula along with the various criteria that could be
    used to modernize it.
        We are aware that changes to the formula could likely
    result in some States seeing increases and other States seeing
    decreases in their funding levels. Due to this, ECOS is not in
    a position to recommend specific changes to the formula at this
    time. But we do support a thorough review to understand if the
    formula is actually meeting the needs of each State and our
    residents.
        We further request that Congress work with EPA and State
    organizations like ECOS in this process. As Congress undertakes
    the process to review the formula, there are several aspects
    that ECOS would recommend you consider. First, the definition
    of need should account for the actual needs and the unique
    needs of States. Infrastructure needs have changed
    significantly since the formula was first implemented. Many
    have already mentioned that in some areas, we have population
    shifts that have resulted in more States experiencing growth
    and a greater need for infrastructure. On the flip side, we
    have States which have had population decreases, which means
    there are fewer resources, fewer ratepayers to tackle aging
    infrastructure.
        In 2016, EPA reevaluated what constitutes need in
    communities to assess needs beyond traditional wastewater
    infrastructure. We support that. For example, in my State,
    stormwater treatments to reduce pollution from existing
    developments is critical. It is critical to protecting the
    Puget Sound estuary.
        Like Washington, of course, each State has its own unique
    clean water priorities that need to be addressed. We support
    EPA's efforts to ensure that these are captured through the
    needs survey.
        Second, the allotment formula should be based on recent and
    robust data. The last Clean Watershed Needs Survey from EPA was
    published in 2016. The data was from 2012. Now we have a new
    survey underway. We hope that the data we are collecting now
    will be able to be analyzed, summarized, and published by EPA
    in 2023 so we get recent data that will be of assistance in
    looking at the formula.
        Third, we recommend reevaluating other criteria after
    completion of the survey. For example, and again you have heard
    this a lot, a formula that is based just on population may not
    reflect all of the needs within a State and if you have high
    quality needs data available, it may not be necessary.
        Fourth, ECOS recommends reviewing how environmental justice
    is considered in the formula. The Clean Water State Revolving
    Fund has long focused on providing guidance in this area to
    support disadvantaged communities. The Infrastructure Act
    strengthens this commitment by assigning certain percentages to
    these disadvantaged communities as grants and forgivable loans.
    Ensuring that the allotment formula incorporates these
    commitments could address longstanding environmental justice
    issues.
        There are a few other recommendations contained in my
    written testimony. In the interest of time, I will wrap it up
    there. Again, I want to thank you on behalf of Washington State
    and my peers, and all of the other States, territories and
    Washington, DC. We very much appreciate your work, your ongoing
    investments and your work to take a fresh look at the allotment
    formula. Thank you.
        [The prepared statement of Ms. Watson follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Senator Carper. Ms. Watson, thank you. I would just say,
    our colleagues who are arriving, all of us are on a lot of
    committees. As it turns out, there are a bunch of hearings
    going on this morning. I am going to be in and out, and the
    Ranking Member, Senator Capito, may be in and out. But we will
    keep things moving. We have been joined by Senators from as far
    away as Arizona, from as close by as Maryland and from as far
    away as Alaska, and fairly far away, from Arkansas. Happy to
    have you all here.
        I want to say to our staffs, both on the majority side and
    minority side, you pulled together and all-star lineup here. We
    are grateful to all of you.
        We are going to move to some questions now. I am going to
    kick it off. Mr. Ramseur, I will start with you. Your written
    testimony outlines the history and the evolution of the Clean
    Water State Revolving Loan Fund. While we know that the formula
    has not been updated, I believe since 1987, Congress has made a
    number of tweaks through the appropriations process to adjust
    the formula to account for additional issues such as tribal
    needs, and maybe needs in Alaska for some of the folks that
    Senator Sullivan represents.
        I am going to ask, Mr. Ramseur, to elaborate for us on some
    of the changes that Congress has made through the
    appropriations process, and give us an idea why you think
    Congress made those changes, what led Congress to make them.
        Mr. Ramseur. First off, the territories initially had .25
    percent in aggregate allocation under the Clean Water Act. In
    recent appropriations acts, I think for the past 10 years or
    so, that aggregate amount has been increased to 1.5 percent.
    That is a change that Congress has made through appropriations
    acts.
        As well, there is a new provision, relatively new provision
    in the Clean Water Act devoting up to 2 percent for Indian
    tribes. EPA has in recent years gone to that 2 percent. Those
    are the changes that have been made in that respect.
        Senator Carper. Second half of the question is, what do you
    think led Congress to make those changes?
        Mr. Ramseur. I would have to dig a little deeper and come
    back to you on that one.
        Senator Carper. Anyone else have a thought on that second
    half of my question? No?
        Senator Capito. That is a stumper.
        [Laughter.]
        Senator Carper. Let the record show this is the first time
    we have ever stumped any panel on any of my questions.
        [Laughter.]
        Senator Carper. All right. We will come back to that later
    on.
        My second question, this would be for Mr. Sigmund. The
    Infrastructure Investment and Jobs Act provides unprecedented
    levels of supplemental funding for the Clean Water State
    Revolving Fund. This kind of historic investment, coupled with
    the ability to distribute a significant amount of funding in
    the form of grants, or in the form of loan forgiveness, will
    provide all States and territories with more resources for
    water infrastructure than they have ever had before, I believe.
        As States begin to implement this historic level of
    funding, Congress needs to start thinking about how to
    rebalance the formula going forward. An important first step in
    balancing the formula is to look at gaps in the funding
    distribution. Here is my question: Are there gaps in the
    current State Revolving Fund program that need to be addressed
    to help EPA provide a more equitable distribution of those
    funds to the States, to tribes and to territories?
        Mr. Sigmund. My experience, my detailed experience is
    through the State of Wisconsin and their clean water fund. I
    have said in the past, the clean water fund in the State of
    Wisconsin is one of the best administered funds that I have
    ever come across. When I was a consultant, I saw many across
    the State. It is encouraging utilities to stay in compliance
    and to get ahead of things. So that is a well-run program.
        In general, I think what we are seeing with this current
    bipartisan infrastructure law is more money coming into States
    for clean water funds. It is bringing it closer to a level as
    to what we need.
        So the biggest gap has been, and hopefully it can be
    rectified in the future, is just the needs greatly exceed the
    funding that comes from the Federal Government. We need to
    continue that. Have I answered your question?
        Senator Carper. I think so. A followup. You mentioned that
    the revolving fund in Wisconsin maybe the best around. Why is
    it? How has it been able to achieve that kind of recognition? I
    like to say, find what works and do more of that. Maybe we can
    learn something from the Badgers.
        [Laughter.]
        Mr. Sigmund. The process that the State of Wisconsin uses,
    it requires utilities, through the compliance and maintenance
    program, we have to submit a scorecard for our utility every
    year to the State of Wisconsin, looking back at our compliance,
    looking at our rated capacity of our facilities, and seeing how
    we stand, as well as environmental compliance. So the State
    requires us to be proactive. And when we do that, we are seeing
    things well in advance of when they need to be implemented,
    capital projects. We then can in a more thoughtful manner plan
    those capital projects, work with our customers to start to
    increase the rates if we need to to fund them. Then also, we
    work with the State of Wisconsin, the Clean Water Fund, to get
    our project into their priority system so they can rank it and
    determine what level of priority it is. And if a utility needs
    some type of supplemental funding outside of just a straight
    line, an additional subsidy. So I think the State of Wisconsin
    has done a great job of working to keep us on task so that
    utilities do not fall into disrepair and then things become an
    emergency.
        Senator Carper. Thank you for that.
        Senator Capito.
        Senator Capito. Thank you, Mr. Chairman. I am going to
    yield to the Senator from Arkansas, Senator Boozman, for his
    questions.
        Senator Boozman. Thank you, Senator Capito, very much. I
    want to thank you and Chairman Carper for having this so, so
    very important hearing. In fact, I think one of the hallmarks
    of this committee is that the hearings that we have greatly
    impact the problems that people have on such a number of
    important issues.
        The Clean Water Revolving Fund formula is so very important
    to the State of Arkansas. Through 2020, Arkansas has leveraged
    more than $325 million in Federal funds to support over 1,300
    projects with the Clean Water State Revolving Fund program. Of
    those projects, 74 percent were in communities with a
    population of less than 10,000 people.
        Access to safe and reliable water is critical for all
    Americans. This initiative makes the process easier and more
    affordable for States to meet their unmet water infrastructure
    needs.
        Mr. Sigmund, in your testimony you commented that
    population should be considered in an updated allocation
    formula, but it should not be the only factor. Can you speak
    more about why you don't believe that a population-only
    approach is the right strategy to allocating SRF dollars?
        Mr. Sigmund. Yes, certainly population, greater population
    leads to greater flows coming into treatment facilities,
    conveyance facilities. So it should be a factor. But there is
    such a significant investment in assets. These assets, at
    wastewater, whether it be large conveyance facilities or
    treatment facilities, tend to be long-lived assets that are
    quite expensive. I think that consideration needs to be what
    are going to do when those assets need to be replaced. Because
    that can be, the Federal Government helped us put them in, and
    we need help replacing them or doing significant repair. We do
    take care of the assets. Operation and maintenance is fully
    within our customers, our annual budgets.
        I think also a factor that needs to be considered, and it
    is different for every State, is what are the environmental
    regulations, the environmental conditions, what levels of
    treatment do utilities need to do to meet the water quality
    standards of the body. And they are different across the
    Country.
        Senator Boozman. That is so important. The EPA has
    ratcheted up, rightfully so in some cases, maybe not so in
    other cases. And again, that is just a tremendous expense that
    falls in an effort to make our waters as clean as possible.
        Community wastewater systems, both publicly and privately
    owned, are essential to the physical and economic health and
    well-being of rural Arkansas. However, rural communities
    oftentimes run into additional problems, such as lacking
    technical expertise and the funds to apply for multiple State
    or Federal assistance programs. As a rural State with low-
    medium household income compared to States with higher
    populations, we have less people but a greater need.
        In your opinion, how can we further help communities with
    smaller ratepayer base get a fair chance at securing State and
    Federal assistance, Mr. Sigmund?
        Mr. Sigmund. The Clean Water Fund loan process is a
    challenging process. When we do a loan, our staff is typically
    preparing a three-plus inch binder of supporting material that
    is needed by the State of Wisconsin in order to secure the
    loan. Our staff has done this over the years. We are fairly
    good at it, if you can ever get really good at it. It is a
    significant burden for a utility that has a smaller staff to be
    able to do that. We understand the State needs to get the
    information it needs to be able to secure its loans. But we
    certainly look forward to trying to simplify the process
    because it is burdensome.
        One of the things that has been talked about in our clean
    water sector is the possibility of a utility such as mine that
    has some expertise in doing that be able to assist smaller
    communities. That has not happened yet, but it is a
    possibility. I think with this bipartisan infrastructure law
    you have allocated some money to both EPA and the State to
    provide training and assistance. One of the things that EPA, a
    call that I was on, acknowledged that they need more people to
    apply for these loans than currently apply for the loans. So we
    are going to have to figure out how we can overcome that hurdle
    of the challenge of putting those together.
        Senator Boozman. Thank you. My time has run out. Thank you
    all for being here. I wish I had the time to just extract all
    of the knowledge out of all of your heads. We do appreciate
    your taking the time for this very important hearing. Thank you
    very much.
        Senator Carper. Senator Boozman, thank you so much. Thanks
    for joining us today. Good to see you.
        Senator Cardin, from our neighboring State of Maryland.
        Senator Cardin. Thank you, Mr. Chairman. Let me thank all
    of our witnesses.
        The Clean Water State Revolving Fund formula that was
    developed in 1987, no one knows exactly why that formula was
    created the way it was. We know it is based somewhat on
    population and need, but we don't know exactly how it was
    conceived. So it is important that we update it.
        But as a practical matter, the only way you are going to be
    able to bring in a new formula is when we put more money into
    the program. Because we don't want to adversely impact any
    jurisdiction and just the pragmatic issues. So this is a time
    to really review the Clean Water State Revolving Fund.
        Let me point out a fact that if you look at our efforts,
    for example, to clean up the Chesapeake Bay, and clean water,
    the largest single growth source of pollutants going into the
    Chesapeake Bay is storm runoff. Locally, we have invested a
    great deal of money and resources into stormwater management.
    Blue Plains, the largest wastewater treatment facility of its
    kind in the world, has invested a considerable amount of money
    to deal with stormwater runoff. I was at Back River in
    Baltimore not too long ago with Senator Van Hollen. They are
    investing in stormwater runoff.
        I mention that because, and we have used creative
    solutions. Ben Grumbles, who is the Secretary of our Department
    of Environment, and also as I understand it is the president of
    the Environmental Council of the States, has found creative
    ways to deal with stormwater runoff. We have used WIFIA funds,
    we have used whatever we can in order to deal with these
    issues.
        But my question is, as we are looking at incorporating need
    into the Clean Water State Revolving Fund, how do stormwater
    infrastructure needs come into plan as we develop that formula?
    Because it has not been successful in accessing the Clean Water
    State Revolving Funds. I have been told that there has actually
    been an increased allocation to stormwater runoff, but still
    less than 4 percent of the allocations under the State
    Revolving Fund for clean water.
        So my question, and whoever wants to volunteer, I will be
    glad to let someone go first, how do we ensure that the needs
    for stormwater management and infrastructure are incorporated
    under the needs part of the State Revolving Fund as we look at
    a new formula?
        Ms. Watson. Well, Senator, everybody is looking at me, so I
    think I will go ahead and take first crack at that. It is
    actually an excellent question from Washington State. We are
    kind of stormwater central as well, so it is a huge focus area
    for us in terms of pollution reduction.
        One of the issues with the stormwater funding, you can
    compare this to wastewater utility funding, wastewater utility
    there is a set rate base and people understand it. There aren't
    a lot of stormwater utilities compared to, there are stormwater
    utilities in States, but not across all regions of the States.
    That itself is an impediment to folks applying for the
    stormwater funds, because there is no real rate base in some
    regions of the Country to be able to match the funds that are
    received.
        Now, EPA, through the needs survey is having States look at
    those stormwater needs. So that is something that States,
    working with local governments, should be able to incorporate
    into the needs survey.
        But I will use some examples actually from your great State
    that I am aware of through Ben Grumbles in terms of other ways
    in which you can increase the States feeling comfortable, local
    governments feeling comfortable applying for those funds. One
    is through education and outreach, EPA doing education and
    outreach to local governments to help governments understand
    how flexible this funding is.
        Another area for education and outreach is just to
    appreciate the co-benefits of stormwater funding, so when you
    are dealing with stormwater projects you are not just dealing
    with the reduction of stormwater, but you are also dealing with
    toxics reduction, for example, in climate resiliency.
        Senator Cardin. I am going to focus on the Clean Water
    State Revolving Fund for one moment. Because a few years ago,
    we had a hearing before this committee on a similar topic. The
    Mayor of Baltimore was one of our witnesses, and she made a
    strong, impassioned plea in regard to additional tools
    available to deal with the infrastructure needs for clean
    water.
        Baltimore is under a consent order as many other cities
    are. The rate structure, the pressure on the ratepayers is
    enormous in Baltimore. The increased rates are extremely
    difficult and not affordable for a lot of people, for their
    basic utility needs.
        So looking at this revolving fund is absolutely essential
    if we are going to be able to make progress on this
    infrastructure need. I will put this for the record, if you
    could come up with ways in which that is reflected in a needs
    part of a formula, I would very much appreciate that help.
        Ms. Dreyfuss-Wells. Senator, if I may, to answer, to build
    on the answer to your question, we operate both a wastewater
    utility and a stormwater utility at the Northeast Ohio Regional
    Sewer District. In response to your question, I think what we
    are seeing is really the professionalization of stormwater,
    sort of bringing it up into the same level of structure that we
    have on the wastewater side, recognizing that stormwater, as
    you said, is as big a pollutant as the bacteria that we focus
    on, the e-coli that we focus on on the wastewater side.
        So I think one of the things that would help very much is
    to sort of demystify green infrastructure, demystify onsite
    stormwater management, so folks understand that these are
    structural solutions to manage stormwater as close to its
    source as possible on each development site with bioretention,
    et cetera. And having folks understand that there is a way to
    build these things correctly that is engineered and is
    maintained and is therefore fundable.
        Senator Cardin. Thank you. Thank you, Mr. Chairman.
        Senator Carper. Senator Cardin, thank you. Senator Cardin
    chairs a major subcommittee on this committee that deals with
    infrastructure. He has been a great leader on these issues. He
    brings a lot of knowledge. He used to be a State legislator,
    including speaker. He was Mr. Speaker in the Maryland General
    Assembly.
        OK, Senator Capito, you are on.
        Senator Capito. I am going to yield to Senator Sullivan for
    questions.
        Senator Sullivan. Thank you, Senator Capito. Thank you, Mr.
    Chairman.
        I want to kind of followup where Senator Boozman started. I
    am concerned about formulas that are too heavily dependent on
    population. Of course, that has to be an element, and Mr.
    Sigmund, you had mentioned that. I want to dig down a little
    bit more on the issue of need, then environmental justice,
    because they are often interrelated.
        In my State, we have over 30 communities, which includes
    thousands of households, that have no infrastructure, no
    wastewater infrastructure at all. Zero. The people in Alaska
    refer to the system of honey buckets, which sounds sweet. It is
    not sweet at all, it is collecting your own human waste and
    then bringing it out in a bucket and dumping it in a lagoon.
    America.
        By the way, Mr. Chairman, these are some of the most
    patriotic communities in America, because they are primarily
    Alaska Native communities, and Alaska Natives serve at higher
    rates in the military than any other ethnic group in the
    Country. So we have thousands of U.S. citizens, patriotic
    Americans, who live in third-world conditions. That is just not
    right.
        When the Flint, Michigan crisis happened, I remember every
    time I heard upgrading infrastructure, great. I agree with
    that. But my point was, well, how about we get to places that
    have no infrastructure first. So to me, that issue should trump
    everything. If you are an American and you have to use a honey
    bucket, sorry, that is just wrong. Every Senator should care
    about that, not just me.
        But can you, maybe Mr. Sigmund, and others, talk about this
    issue of need as a priority? It does, at least in my State,
    raise issues of racial equity because it is primarily Alaska
    Native and indigenous communities that have nothing.
        Mr. Sigmund. I will start and let my colleagues fill in.
    When I was a consulting engineer, I many years ago worked in
    New Mexico and El Paso, Texas. In some of those areas, the
    Native American areas, water was brought to people in a 55-
    galloon drum and put on a stand. You are right, wastewater
    conveyance was not something that was done automatically.
        Communities need to look at those, what their community
    needs. Sometimes when things are----
        Senator Sullivan. I don't want to be rude here, I only have
    so much time. Shouldn't we in the formula prioritize need?
        Mr. Sigmund. I believe you should.
        Senator Sullivan. OK. Does everybody else agree with that?
    Yes? Ms. Watson, do you agree with that as well?
        Ms. Watson. Here on behalf of ECOS, we are not prepared to
    make specific recommendations at this time, because States
    could be winners or losers depending on----
        Senator Sullivan. Well, of course there could be winners
    and losers. Right now, my constituents on this issue are
    losers.
        Ms. Watson. Yes.
        Senator Sullivan. Again, I don't even think this is a close
    call. You talked about racial equity, racial justice, Native
    people in Alaska use honey buckets in a lot of communities.
    That is just completely unacceptable. As American citizens, we
    should all care about that.
        So do you think we should have some kind of element in the
    formula that prioritizes that? It is not just Alaska, by the
    way. I think West Virginia has some of these issues.
        Ms. Watson. Yes, for sure, the needs are important for
    environmental justice communities, as well are rural
    communities and other disadvantaged and smaller communities.
        Senator Sullivan. Let me ask, it is a different question,
    but it is also an important one. It is the issue, again, we
    talk a lot about population, of course we have to have some
    element in the formula about that. But what often gets missed
    in my view is size of the State. I don't have to remind the
    Chairman, I think Alaska is 264 times bigger than Delaware. But
    who is counting?
        Senator Carper. We say in Delaware that we punch above our
    weight.
        Senator Sullivan. They do. I mean, the Chairman certainly--
    --
        Senator Carper. We have 400 chickens for every person in
    our State.
        [Laughter.]
        Senator Sullivan. That is a whole other issue.
        But it does obviously create bigger challenges on
    infrastructure to deploy it when the size of the State is so
    big as well as population. What do the panelists think about
    the issue of, again, in the formula, not just population but
    need, we already talked about that, but the size of the State?
    Ohio is a pretty big State. What is your sense on that?
        Ms. Dreyfuss-Wells. Thank you, Senator. I think the needs
    survey, if done correctly, and if States are given and
    localities are given the resources that they need to put that
    needs survey together. Because even the needs survey requires
    resources, engineering, hydraulic modeling, et cetera, to truly
    understand the need.
        Size will be incorporated into that. Because you will have
    to factor in how many miles do I need to lay this sewer pipe,
    how am I actually going to sewer an area that may be frozen one
    part of the year and not frozen another part of the year. So
    these are the questions that localities can answer if they are
    given the resources to be able to do that.
        So size will be incorporated into a well done needs survey.
        Senator Sullivan. OK. Anyone else on the size issue?
        Mr. Sigmund. I think Kyle has talked about the needs
    survey. The solution for your State is going to be different
    than for my State of Wisconsin. So that is where the needs
    survey, if it looks at the needs of the community, the needs of
    the State, will come up with what is required. And it will be
    different for each State.
        Senator Sullivan. Great. Thank you. Thank you, Mr.
    Chairman. I am concerned that these three potential formulas by
    the EPA that have been developed are too heavily reliant on
    population and can make matters worse, at least for States like
    mine that have these kinds of needs and size and challenges.
        Senator Carper. The Senator from Alaska probably recalls
    when we were debating our water bill on the floor. An amendment
    was offered to basically change one of the formulas that were
    under consideration to, it was like more strictly population.
    My recollection it was defeated something like 86 to 14. So you
    are not the only person who feels that population by itself is
    not sufficient.
        Senator Sullivan. Thank you.
        Senator Carper. OK. Senator Kelly has joined us. We have
    two Navy captains here, and even a Marine colonel and a
    general.
        Senator Kelly. Thank you, Mr. Chairman. First, I want to
    say thank you to you and Ranking Member Capito for holding this
    hearing today. I really appreciate it.
        As you know, this is an important topic to me and to
    Arizona. I understand and appreciate the importance of
    carefully considering any potential changes to the Clean Water
    State Revolving Loan Fund formula.
        Population, size, and change is an important thing in
    Arizona. We are a growing population. But to Senator Sullivan's
    point, we also have similar issues. The Navajo Nation, hundreds
    of thousands of Native people who often live without
    infrastructure, without water and sewer, often without
    electricity, either.
        But I think it is also important for us to acknowledge that
    the current formula needs to be reformed. This is the main
    source of funding for wastewater, stormwater, and groundwater
    infrastructure improvements. Estimates from EPA and the GAO
    indicate that fast-growing States with significant
    infrastructure needs like Arizona could see a two or threefold
    increase in the amount of funding they receive under this
    program if the formula were reformed.
        That is why I have worked with Senator Rubio to raise this
    issue of proposed solutions. Fixing the formula isn't a
    partisan issue. It is a question of making sure that we are
    effectively using scarce Federal dollars to meet the critical
    infrastructure needs of communities across the Country.
        So Mr. Ramseur, thank you for being here. Thank you to all
    of you for being here today. I want to start with a few basic
    questions for you.
        First, the Clean Water SRF was created in 1987. Has the
    formula determining State allocations ever been updated since
    then?
        Mr. Ramseur. Not in the Clean Water Act Statute. There have
    been some small tweaks to it through appropriations acts, and
    EPA has made some administrative changes. But by and large, it
    has been the same allotment since 1987.
        Senator Kelly. Do we know how Congress determined this
    allocation formula?
        Mr. Ramseur. We don't know precisely. Based on the House
    and Senate bills that led to the evolution of the 1987
    amendments, both those bills included factors of population and
    needs and other things. So it is likely that the formula
    included those, but we don't know explicitly what was included.
        Senator Kelly. Congress did not take enough notes from back
    then.
        All right. Is there anything in the congressional Record
    from the time which indicates that the formula was designed to
    consider the water infrastructure needs of the State?
        Mr. Ramseur. Not explicitly. Just based on the House and
    Senate bills which did include needs as a factor, one might
    assume that that was included, but we don't know for sure.
        Senator Kelly. Thank you. You note in your testimony that
    EPA has conducted 16 clean watershed needs surveys since 1972
    to determine water infrastructure needs of a State. Does the
    allocation formula used to distribute the Clean Water SRF take
    into account information from these needs surveys?
        Mr. Ramseur. No.
        Senator Kelly. Does EPA have any legal authority to make
    adjustments to the Clean Water SRF based on the infrastructure
    investment need?
        Mr. Ramseur. Not to my knowledge, no. They have to follow
    the Clean Water Act provision that directs them to the table,
    which has the percentages for each State from 1987.
        Senator Kelly. Thank you. As you know, the EPA also manages
    a companion program to the Clean Water SRF called the Drinking
    Water SRF. Have the State allocations for the Drinking Water
    SRF been updated since it was enacted?
        Mr. Ramseur. Yes, several times.
        Senator Kelly. Several times. And are those allocations
    updated based on need?
        Mr. Ramseur. Yes, that is the requirement in the Drinking
    Water State Revolving Fund program, the allocations are based
    on the most recent needs survey which generally come out every
    4 years.
        Senator Kelly. So the Drinking Water SRF is based on need
    and has been updated, but the Clean Water SRF has not?
        Mr. Ramseur. Correct.
        Senator Kelly. All right. Mr. Chairman, I have additional
    questions that I would like to get to, but let me just say
    before my time is up, I understand it is important to have
    deliberation and debate about funding formula changes. But not
    acting to change the Clean Water SRF formula is kind of
    ridiculous. This formula was created 35 years ago. We don't
    know how the formula was created. And it is not updated to
    account for evolving needs or changing populations in States.
        We have good examples of other formula funding programs
    within this committee's jurisdiction that are regularly updated
    based on the evolving needs of the State. We just pointed out
    one. But this committee has never acted to try to address this
    problem.
        Meanwhile, States like Arizona, which have significant and
    growing water challenges, are forced to do more with fewer
    Federal resources. I hope that this hearing is just the first
    step in a longer process to update the outdated formula.
        I appreciate that you and Senator Capito have taken the
    next step, asking the Government Accountability Office to
    provide legislative recommendations for potential reforms. As
    we see those recommendations, I will look forward to working
    together with you both to continue making progress on this
    issue.
        Senator Carper. Great song by Chicago comes to mind, Only
    the Beginning. Only the Beginning.
        All right, Senator Capito.
        Senator Capito. Thank you. Thank you very much. Thank you
    to all the witnesses.
        My first several questions I was going to ask are a bit
    repetitive of the testimony we have heard. That is that a
    population only based formula is not satisfactory to meet the
    demands and to meet different regions of the Country, urban,
    rural, declining populations, growing populations. So I am not
    going to re-ask that question. I see shaking heads. So thank
    you for that, thank you for confirming that.
        As I am thinking about this, I think that the devil is in
    the details, because there has to be a good definition of what
    is need. Is a need, you don't have enough capacity for a
    growing population, or is a need such as what Senator Sullivan
    brought, or what somebody in a more rural State might have,
    with aging infrastructure? I think Ms. Dreyfuss-Wells, you
    addressed that in some of your testimony.
        So I guess maybe I will start with Mr. Ramseur to say, what
    is the definition of need? Is it aging, is it leaking, is it
    not enough capacity? Wouldn't we be well served, maybe you
    can't weigh in on this, but I think we would be well served to
    make sure definitionally, if we are going to look at this, what
    does need mean. So is there a definition for need in this
    statute, or even in the Safe Drinking one?
        Mr. Ramseur. I would have to circle back on the Safe
    Drinking Water Act precise definition. But under the Clean
    Water Act's, the needs surveys that have been published every 4
    years or so from EPA have multiple categories of needs,
    including stormwater, the big ones, wastewater treatment. But
    to some degree, those categories have changed over the years.
    So if Congress were to look at updating the formula based on
    needs, this would be a central question, what is needs, and how
    wide should the scope of needs be.
        Senator Capito. Mr. Sigmund, do you have a comment on that?
    Am I barking up the right tree here?
        Mr. Sigmund. Need needs to be very broad. All the things
    you talked about, you said is it this or this or this, yes, it
    is all of that.
        Senator Capito. All of the above.
        Mr. Sigmund. In addition to aging infrastructure that needs
    to be refreshed periodically in order to meet the needs, you
    have, again, growth, the ability to handle growth, whether it
    is population or other growth, as well as to be able to deal
    with pending or current regulatory changes.
        So need is very, very broad. We need to widen our
    consideration.
        Senator Capito. Ms. Dreyfuss-Wells, do you have a comment
    on that?
        Ms. Dreyfuss-Wells. Yes, thank you, Senator. I think one
    way to think about need is that our job as wastewater and
    stormwater managers is to support the land use of our
    communities. So that gives a very broad, as Tom said,
    definition of need. So we have aging infrastructure that has to
    be replaced. And I would look to local governments, to mayors,
    to hear about this need as well. I will just throw out the
    example of the city of Maple Heights in northeast Ohio, common
    trench sewers 80 years old, failing, cracking, basement
    flooding, these types of issues. So that is a need that is
    unique to northeast Ohio, but goes to this issue of aging.
        So we as wastewater managers, we support land use. So that
    spreads that need across many categories.
        Senator Capito. Ms. Watson?
        Ms. Watson. Thank you, Senator. I agree with everything
    that has been said. I will just add a little bit of a different
    flavor. There is, on the one hand, the definition of need, then
    there is also the ability to demonstrate need. I think that is
    another issue we have run into with smaller communities, with
    rural communities, with disadvantaged communities, it is quite
    onerous to put together a capital improvement plan to actually
    demonstrate need. So technical assistance resources to those
    communities would go a long way.
        Senator Capito. That is the repeating them we have heard as
    well. We know our cities and communities and counties under the
    COVID relief were given dollars, and one of the qualifying
    areas was water and wastewater infrastructure. I know from my
    mayors, they can't figure out how to do this. Then you
    encourage them to go regionally, and that is not a concept that
    a lot of mayors really, or county administrators, really
    embrace in our State. Regionally is hard for us. But I think it
    is probably the more efficient way to go.
        So let's just say we begin to look at a different way to
    calculate the formula. If in fact we were to do so it would
    change from year to year. I am getting to the issue of
    certainty and predictability. How important is that to you, Ms.
    Dreyfuss-Wells?
        Ms. Dreyfuss-Wells. It is very important. I think the point
    of delivering infrastructure efficiently for our customers is
    having a long term capital plan. So at the sewer district, we
    look at these things over a very long timeframe. And it
    involves advance facilities planning, and then it involves
    detailed design as you come into actually bidding a project.
        So that certainty around funding is very important, so that
    you can put together a capital plan that takes advantage of
    efficiencies from putting together a well run plan.
        Senator Capito. Thank you. My last comment will be, if I
    can, Mr. Chairman, I see this as, this could almost become a
    cycle. If you are in a declining population area, and you
    aren't able to secure funds to modernize your water and
    wastewater systems, in my view that further declines your
    ability to attract jobs, to attract residents, to attract
    people into those areas. So if you don't have the ability
    because it is only based on population, and certainly this
    would be, environmental justice communities would fall into
    this category, you are really going to perpetuate that cycle.
        On the other hand, if you go to growing population areas
    and way increase the amount of money for those, then you are
    going to keep creating more population and you are going to be
    getting more and more dollars to be able to modernize. So I
    think we have to be really careful here, particularly as we are
    looking at declining populations and rural populations, that we
    are not feeding into a phenomenon that a lot of these
    populations are trying to fight right now.
        So I thank you all for your testimony. Thank you for
    listening.
        Senator Carper. Thank you, Senator Capito. We have a couple
    of colleagues who are trying to join us before we close out.
    One is Senator Duckworth, and the other is Senator Padilla.
    Senator Duckworth is trying to join us by WebEx. Are you out
    there?
        Senator Duckworth. Yes.
        Senator Carper. Senator Padilla, are you out there?
        Senator Padilla. I sure am. Can you hear me, Mr. Chairman?
        Senator Carper. I certainly can. Please proceed, Alex.
        Senator Padilla. All right, thank you so much.
        I know others have touched on the State Revolving Fund, the
    Clean Water State Revolving Fund, but I wanted to ask a more
    specific question and surprise, surprise, being a little
    California-centric here. California's wastewater systems serve
    a population of 40 million living in over 13 million homes
    across California, and treat 4 billion gallons of sewage per
    day. The Clean Water State Revolving Fund is a critical funding
    mechanism for managing the more than 100,000 miles of sewer
    collection and 900 wastewater treatment plans throughout my
    home State.
        A lot has changed in California since 1987 when the
    allotment formula was first implemented. California's
    population has grown from about 29 million in 1990 to 40
    million today. Not only that, but Californians are also on the
    front lines of the climate crisis, facing both a historic mega-
    drought that is threatening our water supplies as well as
    rising sea levels that threaten several sewer systems in
    particular regions of the State.
        In its 2016 report, the EPA found that most States do not
    currently receive appropriated funds in proportion to the
    reported water quality needs or population, which demonstrates
    the inadequacy of the current allotment. That is a direct quote
    from the EPA's 2016 report. The study found that revising the
    allocation formula would mean California's clean water needs
    could be even more fairly addressed. In fact, the study
    estimated that such a revision would result in an increase of
    between 14 percent and 24 percent in the State's funding
    allocation depending on the criteria used.
        Mr. Ramseur, how can we ensure that any updated allocation
    formula reflects disadvantaged community needs, water quality
    improvements, and population criteria?
        Mr. Ramseur. If you were to adjust the formula, you would
    want to have it follow the most recent needs survey published
    by EPA. And if you wanted to include certain needs within that
    scope you would need to make that clear in the provisions of
    the Clean Water Act that you are amending.
        Senator Padilla. All right. I appreciate that answer. I
    look forward to working with you to accomplish just that. I am
    sure California is not the only State in a situation with
    significantly different circumstances than when the current
    formulas were established.
        I do have a followup question as it pertains to water
    affordability. Water systems across the Country are increasing
    their rates to help fund necessary drinking water and
    wastewater infrastructure repairs and upgrades. Obviously, the
    need goes far beyond the amount that has been approved in the
    Bipartisan Infrastructure law and what may be envisioned in
    further infrastructure investments.
        But at the same time, households across the Country are
    facing millions of dollars of water debt. So Mr. Ramseur, how
    would you recommend that we account for affordability in the
    Clean Water State Revolving Fund formula?
        Mr. Ramseur. When you are thinking about the scope of
    needs, assuming you are using needs as the key factor, or one
    of the key factors in a revised formula, you could adjust the
    definition of needs to include those types of factors.
    Currently, the States have the ability and the authority to
    provide funding through the SRF programs for these types of
    objectives, up to 30 percent in general from their annual
    allotment. They are required, as of recent enactment of the
    Infrastructure Investment and Jobs Act, to provide 10 percent
    of their annual allotment for this purpose.
        Senator Padilla. OK, that is a good start. I look forward
    to following up with you on these items and working to update
    the criteria and the formulas that suit, not just California's
    needs, but every State's needs in this modern era. Thank you
    very much. Thank you, Mr. Chair.
        Senator Carper. Thank you, Senator Padilla.
        Has Senator Duckworth joined us? No, OK. With that, we will
    wait for another hearing to ask some questions. We are going to
    wrap it up here. I have several more questions I want to ask
    for the record.
        A quick story. When Winston Churchill was bounced out of
    office as Prime Minister of England right after World War II,
    after leading his country valiantly to victory, he was leaving
    10 Downing Street, and he was asked by a reporter, ``Mr.
    Churchill, is this the end?'' And he said, ``This is not the
    end. This is not the beginning of the end, this is the end of
    the beginning.'' And today is really the beginning. It is the
    end of the beginning. But we appreciate your helping us kick
    this off.
        We will not see a rush to judgment. Senator Kelly, I will
    yield to you, you can close it up. I think the folks who are on
    this committee, including the staff who are on this committee,
    can be proud of the historic drinking water and wastewater
    investments that we delivered as part of the Bipartisan
    Infrastructure Law last year. As we look to the future, we look
    forward to continuing our conversation with you and others as
    smart as you, if they are out there. We look forward to
    continuing our conversation with members of this committee and
    our staffs and other stakeholders in order to improve the way
    we invest in our Nation's water infrastructure.
        A little bit of housekeeping before I yield to Senator
    Kelly. I want to ask unanimous consent to submit for the record
    a variety of materials that include letters from stakeholders,
    and other materials that relate to today's hearing.
        [The referenced material follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Senator Carper. Additionally, Senators will be allowed to
    submit questions for the record through the close of business
    on Wednesday, March 30th. We will compile those questions, send
    them to our witnesses who we will ask to reply by April 13th.
    And with that, I yield to Senator Kelly to close it out. And
    again, our thanks to each and every one of you, some of you
    came a long way, and some of you came a short way. But in both
    instances, we are grateful, very much. And some of you came
    from Ohio.
        Senator Kelly. Thank you, Mr. Chairman, and thank you,
    Senator Capito, again, for having this hearing.
        I have a couple of questions I want to submit for the
    record to Ms. Dreyfuss-Wells, and Ms. Watson, another for Mr.
    Ramseur. But I do have one question. I want to really just
    quickly followup, it is about needs again. We have this
    historic drought in Arizona. This question is for Mr. Ramseur.
    We are trying to capture and recharge aquifers. We are treating
    stormwater and even wastewater and re-using it, and turning it
    into drinking water like we do on the space station. I have
    experienced this myself at times. It actually works pretty
    well.
        But we are looking at needs, needs of a State like Arizona.
    Do you feel that needs evolve, and also if things like
    groundwater recharge or treatment of stormwater or wastewater
    should be able to be funded through the Clean Water SRF because
    these are changing needs?
        Mr. Ramseur. The needs that have been allowed to be
    addressed through the Clean Water SRF have evolved over time.
    The initial list of categories was three, and in 2014, Congress
    amended that list of eligible category types and now it is up
    to 13 or 14. So over time, Congress has recognized that the
    needs have changed throughout the States and provided more
    flexibility to the States to address their specific needs.
        Senator Kelly. Thank you. And again, Senator Capito, thank
    you for holding this hearing, and thanks again for everybody
    being here. I do have some questions for the record.
        Senator Capito.
        [Presiding.] Thank you. Thanks to the witnesses, safe
    travels, and we appreciate you all being here today. Thank you.
        [Whereupon, at 11:32 p.m., the hearing was adjourned.]

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