[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

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                                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
        
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                    U.S. GOVERNMENT PUBLISHING OFFICE                    
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               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

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                                                                   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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