[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]


                   CLEAN WATER INFRASTRUCTURE FINANCING: 
                  STATE AND LOCAL PERSPECTIVES AND RECENT 
                               DEVELOPMENTS

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

                                (118-30)

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                    WATER RESOURCES AND ENVIRONMENT

                                 OF THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED EIGHTEENTH CONGRESS

                             FIRST SESSION

                               __________

                           SEPTEMBER 28, 2023

                               __________

                       Printed for the use of the
             Committee on Transportation and Infrastructure
             

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     Available online at: https://www.govinfo.gov/committee/house-
     transportation?path=/browsecommittee/chamber/house/committee/
                             transportation                             
                             
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                    U.S. GOVERNMENT PUBLISHING OFFICE                    
54-211 PDF                 WASHINGTON : 2023                    
      
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             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

  Sam Graves, Missouri, Chairman
Rick Larsen, Washington,             Eric A. ``Rick'' Crawford, 
  Ranking Member                     Arkansas
Eleanor Holmes Norton,               Daniel Webster, Florida
  District of Columbia               Thomas Massie, Kentucky
Grace F. Napolitano, California      Scott Perry, Pennsylvania
Steve Cohen, Tennessee               Brian Babin, Texas
John Garamendi, California           Garret Graves, Louisiana
Henry C. ``Hank'' Johnson, Jr.,      Georgiavid Rouzer, North Carolina
Andre Carson, Indiana                Mike Bost, Illinois
Dina Titus, Nevada                   Doug LaMalfa, California
Jared Huffman, California            Bruce Westerman, Arkansas
Julia Brownley, California           Brian J. Mast, Florida
Frederica S. Wilson, Florida         Jenniffer Gonzalez-Colon,
Donald M. Payne, Jr., New Jersey       Puerto Rico
Mark DeSaulnier, California          Pete Stauber, Minnesota
Salud O. Carbajal, California        Tim Burchett, Tennessee
Greg Stanton, Arizona,               Dusty Johnson, South Dakota
  Vice Ranking Member                Jefferson Van Drew, New Jersey,
Colin Z. Allred, Texas                 Vice Chairman
Sharice Davids, Kansas               Troy E. Nehls, Texas
Jesus G. ``Chuy'' Garcia, Illinois   Lance Gooden, Texas
Chris Pappas, New Hampshire          Tracey Mann, Kansas
Seth Moulton, Massachusetts          Burgess Owens, Utah
Jake Auchincloss, Massachusetts      Rudy Yakym III, Indiana
Marilyn Strickland, Washington       Lori Chavez-DeRemer, Oregon
Troy A. Carter, Louisiana            Chuck Edwards, North Carolina
Patrick Ryan, New York               Thomas H. Kean, Jr., New Jersey
Mary Sattler Peltola, Alaska         Anthony D'Esposito, New York
Robert Menendez, New Jersey          Eric Burlison, Missouri
Val T. Hoyle, Oregon                 John James, Michigan
Emilia Strong Sykes, Ohio            Derrick Van Orden, Wisconsin
Hillary J. Scholten, Michigan        Brandon Williams, New York
Valerie P. Foushee, North Carolina   Marcus J. Molinaro, New York
                                     Mike Collins, Georgia
                                     Mike Ezell, Mississippi
                                     John S. Duarte, California
                                     Aaron Bean, Florida

            Subcommittee on Water Resources and Environment

  David Rouzer, North Carolina, 
             Chairman
Grace F. Napolitano, California,     Daniel Webster, Florida
  Ranking Member                     Thomas Massie, Kentucky
John Garamendi, California           Brian Babin, Texas
Emilia Strong Sykes, Ohio,           Mike Bost, Illinois
  Vice Ranking Member                Doug LaMalfa, California
Jared Huffman, California            Bruce Westerman, Arkansas
Frederica S. Wilson, Florida         Brian J. Mast, Florida
Patrick Ryan, New York               Jenniffer Gonzalez-Colon,
Val T. Hoyle, Oregon                   Puerto Rico
Hillary J. Scholten, Michigan        Burgess Owens, Utah
Julia Brownley, California           Chuck Edwards, North Carolina
Mark DeSaulnier, California          Eric Burlison, Missouri
Greg Stanton, Arizona                John James, Michigan, Vice 
Chris Pappas, New Hampshire          Chairman
Seth Moulton, Massachusetts          Derrick Van Orden, Wisconsin
Troy A. Carter, Louisiana            Brandon Williams, New York
Eleanor Holmes Norton,               Mike Collins, Georgia
  District of Columbia               Mike Ezell, Mississippi
Rick Larsen, Washington (Ex Officio) John S. Duarte, California
                                     Sam Graves, Missouri (Ex Officio)

                                CONTENTS

                                                                   Page

Summary of Subject Matter........................................   vii

                 STATEMENTS OF MEMBERS OF THE COMMITTEE

Hon. David Rouzer, a Representative in Congress from the State of 
  North Carolina, and Chairman, Subcommittee on Water Resources 
  and Environment, opening statement.............................     1
    Prepared statement...........................................     3
Hon. Grace F. Napolitano, a Representative in Congress from the 
  State of California, and Ranking Member, Subcommittee on Water 
  Resources and Environment, opening statement...................     5
    Prepared statement...........................................     7
Hon. Rick Larsen, a Representative in Congress from the State of 
  Washington, and Ranking Member, Committee on Transportation and 
  Infrastructure, opening statement..............................    16
    Prepared statement...........................................    17

                               WITNESSES

Lori Johnson, Assistant Chief, Financial Assistance Division, 
  Oklahoma Water Resources Board, on behalf of the Council of 
  Infrastructure Financing Authorities, oral statement...........    19
    Prepared statement...........................................    21
Todd P. Swingle, P.E., Chief Executive Officer and Executive 
  Director, Toho Water Authority, on behalf of the National 
  Association of Clean Water Agencies, oral statement............    27
    Prepared statement...........................................    29
James M. Proctor II, Senior Vice President, Legal and External 
  Affairs, McWane, Inc., on behalf of the U.S. Chamber of 
  Commerce, oral statement.......................................    32
    Prepared statement...........................................    33
Rebecca Hammer, Deputy Director of Federal Water Policy, Natural 
  Resources Defense Council, oral statement......................    36
    Prepared statement...........................................    38

                       SUBMISSIONS FOR THE RECORD

Letter and Attachments of September 27, 2023, to Hon. David 
  Rouzer, Chairman, and Hon. Grace F. Napolitano, Ranking Member, 
  Subcommittee on Water Resources and Environment, from Jack 
  Waldorf, Executive Director, Western Governors' Association, 
  Submitted for the Record by Hon. David Rouzer..................     8
Submissions for the Record by Hon. Grace F. Napolitano:
    Letter of September 28, 2023, to Hon. Sam Graves, Chairman, 
      and Hon. Rick Larsen, Ranking Member, Committee on 
      Transportation and Infrastructure, and Hon. David Rouzer, 
      Chairman, and Hon. Grace F. Napolitano, Ranking Member, 
      Subcommittee on Water Resources and Environment, from James 
      T. Callahan, General President, International Union of 
      Operating Engineers........................................     4
    Letter of October 4, 2023, to Hon. Sam Graves, Chairman, and 
      Hon. Rick Larsen, Ranking Member, Committee on 
      Transportation and Infrastructure, from Sean McGarvey, 
      President, North America's Building Trades Unions..........    75
    Letter to Hon. Sam Graves, Chairman, and Hon. Rick Larsen, 
      Ranking Member, Committee on Transportation and 
      Infrastructure, and Hon. David Rouzer, Chairman, and Hon. 
      Grace F. Napolitano, Ranking Member, Subcommittee on Water 
      Resources and Environment, from Mark McManus, General 
      President, United Association of Union Plumbers and 
      Pipefitters................................................    77
    Statement of Patricia Sinicropi, Executive Director, 
      WateReuse Association......................................    77
Report, ``Using Clean Water State Revolving Funds for Greening 
  and Climate Resilience: A Guide for Local Governments,'' by 
  American Rivers, January 2023, Submitted for the Record by Hon. 
  Emilia Strong Sykes............................................    57

                                APPENDIX

Questions to Lori Johnson, Assistant Chief, Financial Assistance 
  Division, Oklahoma Water Resources Board, on behalf of the 
  Council of Infrastructure Financing Authorities, from Hon. 
  David Rouzer...................................................    79
Questions to Todd P. Swingle, P.E., Chief Executive Officer and 
  Executive Director, Toho Water Authority, on behalf of the 
  National Association of Clean Water Agencies, from Hon. David 
  Rouzer.........................................................    83
Questions to James M. Proctor II, Senior Vice President, Legal 
  and External Affairs, McWane, Inc., on behalf of the U.S. 
  Chamber of Commerce, from Hon. David Rouzer....................    84

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]


                           September 22, 2023

    SUMMARY OF SUBJECT MATTER

    TO:      LMembers, Subcommittee on Water Resources and 
Environment
    FROM:  LStaff, Subcommittee on Water Resources and 
Environment
    RE:      LSubcommittee Hearing on ``Clean Water 
Infrastructure Financing: State and Local Perspectives and 
Recent Developments''
_______________________________________________________________________


                               I. PURPOSE

    The Subcommittee on Water Resources and Environment of the 
Committee on Transportation and Infrastructure will meet on 
Thursday, September 28, 2023, at 10:00 a.m. ET in 2167 of the 
Rayburn House Office Building to hold a hearing entitled, 
``Clean Water Infrastructure Financing: State and Local 
Perspectives and Recent Developments.'' This hearing will 
provide Members the opportunity to hear local and National 
perspectives on the current state of clean water infrastructure 
financing, including the Clean Water State Revolving Funds, and 
analyze recent changes and current issues in clean water 
infrastructure financing, including changes and additional 
funding provided under the Infrastructure Investment and Jobs 
Act (IIJA) (P.L. 117-58).\1\
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    \1\ IIJA, Pub. L. No. 117-58, 135 Stat. 429.
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    At the hearing, Members will receive testimony from 
witnesses representing the Council of Infrastructure Financing 
Authorities (CIFA), National Association of Clean Water 
Agencies (NACWA), United States Chamber of Commerce, and the 
Natural Resources Defense Council.

                             II. BACKGROUND

CLEAN WATER INFRASTRUCTURE

    Clean Water infrastructure construction and maintenance is 
integral for local communities nationwide. Industries, 
municipalities, households, and other entities all depend on 
wastewater infrastructure, including sewer pipe networks, for 
collection and transportation and onsite or centralized 
treatment facilities, to reduce pollution before being 
discharged into nearby waterbodies or reused for water, energy, 
or nutrient purposes.\2\
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    \2\ See e.g., Am. Soc. of Civil Engineers, 2021 Report Card for 
America's Infrastructure, Wastewater Infrastructure, (2021), available 
at https://infrastructurereportcard.org/wp-content/uploads/2020/12/
Wastewater-2021.pdf [hereinafter Wastewater Infrastructure Report 
Card].
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    There are more than 16,000 private and public wastewater 
treatment systems nationwide, and approximately 80 percent of 
these serve communities with populations of 10,000 or fewer.\3\ 
As of 2021, per day, 62.5 billion gallons of wastewater are 
treated by centralized wastewater treatment plants, a number 
that is increasing due to population trend shifts towards urban 
communities.\4\ In addition, there is estimated over 800,000 
miles of public sewers and 500,000 of private lateral sewers 
that connect to public sewer lines nationwide.\5\ Many of the 
Nation's wastewater treatment plants were designed with a 40 to 
50 year lifespan, and constructed in the 1970s; while 
wastewater pipes, which have a typical lifespan of 50 to 100 
years, are 45 years old on average.\6\
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    \3\ See id.; see also Elena H. Humphreys, Cong. Rsch. Serv. 
(R47633), the Role of Earmarks in CWSRF and DWSRF Appropriations in the 
117th Congress, (July 25, 2023), available at https://www.crs.gov/
Reports/R47633 [hereinafter CRS Report R47633).
    \4\ Wastewater Infrastructure Report Card, supra note 2, at 153.
    \5\ Id.
    \6\ Id.
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    Pursuant to the Clean Water Act (CWA), the United States 
Environmental Protection Agency (EPA) periodically reports on 
the capital cost of wastewater infrastructure needs.\7\ The 
most recent EPA report on wastewater estimates was published in 
2016 and estimates that wastewater treatment facilities would 
need $271 billion over the next twenty years to continue to 
meet Federal standards for water quality.\8\
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    \7\ CWA, Pub. L. No. 92-500, 86 Stat. 816 [hereinafter CWA].
    \8\ EPA, Clean Watersheds Needs Survey (CWNS) Report to Congress--
2012, (Jan. 2016), available at https://www.epa.gov/sites/default/
files/2015-12/documents/cwns_2012_report_
to_congress-508-opt.pdf [hereinafter CWNS 2016].
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CLEAN WATER ACT BACKGROUND

    The CWA is the principal law governing water quality of the 
Nation's surface waters and provides a major Federal-state 
partnership to do so.\9\ Commonly referred to as the CWA, 
Congress enacted the 1972 amendments to the Federal Water 
Pollution Control Act with the objective to ``restore and 
maintain the chemical, physical, and biological integrity of 
the Nation's waters.'' \10\ In doing so, the CWA sets out the 
regulatory requirements with which wastewater utilities must 
comply.
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    \9\ CWA, supra note 7.
    \10\ Id.
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    In addition to wastewater regulatory requirements, Title II 
of the CWA included a grant program that provided funding for 
wastewater treatment facilities construction and related 
objectives.\11\ This grant program was funded through annual 
appropriations and utilized a state-by-state formula included 
in the CWA to allocate funds.\12\ States then use the funding 
to make direct grants to cities for eligible projects, 
typically covering 55 to 75 percent of the total costs.\13\
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    \11\ Elena H. Humphreys & Jonathan L. Ramseur, Cong. Rsch. Serv. 
(R46892), Infrastructure Investment and Jobs Act (IIJA): Drinking Water 
and Wastewater Infrastructure, (updated Jan. 4, 2022), available at 
https://www.crs.gov/Reports/R46892 [hereinafter CRS Report R46892].
    \12\ Id.
    \13\ Id.
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    Prior to the enactment of the CWA in 1972, however, the 
Federal Government administered a comparatively small aid 
program for municipal wastewater infrastructure, whereby the 
Federal Government allocated funding to the states based on 
population.\14\ A statutory formula for allocation did not 
exist.\15\
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    \14\ Jonathan L. Ramseur, Cong. Rsch. Serv. (R47474), Clean Water 
State Revolving Fund Allotment Formula: Background and Options, (Mar. 
15, 2023), available at https://www.crs.gov/Reports/R47474 [hereinafter 
CRS Report R47474].
    \15\ Id.
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    In contrast, under the CWA Title II program, Congress 
appropriated nearly $52 billion between Fiscal Year (FY) 1973 
and FY 1990, the largest nonmilitary public works 
appropriations since the Interstate Highway System.\16\
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    \16\ CRS Report R46892, supra note 11.
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             III. CLEAN WATER STATE REVOLVING FUNDS (CWSRF)

    Throughout the following discussion, it is important to 
highlight that the CWSRF program is not to be confused with the 
Drinking Water State Revolving Fund (DWSRF) program, which is 
part of the Safe Drinking Water Act, and was authorized as part 
of the Safe Drinking Water Act Amendments of 1996.\17\ The 
Committee on Transportation and Infrastructure holds 
jurisdiction over the CWSRF, while the Committee on Energy and 
Commerce holds jurisdiction over the DWSRF.
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    \17\ See Safe Drinking Water Act Amendments of 1996, Pub. L. No. 
104-182, 110 Stat. 1666.
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    Noting the amount of investment that had gone into 
wastewater infrastructure, Congress amended the CWA through the 
Water Quality Act of 1987.\18\ These amendments to the CWA 
established the Clean Water State Revolving Fund (CWSRF) 
program, which today serves as the primary Federal program for 
wastewater infrastructure funding.\19\ The Water Quality Act of 
1987 authorized the CWSRF program and appropriations to 
capitalize state revolving loan funds as Title VI of the CWA, 
in the process phasing out the Title II grant program after FY 
1990.\20\
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    \18\ Water Quality Act of 1987, Pub. L. No. 100-4, 33 U.S.C. 
Sec. Sec.  1381-1387.
    \19\ Id.; see also CRS Report 47474, supra note 14.
    \20\ CRS Report R47633, supra note 3; see also EPA, About the Clean 
Water State Revolving Fund (CWSRF), available at https://www.epa.gov/
cwsrf/about-clean-water-state-revolving-fund-cwsrf [hereinafter About 
the CWSRF].
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    Through the CWSRF program, each state and Puerto Rico 
maintain revolving loan funds to provide low-cost financing for 
approved water quality infrastructure projects.\21\ State 
revolving funds (SRFs) are available to make low-interest 
loans, buy or refinance local debt, subsidize or insure local 
bonds, make loan guarantees, act as security or guarantee of 
state debt, earn interest, and pay administrative expenses.\22\ 
SRF monies may also be used to implement other water pollution 
control programs such as nonpoint source pollution management 
and the National Estuary Program.\23\
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    \21\ Jonathan L. Ramseur, Cong. Rsch. Serv. (R46471), Federally 
Supported Projects for Wastewater, Drinking Water, and Water Supply 
Infrastructure, (updated Aug. 2, 2022), available at https://
www.crs.gov/Reports/R46471 [hereinafter CRS Report R46471].
    \22\ Id.; see generally About the CWSRF, supra note 20.
    \23\ Id.
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    Funds to establish or capitalize the CWSRF programs are 
provided through Federal capitalization grants and state 
matching funds (generally equal to 20 percent of Federal 
grants).\24\ States primarily use their funds to provide loans 
to cities and other eligible recipients. As a loan program, the 
CWSRFs are intended to be supported through the repayment of 
loans to states over time, creating a continuing source of 
assistance for other communities, in contrast to straight 
appropriations.\25\ Loans are made at or below current market 
interest rates, including zero interest loans, and vary by 
state, applicant, and circumstance.\26\
---------------------------------------------------------------------------
    \24\ Id.
    \25\ Id.
    \26\ Id.
---------------------------------------------------------------------------
    Although the CWSRF generally involves loans from the state 
to local wastewater actors, states are also authorized to 
provide ``additional subsidization'' to projects and their 
sponsors.\27\ Additionally, states may also use CWSRF grants to 
provide additional subsidization for projects falling under 
specific categories of infrastructure projects, such as for 
reasons of water or energy efficiency.\28\ In practice, this 
``additional subsidization'' has taken the form of principal 
forgiveness and/or loans with negative interest.\29\
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    \27\ 33 U.S.C. Sec. 1383(i); see also CRS Report R46892, supra note 
11.
    \28\ See CRS Report R46892, supra note 11.
    \29\ Id.
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    Since FY 1989, Congress has provided more than $56 billion 
in Federal capitalization assistance to the states.\30\ In 
turn, this infusion of Federal capital to SRFs has leveraged 
over $153.6 billion in direct assistance to communities through 
44,555 agreements.\31\ According to EPA's latest data, in 2021 
alone, states funded over 1,700 new wastewater infrastructure 
projects totaling more than $8.2 billion through the CWSRF in 
2021.\32\
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    \30\ See CRS Report R47474, supra note 14.
    \31\ EPA, CWSRF 2021 Annual Report, (Dec. 2022), available at 
https://www.epa.gov/system/files/documents/2022-12/2021-CWSRF-Annual-
Report.pdf [hereinafter CWSRF Annual Report].
    \32\ Id.
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                        IV. RECENT DEVELOPMENTS

    In the past two decades, Congress has enacted several 
amendments to the CWA to promote the implementation and 
construction of wastewater infrastructure. Most recently, the 
Infrastructure Investment and Jobs Act (IIJA) reauthorized 
appropriations, provided supplemental funding, and amended the 
CWSRF program.\33\ However, there are still other current 
issues that Congress and stakeholders are interested in.
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    \33\ Infrastructure Investment and Jobs Act, Pub. L. No. 117-58, 
135 Stat 429 [hereinafter IIJA].
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    In 2009, Congress enacted the American Recovery and 
Reinvestment Act (ARRA) to stimulate the United States economy 
and address a range of other policy objectives.\34\ The ARRA 
provided $4 billion in supplemental funding for the CWSRF for 
wastewater infrastructure projects, required states to use at 
least 50 percent of ARRA funds for additional subsidization, 
and authorized the ``green reserve,'' \35\ which required 
states to use at least 50 percent of ARRA grants ``for projects 
to address green infrastructure, water or energy efficiency 
improvements or other environmentally innovative activities.'' 
\36\
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    \34\ American Recovery and Reinvestment Act, Pub. L. No. 111-5, 123 
Stat 115.
    \35\ See e.g., Green Project Reserve Guidance for the Clean Water 
State Revolving Fund (CWSRF) (last updated May 19, 2023), available at 
https://www.epa.gov/cwsrf/green-project-reserve-guidance-clean-water-
state-revolving-fund-cwsrf.
    \36\ Id.; see also CRS Report R47474, supra note 14.
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    In the Water Resources Reform and Development of 2014 
(WRRDA), Congress amended the CWA to authorize CWSRF-eligible 
projects to include measures to manage, reduce, treat, or 
recapture stormwater; replacement of decentralized treatment 
systems such as septic tanks; energy-efficiency improvement at 
treatment works; reusing and recycling of wastewater and/or 
stormwater; and security improvements at treatment works.\37\ 
WRRDA also allowed states under certain conditions to provide 
additional subsidization up to 30 percent of the state's 
allotment.\38\
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    \37\ Water Resources Reform and Development Act, Pub. L. No. 113-
121, 128 Stat. 1322 [hereinafter WRRDA]; CWA Sec. Sec.  601(b)(13), 
603(d)(1)(E), 603(i)(1)(B), 122, 603(c); see also CRS Report R47474, 
supra note 14.
    \38\ WRRDA, supra note 34; see also CRS Report R47474, supra note 
14.
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    America's Water Infrastructure Act of 2018 (AWIA) amended 
the list of activities eligible under the CWSRF program to 
allow nonprofits to aid certain individuals for projects on 
existing decentralized wastewater systems or to connect an 
individual household to a centralized wastewater system.\39\
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    \39\ America's Water Infrastructure Act of 2018, Pub. L. No. 115-
270, 132 Stat. 3876.
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    Additionally, in recent years, the annual appropriations 
bill for the EPA has included additional requirements for 
states to use a portion of CWSRF funds for additional subsidies 
and for the green reserve.\40\
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    \40\ See e.g. Consolidated Appropriations Act of 2023, Pub. L. No. 
117-328, 136 Stat. 4793, (requiring states, to the extent that there 
are sufficient projects or activities eligible for assistance, to 
utilize not less than 10 percent of their CWSRF capitalization grant 
for projects to address green infrastructure, water or energy efficient 
improvements, or other environmentally innovative activities).
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INFRASTRUCTURE INVESTMENT AND JOBS ACT (IIJA)

    IIJA made several changes to the CWSRF program. For the 
first time since Congressional authorization for the program 
expired in 1994, section 50210(b) of IIJA reauthorized a total 
of $14.65 billion in Federal appropriations for the CWSRF 
program between FYs 2022-2026.\41\
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    \41\ IIJA Sec. 50210(b), at 135 Stat 1169, supra note 33.
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    Division J, Title IV of IIJA provided $11.7 billion in 
supplemental appropriations from FYs 2022-2026 for the CWSRF 
program, separate from the authorized level for annual 
appropriations.\42\ Additionally, IIJA provided $1 billion in 
supplemental appropriations set aside specifically to address 
emerging contaminants.\43\
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    \42\ Id. at 135 Stat. 1396.
    \43\ Id.
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    IIJA also included other requirements for how CWSRF funds 
are to be spent. Section 50210(a) explicitly reserved a portion 
of CWSRF funds to be distributed as grants or grant substitutes 
to economically disadvantaged communities and for the 
implementation of energy-efficient or water-efficient 
technologies.\44\ States are required for their supplemental 
IIJA appropriations to use 49 percent of their SRF 
capitalization grant amount as 100 percent principal 
forgiveness and grants.\45\ For the supplemental appropriations 
to address emerging contaminant projects, states are required 
to use 100 percent of their capitalization amount as principal 
forgiveness or grants.\46\
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    \44\ Id. at 135 Stat 1169; see also H. Comm. on Transp. & 
Infrastructure, Jurisdiction and Activities of the Subcomm. on Water 
Res. and Environment, 118th Cong., (2023) (on file with Comm.) 
[hereinafter Jurisdiction and Activities Report].
    \45\ See CRS Report R47633, supra note 3; see also CWSRF Annual 
Report, supra note 31.
    \46\ See CRS Report R47633, supra note 3; see also CWSRF Annual 
Report, supra note 31.
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OTHER CURRENT ISSUES

    During the 117th Congress, providing funds directly to 
communities for wastewater infrastructure projects through 
community project funding resumed.\47\ Some stakeholders are 
concerned about the way these funds have been targeted, as the 
annual appropriations bills for FYs 2022 and 2023 dedicated 
part of the CWSRF funding directly to community project 
funding.\48\ Prior to the new practice, earmarked funds were 
provided separately from SRF appropriations.
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    \47\ See CRS Report R47633, supra note 3.
    \48\ Id.
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    Although the CWA originally directed EPA to publish a Clean 
Watersheds Needs Survey (CWNS) biennially, the last CWNS was 
published in 2016, documenting wastewater infrastructure needs 
from 2012.\49\ IIJA directed EPA to conduct a needs assessment 
for all CWSRF-eligible projects by November 2023, and every 
four years following.\50\
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    \49\ CWNS 2016, supra note 8; see also CRS Report R47474, supra 
note 14.
    \50\ CWA, supra note 7, Sec. 609.
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    The funding allocation percentages when the CWSRF program 
was originally created generally remain in effect today.\51\ 
Although the legislative history does not contain a specific 
analysis of the numbers behind the allocation formulas, the 
formula represents a negotiation between the House and Senate 
and provide each state with at least half of a percent of the 
total appropriation in any given year.\52\
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    \51\ CRS Report R47474, supra note 14.
    \52\ Id.
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              V. OTHER CLEAN WATER INFRASTRUCTURE PROGRAMS

    Although the CWSRF program is generally considered the 
principal Federal source for wastewater project funding, a 
number of related authorities for funding exist.
    The Water Infrastructure Finance and Innovation Act (WIFIA) 
authorizes EPA to provide direct loans or loan guarantees for a 
wide range of drinking water and wastewater projects.\53\ In 
contrast to the CWSRF, under this authority, EPA provides 
credit assistance directly to eligible project recipients and 
may fund projects that may be ineligible for CWSRF assistance 
or are too large for traditional CWSRF funding.\54\
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    \53\ WRRDA, supra note 37; see generally EPA, What is WIFIA?, 
available at https://www.epa.gov/wifia/what-wifia; see also CRS Report 
R46471, supra note 21.
    \54\ CRS Report R46471, supra note 21.
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    The Consolidated Appropriations Act of 2001 authorized EPA 
to establish a new grant program in the CWA to address combined 
sewer overflows, sanitary sewer overflows, or stormwater.\55\ 
Projects under this grant program are subject to the same 
requirements as the CWSRF program. This authority received its 
first Federal appropriations in FY 2020.\56\ IIJA also amended 
this grant program, requiring EPA to work with states to use at 
least 25 percent of grant awards on projects in rural 
communities with populations of fewer than 10,000 and 
financially distressed communities, as defined by each 
state.\57\
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    \55\ Consolidated Appropriations Act of 2001, Pub. L. No. 106-554; 
CWA Sec.  221; see also Jurisdiction and Activities Report, supra note 
44.
    \56\ Jurisdiction and Activities Report, supra note 44.
    \57\ Id.; IIJA, supra note 33, Sec.  50204.
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                             VI. WITNESSES

     LMs. Lori Johnson, Assistant Chief, Financial 
Services Division, Oklahoma Water Resources Board, on behalf of 
Council of Infrastructure Financing Authorities
     LMr. Todd P. Swingle, P.E., Chief Executive 
Officer and Executive Director, Toho Water Authority, 
Kissimmee, FL, on behalf of National Association of Clean Water 
Agencies
     LMr. James M. Proctor II, Senior Vice President 
and General Counsel, McWane Inc., on behalf of United States 
Chamber of Commerce
     LMs. Rebecca Hammer, Deputy Director, Federal 
Water Policy, Natural Resources Defense Council

 
CLEAN WATER INFRASTRUCTURE FINANCING: STATE AND LOCAL PERSPECTIVES AND 
                          RECENT DEVELOPMENTS

                              ----------                              


                      THURSDAY, SEPTEMBER 28, 2023

                  House of Representatives,
   Subcommittee on Water Resources and Environment,
            Committee on Transportation and Infrastructure,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:02 a.m. in 
room 2167 Rayburn House Office Building, Hon. David Rouzer 
(Chairman of the subcommittee) presiding.
    Mr. Rouzer. The Subcommittee on Water Resources and 
Environment will come to order.
    I ask unanimous consent that the chairman be authorized to 
declare a recess at any time during today's hearing.
    Without objection, so ordered.
    I also ask unanimous consent that Members not on the 
subcommittee be permitted to sit with the subcommittee at 
today's hearing and ask questions.
    Without objection, so ordered.
    As a reminder, if Members wish to insert a document into 
the record, they can email it to [email protected]. 
Again, that's [email protected].
    I now recognize myself for 5 minutes for the purposes of an 
opening statement.

   OPENING STATEMENT OF HON. DAVID ROUZER OF NORTH CAROLINA, 
   CHAIRMAN, SUBCOMMITTEE ON WATER RESOURCES AND ENVIRONMENT

    Mr. Rouzer. First, thank you to our witnesses for being 
here today. I am eager to hear from you on the issues local 
communities are facing in their efforts to address the Nation's 
water and wastewater infrastructure needs. Specifically, I am 
most interested in hearing your insights on water 
infrastructure financing, especially the current condition of 
the Clean Water State Revolving Funds, or SRFs, as they are 
commonly known.
    Our clean water infrastructure is something most Americans 
don't think about, but rely on 24/7. Ask anyone who has ever 
dealt with a sewer backup how important wastewater 
infrastructure is. In many cases and in many communities, these 
water and wastewater systems are long past their design life 
and in need of critical repairs, upgrades, or total 
replacement. As a result, leaks and blockages are all too 
common across the Nation and represent a massive waste of a 
vital resource.
    These needs are especially urgent for hundreds of 
communities trying to fix the problems of combined sewer 
overflows and sanitary sewer overflows. Wastewater 
infrastructure deficiencies are particularly acute in many 
small and rural communities. There are more than 16,000 private 
and public wastewater treatment systems nationwide, and 
approximately 80 percent serve communities with populations of 
10,000 or less. For example, in my district there are almost 
100 communities with 1,000 residents or less, including the 
town of Chadbourn in Columbus County. Chadbourn, interestingly 
enough, has wastewater systems as old as their date of 
incorporation, which was 1883. The Clean Water SRF program has 
allowed them to maintain their systems while they pursue long-
term solutions.
    According to the EPA's last ``Clean Water Needs Survey 
Report to Congress,'' the total documented needs for 
sustainable wastewater infrastructure, combined sewer overflow 
and sanitary sewer overflow correction, and stormwater 
management nationwide are at least $270 billion over the next 
two decades.
    In my home State of North Carolina alone, there is a 
documented need of $11 billion for clean water projects. To 
further underscore the need, coastal and low-lying inland 
communities in southeastern North Carolina experience frequent 
storms resulting in flooded rivers and watersheds, which often 
leave water and drainage systems in need of total repair and 
future mitigation.
    These investments are expensive and cannot be handled by 
simply authorizing and appropriating the same or larger amounts 
of Federal funds. The Infrastructure Investment and Jobs Act 
recognized the importance of the Clean Water SRF program, but 
simply pumped more money at the problem without addressing some 
fundamental shortfalls. While Federal, State, and local 
investments are necessary, new approaches are needed to solve 
these problems. Integrated planning and greater regulatory 
flexibility can help communities struggling to address their 
needs and meet compliance mandates, while also reducing 
financial burdens currently levied on ratepayers.
    When the Clean Water SRF program was created in 1987, the 
authors understood States and localities are the experts in 
addressing their own clean water infrastructure challenges. By 
setting up loan programs, States and localities would be able 
to leverage more financial resources for decades to come, much 
easier than relying on direct appropriations. So, it is 
important that we maintain and abide by the intent of this 
longstanding loan structure to continue responsibly addressing 
wastewater infrastructure needs decades into the future. To 
divert more and more of these funds to grants will make the 
program unsustainable and, in the end, help no one.
    The current set-asides for grants and grant substitutes 
passed in IIJA will ultimately be harmful to the program, 
slowly draining the funds States have been able to leverage for 
decades under the traditional low-interest loan structure. When 
combined with unfunded mandates and burdensome regulations 
driving up baseline costs, it puts the long-term viability of 
the Clean Water SRF in question.
    Wastewater infrastructure is incredibly important for my 
constituents and those of every Member of Congress. The Clean 
Water SRF is a great example of good public policy that helps 
keep wastewater costs down and provides reliable service for 
many communities and ratepayers around the country. In order to 
maintain a good clean water infrastructure well into the 
future, a robust and effective program is key.
    So, I look forward to hearing from our witnesses today 
about how we can improve our clean water infrastructure, 
protect against environmental degradation, keep wastewater 
costs low for ratepayers, and address the challenges brought 
about by recent legislative changes surrounding the Clean Water 
SRF program.
    [Mr. Rouzer's prepared statement follows:]

                                 
 Prepared Statement of Hon. David Rouzer, a Representative in Congress 
 from the State of North Carolina, and Chairman, Subcommittee on Water 
                       Resources and Environment
    I'd like to first thank our witnesses for being here today--I am 
excited to hear from the members of this panel on the issues 
communities are facing in addressing the nation's water and wastewater 
infrastructure needs. Specifically, I am interested in hearing your 
insights on water infrastructure financing, especially the current 
condition of the Clean Water State Revolving Funds (SRFs).
    Our clean water infrastructure is something most Americans don't 
think about every day but rely on 24/7. Just ask anyone who has ever 
dealt with a sewer backup how important our wastewater infrastructure 
is.
    Indeed, in many communities, these water and wastewater systems are 
long past their design life and in need of critical repairs, upgrades, 
or total replacement. As a result, leaks and blockages are all too 
common across the nation and represent a massive waste of a vital 
resource. These needs are especially urgent for hundreds of communities 
trying to fix the problems of combined sewer overflows and sanitary 
sewer overflows.
    Needs for improvement in wastewater infrastructure are especially 
the case for many small and rural communities. There are more than 
16,000 private and public wastewater treatment systems nationwide, and 
approximately 80 percent serve communities with populations of 10,000 
or fewer. In my district, there are 95 communities with less than 
10,000 residents, including the Town of Chadbourn in Columbus County. 
Chadbourn has wastewater systems as old as its date of incorporation: 
1883. The Clean Water SRF program has allowed them to maintain their 
systems while they pursue long-term solutions.
    According to EPA's last ``Clean Water Needs Survey'' report to 
Congress in 2016, the total documented needs for sustainable wastewater 
infrastructure, combined sewer overflow and sanitary sewer overflow 
correction, and stormwater management nationwide are at least $270 
billion over the next two decades.
    In my home state of North Carolina alone, there is a documented 
need of $11 billion for clean water projects. To further demonstrate 
these needs, coastal and low-lying inland communities in southeastern 
North Carolina experience frequent storms resulting in flooded rivers 
and watersheds, often times leaving water and drainage systems in need 
of total repair and future mitigation.
    Even by congressional standards, these investments are expensive 
and cannot be handled by simply authorizing and appropriating the same 
or larger amounts of federal funds. The Infrastructure Investment and 
Jobs Act (IIJA) recognized the importance of the Clean Water SRF 
program, but just threw money at the problem without addressing the 
shortfalls of the current programs. While federal, state, and local 
investments are necessary, new approaches are required to solve these 
problems.
    Novel methods such as integrated planning and greater regulatory 
flexibility can help communities struggling to address needs and meet 
compliance mandates while also reducing financial burdens currently 
levied on ratepayers.
    When the Clean Water SRF program was created in 1987, the authors 
understood states and localities are the experts in addressing their 
own clean water infrastructure challenges. By setting up loan programs, 
states and localities would be able to leverage more financial 
resources for decades to come, easier than relying on direct 
appropriations. It is important that we maintain the longstanding loan 
structure to continue responsibly addressing wastewater infrastructure 
needs decades into the future. To do otherwise will make the program 
unsustainable.
    The current set-asides for grants and grant substitutes passed in 
IIJA will ultimately be harmful to the program, slowly draining the 
funds states have been able to leverage for decades under the 
traditional low-interest loan structure. When combined with unfunded 
mandates and burdensome regulations driving up baseline costs, the 
long-term viability of the Clean Water SRF is in doubt.
    The bottom line is that wastewater infrastructure is incredibly 
important for my constituents and for my colleagues here today. The 
Clean Water SRF is an example of good public policy that helps keep 
wastewater costs down and provides reliable service to those around the 
country. In order to maintain robust clean water infrastructure now and 
in the future, a robust and effective program is critical.
    I look forward to hearing from our witnesses today about how we can 
improve our clean water infrastructure, protect against environmental 
degradation, keep wastewater costs low for ratepayers, and address the 
challenges brought about by recent legislative changes surrounding the 
Clean Water SRF program.

    Mr. Rouzer. So, I yield back and now recognize Ranking 
Member Napolitano for 5 minutes for an opening statement.
    Mrs. Napolitano. Thank you, Mr. Chairman. I have a letter 
to insert into the record from the International Union of 
Operating Engineers.
    Mr. Rouzer. Without objection, so ordered.
    [The information follows:]

                                 
 Letter of September 28, 2023, to Hon. Sam Graves, Chairman, and Hon. 
     Rick Larsen, Ranking Member, Committee on Transportation and 
  Infrastructure, and Hon. David Rouzer, Chairman, and Hon. Grace F. 
    Napolitano, Ranking Member, Subcommittee on Water Resources and 
 Environment, from James T. Callahan, General President, International 
Union of Operating Engineers, Submitted for the Record by Hon. Grace F. 
                               Napolitano
                                                September 28, 2023.
The Honorable Sam Graves,
1135 Longworth House Office Building,
Washington, DC 20515.
The Honorable Rick Larsen,
2163 Rayburn House Office Building,
Washington, DC 20515.
The Honorable David Rouzer,
2333 Rayburn House Office Building,
Washington, DC 20515.
The Honorable Grace F. Napolitano,
1610 Longworth House Office Building,
Washington, DC 20515.
    Dear Chairmen Graves and Rouzer and Ranking Members Larsen and 
Napolitano:
    Over two years ago the Council of Infrastructure Financing 
Authorities testified in the Water Resources and Environment Committee 
that compliance with Davis-Bacon Act prevailing wages was not ``an 
issue.'' Since then, more than 10,000 workers have been cheated out of 
their wages, and the Wage and Hour Division of the Department of Labor 
has recovered nearly $30 million in back wages. Clearly, Davis-Bacon 
compliance is an issue for these workers.
    The International Union of Operating Engineers (IUOE) represents 
400,000 working men and women in North America, thousands of whom build 
and maintain water, wastewater, and other critical infrastructure 
throughout the United States. Members of the IUOE perform millions of 
hours of work annually building wastewater systems financed by the 
Clean Water Act-State Revolving Fund program. Stationary engineers of 
the IUOE also maintain and operate wastewater systems in private and 
public settings across the country. The IUOE is also a longstanding 
member of the nation's largest, oldest water-infrastructure advocacy 
coalition, the Water Infrastructure Network.
    Contrary to the Council of Infrastructure Finance Authorities' 
(CIFA) argument that payment of prevailing wages ``is not an issue,'' 
cheating on prevailing wages is rampant. In the last decade, 
enforcement efforts at the Department have resulted in the recovery of 
more than $229 million in back wages for over 76,000 workers. If 
compliance with this fundamental wage law was not a problem, one would 
reasonably expect higher levels of compliance.
    Importantly, the Biden Administration has undertaken a major effort 
to streamline the regulations to implement this pillar of American 
labor law. In March 2022 the Biden Administration began a rulemaking 
process to update Davis-Bacon regulations for the first time in over 
forty years, modernizing the law and further streamlining its 
implementation. In a few short weeks, the rule is scheduled to go into 
effect, delivering major efficiencies to the administration of the 
Davis-Bacon Act and streamlining the ``conformance'' process for making 
wage determinations.
    In fact, in 2011, the Government Accountability Office acknowledged 
CIFA's concerns regarding ``conformances.'' The GAO report ``identified 
dissatisfaction among regulated parties regarding the rigidity of the 
Department's county-based system for identifying prevailing rates, and 
missing wage rates requiring an overuse of ``conformances'' for wage 
rates for specific job classifications.'' It is one of the many issues 
addressed in the DOL's new rule.
    In its final rule, the Department says that it `` . . . agrees with 
commenters that addressing timeliness issues and the overuse of 
conformances are important goals. The use of BLS data, however, could 
cause its own problems with missing classifications . . . '' 
Essentially, DOL dismissed the solution presented by CIFA and the 
Associated Builders and Contractors. Instead, ``the Department is 
adopting new methods of reducing the need for conformances and more 
frequently updating wage determinations, including through the limited 
use of BLS data where it can reasonably be used to estimate wage-rate 
increases in between voluntary surveys.''
    The administrative requirements of the Davis-Bacon Act are critical 
to the prevention of fraud against government agencies and necessary to 
ensure that government contractors do not profit by failing to pay the 
minimum wage--the wage floor--to which construction workers are 
entitled. It is worth noting that the submission of certified payrolls 
through the Davis-Bacon Act serves as the only additional protection 
afforded taxpayers against kickbacks, misclassification, and the 
employment of unauthorized workers on taxpayer-funded public projects.
    In conclusion, the Davis-Bacon Act continues to play a key role in 
the lives and livelihoods of America's construction workers. It is an 
``issue.'' The administrative costs to comply with the Davis-Bacon Act 
are minimal and are being streamlined by the Biden Administration now, 
bringing the law's administration into the 21st century.
    The International Union of Operating Engineers appreciates the 
support of the committee and the clear bipartisan recognition of the 
role that the Davis-Bacon Act plays to support blue-collar workers. 
Please do not hesitate to reach out should you need technical 
assistance with the nation's fundamental labor standard for federally 
assisted construction, the Davis-Bacon Act.
    Thank you for your consideration.
            Sincerely,
                                         James T. Callahan,
     General President, International Union of Operating Engineers.

 OPENING STATEMENT OF HON. GRACE F. NAPOLITANO OF CALIFORNIA, 
RANKING MEMBER, SUBCOMMITTEE ON WATER RESOURCES AND ENVIRONMENT

    Mrs. Napolitano. Thank you very much for holding today's 
hearing to showcase the critical clean water investments made 
by the Bipartisan Infrastructure Law known as the BIL. Thank 
you for being a great partner, Mr. Chair.
    Last Congress, House Democrats worked with the Biden 
administration to provide the largest investment in our 
Nation's crumbling infrastructure in over a generation. With 
each dollar invested and each new water infrastructure project 
implemented, everyday Americans in your district and mine 
realize the benefits of the transformational Bipartisan 
Infrastructure Law with cleaner and safer water and a more 
resilient and more livable environment.
    For example, my congressional district in L.A. County is 
using BIL funding to carry out a list of long-awaited projects 
that benefit our community, our local economy, and our 
businesses and industries that rely on clean, safe, and 
resilient water for their success.
    In just the past 2 years since the BIL was signed, Los 
Angeles County has announced numerous partnerships with the 
U.S. Environmental Protection Agency, the State of California, 
and local utilities to invest in our water-related 
infrastructure.
    In May of 2022, the county closed a $441 million WIFIA loan 
that will support the Clearwater Project--a joint water 
pollution control plant effluent outfall tunnel project that 
will reduce flooding risks and prevent the contamination of 
local drinking water sources.
    In July of 2023, Los Angeles Sanitation District was 
awarded close to $2 million from EPA's brownfields program that 
will allow the district to clean up oil-related contamination 
at a former industrial site to repurpose the property as a new 
wastewater recycling project.
    Through both the BIL and the historic annual appropriations 
for the Clean Water SRF program, the county is moving forward 
on several wastewater and water recycling projects, including 
$266 million for the Advanced Water Purification Facility 
(AWPF) that will produce 19 million gallons per day of purified 
wastewater for groundwater recharge at Hansen Spreading Grounds 
in the San Fernando Valley, a major source of water supply for 
the city's drinking water.
    Mr. Chairman, these are just a few of the thousands of 
examples of critical water-related investments happening all 
across America because of the BIL. And, because House Democrats 
specifically tailored these BIL investments to address the 
unique affordability concerns facing many minority, rural, and 
Tribal communities, all Americans, regardless of zip code, can 
benefit from these investments and have access to clean, safe, 
and reliable drinking and wastewater services.
    Yet, Mr. Chairman, I remain concerned with the direction 
our current House leadership is taking towards sustaining these 
critical investments in the future. For example, the majority 
party has already pulled back from the bipartisan budget 
agreement reached earlier this year to avoid a governmental 
default, and now, on the precipice of a pointless Government 
shutdown, is advocating for deep draconian cuts to programs 
that benefit hard-working Americans. I am very strongly opposed 
to the proposed 40-percent cut to EPA's budget advanced by the 
majority and the likely equivalent reduction in protecting our 
clean water.
    Mr. Chairman, as our witnesses today will reiterate, the 
strength of the American economy is reliant on clean water. It 
is a key ingredient for manufacturing, farming, food 
processing, small business development, tourism, and 
recreational businesses. If we do not protect our Nation's 
waters, this will have a negative impact on businesses, as they 
will not have the high-quality water they need for production 
and growth.
    The decline of water quality will also require consumers, 
businesses, and residents to pay more in water utility bills to 
treat water before it comes to the tap.
    Mr. Chairman, House Democrats proudly support continued 
investments in our clean water future. Now is not the time to 
pull back on Federal investments in our wastewater 
infrastructure.
    I welcome our panelists here today and look forward to 
their valuable testimony.
    [Mrs. Napolitano's prepared statement follows:]

                                 
  Prepared Statement of Hon. Grace F. Napolitano, a Representative in 
Congress from the State of California, and Ranking Member, Subcommittee 
                   on Water Resources and Environment
    Thank you, Mr. Chairman, for holding today's hearing to showcase 
the critical clean water investments made by the Bipartisan 
Infrastructure Law.
    Last Congress, House Democrats worked with the Biden administration 
to provide the largest investment in our nation's crumbling 
infrastructure in over a generation.
    With each dollar invested and each new water infrastructure project 
implemented, everyday Americans in your district and mine realize the 
benefits of the transformational Bipartisan Infrastructure Law with 
cleaner and safer water and a more resilient and more livable 
environment.
    For example, in my congressional district, Los Angeles County is 
using BIL funding to carry out a list of long-awaited projects that 
benefit our community, our local economy, and the businesses and 
industries that rely on clean, safe, and resilient water for their 
success.
    In just the past two years since the BIL was signed, Los Angeles 
County has announced numerous partnerships with the U.S. Environmental 
Protection Agency, the State of California, and local utilities to 
invest in our water-related infrastructure.
    In May of 2022, the County closed a $441 million WIFIA loan that 
will support the Clearwater Project--a joint water pollution control 
plant effluent outfall tunnel project that will reduce flooding risks 
and prevent the contamination of local drinking water sources.
    In July of 2023, Los Angeles Sanitation District was awarded close 
to $2 million from EPA's brownfields program that will allow the 
district to clean up oil-related contamination at a former industrial 
site to repurpose the property as a new wastewater recycling project.
    Through both the BIL and the historic annual appropriations for the 
Clean Water SRF program, the County is moving forward on several 
wastewater and water recycling projects, including $266 million for the 
Advanced Water Purification Facility (AWPF) will produce 19 million 
gallons per day of purified wastewater for groundwater recharge at 
Hansen Spreading Grounds in the San Fernando Valley--a major source of 
water supply for the City's drinking water.
    Mr. Chairman, these are just a few of the thousands of examples of 
critical water-related investments happening all across America because 
of the BIL.
    And, because House Democrats specifically tailored these BIL 
investments to address the unique affordability concerns facing many 
minority, rural, and tribal communities, all Americans, regardless of 
zip code, can benefit from these investments and have access to clean, 
safe, and reliable drinking and wastewater services.
    Yet, Mr. Chairman, I remain concerned with the direction our 
current House leadership is taking towards sustaining these critical 
investments in the future.
    For example, the majority party has already pulled back from the 
bipartisan budget agreement reached earlier this year to avoid a 
governmental default, and now, on the precipice of a pointless 
government shutdown, is advocating for deeper, draconian cuts to 
programs that benefit hard working American families.
    I am strongly opposed to the projected 40 percent cut to EPA's 
budget advanced by the majority--and the likely equivalent reduction in 
protecting our nation's clean water.
    Mr. Chairman, as our witnesses today will reiterate, the strength 
of the American economy is reliant on a clean water.
    It is a key ingredient for manufacturing, farming, food processing, 
small business development, tourism and recreational businesses. If we 
do not protect our nation's waters, this will have a negative impact on 
business as they will not have the high-quality water they need for 
production and growth.
    The decline of water quality will also require consumers, 
businesses, and residents to pay more in water utility bills to treat 
water before it comes to the tap.
    Mr. Chairman, House Democrats proudly support continued investments 
in our clean water future. Now is not the time to pull back on federal 
investments in our wastewater infrastructure.
    I welcome our panelists here today and look forward to their valued 
input.

    Mrs. Napolitano. I yield back.
    Mr. Rouzer. The gentlelady yields back.
    While I have the opportunity, I ask unanimous consent to 
enter into the record a letter sent on September 27, 2023, by 
the Western Governors' Association addressed to myself and 
Ranking Member Napolitano outlining the Western Governors' 
collective policy recommendations for clean water 
infrastructure financing.
    Without objection, so ordered.
    [The information follows:]

                                 
  Letter and Attachments of September 27, 2023, to Hon. David Rouzer, 
Chairman, and Hon. Grace F. Napolitano, Ranking Member, Subcommittee on 
Water Resources and Environment, from Jack Waldorf, Executive Director, 
Western Governors' Association, Submitted for the Record by Hon. David 
                                 Rouzer
                                                September 27, 2023.
The Honorable David Rouzer,
Chairman,
Subcommittee on Water Resources and Environment, Committee on 
        Transportation and Infrastructure, House of Representatives, 
        585 Ford House Office Building, Washington, DC 20515.
The Honorable Grace F. Napolitano,
Ranking Member,
Subcommittee on Water Resources and Environment, Committee on 
        Transportation and Infrastructure, House of Representatives, 
        2165 Rayburn House Office Building, Washington, DC 20515.
    Dear Chairman Rouzer and Ranking Member Napolitano:
    With respect to the Committee's hearing scheduled for September 28, 
Clean Water Infrastructure Financing: State and Local Perspectives and 
Recent Developments, attached please find Western Governors' 
Association (WGA) Policy Resolutions 2021-10, Water Quality in the 
West, and 2021-08, Water Resource Management in the West. These 
resolutions include Western Governors' collective and bipartisan policy 
recommendations concerning the financing of clean water infrastructure.
    The Clean Water Act (CWA) and the Safe Drinking Water Act (SDWA) 
have been the cornerstone of ensuring that Americans can access 
reliable and clean water. Investments in water delivery and wastewater 
infrastructure are essential to our nation's continued prosperity and 
environmental protection. In upholding the cooperative federalism 
model, Congress must ensure that adequate funding is provided to the 
CWA and SDWA State Revolving Funds (SRF) to assist states in addressing 
water infrastructure needs and complying with federal water quality and 
drinking water requirements. Western Governors also urge Congress 
provide greater flexibility and fewer restrictions on state SRF 
management.
    I request that you include these documents in the permanent record 
of the hearing, as they articulate Western Governors' policy positions 
and recommendations on this important issue.
    Thank you for your consideration of this request. Please contact me 
if you have any questions or require further information.
            Sincerely,
                                              Jack Waldorf,
                Executive Director, Western Governors' Association.

Attachments (2)
                               __________

                                                       Attachment 1
                     Western Governors' Association
                       Policy Resolution 2021-10
                       Water Quality in the West
A. BACKGROUND
    1.  Clean water is essential to strong economies and quality of 
life. In most of the West, water is a scarce resource that must be 
managed with sensitivity to social, environmental, and economic values 
and needs. Because of their unique understanding of these needs, states 
are in the best position to manage and protect their water resources.

    2.  Through the Clean Water Act (CWA), Congress has codified its 
policy ``to recognize, preserve, and protect the primary 
responsibilities and rights of states to prevent, reduce, and eliminate 
pollution, to plan the development and use (including restoration, 
preservation, and enhancement) of land and water resources, and to 
consult with the [EPA] Administrator in the exercise of his authority 
under [the CWA].''

    3.  The CWA further expresses Congress's policy that ``the 
authority of each state to allocate quantities of water within its 
jurisdiction shall not be superseded, abrogated, or otherwise impaired 
by this chapter . . . Federal agencies shall co-operate with state and 
local agencies, including authorized tribes, to develop comprehensive 
solutions to prevent, reduce, and eliminate pollution in concert with 
programs for managing water resources.''

    4.  States and the Environmental Protection Agency (EPA) work 
together as co-regulators in the administration and implementation of 
the CWA and the Safe Drinking Water Act (SDWA). Congress has delegated 
to states, by statute, the authority to obtain approval to implement 
certain federal program responsibilities. When a state has been 
approved to implement a program and the state is meeting minimum 
program requirements, the role of federal agencies should be limited to 
funding, technical assistance, and research support. States should be 
free to develop, implement, and enforce statutory requirements using an 
approach that makes sense in their specific jurisdiction, subject to 
the minimum requirements of the federal acts.

    5.  The CWA was last reauthorized in 1987; attempts to reauthorize 
the Act since then have failed. Current federal regulations, guidance, 
and programs pertaining to the CWA do not always recognize the specific 
conditions and needs of most of the West, where water is scarce and 
even wastewater becomes a valuable resource to both humans and the 
environment. The West includes a variety of waters; small ephemeral 
washes, large perennial rivers, effluent-dependent streams, and wild 
and scenic rivers. In addition to natural rivers, streams and lakes, 
there are numerous man-made reservoirs, waterways and water conveyance 
structures. States need more flexibility to determine how to best 
manage these varying resources.
B. GOVERNORS' POLICY STATEMENT
Clean Water Act (CWA)

    1.  State Authority and Implementation of CWA: States have 
jurisdiction over water resource allocation decisions and are 
responsible for how to balance state water resource needs within CWA 
objectives. New regulations, rulemaking, and guidance should recognize 
this state authority.

      a)  CWA Jurisdiction: Western Governors urge EPA and the U.S. 
Army Corps of Engineers to engage the states as sovereigns and co-
regulators in the development of any rule, regulation, policy, or 
guidance addressing the definition of ``waters of the United States'' 
as that term applies to the jurisdictional scope of the CWA. 
Specifically, federal agencies should engage with states--through 
Governors or their designees--with early, meaningful, substantive, and 
ongoing consultation that adequately supports state authority. Such 
consultation should begin in the initial stages of development before 
irreversible momentum precludes effective state participation.

      b)  Total Maximum Daily Loads (TMDLs)/Adaptive Management: States 
should have the flexibility to adopt water quality standards and set 
total maximum daily loads (TMDLs) that are tailored to the specific 
characteristics of western water bodies, including variances for unique 
state and local conditions.

      c)  Anti-degradation: CWA Section 303 gives states the primary 
responsibility to establish water quality standards (WQS) subject to 
EPA oversight. Given the states' primary role in establishing WQS, EPA 
should directly involve the states in the rulemaking process for any 
proposed changes to its existing regulations. Before imposing new 
antidegradation policies or implementation requirements, EPA should 
document the need for new requirements and strive to ensure that new 
requirements do not interfere with sound existing practices.

      d)  Groundwater: States have primary authority over the 
protection of groundwater and exclusive authority over the management 
and allocation of groundwater resources within their borders. The 
regulatory reach of the CWA does not extend to the management and 
protection of groundwater resources unless the activity in question is 
the functional equivalent of a direct discharge from a point source. In 
addressing pollution to groundwater resources, the federal government 
must recognize and respect state authority, work in collaboration with 
states, and operate within the designated scope of federal statutory 
authorities. EPA should engage with states with early, meaningful, 
substantive, and ongoing consultation on any regulatory processes 
focused on groundwater resources or the development and application of 
the meaning of ``functional equivalent.''

    2.  Permitting: Actions taken by EPA in its CWA permitting 
processes should not impinge upon state authority over water management 
or the states' responsibility to implement CWA provisions.

      a)  State Water Quality Certification: Section 401 of the CWA 
requires applicants for a federal license to secure state certification 
that potential discharges from their activities will not violate state 
water quality standards. Section 401 embodies cooperative federalism. 
States' mandatory conditioning authority should be retained in the CWA.

      b)  General Permits: Reauthorization of the CWA must reconcile 
the continuing administrative need for general permits with their site-
specific permitting requirements under the CWA. EPA should promulgate 
rules and guidance that better support the use of general permits where 
it is more effective to permit groups of dischargers rather than 
individual dischargers.

      c)  Water Transfers Rule: Western Governors support EPA's current 
Water Transfers Rule, which exempts water transfers between waters of 
the United States from the CWA National Pollutant Discharge Elimination 
System (NPDES) permitting requirements when such transfers do not 
involve the addition of any pollutants. States possess adequate 
authority to address the water quality issues associated with such 
transfers. Western Governors believe that transporting water through 
constructed conveyances to supply beneficial uses should not trigger 
duplicative NPDES permit requirements.

      d)  Pesticides: Western Governors generally support the primary 
role of the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) 
in regulating agriculture and public health related pesticide 
applications to waters of the U.S. and will seek state-based solutions 
that complement rather than duplicate FIFRA in improving, where 
possible, environmental resources.

    3.  Nonpoint Source Pollution: Nonpoint source pollution requires 
state watershed-oriented water quality management plans; federal 
agencies should collaborate with states to carry out the objectives of 
these plans. The CWA should not supersede other ongoing federal, state, 
and local nonpoint source programs. Federal water policies must 
recognize that state programs enhanced by federal efforts could provide 
a firm foundation for a national nonpoint source policy that maintains 
the non-regulatory and voluntary nature of the program. In general, the 
use of point source solutions to control nonpoint source pollution is 
also ill-advised.

      a)  Forest Roads: Stormwater runoff from forest roads has been 
managed as a nonpoint source of pollution under EPA regulation and 
state law since enactment of the CWA. Western Governors support 
solutions that are consistent with the long-established treatment of 
forest roads as nonpoint sources, provided that forest roads are 
treated equally across ownership within each state.

      b)  Nutrient Pollution: Nitrogen and phosphorus (nutrient) 
pollution is a significant cause of water quality impairment across the 
nation, and continued cooperation between states and EPA is needed. 
This impairment is a serious concern across western states and 
additional resources to make investments in wastewater treatment 
infrastructure are needed as part of a strategy to address it.

       States should be allowed sufficient flexibility to utilize their 
own incentives and authorities to establish standards and control 
strategies to address nutrient pollution, rather than being forced to 
abide by one-size-fits-all federal numeric criteria. Successful tools 
currently in use by states include best management practices, nutrient 
trading, controlling other water quality parameters, and other 
innovative approaches.

    4.  CWA Reauthorization: Western Governors support reauthorization 
of the CWA, provided that it recognizes the unique hydrology and legal 
framework in western states. Further, any CWA reauthorization should 
include a new statement of purpose to encourage the reuse of treated 
wastewater to reduce water pollution and efficiently manage water 
resources.

    5.  Good Samaritan Legislation: Congress should enact a program to 
protect volunteering remediating parties who conduct authorized 
remediation of abandoned hardrock mines from becoming legally 
responsible under the CWA and/or the Comprehensive Environmental 
Response, Compensation, and Liability Act for any continuing discharges 
after completion of a remediation project, provided that the 
remediating party--or ``Good Samaritan''--does not otherwise have 
liability for that abandoned mine or inactive mine site.

    6.  Stormwater Pollution: In the West, stormwater discharges to 
ephemeral streams in arid regions pose substantially different 
environmental risks than do the same discharges to perennial surface 
waters. Western Governors emphasize the importance of state expertise 
in water management, including management of ephemeral streams. The 
federal government must recognize and respect state authority and work 
in collaboration with state agencies to support tailored approaches 
that reflect the unique management needs of ephemeral streams.

    7.  State-Tribal Coordination: Western Governors endorse 
government-to-government cooperation among the states, tribal nations, 
and EPA in support of effective and consistent CWA implementation. 
While retaining the ability of the Governors to take a leadership role 
in coordination with the tribal nations, EPA should promote effective 
consultation, coordination, and dispute resolution among the 
governments, with emphasis on lands where tribal nations have 
treatment-as-state status under Section 518 of the CWA.

Safe Drinking Water Act (SDWA)

    8.  Federal Assistance in Meeting SDWA Standards: Western Governors 
believe that the SDWA and its standards for drinking water contaminants 
have been instrumental in ensuring safe drinking water supplies for the 
nation. It is essential that the federal government, through EPA, 
provide adequate support to the states and water systems to meet 
federal requirements. Assistance is particularly needed for small and 
rural systems, which often lack the resources needed to comply with 
federal treatment standards.

    9.  Drinking Water Standards: Contaminants such as arsenic, 
chromium, perchlorate, and fluoride often occur naturally in the West. 
Western Governors support EPA technical assistance and research to 
improve both the efficiency and affordability of treatment technologies 
for these contaminants. In any drinking water standards that the EPA 
may revise or propose for these and other contaminants, including 
disinfection byproducts, EPA should consider the disproportionate 
effect that such standards may have on western states and give special 
consideration to feasible technology based on the resources and needs 
of smaller water systems.

    10.  Risk Assessments: Analysis of the costs of treatment for 
drinking water contaminants should carefully determine the total costs 
of capital improvements, operation, and maintenance when determining 
feasible technology that can be applied by small systems. These costs 
should be balanced against the anticipated human health benefits before 
implementing or revising drinking water standards.

    11.  Emerging Contaminants/Pharmaceuticals: The possible health and 
environmental effects of emerging contaminants, including per- and 
polyfluoroalkyl substances (PFAS) and cyanotoxins produced by harmful 
algal blooms, and pharmaceuticals are of concern to Western Governors. 
Although some states have existing authorities to address possible 
risks associated with emerging contaminants and pharmaceuticals, there 
is a need for continued investment in scientific research regarding 
human health effects of these contaminants.

Compliance with Federal Water Quality and Drinking Water Requirements

    12.  State Revolving Funds: Western Governors support EPA's Clean 
Water State Revolving Fund (SRF) and Drinking Water SRF as important 
tools that help states and local communities address related water 
infrastructure needs and comply with federal water quality and drinking 
water requirements. Western Governors also urge Congress and the 
Administration to ensure that the SRF Programs are adequately funded 
and provide greater flexibility and fewer restrictions on state SRF 
management.

    13.  Restoring and Maintaining Lakes and Healthy Watersheds: 
Historically, the Section 314 Clean Lakes Program and the Section 319 
Nonpoint Source Management Program provided states with critical tools 
to restore and maintain water quality in lakes and watersheds. Western 
Governors urge the Administration and Congress to support these 
programs. Such support should not come at the expense of other federal 
watershed protection programs.

    14.  EPA Support and Technical Assistance: The federal government, 
through EPA, should provide states and local entities with adequate 
support and technical assistance to help them comply with federal water 
quality and drinking water requirements. EPA should also collaborate 
with and allow states to identify and establish priority areas, 
timelines, and focus on programs that provide the largest public health 
and environmental benefits.

    15.  EPA Grant Funding for Primary Service--Rural Water Programs: 
Some rural communities still lack basic water and sanitary services 
needed to assure safe, secure sources of water for drinking and other 
domestic needs. Adequate federal support, including but not limited to 
the Rural Utilities Service programs of the U.S. Department of 
Agriculture and SRFs through EPA, are necessary to supplement state 
resources.

Water Quality Monitoring and Data Collection

    16.  Water Data Needs: Western water management is highly dependent 
upon the availability of data regarding both the quality and quantity 
of surface and ground waters. Western Governors urge the federal 
government to support and develop programs that can be utilized by 
states for water resource management and protection and to provide 
assistance to states in developing innovative monitoring and assessment 
methods, including making use of biological assessments, sensors and 
remote sensing, as well as demonstrating the value to the states of the 
national probabilistic aquatic resource surveys.
C. GOVERNORS' MANAGEMENT DIRECTIVE
    1.  The Governors direct WGA staff to work with Congressional 
committees of jurisdiction, the Executive Branch, and other entities, 
where appropriate, to achieve the objectives of this resolution.

    2.  Furthermore, the Governors direct WGA staff to consult with the 
Staff Advisory Council regarding its efforts to realize the objectives 
of this resolution and to keep the Governors apprised of its progress 
in this regard.

This resolution will expire in June 2024. Western Governors enact new 
policy resolutions and amend existing resolutions on a semiannual 
basis. Please consult http://www.westgov.org/resolutions for the most 
current copy of a resolution and a list of all current WGA policy 
resolutions.

                                                       Attachment 2
                     Western Governors' Association
                       Policy Resolution 2021-08
                 Water Resource Management in the West
A. BACKGROUND
    1.  Water is a crucial resource for communities, industries, 
habitats, farms, and western states. Clean, reliable water supplies are 
essential to maintain and improve quality of life. The scarce nature of 
water in much of the West makes it particularly important to our 
states.

    2.  States are the primary authority for allocating, administering, 
protecting, and developing water resources, and they are primarily 
responsible for water supply planning within their boundaries. States 
have the ultimate say in the management of their water resources and 
are best suited to speak to the unique nature of western water law and 
hydrology.

    3.  Many communities in the West anticipate challenges in meeting 
future water demands. Supplies are nearly fully allocated in many 
basins across the West, and increased demand from population growth, 
economic development, and intensifying extreme weather and fire events 
places added stress on those limited water resources. Sustainability of 
our natural resources, specifically water, is imperative to the 
foundations upon which the West was developed. Growth and development 
can only continue upon our recognition of continued state stewardship 
of our unique resources and corresponding responsibilities.

    4.  Strong state, regional and national economies require reliable 
deliveries of good-quality water, which in turn depend on adequate 
infrastructure for water and wastewater. Investments in water 
infrastructure also provide jobs and a foundation for long-term 
economic growth in communities throughout the West. Repairs to aging 
infrastructure are costly and often subject to postponement.

    5.  Western Governors recognize the essential role of partnership 
with federal agencies in western water management and hope to continue 
the tradition of collaboration between the states and federal agencies.

    6.  Tribal nations and western states also share common water 
resource management challenges. The Western Governors Association and 
Western States Water Council have had a long and productive partnership 
with tribal nations, working to resolve water rights claims.
B. GOVERNORS' POLICY STATEMENT
    1.  State Primacy in Water Management: As the preeminent authority 
on water management within their boundaries, states have the right to 
develop, use, control and distribute the surface water and groundwater 
resources, subject to international treaties and interstate agreements 
and judicial decrees.

      a.  Federal Recognition of State Authority: The federal 
government has long recognized the right to use water as determined 
under the laws of the various states; Western Governors value their 
partnerships with federal agencies as they operate under this 
established legal framework.
             While the Western Governors acknowledge the important role 
of federal laws such as the Clean Water Act (CWA), the Endangered 
Species Act (ESA), and the Safe Drinking Water Act (SDWA), nothing in 
any act of Congress or Executive Branch regulatory action should be 
construed as affecting, usurping, or intending to affect or usurp 
states' primacy over the allocation and administration of their water 
resources.
             Authorization of federal water resources development 
legislation, proposed federal surplus water rulemakings, and/or storage 
reallocation studies should recognize natural flows and defer to the 
states' legal right to allocate, develop, use, control, and distribute 
such waters, including but not limited to state storage and use 
requirements.

      b.  Managing State Waters for Environmental Purposes: States and 
federal agencies should coordinate efforts to avoid, to the extent 
possible, the listing of water-dependent species under the ESA. When 
ESA listings cannot be avoided, parties should promote the use of 
existing state tools, such as state conservation plans and in-stream 
flow protections, to conserve and recover species.

    2.  Infrastructure Needs: Aging infrastructure for existing water 
and wastewater facilities and the need for additional water projects 
cannot be ignored. Water delivery and wastewater infrastructure 
investments are essential to our nation's continued economic prosperity 
and environmental protection, and they assist states in meeting 
federally-mandated standards under the CWA, SDWA, and other federal 
statutes. Western Governors support efforts to make the most of 
existing infrastructure while seeking creative solutions to add more 
infrastructure with limited resources.

      a.  Federal Support for Infrastructure Investment: Congress 
should provide adequate support for the CWA and SDWA State Revolving 
Funds. Further, Congress should support restoration and repair of aging 
water infrastructure, commit to aiding efforts to address the recurring 
drought conditions across the West, and fully utilize the receipts 
accruing to the Reclamation Fund for their intended purpose in the 
continuing conservation, development and wise use of western resources 
to meet western water-related needs, including the construction of 
Congressionally-authorized Bureau of Reclamation rural water projects 
and facilities that are part of Congressionally-authorized Indian water 
rights settlements.
             Congress should authorize federal water resources 
development legislation on a regular schedule and appropriate 
sufficient funding so that all projects and studies authorized in such 
legislation can be completed in a timely manner.
             The Bureau of Reclamation's WaterSMART Program provides 
valuable support to states, tribal nations, water and irrigation 
districts, and local entities to invest in water conservation projects 
and modern water delivery infrastructure.
             The U.S. Army Corps of Engineers' Planning Assistance to 
the States (PAS or ``Section 22'') Program also funds critical work in 
western states as a program focused on comprehensive water resources 
planning.
             Congress also should recognize the potential of greater 
private investment in water infrastructure, utilizing, where 
appropriate, such tools as loan guarantees, revolving funds, 
infrastructure banks and water trust funds.
             Capital budgeting and asset management principles should 
be used to determine funding priorities based on long-term 
sustainability and not annual incremental spending choices. It should 
be accompanied by dedicated sources of funding with appropriate 
financing, cost-sharing, pricing and cost recovery policies.

      b.  Additional Investment Tools: Federal and state policymakers 
should also consider additional tools to promote investment in water 
infrastructure and reduce financing costs, including: public-private 
partnerships, bond insurance, risk pooling, and credit enhancements.
             Congress should remove the state volume caps for private 
activity bonds used for water and wastewater projects, provide 
guaranteed tax-exempt status for bonds issued by state or local 
agencies to finance water infrastructure, provide loan guarantees, and 
otherwise support and encourage the use of other financing tools.

      c.  Hydropower: In consultation with affected states, Congress 
and the Administration should optimize federally-owned or licensed 
hydropower resources by increasing turbine efficiency and investing in 
conduit hydropower in irrigation canals and wastewater systems 
consistent with existing water diversions. Congress and the 
Administration should also authorize and implement federally-owned or 
licensed hydropower projects and programs through efficient permitting 
processes that: utilize new technology to improve renewable electric 
generation capacity, promote economic development, are consistent with 
the needs of native fisheries and riverine processes, and safeguard and 
solidify states' permitting and certification authority and indigenous 
peoples' rights.

      d.  Infrastructure Planning and Permitting: Federal 
infrastructure planning and permitting guidelines, rules and 
regulations should be coordinated with state processes, and 
sufficiently flexible to: (1) allow for timely decision-making in the 
design, financing and construction of needed infrastructure; (2) 
account for regional differences; (3) balance economic and 
environmental considerations; and (4) minimize the cost of compliance.

    3.  Western States Require Innovative and Integrated Water 
Management: Western Governors believe effective solutions to water 
resource challenges require an integrated approach among states and 
with federal, tribal and local partners. Federal investments should 
assist states in implementing state water plans designed to provide 
water for municipal, rural, agricultural, industrial and habitat needs, 
and should provide financial and technical support for development of 
watershed and river basin water management plans when requested by 
states.
          Integrated water management planning should also account for 
flood control, water quality protection, and regional water supply 
systems. Water resource planning must preserve state authority to 
manage water through policies which recognize state law and financial, 
environmental and social values of water to citizens of western states 
today and in the future.

      a.  Water Transfers: Western Governors recognize the potential 
benefits of market-based water transfers, meaning voluntary sales or 
leases of water rights. The Governors support water transfers that 
avoid or mitigate damages to agricultural economies and communities 
without causing injury to other water rights, water quality, and the 
environment.

      b.  Energy Development: Western Governors recognize that energy 
development and electricity generation may create new opportunities for 
limited water resources. Western Governors recommend increased 
coordination across the energy and water management communities and 
support ongoing work to assess interactions between energy generation 
and water availability in the Western Interconnection.

      c.  Conservation and Efficiency: Because of diminished water 
resources and declining and inconsistent snowpack, Western Governors 
encourage adoption of strategies to sustain water resources and extend 
existing water supplies further through water conservation, water reuse 
and recycling, desalination and reclamation of brackish waters, and 
reductions in per capita water use. The Governors encourage the use of 
and research into promising domestic, municipal, industrial, produced, 
and agricultural water conservation strategies and technologies.

      d.  Local Watershed Planning: Western Governors encourage federal 
agencies and Congress to provide resources such as technical support to 
states and local watershed groups. States may empower these watershed 
groups to address local water issues associated with water quality, 
growth and land management to complement state water needs.

      e.  Forest Health and Soil Stewardship: Better land management 
practices for forests and farmland may help improve water availability 
and soil moisture retention. Wildfires can cause sediment runoff in 
water systems, leading to problems for reservoir management and water 
quality. Governors support policies and practices that encourage 
healthy and resilient forests and soils in order to make the most of 
existing water supplies.

      f.  Intergovernmental Collaboration and Conflict Resolution: 
Western Governors support the settlement of interstate water disputes, 
Indian and Native Hawaiian water rights claims, and other federal water 
needs and claims, the settlement of which are in the best interest of 
western states.

      g.  State-Federal Coordination: Western Governors recognize the 
important role of federal agencies in water resource management in the 
western states. Governors appreciate the efforts of federal agencies to 
coordinate water-related activities, particularly through the Western 
States Water Council, and support the continuation of these key state-
federal partnerships.

    4.  Western States Need Reliable Water Resource Information: Basic 
information on the status, trends and projections of water resource 
availability is essential to sound water management.

      a.  Basic Water Data: Western Governors support federal programs 
dedicated to the improvement of data on snowpack, streamflow, soil 
moisture, and forecasting, including the Natural Resources Conservation 
Service's Snow Survey and Water Supply Forecasting Program; the 
National Oceanic and Atmospheric Administration's weather and 
hydrology-related data collection, monitoring, and drought information 
programs, including the National Integrated Drought Information System; 
the U.S. Geological Survey's Groundwater and Streamflow Information 
Program; and the National Aeronautics and Space Administration's 
National Land Imaging (Landsat) Program. Western Governors further 
support federal efforts to coordinate water data gathering and 
information programs across multiple agencies.

      b.  Extreme Weather Events Planning: Western Governors recognize 
the significant effects posed by extreme weather events and variability 
in water supplies. Western Governors urge Congress and the 
Administration to work closely with states and other resource managers 
to improve predictive and adaptive capabilities for extreme weather 
variability and related impacts. We specifically urge the federal 
government to place a priority on improving the sub-seasonal and 
seasonal precipitation forecasting capabilities that could support 
water management decision-making.

      c.  Water Data Exchange: The Western Governors' Association and 
the Western States Water Council have worked together to create the 
Water Data Exchange, an online portal that will enable states to share 
their water data with each other, federal agencies, and the public via 
a common platform. The Governors encourage the use of state water data 
in planning for both the public and private sectors.
C. GOVERNORS' MANAGEMENT DIRECTIVE
    1.  The Governors direct WGA staff to work with Congressional 
committees of jurisdiction, the Executive Branch, and other entities, 
where appropriate, to achieve the objectives of this resolution.

    2.  Furthermore, the Governors direct WGA staff to consult with the 
Staff Advisory Council regarding its efforts to realize the objectives 
of this resolution and to keep the Governors apprised of its progress 
in this regard.

This resolution will expire in June 2024. Western Governors enact new 
policy resolutions and amend existing resolutions on a semiannual 
basis. Please consult http://www.westgov.org/resolutions for the most 
current copy of a resolution and a list of all current WGA policy 
resolutions.

    Mr. Rouzer. I now recognize the ranking member of the full 
committee, Mr. Larsen, for 5 minutes for an opening statement.

 OPENING STATEMENT OF HON. RICK LARSEN OF WASHINGTON, RANKING 
     MEMBER, COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

    Mr. Larsen of Washington. Thank you, Chair Rouzer and 
Ranking Member Napolitano, for holding this hearing on clean 
water infrastructure financing, and thank you to the witnesses 
for joining us today.
    I have to admit, I am a little disappointed, walking down 
the hallways here and seeing the big lineup outside, and then 
realizing they weren't here for the clean water infrastructure 
hearing. I do think it is an important issue, perhaps not as 
important as other things, but I am glad we are having this 
hearing and the folks at home can participate otherwise.
    In June, I joined EPA's Assistant Administrator for Water, 
Radhika Fox, in my district in Ferndale, Washington, to 
announce over $278 million in funding for water infrastructure 
for American Indian Tribes and Alaska Native Villages. These 
historic investments were the largest ever made by the EPA to 
Tribes through regular appropriations funding.
    Clean water is a human right that historically underserved 
communities, including Tribal communities, have lacked access 
to for far too long. Investments like these made possible by 
the Bipartisan Infrastructure Law will improve lives, level the 
playing field for communities, and create jobs.
    In the BIL, on a bipartisan basis, Congress affirmed its 
commitment to water infrastructure with significant 
investments: $14.4 billion in Federal dollars for upgrading 
wastewater systems, preventing pollution, and supporting 
restoration programs in places like Puget Sound and the Salish 
Sea. These investments are critical, providing a lifeline to 
communities across the country struggling to maintain water 
quality. Members who voted for the BIL voted for clean water.
    House Democrats have consistently supported investments in 
water infrastructure to protect public health and the work that 
EPA and other agencies do in support of this clean water 
mission. In contrast, the House Republican Interior 
Appropriations bill proposes a two-thirds reduction in funding 
for the Clean Water SRF, a cut of over $1 billion.
    The Clean Water State Revolving Fund, or the SRF, has been 
the linchpin of efforts to protect and improve water quality 
for over three decades. I suspect that's why, despite their 
differences, all the witnesses appearing before us today agree 
on the importance of Clean Water SRF funding.
    In just the last 2 years, in the district I represent, the 
Clean Water SRF has been used to upgrade aging sewer and water 
equipment, improve nutrient removal capabilities, and protect 
local groundwater supply. And I have toured, far too many to 
count, wastewater facilities in my district--it's the thing you 
get to do when you are a Member of Congress--and I can assure 
you there is plenty more work that needs to be done.
    From a $1.4 million SRF loan in Whatcom County to a 
$200,000 grant to the Lummi Tribe for engineering reviews, the 
Clean Water SRF is making a difference. Established in 1987, it 
has been critical for countless communities striving to upgrade 
and maintain their water and wastewater infrastructure. It has 
provided low-interest loans and grants to States and 
municipalities, allowing them to undertake vital projects that 
protect public health, preserve our natural resources, and 
stimulate economic growth.
    Unfortunately, we have at times neglected to invest in our 
infrastructure. Aging pipes, polluted waterways, and 
increasingly frequent extreme weather events have stretched our 
water systems and wastewater systems to a breaking point. The 
most recent EPA report on wastewater infrastructure needs 
estimated we would need $271 billion over the next 20 years to 
continue to meet Federal standards for water quality. These 
challenges are not limited to one region; they affect 
communities from coast to coast and across the political 
spectrum.
    Under the Bipartisan Infrastructure Law, $11.7 billion in 
supplemental appropriations for the Clean Water SRF will be 
provided through 2026, on top of what should be continued in 
regular appropriations. These investments are a downpayment on 
transforming our Nation's wastewater infrastructure, and their 
significance cannot be overstated. This funding will enable 
communities large and small to embark on a new era of water 
infrastructure projects that will modernize our systems, 
improve water quality, and ensure the safety and health of 
citizens.
    The impact of this investment goes beyond the immediate 
benefits of improved water quality. It will create jobs. It 
will stimulate local economies. It will support American 
business.
    The Bipartisan Infrastructure Law recognizes that investing 
in our water infrastructure is an investment in our future.
    So, I thank you again, Mr. Chair and Ranking Member, for 
holding this hearing, and I look forward to the testimony.
    [Mr. Larsen of Washington's prepared statement follows:]

                                 
 Prepared Statement of Hon. Rick Larsen, a Representative in Congress 
    from the State of Washington, and Ranking Member, Committee on 
                   Transportation and Infrastructure
    Thank you, Chairman Rouzer and Ranking Member Napolitano, for 
holding this hearing on clean water infrastructure financing, and thank 
you to the witnesses for joining us today.
    In June, I joined Environmental Protection Agency's (EPA) Assistant 
Administrator for Water Radhika Fox in my district in Bellingham, 
Washington, to announce over $278 million in funding for water 
infrastructure for American Indian Tribes and Alaska Native Villages.
    These historic investments were the largest ever made by EPA to 
Tribes through regular appropriations funding.
    Clean water is a human right that historically underserved 
communities, including Tribal communities, have lacked access to for 
far too long.
    Investments like these made possible by the Bipartisan 
Infrastructure Law (BIL) will improve lives, level the playing field, 
and create jobs.
    In the BIL, on a bipartisan basis, Congress affirmed its commitment 
to water infrastructure with significant investments--$14.4 billion in 
federal dollars for upgrading wastewater systems, preventing pollution 
and supporting restoration programs in places like the Puget Sound and 
the Salish Sea.
    These investments are critical, providing a lifeline to communities 
across the country struggling to maintain water quality. Members who 
voted for the BIL voted for clean water.
    House Democrats consistently support investments in water 
infrastructure to protect public health and the work EPA and other 
agencies do in support of this clean water mission.
    In contrast, the House Republican Interior Appropriations bill 
proposes a two-thirds reduction in funding for the Clean Water SRF--a 
cut of over $1 billion.
    The Clean Water State Revolving Fund, or Clean Water SRF, has been 
the linchpin of efforts to protect and improve water quality for over 
three decades.
    I suspect that's why, despite their differences, all the witnesses 
appearing before us today agree on the importance of Clean Water SRF 
funding. In just the last two years, in the district I represent, the 
Clean Water SRF has been used to upgrade aging sewer and water 
equipment, improve nutrient removal capabilities, and protect local 
groundwater supply.
    I have toured, far too many to count, wastewater facilities in my 
district--the things you get to do when you're a Member of Congress--
and I can assure you that there is plenty more work that needs to be 
done.
    From a $1.4 million SRF loan in Whatcom County to a $200,000 grant 
to the Lummi Tribe for engineering reviews, the Clean Water SRF is 
making a difference.
    The Clean Water SRF, established in 1987, has been critical for 
countless communities striving to upgrade and maintain their water and 
wastewater infrastructure.
    It has provided low-interest loans and grants to states and 
municipalities, allowing them to undertake vital projects that protect 
public health, preserve our natural resources, and stimulate economic 
growth.
    Unfortunately, we have at times neglected to invest in our water 
infrastructure. Aging pipes, polluted waterways, and increasingly 
frequent extreme weather events have stretched our water and wastewater 
systems to the breaking point.
    The most recent EPA report on wastewater infrastructure needs 
estimated we would need $271 billion over the next twenty years to 
continue to meet federal standards for water quality.
    These challenges are not limited to one region; they affect 
communities from coast to coast and across the political spectrum.
    Under the Bipartisan Infrastructure Law, $11.7 billion in 
supplemental appropriations for the Clean Water SRF will be provided 
through 2026, on top of what should be continued regular 
appropriations.
    These investments are a down payment on transforming our nation's 
wastewater infrastructure and their significance cannot be overstated.
    This funding will enable communities large and small to embark on a 
new era of water infrastructure projects that will modernize our 
systems, improve water quality, and ensure the safety and health of our 
citizens.
    The impact of this investment goes beyond the immediate benefits of 
improved water quality. It will also create jobs, stimulate local 
economies, and support American businesses.
    The Bipartisan Infrastructure Law recognizes that investing in our 
water infrastructure is an investment in our future.
    Thanks again to the Chairman and Ranking Member for holding this 
hearing, I look forward to the testimony.

    Mr. Rouzer. I thank the gentleman. I would now like to 
welcome our witnesses. And again, thank you for being here 
today.
    First, we have Ms. Lori Johnson, assistant chief, Financial 
Assistance Division, at the Oklahoma Water Resources Board, 
here on behalf of the Council of Infrastructure Financing 
Authorities.
    We have Mr. Todd Swingle, CEO and executive director of 
Toho Water Authority in Kissimmee, Florida, on behalf of the 
National Association of Clean Water Agencies.
    And we have Mr. Jim Proctor, senior VP of legal and 
external affairs at McWane, Incorporated, on behalf of the U.S. 
Chamber of Commerce.
    And last, but certainly not least, Ms. Rebecca Hammer, the 
deputy director for Federal water policy at the Natural 
Resources Defense Council.
    So, briefly, let me explain the lighting system, of which I 
am sure you are already fully aware. Green means go; yellow 
means you've got about 30 seconds left; and red means wrap it 
up as quick as you can.
    I ask unanimous consent that the witnesses' full statements 
be included in the record.
    Without objection, so ordered.
    As your written testimony has been made part of the record, 
the subcommittee asks that you limit your oral remarks to 
roughly 5 minutes.
    With that, Ms. Johnson, you are recognized for 5 minutes.

     TESTIMONY OF LORI JOHNSON, ASSISTANT CHIEF, FINANCIAL 
ASSISTANCE DIVISION, OKLAHOMA WATER RESOURCES BOARD, ON BEHALF 
OF THE COUNCIL OF INFRASTRUCTURE FINANCING AUTHORITIES; TODD P. 
SWINGLE, P.E., CHIEF EXECUTIVE OFFICER AND EXECUTIVE DIRECTOR, 
TOHO WATER AUTHORITY, ON BEHALF OF THE NATIONAL ASSOCIATION OF 
    CLEAN WATER AGENCIES; JAMES M. PROCTOR II, SENIOR VICE 
PRESIDENT, LEGAL AND EXTERNAL AFFAIRS, McWANE, INC., ON BEHALF 
  OF THE U.S. CHAMBER OF COMMERCE; AND REBECCA HAMMER, DEPUTY 
  DIRECTOR OF FEDERAL WATER POLICY, NATURAL RESOURCES DEFENSE 
                            COUNCIL

     TESTIMONY OF LORI JOHNSON, ASSISTANT CHIEF, FINANCIAL 
ASSISTANCE DIVISION, OKLAHOMA WATER RESOURCES BOARD, ON BEHALF 
     OF THE COUNCIL OF INFRASTRUCTURE FINANCING AUTHORITIES

    Ms. Johnson. Thank you, Chairman Rouzer, Ranking Members 
Napolitano and Larsen, and members of the committee, for 
allowing me to testify before you today. My name is Lori 
Johnson, and I am the assistant chief of the Financial 
Assistance Division of the Oklahoma Water Resources Board. I am 
testifying today on behalf of the Council of Infrastructure 
Financing Authorities, also known as CIFA, which is a national 
organization that represents the Clean Water SRFs around the 
country.
    Clean Water SRFs around the country wanted me to leave you 
with three take-home messages today.
    First, we love loans. I know I am probably one of the few 
witnesses to testify to that, but the SRFs love subsidized 
loans because they are a model of fiscal responsibility. 
Federal funding is used over and over in perpetuity to meet the 
never-ending need to repair, rehabilitate, and replace aging 
infrastructure. For example, Federal appropriations from the 
1990s are being used today to finance billions of dollars in 
infrastructure projects. Without loan repayments, these water 
projects would likely cost more or wouldn't be built at all.
    We also love SRF subsidized loans because they foster 
fiscal responsibility. To qualify for a loan, these communities 
have to have their finances in order.
    And the SRFs love subsidized loans because they save money, 
real money. Subsidized loans can save as much as two-thirds in 
interest payments, which is essentially a grant equivalent, 
financing costs which would otherwise be passed on to 
ratepayers through utility bills.
    Second, the cumulative impact of Federal mandates is 
increasing the cost of water infrastructure and threatening the 
affordability of SRF subsidized loans. Since 2009, a growing 
number of Federal mandates has eroded the savings from SRF 
subsidized loans. Today, Federal mandates impact many aspects 
of water infrastructure projects, including planning and 
design, procurement of professional services, wages for 
construction workers, and the eligibility of construction 
materials, all of which impact the cost of the project.
    While well-intentioned public policy, these Federal 
mandates may not be achieving the goals originally envisioned 
by Congress and, more importantly, the goals of the Clean Water 
Act, which is to maintain, restore, and protect the quality of 
the Nation's waters. The Clean Water SRFs urge the committee to 
fully evaluate the impact of Federal mandates on SRF subsidized 
loans, specifically whether these mandates are increasing 
protection for public health and the environment, which are the 
goals of the SRF programs.
    Third, the Clean Water SRFs urge the committee to establish 
a separate authorization for congressional earmarks. For the 
last 2 years, the Appropriations Committee has diverted more 
than $1.3 billion in annual Federal funding from the Clean 
Water SRFs to pay for congressional earmarks. While 
supplemental funding in the Infrastructure Investment and Jobs 
Act is mitigating the immediate damage of those cuts, shifting 
Federal funding from loans to grants will have lasting effects 
on the Nation's ability to finance water infrastructure in the 
future, not to mention undermining the transformation potential 
of the Infrastructure Investment and Jobs Act.
    Additionally, the Clean Water SRFs face a fiscal cliff when 
this short-term funding ends in just 3 years. Establishing a 
separate authorization would provide greater transparency to 
annual Federal funding for the Clean Water SRFs, which is 
essential for managing the SRF project pipeline.
    Thank you again for the opportunity to testify on behalf of 
the Clean Water SRFs. I look forward to answering any questions 
you may have.
    [Ms. Johnson's prepared statement follows:]

                                 
    Prepared Statement of Lori Johnson, Assistant Chief, Financial 
 Assistance Division, Oklahoma Water Resources Board, on behalf of the 
            Council of Infrastructure Financing Authorities
    Chairman Rouzer, Ranking Member Napolitano and members of the 
Committee, thank you for the opportunity to testify before you today on 
behalf of the 51 Clean Water State Revolving Funds (SRFs), the nation's 
premier programs for financing water infrastructure that protects 
public health and the environment.
    My name is Lori Johnson and I am Assistant Chief of the Financial 
Assistance Division for the Oklahoma Water Resources Board, which 
manages the Clean Water SRF in the Sooner State. I also serve as 
Secretary for the Board of Directors of the Council of Infrastructure 
Financing Authorities (CIFA), which is a national not-for-profit 
organization that educates and advocates on behalf of the Clean Water 
and Drinking Water SRFs.
  The Clean Water SRFs are a national model for federal investment in 
                            infrastructure.
    More than three decades ago, Congress established the Clean Water 
SRFs as federally subsidized loan programs to provide affordable 
financing for municipal water infrastructure that protects public 
health and the environment. Since then, the Clean Water SRFs have used 
$52 billion in federal capitalization grants to generate $163 billion 
in financial assistance for more than 46,000 clean water infrastructure 
projects in communities across the nation.
    Because of Congress' foresight and fiscal responsibility, the Clean 
Water SRFs are generating a recurring, renewable source of revenue to 
meet the never-ending need to repair, rehabilitate and replace aging 
water infrastructure. As of 2022, loan repayments permanently revolving 
in the Clean Water SRFs topped $63 billion, exceeding cumulative 
federal funding and financing projects that may never have been built 
had Congress created a grant program instead.
The Clean Water SRF subsidized loans save money to keep water bills 
        affordable.
    In 2022, the average interest rate on an SRF subsidized loan was 
1.2% \1\, while the average interest rate on a municipal bond was 3.8% 
\2\--more than triple the average SRF interest rate. A utility that 
finances a $10 million project through an SRF will save more than $3.15 
million, or 71%, in interest payments, compared to the interest on a 
municipal bond. Reducing the cost of water infrastructure alleviates 
pressure on utilities to raise rates for wastewater, stormwater and 
recycled water services.
---------------------------------------------------------------------------
    \1\ According to the U.S. Environmental Protection Agency, the 
average Clean Water SRF interest rate was 1.2% in 2022.
    \2\ According to the Securities Industry and Financial Markets 
Association, the average interest rate for a 20-year high grade average 
was 3.8% in 2022.
---------------------------------------------------------------------------
The Clean Water SRFs are effective and responsive to communities.
    The Clean Water SRFs are effective because federal law allows 
states to customize their program within a broad federal framework. 
This flexibility, which is a hallmark of the SRF state-federal 
partnership, allows the SRFs to be responsive to the diverse and 
evolving needs of communities across the nation--from small communities 
such as Tabor City, North Carolina, with a population of 4,000, to 
urban centers, such as Los Angeles, California, with a population of 
nearly four million.
The Clean Water SRFs are efficient, low-cost infrastructure funding 
        programs.
    The amount of annual federal funding that can be used to administer 
the Clean Water SRFs is capped at just 4%. To maximize the amount of 
federal funding for water infrastructure projects, some SRFs use state 
funding or other revenue sources to pay staff and administrative 
expenses. To improve the impact and outcomes of federal funding, some 
SRFs use the administrative allotment to fund technical assistance, 
apprenticeship programs, or other statewide initiatives.
The Clean Water SRFs efficiently deliver billions in financial 
        assistance every year.
    Just last year, the Clean Water SRFs delivered $9.6 billion in 
state and federal funding for more than 1,600 water infrastructure 
projects. More than half of the water infrastructure projects were in 
small and rural communities with a population of less than 3,500. SRFs 
are often the only funding option for small and rural communities, 
which lack the revenue to qualify or afford financing on the municipal 
bond market.
   While well-intended, federal mandates on SRF subsidized loans are 
   increasing the cost of water infrastructure; these costs are then 
  passed onto households and small businesses in higher water bills. 
 Perhaps more importantly, these federal mandates may not be achieving 
                   the goals that Congress intended.
    Since 2009, Congress has added multiple federal mandates on SRF 
subsidized loans, including state funded loans. Today, federal mandates 
impact nearly every aspect of a water infrastructure project, including 
planning and design, procurement of professional services, wages for 
construction workers, and eligibility of building materials.

------------------------------------------------------------------------
                                                Federally       State
             Mandate                Enacted     Financed      Financed
                                                Projects      Projects
------------------------------------------------------------------------
Davis Bacon.....................       2009             X             X
American Iron and Steel.........       2014             X             X
Water and Energy Certification..       2014             X             X
Fiscal Sustainability Plan......       2014             X             X
Engineering Procurement.........       2014             X
Build America, Buy America......       2021             X
------------------------------------------------------------------------

                    Davis Bacon Prevailing Wage Laws
    Since 2009, annual appropriations bills and subsequently the Clean 
Water Act have required all SRF projects, including those financed by 
state funding, to comply with Davis Bacon, which requires construction 
workers to be paid the federal prevailing wage rate for the county in 
which the project is built.
    For most projects, paying the federal prevailing wages isn't an 
issue, especially in today's tight labor market which often requires 
contractors to pay more than the federal prevailing wage to attract and 
retain skilled workers. The problem is the prescriptive, burdensome and 
duplicative federal procedures and paperwork required to demonstrate 
compliance with the federal mandate.
    CIFA offers these suggestions to streamline the compliance 
procedures for Davis Bacon while maintaining the mandate for federal 
prevailing wages:
      Modernize the contract threshold and index the threshold 
to inflation: Davis Bacon applies to water infrastructure projects that 
cost more than $2,000, a threshold that hasn't been updated since the 
law was enacted in 1931. For context, the average cost of a water 
infrastructure project in a small community (fewer than 10,000 people) 
was $1.8 million in 2022.
      Allow the use of the wages published by the Department of 
Labor's Bureau of Labor Statistics in lieu of conformance: Wage 
determinations are not always available for every job in every county, 
especially in rural counties. Allowing the use of a trusted, 
alternative source for wages would eliminate the need for conformance, 
which can be a lengthy process for getting a wage determination.
      Allow compliance with state prevailing wage laws to 
satisfy compliance with Davis Bacon: 26 states have state prevailing 
wage laws and must comply with both federal and state compliance 
procedures, which is duplicative and increases the cost of compliance 
but may not benefit workers.
      Allow Governors to develop compliance procedures that 
better align with state law: The Clean Water Act allows Governors to 
develop compliance procedures,\3\ but EPA has not approved 
implementation of this provision.
---------------------------------------------------------------------------
    \3\ Clean Water Act 33 U.S.C. Sec. 1382 (b) (6) treatment works 
eligible under this chapter which will be constructed in whole or in 
part with assistance made available by a State water pollution control 
revolving fund authorized under this subchapter, or section 1285(m) of 
this title, or both, will meet the requirements of, or otherwise be 
treated (as determined by the Governor of the State) under sections 
1371(c)(1) and 1372 of this title in the same manner as treatment works 
constructed with assistance under subchapter II of this chapter;
---------------------------------------------------------------------------
      Allow state prevailing wages to be used in lieu of 
federal prevailing wages: According to a 2019 audit by the Inspector 
General of the Department of Labor,\4\ the agency adopts state 
prevailing wages for transportation projects but not for water and 
other projects. Extending this accepted practice to water 
infrastructure projects would eliminate duplication and reduce the cost 
of administration for water infrastructure projects.
---------------------------------------------------------------------------
    \4\ Better Strategies are Needed to Improve the Timeliness and 
Accuracy of Davis-Bacon Prevailing Wage Rates, U.S. Department of Labor 
Inspector General, Report Number 04-19-001-15-001, March 29, 2019.
---------------------------------------------------------------------------
       American Iron and Steel and Build America, Buy America Act
    Two federal mandates for domestic procurement apply to water 
infrastructure projects financed with SRF subsidized loans.
      Since 2014 annual appropriations bills and subsequently 
the Clean Water Act have required all SRF projects, including those 
financed with state funding, to use iron and steel made in the U.S., 
known as America Iron and Steel (AIS) requirements.
      Since 2021, the Build America, Buy America Act (BABAA) 
has required all federally funded water infrastructure projects, 
including federally funded SRF projects,\5\ to use iron, steel, 
construction materials and manufactured products made in the U.S.
---------------------------------------------------------------------------
    \5\ Federally funded SRF projects include ``equivalency projects.''

    Clear guidance, consistent implementation and equal application of 
the law are needed to successfully implement BABAA and ensure critical 
water infrastructure projects remain on track, on time and on budget. 
With the second anniversary of BABAA quickly approaching, it is 
imperative that EPA provide detailed guidance for demonstrating 
compliance with BABAA, especially for manufactured products.
    While EPA has issued a waiver for projects that initiated design 
planning by the effective date of the law, many SRFs no longer have 
projects that qualify for this waiver. In the absence of clear guidance 
for demonstrating compliance and in an abundance of caution, some SRFs 
are urging borrowers to apply for a project-specific waiver to avoid 
potential non-compliance. Until there is clarity on compliance, EPA and 
the Made In America Office (MIAO) could quickly become overwhelmed with 
requests for project-specific waivers.
    Additionally, EPA has proposed sunsetting the current BABAA waiver 
for SRF projects on September 30, 2024. SRF projects that are eligible 
for the current waiver, particularly large, multi-year projects that 
are already under construction, are likely to abandon SRF financing 
rather than redesign their projects. This unintended consequence will 
likely increase the cost of water infrastructure, which will be passed 
onto households and small businesses in higher water bills.
    CIFA offers these suggestions for strengthening implementation of 
and compliance with BABAA:
      A Level Playing Field: The same types of water 
infrastructure projects are treated differently depending on the agency 
and program that provides federal funding. As a result, some programs 
may have more, or less, stringent requirements than other programs, 
creating inequity among recipients of federal funding. Requiring the 
same rules for the same types of water infrastructure projects will 
ensure a level playing field.
      +  The EPA, U.S. Department of Agriculture Rural Development, 
U.S. Department of Interior Reclamation Grants and U.S. Department of 
Housing and Development Community Development Block Grants have 
different rules for the same types of water projects, which creates 
confusion across the water sector, especially for projects that are co-
funded.
      +  EPA has different rules for different programs that fund the 
same types of water projects within the agency. Several of these 
programs are delegated to the states and managed by the SRFs, creating 
even more confusion about rules of compliance.
      Standards for Demonstrating Compliance: The SRFs need 
clear and consistent guidance for documenting compliance. For example, 
will manufacturers have to provide documentation for every step in the 
manufacturing process (supplier, fabricator, manufacturer, processor) 
and for every subcomponent in a manufactured product (water 
purification technologies can have hundreds of subcomponents)?
      Conflicting Standards: The SRFs believe AIS and BABAA 
have conflicting guidance for precast concrete products and 
subcomponents of iron and steel products. Providing explicit direction, 
such ``compliance with AIS satisfies compliance with BABAA,'' would 
ensure consistency for programs with the AIS mandate.
      Codify the Current BABAA Waiver for SRFs: The current 
BABAA waiver for SRF projects exempts projects that initiated design 
planning before the effective date of the law. Waiving BABAA 
requirements for projects that were designed or under construction 
before the law took effect ensures communities can maintain affordable 
SRF financing for their water infrastructure projects without going 
back to the drawing board.
      Waiver Decisions: The turnaround time for a decision on 
waivers is unknown. A typical AIS waiver takes about eight weeks. 
Because the waiver must be approved by both EPA and MIAO, it's 
anticipated that the turnaround time for a BABAA waiver could take as 
long as 16 weeks. Requiring a specific turnaround time for waiver 
decisions is essential for planning purposes and to avoid liquidated 
damages for contractors that miss deadlines due to BABAA waiver 
determinations.
               Water and Energy Efficiency Certification
    Since 2014, the Water Resources Reform and Development Act (WRRDA) 
has required all SRF borrowers to conduct a cost and effectiveness 
analysis and certify that their project ``maximizes the potential for 
efficient water use, reuse, recapture, and conservation, and energy 
conservation.''
    Conducting a cost and effective analysis increases the cost of 
water infrastructure projects but may not provide significant, or even 
measurable, environmental benefits for most SRF projects, especially 
those in small and rural communities with populations fewer than 10,000 
people which comprise two-thirds of SRF loans.
    For example,
      Conservation or reducing consumption is an important goal 
for drinking water projects. However, conservation is challenging for 
projects that lack a consumption component, such as collecting and 
treating wastewater and stormwater.
      The analysis is irrelevant, but still required, for 
projects specifically designed to reuse or recycle water or to reduce 
energy consumption, which are the goals of the federal mandate.
      The analysis is unnecessary, but still required, for 
projects that don't use any energy, such as gravitational sewer 
collection systems, lagoon treatment systems or pipe replacement 
projects.

    SRFs understand the importance of pursuing water and energy 
efficiency, but allowing SRFs to identify the projects that will 
benefit from this cost and effectiveness analysis is a more efficient 
and effective approach for achieving Congress' goals.
                       Fiscal Sustainability Plan
    Since 2014, WRRDA has required select SRF borrowers to develop a 
fiscal sustainability plan for the water infrastructure project being 
financed. The law requires the plan to include an inventory of critical 
assets, an evaluation of the condition and performance of assets, and a 
funding plan to maintain, repair and replace the assets. These select 
SRF borrowers must also certify implementation of water and energy 
efficiency as part of the plan.
    Complying with this federal mandate increases the cost of water 
infrastructure but may not further the goal of fiscal sustainability. 
The federal mandate only applies to projects that receive SRF loans, 
not to projects that are financed by bonds issued by municipalities and 
purchased by the SRFs. Additionally, while the fiscal sustainability 
plan is intended to be a ``living document'' to improve operations and 
management, many small and rural communities with few professional 
staff don't have the capacity to continually review, revise and 
implement these plans.
    The Clean Water SRFs understand the importance of fiscal 
responsibility and financial sustainability and conduct a thorough 
review of an applicant's financial health as part of their underwriting 
process before a subsidized loan is awarded. SRFs also provide grant 
funding for rate studies and asset management plans to foster 
accountability for the federal and state investment in clean water 
infrastructure.
               Architectural and Engineering Procurement
    Since 2014, WRRDA has required borrowers of federally funded SRF 
projects to use the federal procurement process to select architects 
and engineers. Established by the Brooks Act, the federal procurement 
process requires selection based solely on qualifications and prohibits 
the cost of services from being considered as a factor.
    Approximately two-thirds of states have a ``mini'' Brooks Act which 
aligns to the federal process and allows for seamless procurement. 
However, in other states, the federal procurement process conflicts 
with the state procurement process, making it difficult or impossible 
to implement.
    Even in states where the state and federal procurement process are 
aligned, this federal mandate poses an obstacle. Many borrowers engage 
an engineering firm before deciding to pursue SRF financing. Small 
communities may be prohibited from using an engineer that serves on 
long-term contract as staff augmentation.
    In some states, this requirement deters communities from pursuing 
SRF financing for planning and design. In other states, the SRFs issue 
separate loan agreements--one for engineering funded with state money 
and one for construction funded with federal money--which creates more 
process, paperwork and expense without more protection for public 
health and the environment.
 The Clean Water SRFs are concerned about the transformation of these 
state-run, subsidized loan programs into a top-down, one-size-fits-all 
                         federal grant program.
    In addition to federal mandates on borrowers, federal mandates on 
the Clean Water SRFs are eroding the lending power of the SRFs. 
Diverting annual federal funding from the SRFs to provide grants for 
congressional earmarks and requiring the SRFs to use annual federal 
funding as grants or principal forgiveness, instead of subsidized 
loans, reduces leveraging to meet current demand and permanently 
eliminates a reliable source of recurring revenue to fund water 
infrastructure projects in the future.
    Transforming the SRF subsided loan program into a grant program has 
permanent adverse consequences. Every federal dollar diverted from SRF 
subsidized loans to congressional earmarks, grants or principal 
forgiveness permanently eliminates a recurring source of funding to 
build water infrastructure projects in the future. Unlike grants that 
fund one project, SRF subsidized loans generate loan repayments that 
can be used, and reused, in perpetuity to fund multiple water 
infrastructure projects, alleviating the cost of construction and 
compliance on future generations.
         Additional Subsidy (Grants and Principal Forgiveness)
    Federal mandates requiring the SRFs to use annual federal funding 
as grants or principal forgiveness, instead of subsidized loans, have 
doubled in the last two years. Increased federal mandates for 
additional subsidy have coincided with the return of earmarks, which 
means the majority of annual federal funding is being provided as 
grants or grant-equivalents, instead of subsidized loans.
    Since 2009, appropriations bills have mandated that the SRFs 
provide a percentage of annual federal funding as grants or principal 
forgiveness, known as additional subsidy. Since 2021, the Clean Water 
Act has mandated the Clean Water SRFs provide 10% of their annual 
federal funding as grants or principal forgiveness. In 2023, the total 
federal mandate for grants or principal forgiveness is 20% of annual 
federal funding.
    While additional subsidy is an important tool, SRFs believe it 
should only be used when absolutely necessary to help communities that 
couldn't otherwise afford to build clean water infrastructure. A one-
size-fits-all federal mandate for additional also ignores the 
variability of need from state to state. For example, states with 
generous state grant programs for water infrastructure could use 100% 
of annual federal funding for SRF subsidized loans.
    Additionally, the Infrastructure Investment and Jobs Act (IIJA) 
mandates that 49% of supplemental funding be provided as grants or 
principal forgiveness, permanently eliminating a significant source of 
recurring funding for future water infrastructure.
Recommendation: End federal mandates for grants or principal 
        forgiveness.
    Ending the federal mandate wouldn't end the SRFs' ability to 
provide grants or principal forgiveness. The Clean Water Act allows up 
to 30% of annual federal funding to be used as grants or principal 
forgiveness for communities that meet affordability criteria. Even 
without the federal mandates, the SRFs would continue to help 
communities that couldn't otherwise afford to pay for clean water 
infrastructure. Moreover, many Clean Water SRFs would prefer to use 
state grant programs, which have more flexibility and fewer 
requirements, to help communities with significant affordability 
challenges.
                              State Match
    The Clean Water Act requires states to match 20% of the annual 
capitalization grant. When the match requirement was established, 100% 
of federal funding had to be used for subsidized loans; the law didn't 
allow federal funding to be used for grants or principal forgiveness.
    Some SRFs, like the Oklahoma Clean Water SRF, issue revenue bonds 
to provide state match. However, federal mandates for grants or 
principal forgiveness jeopardize the ability of the SRFs to generate 
state match because only interest payments on subsidized loans can be 
used to repay the bond. Because federal mandates for grants or 
principal forgiveness reduce funding for subsidized loans, some SRFs 
may need to raise interest rates to generate adequate state match.
Recommendation: End state match for federally mandated grants and 
        principal forgiveness.
    States should only be required to match federal funding for SRF 
subsidized loans, not for federally mandated grants or principal 
forgiveness.
                         Congressional Earmarks
    Over the last two years, Congress has diverted $1.3 billion or 40% 
of annual federal funding from the Clean Water SRFs to create a 
gigantic new EPA grant program for congressional earmarks. The proposed 
2024 appropriations bills from the U.S. House of Representatives and 
U.S. Senate would divert another $815 million from Clean Water SRF 
subsidized loans to one-time grants--$470 million for House earmarks 
and $345 million for Senate earmarks. Additionally, the House 
appropriations bill would provide less than $65 million to split among 
50 states and Puerto Rico for Clean Water SRF projects, a 96% cut from 
annual federal funding of $1.6 billion just three years ago.
    Congressional earmarks have also undermined the transformational 
potential of the IIJA. While the IIJA has provided $4.1 billion in 
supplemental federal funding for the Clean Water SRFs over the last two 
years, nearly one-third, or $1.3 billion, was needed to backfill cuts 
to annual federal funding caused by using the SRF capitalization grant 
to pay for congressional earmarks. If this practice continues, the SRFs 
face a program-ending funding cliff when short-term IIJA funding ends 
in three years.
Recommendation: Establish a separate authorization for congressional 
        earmarks.
    Creating a separate authorization for congressional projects would 
restore transparency and fiscal integrity to the Clean Water SRFs.
     Minor tweaks to the IIJA will improve operations and outcomes.
                 IIJA Funding for Emerging Contaminants
    The IIJA provided $1 billion over five years to the Clean Water 
SRFs specifically to remediate the potential harm of emerging 
contaminants on public health and the environment. However, appropriate 
restrictions in the base program are limiting the most effective use of 
this short-term dedicated funding.
      Under current law, routine water quality testing and 
monitoring is ineligible for SRF funding. While CIFA supports this 
prohibition for the base program, testing and monitoring are critical 
activities for developing a comprehensive plan to detect, prevent and 
mitigate emerging contaminants.
      Under current law, watershed studies, which include water 
quality testing and monitoring, are eligible for SRF funding. However, 
EPA limits eligibility to studies in watersheds with known 
contamination; studies to detect contamination in a watershed are 
ineligible.
      Under current law, capital improvement projects for 
pretreatment at industrial facilities are eligible for SRF funding if 
discharges are treated beyond pretreatment standards. A utility or 
government agency must serve as a conduit for the SRF loan, also known 
as a pass-through loan. However, this option has not been widely used 
to date.
Recommendation: Expand the eligible uses of funding for emerging 
        contaminants
    Explicitly allow SRFs to use IIJA emerging contaminants funding for 
sampling, testing and monitoring to detect sources of contamination, 
watershed studies to detect and map the pathways of contamination, and 
capital improvement projects at industrial facilities to pretreat 
wastewater to reduce and prevent contamination.
                          Technical Assistance
    As part of the IIJA, the Drinking Water and Wastewater 
Infrastructure Act amended the Clean Water Act to allow the Clean Water 
SRFs to use up to 2% of annual federal funding to provide technical 
assistance to small and rural communities. While similar to a long-term 
provision in the Safe Drinking Water Act, the Drinking Water SRFs have 
more flexibility to fund qualified providers,\6\ including private 
sector professionals, while the Clean Water SRFs can only fund 
government and not-for-profit providers \7\.
---------------------------------------------------------------------------
    \6\ Safe Drinking Water Act, U.S.C. 42 Sec. 300j-12 (g)(2)(C) ``An 
additional 2 percent of the funds annually allotted to each State under 
this section may be used by the State to provide technical assistance 
to public water systems serving 10,000 or fewer persons in the State.''
    \7\ Clean Water Act, U.S.C. 33 Sec. 1383 (k) ``A State may use an 
additional 2 percent of the funds annually awarded to each State under 
this subchapter for nonprofit organizations (as defined in section 
1254(w) of this title) or State, regional, interstate, or municipal 
entities to provide technical assistance to rural, small, and tribal 
publicly owned treatment works (within the meaning of section 
1254(b)(8)(B) of this title) in the State.''
---------------------------------------------------------------------------
    CIFA defines technical assistance is the targeted delivery of 
professional services to help communities comply with water quality 
standards, build physical, financial and operational resiliency, and 
develop and implement an economically and technically sound plan for 
capital improvement projects. Unfortunately, government and non-profit 
providers have limited capacity to provide needed professional 
services, such as engineering, environmental assessment, and 
accounting, to accomplish these goals for small and rural communities.
Recommendation: Expand eligible providers for technical assistance
    Align the language in the Clean Water Act to the language in the 
Drinking Water Act to allow the SRFs to use up to 2% of annual federal 
funding for technical assistance provided by any qualified provider, 
including government, not-for-profit organizations or private sector 
entities.
                    Thank you for your partnership.
    On behalf of the Clean Water SRFs, thank you for your partnership. 
With your continued support, the Clean Water SRFs will continue to 
finance water infrastructure projects that improve water quality and 
provide safe and affordable wastewater services for hundreds of 
millions of Americans.

    Mr. Rouzer. Mr. Swingle.

TESTIMONY OF TODD P. SWINGLE, P.E., CHIEF EXECUTIVE OFFICER AND 
  EXECUTIVE DIRECTOR, TOHO WATER AUTHORITY, ON BEHALF OF THE 
          NATIONAL ASSOCIATION OF CLEAN WATER AGENCIES

    Mr. Swingle. Good morning, Chairman Rouzer, Ranking Members 
Larsen and Napolitano, and to all the members of the 
subcommittee. Thank you for the opportunity to testify on 
behalf of the National Association of Clean Water Agencies, 
NACWA, the Nation's leading organization of publicly owned 
clean water utilities. It is an honor to be here today.
    My name is Todd Swingle, and I am the CEO and executive 
director of Toho Water Authority in Kissimmee. Toho provides 
water, wastewater, and reuse water services to approximately 
430,000 residents and visitors of central Florida. I am also a 
board member of NACWA.
    Communities across the country face a growing array of 
complex water challenges, including increasingly stringent 
compliance obligations. As we strive to deliver on the public 
health and environmental protection outcomes that our 
communities expect and deserve, Clean Water State Revolving 
Funds, integrated water resource planning, and the remaining 
topics of my testimony are critical.
    Since 1987, SRFs have served as the primary Federal 
financing tool helping local communities more affordably meet 
Clean Water Act compliance obligations. The Clean Water SRF's 
low-interest rates are particularly helpful in times such as 
these, when interest rates for other borrowing options are 
elevated.
    In Florida and across the country, SRF investments have 
helped both urban and rural utilities to treat wastewater to 
higher standards, improve energy efficiency, capture and reuse 
biogas, enhance beneficial reuse, reduce nitrogen and 
phosphorus loading, and address wet weather and resiliency 
challenges.
    Building on the Clean Water SRFs, the 5-year, $11.7 billion 
Infrastructure Investment and Jobs Act serves as a historic 
investment in clean water infrastructure. However, this was 
intended to be a one-time infusion of capital to the Clean 
Water SRFs in addition to the ongoing annual appropriations. 
Likewise, the return of community project funding provides an 
alternative option for communities to address the rapidly 
widening funding gap.
    Growing a portfolio of accessible funding approaches is 
critical to delivering on our promise of public health and a 
clean water environment. With all due respect to the committee, 
the current Clean Water SRF investments proposed in the House's 
fiscal year 2024 appropriations bill are not adequate to 
achieve these goals. It is imperative that Congress fully 
appropriate the amounts authorized under the IIJA, and fund 
earmarks from a source other than the Clean Water SRF.
    At the top of the list of challenges for utilities is PFAS. 
Utilities embrace a role that we play in removing PFAS under 
Clean Water Act science-based regulatory processes, but it is 
the actual polluters who alone must be held liable. While the 
IIJA allocated $1 billion in mandatory Federal funding for 
emerging contaminants, the Clean Water SRF is designed for 
capital infrastructure investments.
    Today, the need for many utilities includes PFAS 
monitoring, assessments, and pretreatment efforts. It is 
important that Congress provide a legislative fix to allow for 
flexible access to this funding for these needs.
    Another important provision of the IIJA is the requirement 
that 49 percent of the mandatory dollars be allocated as a 
subsidy, essentially forgivable loans or grants for 
disadvantaged communities. To date, we have heard that numerous 
States have updated their definition of disadvantaged 
communities, consistent with the EPA's recommendation to 
consider multiple factors like unemployment, how water and 
sewer rates compare to the lowest quintile income, and ensuring 
funds reach urban areas of poverty, as well as rural and small 
communities. We recommend that Congress continue to monitor the 
success of these subsidies and remain open to providing further 
direction.
    In addition to funding, the regulatory approaches are 
instrumental in delivering effective, affordable solutions. 
Furthering acceptance of integrated planning is another key way 
that regulators can help communities stretch limited 
infrastructure dollars. NACWA greatly appreciates the 
bipartisan leadership of this committee in getting integrated 
planning codified to the Clean Water Act in 2018. We look 
forward to working with Congress and EPA to help State 
regulators further enhance this critical tool.
    Finally, it is imperative that Congress enact sensible, 
targeted reforms to the Clean Water Act to provide regulatory 
certainty needed for utilities to effectively and affordably 
plan and invest in long-term capital projects to meet 
compliance obligations. Without regulatory certainty, 
investments such as those made through the Clean Water SRF will 
not have the full positive impact intended.
    In closing, growing the water infrastructure funding 
portfolio, maintaining and growing the foundational Clean Water 
SRFs, and addressing the other challenges, including integrated 
planning and regulatory certainty, are critical as utilities 
strive to continue providing essential clean water services to 
our communities. NACWA appreciates the ongoing engagement by 
the committee on these critical issues.
    Thank you again for the opportunity to testify before you 
today, and I would be happy to answer any questions from the 
committee.
    [Mr. Swingle's prepared statement follows:]

                                 
 Prepared Statement of Todd P. Swingle, P.E., Chief Executive Officer 
and Executive Director, Toho Water Authority, on behalf of the National 
                  Association of Clean Water Agencies
                              Introduction
    Good morning, Chairmen Graves and Rouzer, Ranking Members Larsen 
and Napolitano, and to all the members of the Subcommittee. Thank you 
for the opportunity to testify on behalf of the National Association of 
Clean Water Agencies, or NACWA. It is an honor to be here with you.
    My name is Todd Swingle, and I am the CEO and Executive Director of 
the Toho Water Authority (Toho) in Kissimmee, Florida. Toho operates 17 
water treatment facilities and nine wastewater treatment facilities, 
treating and distributing over 50 million gallons of potable water and 
reclaiming approximately 35 million gallons of wastewater each day for 
the 430,000 residents and visitors that we serve throughout the region.
    I am also a Board member of NACWA, the nation's leading 
organization of publicly owned clean water utilities. Toho's 500 plus 
employees, like the workforces of NACWA member utilities from Coast-to-
Coast, are on the front lines each day providing essential services. 
Our utilities are anchor institutions within our communities and for 
over 50 years since the enactment of the Clean Water Act (CWA), NACWA's 
members have made incredible progress in cleaning up the Nation's vital 
water resources, supporting economic prosperity in our communities, and 
improving the quality of life of all Americans in line with the CWA's 
``cooperative federalism'' framework.
    Communities across the country face a growing array of complex 
water quality challenges including increasingly stringent CWA 
compliance obligations. As we strive to deliver on the public health 
and environmental protection outcomes that our communities expect and 
deserve, the Clean Water State Revolving Fund (CWSRF), integrated water 
resource planning flexibility and the remaining topics of my testimony 
are critical throughout the Nation.
Clean Water State Revolving Fund (CWSRF) and Infrastructure Investment 
                          and Jobs Act (IIJA)
    Since the establishment of the CWSRF under the 1987 CWA amendments, 
Congress has appropriated over $50 billion in federal investment 
collectively to the state CWSRFs, who in turn have provided over $160 
billion to local communities. These low-interest loans, and in some 
cases grants through additional subsidization provisions, provided 
under the CWSRF have remained the primary federal clean water financing 
tool that public clean water utilities have used to help their local 
communities more affordably meet their CWA compliance obligations and 
upgrade their aging treatment plants and critical infrastructure. The 
low interest rates offered by the CWSRF can be particularly helpful, 
especially during times such as these when interest rates for other 
borrowing options are elevated.
    In Florida and across the country, SRF investments have helped fund 
projects to treat wastewater to higher standards, improve energy 
efficiency and lower emissions, capture and reuse biogas, reduce 
nitrogen and phosphorus loading, and address wet weather and resiliency 
challenges, among many other types of projects.
    The historic water infrastructure investments further provided 
under the Infrastructure Investment and Jobs Act (IIJA), also referred 
to as the Bipartisan Infrastructure Law (BIL), are the most critical 
investments for clean water since the Construction Grants Program 
helped build the network of wastewater treatment agencies after passage 
of the CWA in 1972. The IIJA or BIL's $11.7 billion over five years to 
the CWSRF in direct mandatory appropriations will be instrumental in 
helping many communities upgrade their clean water infrastructure and 
treatment systems.
    However, these five-year investments were intended to be a one-time 
infusion into the CWSRF in addition to the ongoing annual 
appropriations. It is imperative that Congress continue providing the 
highest level of annual CWSRF appropriations and, as provided under the 
authorizing portions of the IIJA, fully maximize these historic 
investments and ensure the long-term viability of this bipartisan 
program.
    Likewise, the return of Community Project Funding, also known as 
earmarks, provide an alternative option for communities to address 
critical infrastructure projects. The Nation's growing water 
infrastructure needs are already resulting in a rapidly widening 
funding gap. Growing a portfolio of accessible funding approaches is 
critical to communities and the Nation in delivering on our promise of 
public health and a clean water environment.
    With all due respect to the Committee, the current investments in 
the CWSRF proposed in the House's FY2024 budget are not adequate to 
achieve these goals. It is imperative that Congress fully appropriate 
the CWSRF at the amounts authorized under the IIJA and fund earmarks 
from a source other than the CWSRF.
    CWSRF investments are vital for helping both urban and rural 
communities more affordably meet 21st century clean water challenges to 
maintain and update their clean water infrastructure; expand treatment 
systems and technologies to address new pollutant standards and to 
remove per- and polyfluoroalkyl substances (PFAS); advance reuse 
initiatives; manage population growth, industrial and agricultural 
expansion and land development pressures; and help utilities improve 
resilience to storms and other natural impacts, among others.
                     PFAS and Emerging Contaminants
    At the top of this list of challenges, public clean water utilities 
are extremely concerned about the potential health and environmental 
risks associated with exposure to PFAS. PFAS remediation must be paid 
for by the polluters--those who manufactured and profited from this 
ubiquitous chemical. The innocent water or wastewater treatment utility 
ratepayers who had no part in creating or profiting from PFAS must not 
in any way be left holding the bill to deal with PFAS. There is a role 
for utilities to appropriately play in the removal of PFAS under the 
CWA based on a science-based regulatory processes, but it is the actual 
polluters who alone must be held liable.
    An important provision in the IIJA was the specific allocation of 
an additional $1 billion in mandatory federal funding through the CWSRF 
for utilities to address Emerging Contaminants, including PFAS. 
However, with these dollars flowing through the SRF, a program designed 
for the purpose of capital infrastructure investments, clean water 
utilities have mostly been unable to utilize these resources for the 
types of efforts that they are currently undertaking to address PFAS--
such as monitoring, assessments, and pretreatment efforts with 
industrial users they serve. Essentially, the types of proactive 
efforts not commonly supported by the CWSRF because they are not deemed 
to be ``infrastructure'' projects.
    Unfortunately, there are currently no available technologies that 
effectively and affordably destroy PFAS in clean water or biosolids at 
the scale managed by public clean water utilities. Additionally, state 
SRFs have the authority to request full transfer of CWSRF funds 
designated for Emerging Contaminants to be applied to accounts for 
drinking water, which several states have already opted to do.
    It is important that Congress provide a legislative fix to allow 
clean water utilities more flexible access to this IIJA funding to do 
critical PFAS monitoring and assessment work so local communities can 
understand the key sources of PFAS loading to their water systems, 
identify opportunities for controls, and prioritize opportunities for 
investment to reduce PFAS.
                             Affordability
    Another important provision in the IIJA, and one that NACWA helped 
champion, is a requirement that 49 percent of the mandatory dollars 
under the legislation flowing to the SRF programs must be allocated by 
the states as additional subsidization--meaning that these funds are 
essentially forgivable loans (or grant equivalents). This provision is 
particularly important for getting federal help to target areas facing 
serious need or financial hardship and to disadvantaged communities 
that might not have the capacity for loan financing.
    Because the SRFs are run through the states--each of which has its 
own rules for applying additional subsidization--EPA has provided 
recommendations for how states should consider targeting such funds to 
reach potentially eligible areas and communities. Strengths of this 
guidance include encouraging states to look beyond singular metrics of 
disadvantage and consider various metrics like unemployment, comparison 
of water and sewer rates compared to lowest quintile income, and 
ensuring funds reach urban areas of poverty as well as rural and small 
communities.
    While EPA has laid out this guidance, the task of implementation 
falls to the states. Given the significant influx of funding, NACWA 
strongly believes that states must be innovative in how they apply this 
additional subsidy, and we stand ready to further serve as a resource 
in how states update their definitions. To date, we have heard that 
numerous states have updated their definitions of disadvantaged 
communities to be more inclusive. We recommend that Congress continue 
to monitor how additional subsidies are applied and remain open to 
providing further direction to the programs as implementation advances. 
This will help ensure that the IIJA resources help those urban and 
rural communities more affordably and directly access much-needed 
infrastructure funding.
    Congress should also provide oversight for how EPA addresses 
affordability issues. Earlier this year, EPA finalized its revised 
Financial Capability Assessment (FCA) Guidance, which is used by EPA 
and the states to determine how much a community can afford to pay to 
meet increasing compliance requirements under the CWA.
    For several years prior, NACWA, in partnership with the other major 
water sector organizations, and key municipal groups, jointly worked 
with EPA under both the Obama and Trump Administrations to advocate for 
a new approach that specifically looked at the impacts that the cost of 
compliance with expanding CWA mandates would have on low-income 
households within an impacted community, as opposed to broader service 
area metrics that often mask the actual impact on individual households 
in the lower quartile of the service areas income bracket.
    Unfortunately, the new FCA Guidance failed to fully embrace this 
low-income approach, meaning that the true impacts on these rural and 
urban households may not be fully considered and could leave them 
paying a disproportionate amount of their income on water and sewer 
bills.
    This is a key opportunity for Congress to support true water 
affordability by providing oversight of how EPA addresses affordability 
issues and by ensuring its affordability guidance truly aims to help 
actual low-income households in urban and rural areas.
                          Integrated Planning
    Furthering the acceptance of Integrated Planning by state and 
federal regulatory/permitting and enforcement agencies is another way 
that regulators can help communities stretch limited infrastructure 
investment dollars. Integrated Planning can help large and small 
communities better manage costs and prioritize their growing list of 
clean water investments and obligations more affordably over time to 
best serve their ratepayers. NACWA greatly appreciates the bipartisan 
leadership of this Committee in getting Integrated Planning codified 
into the Clean Water Act in 2018. We look forward to further working 
with Congress and EPA to help state regulators in particular enhance 
this critical tool and incorporate Integrated Planning approaches into 
permitting and enforcement, and help communities best develop their 
Integrated Planning framework and work with their regulators on 
approval.
                          Regulatory Certainty
    Finally, it is imperative that sensible, targeted reforms to the 
CWA are enacted to ensure that clean water utilities have the 
regulatory certainty needed to effectively and affordably plan and 
invest in long-term capital infrastructure projects and meet their 
compliance obligations.
    Without regulatory certainty, as well as improved transparency and 
due process, greater scientific integrity, and protection for utilities 
against the increasing number of unwarranted CWA citizen suits, 
investments such as those made through the CWSRF will not have the full 
positive impact intended to affordably provide local communities with 
the highest levels of water quality improvement. NACWA has previously 
testified before this Committee about these issues and looks forward to 
working with the Committee on this important topic.
                               Conclusion
    Growing the water infrastructure funding portfolio, including the 
foundational CWSRF, and addressing the other challenges I have 
mentioned are critical as utilities strive to continue providing 
essential public clean water services to their communities. NACWA 
appreciates the ongoing engagement by the Committee with the public 
clean water sector on these critical issues. Thank you again for the 
opportunity to testify before you today and I would be happy to answer 
any questions the Committee may have.

    Mr. Rouzer. Mr. Proctor.

TESTIMONY OF JAMES M. PROCTOR II, SENIOR VICE PRESIDENT, LEGAL 
   AND EXTERNAL AFFAIRS, McWANE, INC., ON BEHALF OF THE U.S. 
                      CHAMBER OF COMMERCE

    Mr. Proctor. Chairman Rouzer, Ranking Member Napolitano, 
Ranking Member Larsen, members of the subcommittee, thank you 
for the opportunity and the invitation to be here today to talk 
about clean water infrastructure financing.
    My name is Jim Proctor. I am with McWane, Incorporated. We 
are a privately owned company that for over 175 years has 
provided the basic building blocks of the country's water 
infrastructure. We employ more than 6,000 team members across 
the country in 14 States and 25 manufacturing facilities.
    Over the past several years, Congress has passed monumental 
legislation that includes substantial investments in water 
infrastructure. However, several problems have emerged that 
could jeopardize the ability of the States and the private 
sector to realize the opportunities that Congress intended to 
create.
    One such obstacle is the lack of regulatory clarity in many 
critical areas. For example, the authorization for the funds 
for emerging contaminants expires in December 2027. However, 
EPA has yet to issue effluent limitation guidelines for any 
PFAS. Knowing the standards that utilities must meet is 
critical to the design of waste treatment and other projects in 
evaluating and selecting the appropriate technology. These 
delays in announcing standards are putting utilities and State 
agencies in a squeeze that could preclude the funding of 
important projects.
    Second, earmarks for specific projects demonstrate 
responsiveness to constituent needs and offer an important tool 
to Members of Congress to respond to those needs. But they 
should be additive to the existing SRF allocations. More than 
1,400 projects were earmarked for funding in the SRF 
appropriations for 2022 and 2023, constituting the majority of 
the funding for 2023. Although the funding must attach within 2 
years, to date, fewer than 200 of those 1,400 projects for 2022 
and 2023 have applied for approval, and fewer still have been 
approved. Earmarks that aren't additive reduce the funding 
available for other non-earmarked SRF projects with acute need, 
reduce the funds available for program administration, and 
create uncertainty in the planning process, all of which slows 
the allocation of funding across all projects.
    But in addition, delays in the allocation of this earmarked 
funding also creates uncertainty in the private sector, which 
discourages the capital investment needed to ensure that supply 
chains are able to provide the critical products and equipment 
to meet the needs of project owners. For example, our industry 
saw a significant post-COVID surge in demand that created 
production and delivery backlogs for a short period of time.
    The infrastructure programs passed by Congress, though, 
signaled an assurance of continued demand that prompted us to 
significantly increase our capital expenditures and expand 
capacity not only to eliminate those existing backlogs, but 
also to position our plants to serve the needs created by the 
infrastructure programs. However, the slow commencement of 
projects and uncertainties about the programs have resulted in 
a dramatic decrease in demand that has forced us to consider 
reducing production expansion plans and associated employment. 
Also, permitting delays have slowed the construction of 
expansion projects, a situation that will be aggravated by the 
possible adoption of EPA's new PM2.5 standards.
    Because many other producers face the same situations, when 
projects eventually do commence, the demand for essential 
products with which to build those projects will hit the market 
in a large, compressed surge that manufacturers could be ill-
positioned to meet, which could result in delays or 
cancellations of projects and increased costs.
    To avoid these problems, we ask the members of this 
committee to consider extending some of the deadlines 
applicable to the Bipartisan Infrastructure Law and IRA funding 
to engage with EPA to accelerate the rollout of the authorized 
funding to increase the availability of much-needed technical 
assistance, and to ask your colleagues on the Appropriations 
Committee to support full funding for the SRF in addition to 
whatever earmarks they might deem appropriate.
    Thank you very much for the opportunity to testify, and I 
will be happy to answer any questions.
    [Mr. Proctor's prepared statement follows:]

                                 
Prepared Statement of James M. Proctor II, Senior Vice President, Legal 
 and External Affairs, McWane, Inc., on behalf of the U.S. Chamber of 
                                Commerce
    Chairman Rouzer, Chairman Graves, Ranking Member Napolitano, 
Ranking Member Larsen, and members of the subcommittee, thank you for 
the invitation to testify today on Clean Water Infrastructure 
financing.
    During my career I have had the privilege to help promote policies 
that will make our water infrastructure systems more resilient, secure, 
and efficient, working not only in my capacity as senior vice president 
for McWane, Inc., but also as a member of the executive committee of 
the BuildStrong Coalition, the corporate advisory council of the Blue-
Green Alliance, the Water Infrastructure Leadership Group (the ``Ad Hoc 
Group''), the U.S. Water Partnership, the Environmental Protection 
Agency's National Drinking Water Advisory Council, and the role in 
which I am here presenting today, chair of the U.S. Chamber of 
Commerce's Business Task Force on Water Policy.
    My company, McWane, is deeply involved in water infrastructure. For 
almost 175 years McWane has proudly provided the building blocks for 
our nation's water infrastructure, supplying the pipe, valves, 
fittings, and related products that transport clean water to 
communities and homes across the country and around the world. More 
recently we have expanded our operations into the fields of 
infrastructure technology and electric power distribution. We employ 
more than 6,000 team members, who work in 25 manufacturing facilities 
in fourteen states.
    Over the past several years Congress has passed monumental 
infrastructure legislation that includes substantial investments in 
water infrastructure, including $11.7 billion for the Clean Water State 
Revolving Funds over five years through the Bipartisan Infrastructure 
Law. However, several problems have emerged that could jeopardize the 
ability of the states and the private sector to realize the 
opportunities that Congress intended to create. First, the BIL imposes 
short deadlines that have been compressed even further by EPA's slow 
roll out of guidance for the implementation of some of the governing 
principles for the programs. The impact of these impending deadlines 
has been and will be particularly acute with the funds allocated for 
emerging contaminants. The authorization for these funds expires in 
December 2027, with a possibility of an extension until 2029. However, 
EPA has yet to recommend water quality criteria or issue effluent 
limitations guidelines for any PFAS. Knowing the standards that 
utilities must meet is critical to the design of waste treatment and 
other projects and evaluating and selecting the appropriate technology. 
Unless and until utilities know what to target, they cannot design the 
projects and select the appropriate equipment. These delays in 
announcing the standards coupled with the impending deadlines are 
putting utilities and state agencies in a squeeze that could preclude 
the funding of important projects.
    Second, it is true that earmarks for specific projects can 
demonstrate responsiveness to constituent needs and offer an important 
tool to Members of Congress, but they should be additive to the 
existing SRF allocations. More than 1,400 projects were earmarked for 
funding in the latest SRF appropriation, constituting the majority of 
the funding for 2023. Although the funding must attach within two 
years, to date fewer than 200 of these 1,400 projects for 2022-23 have 
applied for approval and fewer still have been approved. Earmarks (that 
are not additive) reduce the funding available for other, non-earmarked 
SRF projects with acute need, reduce the funds available for program 
administration, and create uncertainty in the planning process, which 
will slow the allocation of funding across all projects. But but even 
to the extent they serve important needs of their own, the delays in 
the allocation of this earmarked funding also creates uncertainty in 
the private sector, which discourages the capital investment needed to 
ensure that supply chains are able to provide critical products and 
equipment to meet the needs of project owners.
    For example, our industry saw a significant, post-COVID surge in 
demand that created production and delivery backlogs. Although we knew 
that situation was temporary, the passage of BIF, IRA, and the 2022-23 
appropriations provided the assurance of continued demand necessary to 
significantly increase our capital expenditures and expand capacity, 
not only to eliminate those backlogs, but also to position our plants 
to serve the needs created by the infrastructure programs. However, the 
slow commencement of specific projects has resulted in a dramatic 
decrease in demand that, together with the uncertainty about whether 
projects will even receive funding before the deadlines, has compelled 
us to rethink our expansion plans and reduce the number of production 
shifts and associated employment. Moreover, even for those capital 
projects that remain in play, permitting delays are a continuing 
problem. Because many other producers face the same situations, when 
projects eventually do commence, the demand for essential products with 
which to build those projects will hit the market in a large but 
compressed surge that manufacturers will be ill-positioned to meet, 
which could result in delays or cancellations of projects and increased 
costs.
    Furthermore, the increased use of earmarks disrupts the states' 
ability to prioritize projects based on need, because in some cases the 
funds are directed to projects with low need at the expense of those in 
disadvantaged areas. And since earmarked dollars are dispensed directly 
by EPA, not the states, they are not paid back into the revolving fund, 
and thus cannot be reloaned again for future projects.
    To avoid these issues, we ask the members of this committee to 
consider extending some of the deadlines applicable to the BIL and IRA 
funding, to engage with EPA to accelerate the roll out of the 
authorized funding, increase the availability of much needed technical 
assistance, and to ask your colleagues in the appropriations process to 
support full funding for the SRFs aside from whatever earmarks they 
might deem appropriate. There is consensus on these issues across the 
stakeholder community: The Chamber and a broad coalition of 
stakeholders sent a letter to appropriators supporting full SRF funding 
and funding for water provisions in the BIL, which were authorized but 
not appropriated.\1\ The leaders of 45 state and territorial 
environmental agencies also recently called on Congress to restore 
funding for--and fully appropriate--the Clean Water and Drinking Water 
State Revolving Funds.
---------------------------------------------------------------------------
    \1\ https://www.uschamber.com/environment/coalition-letter-on-
water-infrastructure-program-funding
---------------------------------------------------------------------------
    I also would like to make several points about how to improve the 
current state of clean water infrastructure financing.
    First, meeting our clean water infrastructure needs requires a 
partnership between the public and private sectors. Many smaller, 
disadvantaged utilities are simply overwhelmed by the financial and 
increasingly complex management challenges that they face. As a result, 
many of them are regularly out of compliance with applicable water 
quality standards but lack the expertise and resources to rectify the 
problems. Although there are public and private utilities that could 
help, they are often reluctant to do so because of fear of inheriting 
the distressed entity's enforcement problems. In addition, private 
utilities are currently ineligible for Clean Water SRF funding. As a 
result, a private utility cannot assume ownership of a struggling 
public utility unless any outstanding SRF loans are repaid immediately. 
These problems create poison pills that effectively bar Good Samaritan-
private entities from helping protect the public when distressed 
utilities cannot do so on their own. To eliminate these obstacles to 
private sector assistance, Congress should: provide a ``safe harbor'' 
for the acquirer of a troubled system that proscribes enforcement for a 
time period sufficient to bring it into compliance; expand Clean Water 
SRF eligibility to include private entities; and extend an investment 
tax credit to the acquirer of non-compliant systems with fewer than 
10,000 service connections.
    Second, meeting our clean water infrastructure needs also requires 
regulatory consistency. At present, concern over PFAS has some EPA 
regions getting ahead of the regulatory process. For example, some 
wastewater utilities are being asked to monitor for dozens of PFAS, 
even without a complete analysis of whether the specific PFAS presents 
a public health risk before the promulgation of a water quality 
standard.
    The Chamber has long made permitting reform a top priority, 
especially considering the massive infusion of funding from the BIL. If 
we are to meet our ambitious climate and infrastructure goals as a 
nation, projects must begin without delay. This does not mean that 
environmental protections should not be part of the process but rather 
reviews should be timebound with concrete milestones.
    Third, meeting our clean water infrastructure needs requires 
innovation. Communities around the country are facing daunting 
investment challenges. There are many technological solutions that can 
provide more efficient and less expensive ways to protect public health 
and the environment. Many such technologies would benefit rural and 
disadvantaged communities in particular, making access to clean water 
more affordable. Not only should EPA encourage the use of these 
innovations through targeted project funding and streamlined approvals, 
but it should also provide financial assistance for their development. 
Money invested in innovation will be recouped with cost savings.
    Fourth, permitting delays remain a problem for both manufacturers 
and utilities. Even in emergency situations environmental reviews of 
clean water projects can drag on for six months or more, leaving 
communities at risk in the interim. Similarly, obstacles and delays in 
the permitting of capacity expansions, such as those that will result 
from EPA's new PM 2.5 regulation, will diminish the ability of American 
industry to produce the products essential to infrastructure projects 
across the country.
    Fifth, meeting our clean water infrastructure needs requires 
technical assistance. Accessing the SRFs is sometimes a very complex 
process that requires specialized expertise, which is often lacking in 
the communities that could benefit most. That is why for drinking water 
infrastructure the Chamber and its partners developed the Small and 
Disadvantaged Community Water Funding Roadmap to identify the latest 
public and private technical assistance resources that will help 
communities access the water and resilience funding in the BIL. You may 
have seen that our colleague George Hawkins, who is a leading thinker 
in this area, received an EPA grant to reach the disadvantaged 
communities. The Chamber also was a strong supporter of the recent FEMA 
designations of 483 Community Disaster Resilience Zones in communities 
nationwide that can help direct funding to the most vulnerable and the 
most at risk.
    Technical assistance funding for disadvantaged and rural 
communities from the Infrastructure Law has been very slow. For 
example, the Environmental Finance Centers, a major source of the new 
technical assistance, were not online until November 2022. That means 
we were already in the second year of the five-year BIL funding window 
before technical assistance was provided to small communities to help 
them plan projects and get on state Intended Use Plans.
    Sixth, wastewater is often viewed as a source of pollution, but 
should be promoted as a resource to provide sustainable nutrients and 
energy. At a time when climate impacts are exacerbating water scarcity 
in regions across our nation and the world, private sector innovation 
and solutions are needed to more effectively reuse and recycle 
wastewater for various applications--from flushing toilets to 
irrigation and process water.
    The Chamber last year launched the Industrial Water Reuse Champions 
Awards to recognize companies that are leading in this effort and to 
encourage their peers to join. The initial winners represented sectors 
across the economy--Apache, Intel, and PepsiCo.
    Finally, addressing the aging water workforce should be a top 
priority for our nation. Congress should build on the current EPA 
efforts and increase coordination with the U.S. Department of Labor and 
other agencies in developing a workforce development program that will 
help American workers get the skills and credentials needed to support 
the operation, maintenance, and improvement of the water and wastewater 
systems of tomorrow. Congress should enact policies that simplify the 
award and interstate recognition (e.g., reciprocity and portability) of 
water operator and engineering certifications.
    Thank you again for the opportunity to testify. I would be happy to 
answer any questions.

    Mr. Rouzer. Ms. Hammer.

 TESTIMONY OF REBECCA HAMMER, DEPUTY DIRECTOR OF FEDERAL WATER 
           POLICY, NATURAL RESOURCES DEFENSE COUNCIL

    Ms. Hammer. Thank you, Chairman Rouzer, Ranking Members 
Larsen and Napolitano, and members of the committee. I 
appreciate the opportunity to testify today. My name is Becky 
Hammer. I am the deputy director of Federal water policy for 
the Natural Resources Defense Council.
    NRDC is a nonprofit organization working to protect public 
health and ensure a safe, sustainable environment for all 
people. At NRDC, I advocate for policies to ensure that 
everyone in this country has access to wastewater and 
stormwater infrastructure that works.
    No matter where they are located, these systems should 
provide communities with clean waterways, safe sanitation, and 
protection from urban flooding without imposing unaffordable 
costs on families. Unfortunately, that is not the reality for 
far too many people. Across the United States, polluted runoff 
and sewage degrade sources of drinking water, while rainwater 
floods streets and homes. Aging systems are stressed by 
changing precipitation patterns and population shifts. In some 
rural areas, a complete lack of sanitation infrastructure has 
created a public health crisis.
    The Infrastructure Investment and Jobs Act, IIJA, also 
known as the Bipartisan Infrastructure Law, or BIL--this law 
has too many names--took a significant step toward tackling 
these problems by providing a critical and historic investment 
in America's wastewater and stormwater systems. I want to take 
this opportunity to thank all the Members who worked on and 
supported that legislation. The funding it provided will make a 
real difference to many communities.
    Yet even after this influx of supplemental funds, our 
country still faces an enormous backlog of clean water 
infrastructure needs that can be measured in the hundreds of 
billions of dollars. In many places, State and local resources 
are simply insufficient to cover these costs. We should not 
accept communities having to live with health and environmental 
burdens when we have the ability to help.
    I ask the members of this committee to work with your 
colleagues who have responsibility for appropriations to ensure 
that the Clean Water State Revolving Fund receives the full 
funding authorized in IIJA. Recent proposals to reduce 
appropriations would undercut this committee's work to provide 
much-needed resources to cities and towns that have been 
waiting years or even decades for assistance.
    I also echo the concerns of the other witnesses about the 
practice of taking water infrastructure earmarks out of the 
State allotment. This practice results in unpredictable 
fluctuations in State funding, frustrates public engagement and 
long-term planning, and reduces the number of grants available 
to disadvantaged communities. Any clean water project earmarks 
should be additional to SRF State allotments.
    On the subject of disadvantaged communities, IIJA's 
requirement to distribute 49 percent of the supplemental funds 
as additional subsidy that does not have to be repaid is a 
game-changer for small, rural, and low-income communities that 
cannot afford a traditional SRF loan. These communities have 
faced obstacles to accessing SRF assistance for too long. By 
asking EPA and the States to make a greater effort to reach 
them, IIJA has created an enhanced awareness of the need to 
make the program more inclusive moving forward.
    To build on that progress, Congress should not only 
maintain existing statutory requirements for additional 
subsidization, but also raise the limit beyond 30 percent of 
the annual capitalization grant so that States with the 
financial capacity to distribute more than that can exercise 
their discretion to do so.
    At the same time, Congress should provide resources to EPA 
for technical assistance to help State SRF managers eliminate 
policy barriers that continue to exclude disadvantaged 
communities from the program, such as caps on the amount of 
subsidy an individual applicant can receive.
    Critically, Congress should also establish a permanent 
Federal water and sewer assistance program. Communities facing 
affordability challenges may defer implementing infrastructure 
projects to avoid raising rates on residents. Assistance for 
low-income households can not only help people afford basic 
needs like water and sewer service, but also put communities in 
a better position to access SRF assistance.
    As Congress works to establish a permanent program, it 
should also provide additional bridge funding for the temporary 
LIHWAP program that is about to expire.
    I want to make two final points before I conclude.
    First, Congress should make the Green Project Reserve a 
permanent feature of the Clean Water SRF to guarantee continued 
support for sustainable projects that provide multiple benefits 
to communities.
    And second, Congress should work with EPA to improve 
transparency around IIJA spending decisions and SRF funding 
more generally by publishing project-level data in an online 
dashboard. The American public deserves to know how these 
historic funds are being used.
    I would be happy to discuss any of these recommendations in 
more detail. Thank you.
    [Ms. Hammer's prepared statement follows:]

                                 
Prepared Statement of Rebecca Hammer, Deputy Director of Federal Water 
               Policy, Natural Resources Defense Council
    Chairman Graves, Ranking Member Larsen, Subcommittee Chair Rouzer, 
Subcommittee Ranking Member Napolitano, and members of the 
Subcommittee:
    Thank you for the opportunity to testify today about the importance 
of robust federal funding and support for our nation's clean water 
infrastructure. My name is Rebecca Hammer, and I am the deputy director 
of federal water policy for the Natural Resources Defense Council 
(NRDC). NRDC is an international, non-profit environmental organization 
working to protect the world's natural resources, improve public 
health, and ensure a safe and sustainable environment for all.
                          Summary of Testimony
    The Infrastructure Investment and Jobs Act of 2021 (IIJA) was a 
historic bipartisan investment in our nation's infrastructure that will 
make progress toward our goals of providing every person in this 
country with clean waterways and safe sanitation, ensuring the long-
term viability of our wastewater and stormwater systems in a changing 
environment, and lifting up families and communities who struggle to 
bear the burden of unaffordable water and sewer costs. In my testimony, 
I will focus on the importance of building upon the momentum of IIJA to 
continue closing the clean water infrastructure gap, ensuring that 
funds support underserved communities and sustainable projects, and 
providing transparency in spending decisions.
    To achieve these goals, NRDC recommends:
      Funding the Clean Water State Revolving Fund (CWSRF) at 
the full IIJA-authorized level, at minimum, with any congressionally 
directed spending provided in addition to that funding.
      Raising the statutory limit on the amount of additional 
subsidization that states are allowed to provide.
      Providing resources for the Environmental Protection 
Agency (EPA) to provide technical assistance to state CWSRF managers on 
best practices for improving the accessibility and fairness of their 
programs.
      Establishing a permanent federal water and sewer 
assistance program, and providing additional funding for the existing 
temporary Low-Income Household Water Assistance Program (LIHWAP) as a 
bridge to the establishment of that permanent program.
      Making the Green Project Reserve a permanent feature of 
the CWSRF by codifying it in statute.
      Providing more resources for outreach and technical 
assistance to potential Green Project Reserve applicants.
      Requiring and supporting enhanced public transparency 
around IIJA-funded CWSRF projects and technical assistance efforts.
   America's Wastewater and Stormwater Systems Face Challenges That 
 Threaten Their Ability to Provide Clean Water, Thriving Communities, 
                       and a Healthy Environment
    All people in America should have access to wastewater and 
stormwater infrastructure that works. No matter where they are located, 
these systems should provide communities with clean waterways, 
effective sanitation, and protection from urban flooding.
    Yet in many areas, our nation's infrastructure is not up to the 
task of meeting those objectives. Pipes, septic tanks, and treatment 
facilities have exceeded their intended lifespans and are breaking 
down. As population growth puts stress on wastewater systems, fifteen 
percent of treatment plants have already reached or exceeded their 
design capacity.\1\ Elsewhere, communities affected by depopulation and 
disinvestment struggle to update their infrastructure to meet existing 
demand.\2\ Hundreds of cities and towns are still served by combined 
sewer systems that overflow into nearby rivers and lakes when it rains, 
and many flood control measures are not capable of handling the 
increasingly vast quantities of runoff generated by sprawling 
development.
---------------------------------------------------------------------------
    \1\ American Society of Civil Engineers, 2021 Report Card for 
America's Infrastructure: Wastewater, https://
infrastructurereportcard.org/wp-content/uploads/2020/12/Wastewater-
2021.pdf.
    \2\ See Rachel Butts and Stephen Gasteyer, ``More Cost per Drop: 
Water Rates, Structural Inequality, and Race in the United States--The 
Case of Michigan,'' Environmental Practice 13, no. 4 (2011): 386-95, 
https://doi.org/10.1017/S1466046611000391.
---------------------------------------------------------------------------
    As a result, sewage spills foul our waterways, polluted stormwater 
degrades once-productive ecosystems, and rainwater floods our streets 
and homes. The American Society of Civil Engineers rated the nation's 
wastewater infrastructure a D+, and its stormwater infrastructure a D, 
in its most recent infrastructure report card.\3\
---------------------------------------------------------------------------
    \3\ American Society of Civil Engineers, 2021 Report Card for 
America's Infrastructure, https://infrastructurereportcard.org/.
---------------------------------------------------------------------------
    Some rural communities do not have access even to inadequate sewer 
infrastructure, as they lack functional wastewater treatment 
entirely.\4\ According to the U.S. Census Bureau's American Housing 
Survey, 180,000 households use rudimentary sewage disposal approaches 
like outhouses and chemical toilets, and 35,000 households have no form 
of wastewater treatment at all.\5\ Exposure to raw sewage can cause 
disease outbreaks and hookworm infections. The situation is especially 
dire in regions such as the Black Belt of Alabama, where homes have 
``straight pipes'' discharging untreated waste into their yards; 
Hawaii, where cesspools are leaking 53 million gallons of untreated 
waste into streams, oceans, and drinking water every day; and 
indigenous communities in the Southwest and Alaska that lack plumbing 
and sanitation infrastructure, just to name a few examples.\6\
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    \4\ EPA, ``Closing America's Wastewater Access Gap Community 
Initiative,'' https://www.epa.gov/water-infrastructure/closing-
americas-wastewater-access-gap-community-initiative.
    \5\ U.S. Environmental Protection Agency, Office of Water, Report 
to Congress on the Prevalence Throughout the U.S. of Low- and Moderate-
Income Households Without Access to a Treatment Works and the Use by 
States of Assistance Under Section 603(c)(12) of the Federal Water 
Pollution Control Act (July 2021), p. 6, Table 2, https://www.epa.gov/
system/files/documents/2022-01/low-mod-income-without-treatment_report-
to-congress.pdf.
    \6\ See Dennis Pillion, ``This Is Unacceptable: EPA Chief Visits 
Failing Sewage Systems in Alabama Black Belt,'' AL.com, Mar. 5, 2022, 
https://www.al.com/news/2022/03/this-is-unacceptable-epa-chief-visits-
failing-sewage-systems-in-alabama-black-belt.html; Hawaii Department of 
Health, Cesspools in Hawai'i, https://health.hawaii.gov/wastewater/
home/cesspools/; Dig Deep & U.S. Water Alliance, Closing the Water 
Access Gap in the United States (2019), https://
uswateralliance.org/sites/uswateralliance.org/files/publications/
Closing%20the%20Water
%20Access%20Gap%20in%20the%20United%20States_DIGITAL.pdf.
---------------------------------------------------------------------------
    Climate change is adding further stress to our wastewater and 
stormwater systems, even those in good condition. Wastewater treatment 
plants are typically located at low elevations and along coastlines, 
which makes them particularly susceptible to floods and sea level rise. 
When tanks and pipes are inundated, these facilities can discharge raw 
sewage into nearby communities and waterways. In 2017, flooding from 
Hurricane Harvey caused 40 wastewater treatment facilities to become 
inoperable and led to the release of 23 million gallons of untreated 
wastewater.\7\ Even smaller flooding events, if they occur more often, 
can impose significant costs, such as frequent pumping to keep parts 
dry and a reduced lifespan of components exposed to water. One study 
estimated that four million people in the U.S. could lose access to 
municipal wastewater services with 30 centimeters (around 1 foot) of 
sea level rise; this estimate rises to 31 million people if sea level 
rise reaches 180 centimeters (around 6 feet).\8\
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    \7\ Texas Commission on Environmental Quality, Sanitary Sewer 
Overflows from Hurricane Harvey, https://www.tceq.texas.gov/response/
hurricanes/sanitary-sewer-overflows; Hurricane Harvey: Status Summary 
of Impacted Public Drinking Water and Wastewater Systems, https://
www.tceq.texas.gov/assets/public/response/hurricanes/hurricane-harvey-
tracking-summary.pdf.
    \8\ Michelle Hummel et al., ``Sea Level Rise Impacts on Wastewater 
Treatment Systems Along the U.S. Coasts,'' Earth's Future (2018), 
https://agupubs.onlinelibrary.wiley.com/doi/10.1002/2017EF000805.
---------------------------------------------------------------------------
    As heavy precipitation events and extreme storms grow more 
frequent, increasingly disruptive flood events are occurring in 
communities across the country. Most stormwater systems are designed to 
handle the ``10-year'' or ``100-year'' storm, concepts that climate 
change has rendered obsolete. Urban flooding already results in $9 
billion in damages each year, a figure that is certain to grow unless 
we take swift action to adapt and modernize our infrastructure.\9\ 
These storms also impact water quality: as more intense precipitation 
leads to increased runoff, more stormwater pollution is washed into our 
waterways, including sediments, nitrogen from agriculture, disease 
pathogens, pesticides, herbicides, and more. This pollution imposes 
steep costs on communities, including higher treatment costs for the 
two-thirds of America's drinking water that comes from rivers, streams, 
and lakes.
---------------------------------------------------------------------------
    \9\ National Academies of Sciences, Engineering, and Medicine, 
Framing the Challenge of Urban Flooding in the United States (2019), 
https://www.nap.edu/catalog/25381/framing-the-challenge-of-urban-
flooding-in-the-united-states.
---------------------------------------------------------------------------
    While infrastructure challenges are widespread, they affect certain 
communities more severely than others. Across the country, 
socioeconomically disadvantaged people face greater challenges in 
accessing properly functioning sanitation systems and flooding 
controls.\10\ Conventional approaches to paying for infrastructure--
which rely on local sources of revenue to fund investments--have 
deepened inequities along racial and economic lines. For example, in 
many cities, historically redlined neighborhoods are exposed to a 
higher risk of urban flooding than other areas.\11\
---------------------------------------------------------------------------
    \10\ See Amy Vanderwarker, ``Water and Environmental Justice,'' 
chapter 3 in Juliet Christian-Smith et al., A Twenty-First Century U.S. 
Water Policy (Oxford, U.K.: Oxford University Press, 2012), 52-89, 
https://pacinst.org/wp-content/uploads/2013/02/water_and_environmental_
justice_ch3.pdf.
    \11\ Kriston Capps and Christopher Cannon, ``Redlined, Now 
Flooding,'' Bloomberg CityLab, March 15, 2021, https://
www.bloomberg.com/graphics/2021-flood-risk-redlining/.
---------------------------------------------------------------------------
    In light of these varied threats, federal support for wastewater 
and stormwater infrastructure is more important than ever. We must 
ensure that all communities have the resources they need to build, 
maintain, and operate systems that can serve their residents 
effectively and affordably, now and in the future.
  The Infrastructure Investment and Jobs Act (IIJA) Provided Historic 
               Funding to Communities, But More Is Needed
    IIJA's appropriation of $11.7 billion in supplemental funding for 
the Clean Water State Revolving Fund (CWSRF), our nation's largest 
dedicated source of wastewater and stormwater financing, was a much-
needed investment in American communities' clean water infrastructure. 
That funding--distributed over a five-year period--will support efforts 
across the country to clean up waterways and provide safe sanitation. 
States have already begun to award IIJA funds to projects that will fix 
broken sewer pipes and pumps, upgrade treatment plants to provide 
greater pollution reductions, extend service to areas that lack 
centralized wastewater treatment, restore wetlands and floodplains to 
prevent flooding, implement energy and water efficiency upgrades, and 
eliminate combined sewer overflows.
    These funds are providing a lifeline for many communities that have 
been waiting for assistance, in some cases for years or even decades. 
Yet despite the progress this investment will make toward addressing 
our clean water infrastructure backlog, an enormous gap still exists.
    IIJA's $11.7 billion in CWSRF funds represent a small fraction of 
the $271 billion minimum that communities are estimated to need in 
order to maintain and repair their wastewater and stormwater 
infrastructure over the next twenty years.\12\ In fact, the true need 
is certainly much higher, as that EPA dollar figure is now a decade out 
of date and is widely agreed to be a substantial underestimate--it does 
not account for inflation or include a reliable inventory of necessary 
nonpoint source projects. It also does not consider the resources 
needed to adapt to climate change, which utilities say could add 
hundreds of billions of dollars in additional water infrastructure 
funding requirements through the middle of the century.\13\ A new EPA 
survey of clean water infrastructure needs will be released next year, 
which should give us a better understanding of the true level of 
investment required.
---------------------------------------------------------------------------
    \12\ U.S. Environmental Protection Agency, Clean Watershed Needs 
Survey 2012 Report to Congress, https://www.epa.gov/cwns/clean-
watersheds-needs-survey-cwns-report-congress-2012.
    \13\ National Association of Clean Water Agencies & Association of 
Metropolitan Water Agencies, Confronting Climate Change: An Early 
Analysis of Water and Wastewater Adaptation Costs (2009), https://
www2.nacwa.org/images/stories/public/2009-10-28ccreport.pdf.
---------------------------------------------------------------------------
    No matter what the specific estimate is, it is clear that need far 
outstrips the resources that have been provided. Even accounting for 
the one-time influx of supplemental IIJA funds, the federal 
government's contribution to water infrastructure spending as a share 
of total investment has fallen dramatically over the last several 
decades.\14\ When federal support is unavailable, state and local 
governments are left to pick up the tab. This burden has strained 
municipal and utility budgets across the country, and many important 
projects are not being implemented as a result. The Value of Water 
Campaign has estimated the annual funding gap for drinking water, 
wastewater, and stormwater infrastructure--in other words, the gap 
between actual spending and estimated needs each year--is $82 
billion.\15\ This figure tells us that relying on state and local 
resources is not an adequate way to fund infrastructure that is 
necessary to keep our families safe and healthy.
---------------------------------------------------------------------------
    \14\ Value of Water Campaign, The Economic Benefits of Investing in 
Water Infrastructure (2017), p. 5, http://thevalueofwater.org/sites/
default/files/Economic%20Impact%20of%20Investing
%20in%20Water%20Infrastructure_VOW_FINAL_pages.pdf.
    \15\ Id. at p. 2.
---------------------------------------------------------------------------
    Because of this heavy reliance on local funds, the quality of a 
community's infrastructure largely depends on the financial capacity of 
its residents. Communities with less wealth have been forced to 
postpone or forego important projects, endangering public health and 
environmental quality. Other communities have sought alternative, more 
expensive financing for their projects, which requires them to raise 
rates and jeopardize the affordability of service for their customers. 
Neither alternative is acceptable.
    In order to bring relief to communities and ensure that all people 
in this country have access to high-quality infrastructure, Congress 
should fund the Clean Water State Revolving Fund at least at the full 
IIJA-authorized level. CWSRF appropriations in the past two years have 
fallen short of the authorized amount by more than half. Concerningly, 
recent budget proposals for FY24 would slash appropriated funding for 
the program even further. The intent of IIJA was to supplement current 
funding levels and provide help to more communities than ever before, 
not to offset steep cuts to annual spending and leave overall program 
investments barely holding steady.
    Not only is total program funding falling short, but the recent 
practice of diverting that funding away from state CWSRF programs 
toward congressionally directed spending is particularly concerning. In 
FY23, more than half of the total CWSRF appropriation was directed to 
specific earmarked projects, leaving less than half for states to 
allocate through their programs.\16\ Proposed FY24 spending bills would 
increase the proportion of funding directed to earmarks even more 
dramatically.
---------------------------------------------------------------------------
    \16\ See Tony Room, ``States Lose Federal Water Funds as Lawmakers 
Redirect Money to Pet Projects,'' Washington Post, July 24, 2023, 
https://www.washingtonpost.com/business/2023/07/24/water-
infrastructure-congress-earmarks/.
---------------------------------------------------------------------------
    This shift has several negative consequences. First, it circumvents 
the existing allotment formula prescribing how much CWSRF funding flows 
to states each year, creating a situation where some states come out 
ahead and others lose.\17\ The unpredictability of these fluctuations 
creates confusion and makes it difficult for states to implement their 
long-term infrastructure improvement plans. Second, while funds that 
flow through state CWSRF programs are subject to public engagement and 
oversight through the annual adoption of the state's intended use plan, 
there is no formal opportunity for the public to weigh in on decisions 
around earmarks, frustrating transparency and accountability. Third, 
the CWSRF program requirements that apply to state-distributed funds, 
such as the reservation of grant funds for disadvantaged communities, 
do not apply to congressionally directed spending. This can result in 
wealthy, politically connected communities receiving earmark grant 
funds they do not need and would not have qualified for under normal 
CWSRF rules, leaving such funds unavailable for lower-income 
communities that depend on them.\18\
---------------------------------------------------------------------------
    \17\ Id. (noting that 38 states have been shortchanged about $660 
million in DWSRF and CWSRF funding combined over the last two years due 
to earmarks).
    \18\ Id. (noting that in some states, very few congressionally 
directed spending projects have been located in disadvantaged 
communities).
---------------------------------------------------------------------------
    While many congressionally directed spending projects are 
worthwhile projects with positive benefits for communities, funding for 
such projects should come on top of the regular annual CWSRF 
appropriation, rather than being carved out of it.
    Reducing appropriations and diverting funds toward earmarks would 
diminish the impact of IIJA's historic funds and undermine that 
legislation's purpose. If we want to make a meaningful dent in our 
country's infrastructure needs, we must increase--not decrease--CWSRF 
annual appropriations. We must also fully fund the other important 
programs authorized in IIJA, such as the Sewer Overflow and Stormwater 
Reuse Municipal Grants Program and the Household Decentralized 
Wastewater Grant Program. Alongside these funds, Congress should 
provide additional resources to EPA and state CWSRF administrators so 
they can continue to build capacity to operate these programs 
efficiently.
    A recent national poll of U.S. voters shows that the vast majority 
of people (68%) believe water infrastructure should be a top priority 
for investment by the federal government, a higher positive response 
rate than for any other type of infrastructure.\19\ Increasing federal 
funding for water systems would not only support public health and the 
environment, it would also generate billions of dollars in economic 
activity and create thousands of jobs.\20\ And it would make funds 
available for beneficial but cost-intensive infrastructure such as 
water recycling and reuse projects that can help arid regions adapt to 
conditions of increasing water scarcity. Members of this Committee and 
Subcommittee should work with their colleagues on the Appropriations 
Committee to ensure that substantially enhanced funding for the CWSRF 
and other clean water programs is provided in FY24 and beyond.
---------------------------------------------------------------------------
    \19\ Water Hub, National Voter Poll on Water Access, Affordability, 
and Safety (Aug. 2023), https://waterhub.org/wp-content/uploads/2023/
09/August-2023-Polling-Memo.pdf.
    \20\ Value of Water Campaign, The Economic Benefits of Investing in 
Water Infrastructure.
---------------------------------------------------------------------------
  Congress Should Support Efforts to Direct Funding to Disadvantaged 
          Communities and Improve Water & Sewer Affordability
    A key component of IIJA's investment in clean water infrastructure 
was its requirement that states distribute 49 percent of the 
supplemental funds in the form of additional subsidization--grants, 
principal forgiveness, and other forms of assistance that recipients do 
not have to repay.\21\ IIJA also amended the Clean Water Act to require 
that states distribute at least 10 percent of their annual CWSRF 
capitalization grants in the form of additional subsidization each 
year, leaving in place the statute's existing maximum limit of 30 
percent.\22\
---------------------------------------------------------------------------
    \21\ Pub. L. No. 117-58, Title VI.
    \22\ Pub. L. No. 117-58, Sec.  50210(a)(1)(B) (codified at 33 
U.S.C. Sec.  1383(i)(3)(B)(i)(II)).
---------------------------------------------------------------------------
    Additional subsidization is a critical tool for ensuring that all 
communities can take advantage of CWSRF assistance. Communities with a 
small, declining, and/or low-income rate base often experience 
difficulty obtaining financing for infrastructure projects and in many 
cases cannot afford to pay back even a low-interest CWSRF loan. These 
jurisdictions may have the means to carry out priority projects only if 
they receive additional subsidization. As a result, additional 
subsidization facilitates high-impact projects that would not otherwise 
get built. This is what the CWSRF program is about at its core: 
ensuring that the environmental and public health benefits of good-
quality infrastructure are not a privilege for the few, but rather are 
accessible to everyone in this country, even those living in less 
affluent jurisdictions.
    Prior to IIJA, states distributed relatively little funding in the 
form of additional subsidization. From 2011 to 2020, for example, 
states distributed only about 4 percent of total assistance as 
additional subsidization ($2.6 billion out of $62.5 billion).\23\ Many 
CWSRF program managers have been hesitant to distribute funding that 
does not ``revolve'' as loan repayments because of concerns about the 
long-term viability of the state's fund. This perspective has led to 
state programs that are financially stable but are not serving the 
communities that need help the most, frustrating the purpose and goals 
of the CWSRF.
---------------------------------------------------------------------------
    \23\ EPA, Clean Water SRF Program Information: National Summary, 
February 2022, 15-16, line 109; 19-20, line 128; and 65-66, lines 321 
and 323, https://www.epa.gov/system/files/documents/2022-03/us21.pdf.
---------------------------------------------------------------------------
    In its focus on providing more funding as grants and principal 
forgiveness, IIJA is helping to bring about a shift in mindset that is 
long overdue. Requiring nearly half of the supplemental funds to be 
distributed as additional subsidization has had a significant impact on 
the way EPA and states implement the CWSRF program. It has raised 
awareness of the need to adopt policies that make the program 
accessible to a wider range of potential recipients and to conduct 
outreach to communities that have not participated in the past. 
Implementing this additional subsidization requirement has proven to be 
feasible and has already resulted in communities receiving CWSRF 
assistance that have never received it before.
    Congress should build upon IIJA's progress in this area by raising 
the permanent statutory limit on additional subsidization beyond 30 
percent of the annual capitalization grant. Given the immense positive 
impact of these funds, states should have the discretion to distribute 
more subsidization than this arbitrarily low threshold allows, assuming 
they determine that they have the community demand and financial 
capacity to do so.
    That said, even if greater amounts of additional subsidization 
become available, many states still have policies on the books--in 
their intended use plans (IUPs), regulations, and state statutes--that 
make it difficult for certain underserved communities to access that 
funding. For example, many states cap the amount of additional 
subsidization an individual recipient can receive, excluding the 
neediest jurisdictions from accessing CWSRF funds. Some states set this 
cap as low as 20 or 30 percent of the total award. A low-income 
community that cannot finance the remaining 70 or 80 percent of the 
project costs on its own will not be able to access CWSRF assistance 
with such a cap in place. Other state policies that make it harder for 
communities to obtain funding include limiting subsidization 
eligibility based on strict population thresholds, not allowing 
disadvantaged areas within non-disadvantaged communities to qualify for 
subsidization, and failing to account for affordability or financial 
need within the state's project ranking system.
    Policies like these have led to inequities in the distribution of 
past years' CWSRF funding. A nationwide analysis of CWSRF awards 
between 2011 and 2020 found that small and minority communities were 
statistically less likely to receive assistance.\24\ Federal guidance 
is needed to encourage and assist states in updating their policies to 
ensure that all communities have a shot at obtaining CWSRF funds. 
Congress should provide resources for EPA to provide technical 
assistance to state CWSRF managers on best practices for improving 
accessibility and fairness in their programs.
---------------------------------------------------------------------------
    \24\ Katy Hansen, EPIC & Becky Hammer, NRDC, A Fairer Funding 
Stream: How Reforming the Clean Water State Revolving Fund Can 
Equitably Improve Water Infrastructure Across the Country (2022), 
https://www.nrdc.org/sites/default/files/clean-water-state-revolving-
fund-infrastructure-report.pdf.
---------------------------------------------------------------------------
    Beyond state program rules, another policy mechanism to make it 
easier for disadvantaged communities to access CWSRF funds is financial 
assistance for low-income customers. Water and wastewater utility bills 
have been increasing at more than three times the rate of inflation in 
recent years.\25\ Researchers have found that 10 percent of households 
spend more than 4.5% of their annual income on essential water and 
sewer services.\26\ Communities facing greater affordability challenges 
often defer implementing infrastructure projects to avoid raising rates 
on vulnerable residents. Conversely, communities with more affordable 
sewer rates that do not unduly burden their customers are in a better 
position to access CWSRF assistance and carry out needed construction 
and maintenance work.
---------------------------------------------------------------------------
    \25\ David Harrison, ``Why Your Water Bill Is Rising Much Faster 
Than Inflation,'' The Wall Street Journal, March 15, 2018, https://
www.wsj.com/articles/who-is-paying-to-fix-outdated-water-and-sewer-
systems-you-are-1521106201.
    \26\ Diego S. Cardoso & Casey J. Wichman, ``Water Affordability in 
the United States,'' Water Resources Research, Vol. 58, Issue 12, 
November 2022, https://agupubs.onlinelibrary.wiley.com/doi/abs/10.1029/
2022WR032206.
---------------------------------------------------------------------------
    In order to support water and sewer affordability in all 
communities, Congress should establish a permanent federal water and 
sewer assistance program. In the meantime, Congress should also provide 
additional funding in FY24 for the existing temporary Low-Income 
Household Water Assistance Program (LIHWAP) as a bridge to the 
establishment of that permanent program. Through the third quarter of 
FY23, LIHWAP helped over 1.1 million households nationwide afford their 
water and sewer bills.\27\ Recent national polling found that 79 
percent of voters support the federal government helping lower-income 
families with their water and sewer bills, and 76 percent support 
extending LIHWAP funding when the program expires at the end of this 
fiscal year.\28\ Drawing from experience with program implementation to 
date, any LIHWAP funding moving forward should require improvements to 
administration, such as automatic enrollment of households that already 
participate in other income-qualified programs.
---------------------------------------------------------------------------
    \27\ Quarterly LIHWAP Report Snapshot, https://lihwap-hhs-
acf.opendata.arcgis.com/pages/quarterly-snapshot.
    \28\ Water Hub, National Voter Poll on Water Access, Affordability, 
and Safety, p. 1-2.
---------------------------------------------------------------------------
     Congress Should Support Increased Investment in Green Projects
    A priority in CWSRF program implementation over the past decade and 
a half has been to encourage applicants to carry out sustainable 
``green'' projects: green stormwater infrastructure, water and energy 
efficiency upgrades, and other environmentally innovative activities. 
These projects can provide wide-ranging benefits to communities. For 
example, green infrastructure reduces stormwater volumes and pollutant 
loads, leading to cleaner waterways, reduced wastewater treatment needs 
for combined sewer systems, reduced flooding, and increased groundwater 
recharge. It is frequently more cost-effective than gray 
infrastructure, so it can reduce the costs of water quality compliance 
and flood control for communities and ratepayers.\29\
---------------------------------------------------------------------------
    \29\ Environmental Protection Agency, Green Infrastructure Cost-
Benefit Resources, https://www.epa.gov/green-infrastructure/green-
infrastructure-cost-benefit-resources.
---------------------------------------------------------------------------
    For its first two decades, the CWSRF did not fund many green 
projects. According to the EPA, many states had ``little or no 
history'' of funding such projects because their programs focused on 
traditional infrastructure, or because state law presented 
obstacles.\30\ Then, in 2009, Congress passed the American Recovery and 
Reinvestment Act (ARRA). ARRA provided supplemental appropriations for 
the CWSRF and required that states allocate at least 20 percent of 
these new funds as a Green Project Reserve (GPR) for green 
infrastructure, water efficiency, energy efficiency, and other 
environmentally innovative projects. It also made GPR projects eligible 
for additional subsidization.\31\ Since 2009, Congress has extended the 
GPR in appropriations acts each year, though starting in FY2012 the 
requirement was reduced from 20 percent to 10 percent of the state's 
annual CWSRF capitalization grant.\32\
---------------------------------------------------------------------------
    \30\ EPA, ARRA Clean Water State Revolving Fund Green Project 
Reserve Report (2012), p. 8, https://www.epa.gov/sites/production/
files/2015-04/documents/arra_green_project_reserve_
report.pdf.
    \31\ American Recovery and Reinvestment Act of 2009, P.L. 111-5 
(123 Stat. 169).
    \32\ See Congressional Research Service, ``Greening'' EPA's Water 
Infrastructure Programs through the Green Project Reserve (2016), 
https://www.everycrsreport.com/reports/IN10540.html.
---------------------------------------------------------------------------
    The establishment of the Green Project Reserve led many states to 
fund green projects with CWSRF resources for the first time. Over the 
past fourteen years, the GPR has funded hundreds of beneficial green 
infrastructure projects across the country--everything from urban 
reforestation and wetlands preservation to green roofs and roadway 
retrofits. Additionally, the GPR has supported energy efficiency and 
water efficiency projects that advance clean water objectives by 
upgrading the efficiency of pumps and motors, powering clean water 
facilities with renewable energy from on-site resources, and reducing 
both customer and facility water use. Decentralized wastewater 
treatment solutions in areas lacking access to sanitation are also 
eligible for the GPR in the ``environmentally innovative'' 
category.\33\
---------------------------------------------------------------------------
    \33\ EPA, ``2012 Clean Water State Revolving Fund 10% Green Project 
Reserve: Guidance for Determining Project Eligibility,'' pp. 11-12, 
https://www.epa.gov/sites/production/files/2015-04/documents/
green_project_reserve_eligibility_guidance.pdf.
---------------------------------------------------------------------------
    The EPA determined last year that if the Green Project Reserve is 
included in an annual appropriations bill, it applies to the IIJA 
capitalization grants for the corresponding fiscal year.\34\ Green 
projects are also eligible for the 49% of supplemental IIJA CWSRF funds 
that must be distributed as additional subsidization (discussed 
above).\35\ As a result, IIJA has created strong incentives for the 
implementation of sustainable infrastructure and has already funded 
dozens of GPR-eligible projects.
---------------------------------------------------------------------------
    \34\ Radhika Fox, EPA Assistant Administrator, Memorandum: 
Implementation of the Clean Water and Drinking Water State Revolving 
Fund Provisions of the Bipartisan Infrastructure Law (March 2022), p. 
22, https://www.epa.gov/system/files/documents/2022-03/combined_srf-
implementation-memo_final_03.2022.pdf.
    \35\ Id., p. 3.
---------------------------------------------------------------------------
    Despite the program's growing impact, overall the CWSRF has been 
underutilized as a funding source for green projects. Since the 
establishment of the Green Project Reserve in 2009, EPA data indicate 
that only 10.6 percent of total CWSRF assistance has gone to GPR 
projects ($10.2 billion out of $95.7 billion).\36\
---------------------------------------------------------------------------
    \36\ EPA, Clean Water SRF Program Information: National Summary 
(February 2023), https://www.epa.gov/system/files/documents/2023-02/
us.pdf.
---------------------------------------------------------------------------
    Under the existing Green Project Reserve requirement, states do not 
have strong incentives to educate potential applicants about the 
benefits of green projects and the availability of GPR funding, nor to 
assist them with their funding applications. The current 10 percent 
requirement only applies to the extent that a state receives 
``sufficient eligible project applications.'' \37\ EPA has interpreted 
this rule to require a ``good faith solicitation effort'' by the state 
to identify eligible GPR projects, but the state's annual open 
solicitation for CWSRF projects is deemed to meet the requirement, even 
if the state does not conduct any outreach on the Green Project Reserve 
specifically.\38\ This interpretation largely takes the burden off the 
state CWSRF program to actively solicit potential GPR projects. As a 
result, states sometimes fail to meet the GPR requirement. For example, 
in 2020 Florida fell short of the requirement because it did not 
receive sufficient project applications.\39\ Oregon did not fund a 
single GPR project that year.\40\ Missouri is two years behind on 
awarding its GPR dollars.\41\
---------------------------------------------------------------------------
    \37\ See Consolidated Appropriations Act 2023, p. 335, https://
www.congress.gov/117/plaws/publ328/PLAW-117publ328.pdf.
    \38\ See EPA, Procedures for Implementing Certain Provisions of 
EPA's Fiscal Year 2012 Appropriations Affecting the Clean Water and 
Drinking Water State Revolving Fund Programs, p. 3, https://
www.epa.gov/sites/production/files/documents/
final_fy12_srf_guidelines_1.pdf.
    \39\ Florida Department of Environmental Protection, CWSRF 2020 
Annual Report, p. 13, https://floridadep.gov/sites/default/files/
CWSRF%20Annual%20Report%202020.pdf.
    \40\ Oregon Department of Environmental Quality, Clean Water State 
Revolving Fund Annual Report, September 2020, p. 7, https://
www.oregon.gov/deq/wq/Documents/cwsrfAnnualRep
2020.pdf.
    \41\ Missouri Department of Natural Resources, Clean Water State 
Revolving Fund 2022 Annual Report, pp. 10, https://dnr.mo.gov/document-
search/fiscal-year-2022-clean-water-state-revolving-fund-annual-report.
---------------------------------------------------------------------------
    Additionally, the amount of funding that Congress requires states 
to allocate to the Green Project Reserve has fluctuated over time and 
has never been codified in statute, making potential applicants 
uncertain about whether GPR funds will be available for their projects 
in future years.\42\ This uncertainty depresses demand for funds.
---------------------------------------------------------------------------
    \42\ See Illinois EPA, Water Pollution Control Loan Program 2024 
Intended Use Plan (July 2023), p. 16, https://epa.illinois.gov/content/
dam/soi/en/web/epa/topics/grants-loans/state-revolving-fund/documents/
2024-iup/WPCLP-2024-IUP-Final.pdf (``Despite uncertainty regarding the 
Federal GPR requirement, the Illinois EPA is taking steps to 
institutionalize certain green infrastructure practices . . .'').
---------------------------------------------------------------------------
    To resolve this issue, Congress should end the process of inserting 
the Green Project Reserve requirement into annual appropriations bills 
and codify it permanently in statute. A statutory Green Project Reserve 
is needed to ensure that state CWSRF programs have a continued mandate 
to fund green projects. As pre-2009 history shows, without the GPR 
requirement it is likely that fewer green projects will receive CWSRF 
assistance. Decades of implementation have proven that these projects 
offer significant benefits to utilities, ratepayers, the environment, 
and public health. Congress should affirm its durable support for them 
by writing the GPR into law.
    Finally, when states fall short of the Green Project Reserve 
minimum requirement, it isn't because there are no possible green 
projects for communities to implement. According to the EPA, many 
potential GPR applicants are simply unaware of the funding 
opportunities available.\43\ States can address this knowledge gap 
through marketing and outreach, but they need resources in order to do 
so. Small and disadvantaged communities need technical assistance to 
develop projects and complete applications, and this assistance 
requires resources as well. Congress should set aside more funding for 
states to build awareness and expertise among potential GPR applicants, 
with the goal of ensuring that no state ever falls short of its minimum 
Green Project Reserve requirement due to a lack of eligible project 
applications.
---------------------------------------------------------------------------
    \43\ EPA, Financing Green Infrastructure: A Best Practices Guide 
for the Clean Water State Revolving Fund (2015), p. 3, https://
www.epa.gov/sites/default/files/2016-01/documents/
final_gi_best_practices_guide_12-9-15.pdf.
---------------------------------------------------------------------------
    Congress Should Require Increased Transparency Around Spending 
                               Decisions
    With a federal investment as substantial and historic as IIJA, it 
is critical that the public understand which communities are receiving 
funds and what kinds of projects they are carrying out. At present, it 
is difficult to access information about states' CWSRF IIJA awards in a 
timely or efficient manner. There is no centralized public database of 
funded projects, so stakeholders must look at each state's intended use 
plan, one by one, and those plans do not always contain details on 
specific projects or the kind of consistent information that would make 
national data aggregation possible. This situation frustrates 
accountability for ensuring that IIJA's critical supplemental funding 
is being spent efficiently and equitably. Greater transparency around 
spending decisions is required in order to understand where policy 
reforms may be needed at the federal and state levels to improve 
program operations and achieve better results.
    Congress should direct EPA to publish all IIJA clean water 
infrastructure spending data--with the long-term goal of including all 
CWSRF award data, not limited to this supplemental funding--in a 
nationwide online database or dashboard that is updated on a frequent 
basis. The database should be searchable by state, county, and census 
tract and include other important standardized information such as the 
financial terms of the award, the project type and description, the 
recipient's eligibility to receive additional subsidization under the 
state's affordability criteria, and the project's eligibility under the 
Green Project Reserve. Such a requirement would improve EPA's ability 
to oversee, manage, and monitor this substantial investment of public 
funds. It would also be consistent with existing federal policies 
requiring agencies to assess the results of other government programs.
    Finally, it is important for the public to understand where IIJA's 
substantial technical assistance funding is going and what assistance 
providers are doing with it. The Biden administration has made several 
announcements over the past year about large grants distributed to 
Environmental Finance Centers and other entities to help communities 
access IIJA funds.\44\ The recipients of these grants should be 
required to publicly report on their activities, including the 
communities they assist and whether those communities are ultimately 
successful in obtaining IIJA funds. Information must be available to 
assess their performance so that EPA can make informed decisions about 
which providers to support in future years.
---------------------------------------------------------------------------
    \44\ See EPA, Water Technical Assistance, https://www.epa.gov/
water-infrastructure/water-technical-assistance-waterta.
---------------------------------------------------------------------------
    Congress should support all of these transparency, tracking, and 
reporting activities by providing the resources necessary to carry them 
out. Stronger reporting requirements could be implemented with little 
burden on CWSRF recipients if Congress provides adequate resources for 
data collection and instructs EPA to take the lead on gathering and 
aggregating the data.
                               * * * * *
    Thank you for the opportunity to testify today. NRDC looks forward 
to working with the Subcommittee on solutions to provide all 
communities with high-quality, sustainable, and affordable wastewater 
and stormwater infrastructure.

    Mr. Rouzer. Thank you very much. I have to say, you all get 
the gold star, the gold medal, whatever you want. I have never 
seen four panelists stay within 5 minutes.
    [Laughter.]
    Mr. Rouzer. Staff, have you ever seen all four stay within 
5 minutes?
    Mrs. Napolitano. And even [inaudible].
    Mr. Rouzer. I tell you what, you all--I applaud.
    [Laughter.]
    Mr. Rouzer. Anyway, I can assure you no Member of Congress 
can stay under 5 minutes.
    [Laughter.]
    Mr. Rouzer. So, with that, I will allocate 5 minutes to 
myself.
    So, Ms. Johnson, I am going to start with you. Obviously, 
it's no secret we have an aging infrastructure. The average age 
is 40 to 50 years old. That is just the average. I mentioned my 
town of Chadbourn in my district that has had a system in place 
since 1883.
    My question is this: What do you estimate the total need in 
the country to be?
    And then, can you talk a little bit about what the 
investment is, as well? Because it is a pretty large gap there.
    Is the need twice as large as the available supply of 
dollars? Ten times? What is your thought?
    Ms. Johnson. I don't know specifically the need of the 
entire Nation off the top of my head. I know in Oklahoma, the 
last update we had to our comprehensive water plan, we 
identified an $80 billion infrastructure need over the next 50 
years for water and wastewater infrastructure. And since the 
inception of all of our financing programs, we have funded 
approximately $6 billion of infrastructure needs.
    So, there is quite a difference, I am sure, that can 
extrapolate to the entire country's demand for water and 
wastewater infrastructure.
    Mr. Rouzer. Well, absolutely. I think it is important to 
underscore just what a wide gap exists there, and we must 
maximize every dollar that we can. It is going to get harder 
and harder to get the dollars needed, given the nature of the 
budget situation here in Washington with a $32-$33 trillion 
debt. There is going to be more and more pressure to cut 
discretionary dollars because nobody really wants to touch the 
mandatory spending, which is what really is driving the debt.
    Let me ask this. In your experience running a Clean Water 
SRF, what do you see as the easiest hurdle or hurdles to remove 
to help ensure that we are maximizing each Federal dollar?
    Ms. Johnson. While the SRF programs are a great model for 
leveraging the Federal funding and maximizing capacity in their 
State, in Oklahoma we are a leveraged State, so, we issue debt 
in order to meet the demand in our State for infrastructure 
financing. So, as far as hurdles, of course, all of the Federal 
mandates that I mentioned earlier are increasing the cost of 
projects, while not necessarily meeting the intention of the 
Federal mandate or the goals of the Clean Water Act.
    So, removing or revising those Federal mandates after--a 
lot of these Federal mandates have been in place for more than 
a decade. So, we are looking at those mandates to make sure 
that they have had the transformational gap that Congress 
intended when they proposed those mandates. And if they are not 
meeting that intention, then maybe it's time to revise them.
    Mr. Rouzer. Let me ask this, and I will open it up for the 
rest of the panel. Are we concerned that maybe we are putting 
too much money towards grants movement that way that is going 
to shortchange us long term?
    Ms. Johnson. I believe so. While it is very important for 
the very small, disadvantaged communities to have an 
opportunity for grant funding to finance their infrastructure 
needs, grant funding can have a negative impact on 
infrastructure financing and public health and the environment 
protection because large grant programs like we are seeing 
currently, communities rely on that and delay their 
infrastructure projects, hoping that they are the next in line 
to receive a grant that may or may not come their way. So, 
while they are waiting for grant funding, their infrastructure 
is not meeting the compliance requirements for the Clean Water 
Act.
    Mr. Rouzer. Thank you.
    Mr. Swingle and Mr. Proctor, I am running out of time here. 
But real quickly, are there any specific suggestions for 
Congress as it relates to permitting reform?
    This is a subject that we are taking a real close look at. 
Either one of you. And turn on your microphone.
    Mr. Swingle. We represent four different member governments 
and having flexibility to make sure that we are using our 
dollars as wisely as possible. So, tying into integrated 
planning and also funding flexibility, as well, is absolutely 
critical.
    Mr. Rouzer. Thank you.
    My time is expired. Mrs. Napolitano.
    Mrs. Napolitano. Thank you, Mr. Chair.
    To all the panel, thank you for recognizing the historic 
clean water investment contained in the BIL. More than ever, 
sustaining the Federal commitment to robust infrastructure 
investments requires constant attention. And as the chairman 
stated, we have an aging infrastructure. Do you support cutting 
clean water infrastructure investment by roughly two-thirds, as 
recommended by my colleagues?
    And what would be the consequences of such a cut?
    Ms. Johnson. No, we do not support cuts to the SRF 
programs. In fact, we suggest fully funding the SRFs to the 
full authorization levels.
    Mrs. Napolitano. Mr. Swingle?
    Mr. Swingle. And we agree that funding the full 
authorization levels is important.
    Having a diverse funding portfolio, as I stated, is 
absolutely critical. We are continuing to see increasing 
regulations, and the current inflationary environment in the 
utility sector is as significant or more profound than many 
other areas of the economy.
    Mrs. Napolitano. Thank you.
    Mr. Proctor.
    Mr. Proctor. As I mentioned in my opening remarks, we 
agree, as well.
    Two things to keep in mind. Without full funding, the 
States are deprived of critical administrative resources that 
they need to implement the programs, whether they are regular 
programs or earmarked. But another thing is, if the funds 
aren't fully funded, they don't continue to revolve to where 
the money gets lent out, and then it gets paid back, and then 
it is available for future projects, as well.
    Mrs. Napolitano. Ms. Hammer?
    Ms. Hammer. We absolutely would not support cuts. As the 
other witnesses have stated, the demand far exceeds the 
available resources.
    Just in one State, Texas, last year, they had $378 million 
to distribute through their Clean Water SRF, but received 
requests for $2.8 billion worth of projects. So, they could 
fund only about one-eighth of the existing demand. And now that 
is--every State has different needs, but it is clear that the 
demand is there, and cutting available funds would have huge 
impacts.
    Mrs. Napolitano. Thank you.
    Mr. Swingle and Ms. Hammer, last Congress, we worked 
closely with your organizations to reauthorize the Clean Water 
State Revolving Fund for the first time since its enactment. 
There were, however, some provisions not included in the final 
package, including increasing the percentage of funds awarded 
as a grant rather than loans. Do your organizations support 
increasing the amounts of base SRF funds to go to our 
communities as grant or loan substitutes?
    Ms. Johnson. Let me make sure I understand the question. 
Are you asking if we support increased grant funding and loan 
forgiveness?
    Mrs. Napolitano. Yes, ma'am, but I asked the question to 
Mr. Swingle and Ms. Becky Hammer.
    Ms. Johnson. Thank you.
    Mr. Swingle. Thank you. Yes, we support the grant funding 
as proposed in IIJA. We think that that particularly, again, in 
this current pace of change for utilities, that those grant 
funds do play a significant role, particularly for 
disadvantaged communities.
    We are seeing--we often, as utilities, think in terms of 
not years, but decades, when we are making infrastructure 
investments. And because of the pace of change of the 
regulatory environment and those cost changes, the grants do 
particularly help those small, disadvantaged communities in 
adapting to supporting their ratepayers.
    Mrs. Napolitano. Thank you.
    Ms. Hammer?
    Ms. Hammer. Yes. Additional subsidization grants are really 
the only option for a large number of communities, as well as 
certain types of projects. For example, important nonpoint 
source projects that don't have a revenue stream available to 
repay a loan would not be possible without additional 
subsidization.
    Not all States operate separate grant programs that could 
make up the difference if additional subsidization weren't 
available. And to me, it really goes to the core of what the 
purpose of this program is. Do we really want to have a fund 
that revolves in perpetuity, but doesn't help the communities 
that actually need assistance?
    The entire purpose of this program is to help communities 
implement infrastructure projects that they wouldn't be able to 
do otherwise. So, if anything, we should be distributing more 
funding as subsidy.
    Mrs. Napolitano. Thank you.
    Mr. Proctor, what has been the single tangible benefit of 
the requirement to utilize American-made iron and steel in 
clean water infrastructure projects for the iron and steel 
industry in the U.S.?
    Do you think this provision fundamentally increases the 
cost of clean water projects?
    Mr. Proctor. Well, speaking on behalf of McWane, I will 
talk with respect to American iron and steel, which is the 
program most applicable to our industry. And to quote EPA, it 
has been a resounding success. It has increased capacity, it 
has brought production back to the U.S., it has increased jobs. 
It has done everything that it was intended to do.
    And to give you an example from our industry, there used to 
be dozens of manufacturers of waterworks fittings, which are 
products that are critical to pipelines across the country. By 
the time the Great Recession hit, we were down to one last 
remaining domestic manufacturer, and that was us. And we were 
close to having to close our last plant. But the passage of AIS 
saved all of those jobs. Not only that, but it gave us the 
incentive to reinvest in the plant and increase jobs.
    And more importantly, the very companies that were the 
architects of the demise of the domestic industry realized that 
if they wanted to participate in these programs, they had to 
reshore the production of those products. So, they opened up a 
new plant in Oklahoma, and they are today manufacturing those 
products that they tried to take over to other countries across 
the ocean.
    Mrs. Napolitano. Thank you.
    Sorry, Mr. Chair. I yield back.
    Mr. Rouzer. The gentlelady yields back. Mr. Van Orden, you 
are recognized for 5 minutes.
    Mr. Van Orden. Thank you, Mr. Chairman. I understand 
everybody here has the sense of displeasure with 
congressionally directed spending at the expense of the State 
allocations. But I live in a very rural area, and I will be 
frank with you. Sometimes people play politics with this issue, 
and I think that is, frankly, despicable. I submitted several 
congressionally directed spending things for projects, and my 
primary--my cutoff in order of precedence was clean water as 
the first one, and then it was public safety. So, I get what 
you are saying.
    But unfortunately, again, sometimes when the Federal 
Government sends moneys to State governments, they are 
allocated in a way that there is a big political thumb on that. 
And rural areas, which the Third Congressional District of the 
State of Wisconsin predominantly is, oftentimes are neglected. 
So, I really--I want you to think about that in that context, 
that we are not throwing stuff around here and trying to take 
away from the State's ability to allocate funds for clean 
water. We want to make sure that Federal moneys are going 
directly to where they can have the most impact. Is that clear 
with everybody here?
    So, a lot of things that I hear from my folks that make 
these projects more difficult to administer is the moving 
needle from the EPA, especially when we are talking about 
different levels for agricultural runoff, phosphates, nitrates, 
and now the PFAS. So, I want to ask you--and we will just start 
with Ms. Johnson, if that is all right--with the EPA saying 
that the PFAS is in our hazardous materials, essentially, a lot 
of the concerns from our municipal water treatment facilities 
is that they are going to be held liable in some way for not 
being able to get the water to a clean enough level to a moving 
standard from the EPA. Have you heard that?
    Ms. Johnson. I have not heard that, personally. I know 
communities are used to the ever-changing regulations in the 
water and wastewater industry and will do everything they can 
to meet those compliance requirements.
    Mr. Van Orden. So, when you are saying that because Members 
of Congress, who speak directly to our constituents on a daily 
basis, we are cherry picking money out of these funds to put 
them directly where they are needed, add some uncertainty?
    The same thing happened--uncertainty for planning 
financially, the same thing happens to each one of these 
municipalities with this moving target.
    Mr. Swingle, have you heard from folks about the issue of 
the moving target from the EPA for these different standards?
    I mean, you are one of the guys, right?
    Mr. Swingle. Excuse me?
    Mr. Van Orden. You are running one of these, correct?
    Mr. Swingle. I am sorry, I didn't understand.
    Mr. Van Orden. What you do for your day job, you are 
predominantly responsible for conducting these operations, 
correct?
    Mr. Swingle. Yes, that is correct. Now----
    Mr. Van Orden [interrupting]. So, then, I guess, have you 
heard this, Mr. Swingle?
    Mr. Swingle. We do operate under the Florida Department of 
Environmental Protection, which is a delegated authority. And 
so, we do have uncertainty about where we will land with PFAS.
    And in Florida in particular, it is somewhat complex 
because as a utility, we have eliminated all surface water 
discharges, but use our treated effluent that is to public 
reuse standards for replenishing groundwater. And the 
complexities of that uncertainty associated with the regulatory 
environment, and whether that would be regulated by the MCLs 
that are proposed on the drinking water side or on the--
through, ultimately, a flow-down from EPA on the wastewater 
side, does create significant uncertainty for us.
    Mr. Van Orden. So, from your perspective, from your 
position where you are at, if the EPA could be more consistent 
upfront and possibly share things on a more regular basis, it 
would make your job easier?
    Mr. Swingle. Regulatory certainty is absolutely critical 
for utilities when we are making these significant investments.
    Mr. Van Orden. Outstanding. Just to be clear, we have an 
entire town. Every single well has been contaminated by PFAS 
because there is an airfield right there on French Island, 
actually. It is a township of Campbell. It is a beautiful 
place.
    Mr. Proctor.
    Mr. Proctor. Well, PFAS is, obviously, a very complex 
topic. But if I could address your question from the standpoint 
of the private sector and the people that make the things that 
are going to be necessary to help resolve the problem, I hear a 
lot from--well, one thing that is certain----
    Mr. Van Orden [interrupting]. Mr. Proctor, you have 17 
seconds.
    Mr. Proctor. I am sorry?
    Mr. Van Orden. You have now 15 seconds.
    Mr. Proctor. I am sorry. I still couldn't hear.
    Mr. Van Orden. My time is expired. I yield back.
    Mr. Proctor. OK.
    Mr. Rouzer. Mr. Carter.
    Mr. Carter of Louisiana. Thank you very much, Mr. Chairman.
    As a former local and State elected official, I understand 
the importance of intergovernmental coordination when it comes 
to protecting precious resources, particularly in the event of 
a disaster.
    Right now, in my home State of Louisiana, we are facing the 
impending crisis of saltwater intrusion currently creeping up 
the Mississippi River. My office has been working in close 
coordination with the Army Corps of Engineers, the State, and 
the city of New Orleans, and the Sewerage and Water Board to 
combat the saltwater intrusion.
    What role do you see State and local government playing in 
preparing for disaster events such as this that may threaten 
drinking water and the water supply?
    How can Federal agencies help their State and local 
governments better prepare for these events?
    Ms. Hammer, could you address that for us?
    Ms. Hammer. Thanks for the question. I am actually not sure 
I am positioned to answer that, as I don't work on disaster 
preparedness and response issues.
    Do any of the other witnesses?
    Mr. Carter of Louisiana. Anybody else want to take a crack 
at that?
    Yes, sir, Mr. Proctor.
    Mr. Proctor. Well, one thing I would note is the new BRIC 
program that Congress created--I guess it was back in 2017--
provides some terrific opportunities for communities to access 
funding to address predisaster mitigation, including things 
like saltwater infiltration and that sort of thing. So, there 
are programs out there available to communities.
    But I think there have been some problems with rolling out 
some of that BRIC funding over the past couple of years. And if 
we could eliminate some of those obstacles, that would be 
another source of resources for communities to address that 
issue.
    Mr. Carter of Louisiana. OK. On December 21, EPA announced 
that they were providing $275 million in WIFIA grants to the 
city of New Orleans and Sewerage and Water Board to modernize 
the city's aging and storm-damaged water system. EPA's 
financing of this project has historically helped protect 
communities in historically underserved areas from the impact 
of storm events and climate change.
    How does WIFIA expanded eligibility help EPA supplement the 
CWSRF program?
    Mr. Swingle. Part of the testimony that I talked about was 
a portfolio of funding approaches, and that is absolutely 
critical. As our particular utility already has a WIFIA loan, 
we are now in the process of our second. But for many smaller 
utilities, WIFIA isn't the right solution. And that is where 
SRF and WIFIA and the community appropriations all come into 
play to create that portfolio.
    As utilities, we are reflections of our community. And 
often the differences in these funding approaches also 
recognize that flexibility and add to each community being able 
to access funding that is appropriate for their needs.
    Mr. Carter of Louisiana. As our climate rapidly changes due 
to global warming, drinking water increasingly becomes a more 
precious natural resource. How do we see drought and arid 
conditions affecting State and local water agencies?
    Mr. Swingle. Well, as a State and local water agency, I 
will address that. We are very proactive in our planning, both 
for conservation and diversifying our supplies. Where we were 
traditionally a groundwater-only entity, we are now 
diversifying into surface water reservoirs. We are doing 
extensive groundwater recharge to create future supplies. And 
that is where also flexibility in the regulatory and funding 
environment particularly comes into play for us, as local 
utilities.
    Mr. Carter of Louisiana. So, with the Clean Water State 
Revolving Fund, how has BIL's investment into the program 
helped improve clean water in the States?
    Ms. Johnson. The investment through the Infrastructure 
Investment and Jobs Act was a historic investment into the 
Clean Water SRF programs. As I mentioned previously, with the 
cuts to the regular program, it is really mitigating the 
effects of those cuts at this point in time and putting a Band-
Aid on it, basically, for diverting those funds.
    And so, in Oklahoma, we are a leveraged State. So, we issue 
debt to make sure that we meet the capacity and the demand for 
projects in our State. And so, in doing so, the more funds we 
divert out as grants or loan forgiveness, the less loans that 
we are able to make to be able to repay that debt.
    Mr. Carter of Louisiana. And all of these critical issues 
would be further exacerbated with a Government shutdown.
    Voice. Yes.
    Mr. Carter of Louisiana. My time is expired. I yield back.
    Mr. Rouzer. Mr. Owens, you are recognized.
    Mr. Owens. Thank you.
    Mr. Proctor, you mentioned in your testimony that clean 
water infrastructure requires innovation. In what ways do you 
see the clean water industry looking to innovate?
    Mr. Proctor. Well, one area is back to the topic of PFAS. 
As I mentioned a second ago, that is a very complex topic, and 
it is going to require a lot of innovation and a lot of new 
technology from the private sector to be able to address that 
topic.
    One concern that many people in the private sector have is 
that one of the remedies EPA is considering is to designate 
PFAS a CERCLA constituent. We have a lot of concern about that 
because that could potentially disincentivize the private 
sector from getting involved in this topic. If there is a 
prospect that they could get sucked into extensive and 
expensive litigation and liability simply by providing some of 
the solutions, that is a serious disincentive to going down 
that path.
    And so, as we start to look for the solutions for the PFAS 
problem, we need to be mindful of unintended consequences.
    Mr. Owens. Very good. Ms. Johnson, in your testimony, you 
outline several Federal mandates that have made costs for clean 
water projects too expensive, even with funding available. What 
do you estimate the total extra cost of these mandates have 
added to projects?
    And would you agree that these added costs might stifle 
innovation that Mr. Proctor just mentioned?
    Ms. Johnson. So, it is very difficult to quantify the cost 
of federalizing State programs, but there is a cost. Obviously, 
it takes time and effort to document compliance with all of 
these Federal requirements that may or may not be meeting the 
intention of the congressional requirement. So, while we don't 
have a statistical data for the actual true cost of the added 
Federal mandates to the program, we do know that it does drive 
infrastructure costs up.
    Mr. Owens. OK. With these costs, do you believe there is 
a--because we have chosen winners and losers when it comes to 
receiving funds? And why, if that is the case.
    Ms. Johnson. I am sorry, can you repeat that?
    Mr. Owens. Do you believe, with the costs you are talking 
about, does this preemptively choose losers and winners in the 
industry you are part of?
    Ms. Johnson. Yes, and increased costs of infrastructure is 
going to trickle down to the ratepayers in your local 
communities, especially in the disadvantaged communities where 
their priority is keeping rates affordable for their fixed-
income homeowners.
    Mr. Owens. OK. I am just--I will just say this. Thank you 
for your innovation, because this is really what makes our 
country what it is. And obviously, here in DC, they have no 
clue what that looks like. So, I love the fact of innovation 
being a topic. We just have to make sure to give you the 
bandwidth to make sure that happens. So, thank you, and I will 
yield back.
    Ms. Johnson. Thank you.
    Mr. Rouzer. Ms. Scholten.
    Ms. Scholten. Thank you, Mr. Chair, and thank you so much 
to all of our witnesses here today.
    Congresswoman Hillary Scholten from Michigan's Third 
Congressional District. I am proud to represent miles of 
beautiful Lake Michigan shoreline, as well as the Grand River, 
the largest river system in our State.
    This topic today is so important to me for a number of 
reasons. Water is a way of life in west Michigan and not only 
for providing recreation. My family, we are year-round anglers, 
but the Great Lakes watershed is a multibillion-dollar 
industry. Keeping our water systems healthy and clean is a top 
priority for me.
    We have been talking a lot about PFAS contamination, which 
is a huge problem. Michigan has been leading the way for 
decades in identifying and remediating PFAS contamination sites 
throughout our State. And Michigan's Third Congressional 
District is no exception.
    Mr. Swingle, I am wondering if you could talk a little bit 
more specifically about some remediation efforts that you see 
possible, and where we might be sort of losing the way in 
addressing this deeply difficult issue. Specifically, how can 
Congress help clean water agencies address PFAS remediation, 
and what infrastructure do we need to prevent this sort of 
contamination in the future? It feels like a problem that we 
continue to throw more and more money at without really solving 
the problem.
    Mr. Swingle. Thank you. Yes, it really has to be a 
multipronged approach because, as you are very well aware, as 
public utilities, we are passive receivers of this pollution 
that comes from a variety of sources.
    As in my testimony, right now, understanding exactly where 
these pollutants are coming from in our systems so that we can 
target removal of those constituents upstream. It is always 
more cost effective to remove at the source rather than when 
you get to our systems and have the entirety of a flow from an 
entire community.
    So, as--one of the things that I did mention was ensuring 
that that fix was in place to allow some of that mandatory 
funding from IIJA to be accessible for that upfront assessment 
and planning and pretreatment. That is absolutely critical.
    The other is, because of the timelines associated with PFAS 
regulation, is ensuring that we do have that regulatory 
certainty. Utilities across the country will be investing 
millions and millions, if not billions and billions, of 
dollars. And ensuring that that infrastructure that we build, 
that we have to make sure that we have in place, that it is 
effective investments. And again, ultimately, that we are not 
also responsible for the liability associated with the pass-
through of those discharges.
    But we do face many technology challenges right now. Our 
systems at that scale right now are not equipped to cost-
effectively handle PFAS. And so, there is significant research 
and development on the technology side that is required, as 
well.
    Ms. Scholten. Thank you. That was really informative.
    In the rest of my time, Mr. Proctor, I want to move on to 
you with a question. I am very receptive to the need to 
potentially extend some of these deadlines for the Bipartisan 
Infrastructure Law, and you talk about the need for additional 
technical assistance. Can you speak a little bit more 
specifically about what kind of technical assistance is needed, 
how it would be used, and how it would help?
    Mr. Proctor. Well, the process for applying for SRF loans 
and grants can be very arcane sometimes, and complex. And 
typically, the utilities that need that assistance the most are 
the most ill-equipped and lack the expertise to be able to 
figure out that process. And that is where technical assistance 
becomes critical. Providing them the resources, the information 
that they need to be able to take advantage of the funding is a 
very, very important part of making sure that that money gets 
where it needs to go.
    Going back to something I said in my opening comments, the 
lower the appropriations for the regular allocations to the 
SRFs, the less technical assistance is going to be available 
for those disadvantaged communities. And so, I would just 
reiterate my plea that you all work with the folks over on the 
appropriations side to make sure that that money gets there.
    Ms. Scholten. Thank you. My time is up. I yield back.
    Thank you all.
    Mr. Rouzer. The gentlelady yields back. Mr. Collins, you 
are recognized for 5 minutes.
    Mr. Collins. Thank you, Mr. Chairman. I would like to start 
off by telling people this is kind of my industry sitting in 
here, because I am in the transportation--I am in the trucking 
business. And so, a lot of times I like to focus kind of on 
what I know a little bit about.
    And so, I want to kind of go into the supply chain issues a 
little bit. It is obvious that up here, as much as--this 
Congress, any time you say ``supply chain,'' heads turn. So, it 
has been, especially since the pandemic, in the forefront of 
people's minds, whether they are service providers or 
manufacturers.
    And Mr. Proctor, as a manufacturer, I would love to know 
how you have been impacted by these supply chain disruptions.
    Mr. Proctor. Fairly severely on a number of different 
fronts.
    We make ductile iron pipe, ductile iron valves, fittings, 
that sort of thing. And to give you one example, the war in 
Ukraine has had a significant impact on our ability to 
manufacture those products. Russia and Ukraine are the largest, 
not the sole sources, of magnesium, which is a critical element 
to the manufacture of those products. And so, the war over 
there has disrupted our supply chain significantly when it 
comes to those basic raw materials.
    But the other thing that I want to emphasize is workforce 
development. When we talk about supply chains, we need to keep 
in mind the people that actually do the work that produces 
these products. We need more people who are willing to come in 
and help us provide those services, and that is a real 
challenge for us.
    And so, as you are thinking about things that could be done 
to not only improve supply chain issues but also the operation 
of the utilities themselves, please keep in mind that workforce 
development and training good folks who want to come in and 
work for what is really one of the last opportunities for 
someone without a college education to make a good, solid 
middle-class wage.
    Mr. Collins. I couldn't agree with you any more. Usually 
behind supply chain issues is workforce. We always end up 
talking about workforce. As a matter of fact, we were just 
talking about it at a meeting I had this morning at 8 o'clock. 
And you are exactly right.
    I also sit on the Committee on Natural Resources. And when 
you were talking about critical minerals and the fact that we 
are 80 percent dependent on China to process the critical 
minerals that we need here in this country, and then you factor 
in the fact that we have an administration that has continually 
not allowed mining in our own country, much less processing, 
because we are down to three smelters, so, I think that is a 
very important point, that we move our mineral mining 
processing right back to the United States, and get away from 
this dependence on some of these countries.
    Mr. Proctor. Well, if I could echo that, our products are 
made from 95 percent recycled content, which means iron and 
steel scrap. But the global demand for scrap is such now that 
it is getting increasingly difficult to find scrap that can go 
into our processes.
    What that means is at some point in time, we are going to 
have to look to developing iron and steel from mining and 
refining and other activities like that. And so, that's a 
future issue that is going to become more acute as the years go 
by.
    Mr. Collins. Well, I've got one more question for you. I 
know I am getting limited here, but so, there has obviously 
been an impact on the construction and completion of the 
projects that you are supplying for, correct?
    Mr. Proctor. Yes.
    Mr. Collins. All right. Besides workforce development, is 
there anything else that Congress can be doing? Permitting or 
anything in that area?
    Mr. Proctor. Absolutely, and I will give you one specific 
example.
    EPA is currently considering a discretionary review of the 
PM2.5 rules. If they ratchet down the 
PM2.5 requirements beyond where they are now, it is 
going to put almost the entire country in a nonattainment 
situation. And that means projects that would expand capacity 
and increase jobs and increase the ability of the manufacturing 
sector to meet the demand for the sort of products that we are 
going to need to build all these projects, it is going to be 
virtually impossible.
    We all want clean air, don't get me wrong. But if you look 
at the statistics, our air now is the cleanest it has been in 
40 years, and it is the cleanest in the world in many respects. 
So, let's make certain that, as we are looking at these new 
regulations and changes, that we keep in mind, once again, the 
unintended consequences.
    Mr. Collins. Yes, sir, something I like to call common 
sense.
    Thank you, Mr. Chairman. I know I am out of time. Thank 
you.
    Mr. Rouzer. Mrs. Sykes.
    Mrs. Sykes. Thank you, Mr. Chair. Thank you, Ranking 
Member, for this. And to our witnesses, welcome, and I 
appreciate your testimony.
    One thing that has become very clear is how important the 
Bipartisan Infrastructure Law is nationwide, not just in my 
community in Ohio's 13th Congressional District.
    And you have talked about how the Clean Water State 
Revolving Fund especially is important. And having been a 
State-level legislator, I have talked about this quite a bit. 
And so, it is good to see the synergy--or lack of synergy, 
sometimes--between how these programs work.
    Mr. Swingle, I want to ask you briefly, in your testimony, 
you mentioned the current investments in the Clean Water State 
Revolving Fund proposed in the House's budget are not adequate. 
Can you talk about why this proposed funding does not meet the 
needs of our communities, and what would happen if we funded 
the Clean Water State Revolving Fund at the proposed fiscal 
year 2024 levels?
    Mr. Swingle. Thank you, yes. We have talked about funding 
or cost increases that are driven by both the regulatory 
environment and the inflationary environment, and so, as we get 
to this discussion where there is a reduction in either the 
Clean Water SRF or just funding in general, that gap has to be 
widening.
    And we know the importance of clean water. And when that 
funding gap exists, there are going to be reductions in--
whether it is compliance or the ability to meet the needs of 
the communities.
    Mrs. Sykes. Thank you for that answer.
    So, it is clear we need to hold up the spirit of the 
Bipartisan Infrastructure Law and keep investing in those 
critical programs, not just for my district but across the 
country, and including in your community. It is why I was proud 
to lead a letter with Ranking Member Napolitano to the 
Appropriations Committee, speaking of that, with 30 of my 
colleagues earlier this year requesting robust funding for 
those water infrastructure programs, and also why 
Representative Nikema Williams of Georgia and I introduced a 
bill to ensure funding for environmentally friendly water 
infrastructure projects.
    Working with organizations like the American Rivers to 
advance bills like the WISE Act would ensure longevity of our 
infrastructure and the environment and protect these programs 
to come. So, Mr. Chairman, at this time, I request unanimous 
consent to submit a report by American Rivers on the Clean 
Water State Revolving Fund for the record.
    Mr. Rouzer. Without objection.
    [The information follows:]

                                 
  Report, ``Using Clean Water State Revolving Funds for Greening and 
   Climate Resilience: A Guide for Local Governments,'' by American 
 Rivers, January 2023, Submitted for the Record by Hon. Emilia Strong 
                                 Sykes
    [The 15-page report is retained in committee files and is available 
online at https://www.americanrivers.org/wp-content/uploads/2023/02/
CWSRF-Guide-for-Municipalities.pdf.]

    Mrs. Sykes. Thank you, Mr. Chairman.
    Ms. Hammer, I want to turn to you now. I was drawn to a 
comment in your testimony and was hoping that you could discuss 
a little bit further about water affordability and cost. We are 
all concerned about it. I hear my community members talk about 
inflation and water. Obviously, affordability is rising to the 
surface, especially post-pandemic. Most people were not aware 
that there was such a thing called water shutoffs, and people's 
water would be shut off for lack of payment.
    The Low-Income Household Water Assistance Program is 
vitally important, and you make a suggestion to make this 
permanent. Can you talk a bit more about that?
    And I will just say that this program has helped about 
25,000 Ohio households make ends meet, protecting their quality 
of life and safety. So, why would you suggest that we make this 
pilot program permanent?
    Ms. Hammer. Thanks. I really appreciate that question.
    As I had discussed in my written testimony, there truly is 
an affordability crisis in this country. Some recent studies 
have found that anywhere between around 10 to 20 percent of 
households are experiencing affordability challenges with water 
and sewer bills. Most utilities do not operate their own low-
income assistance programs. In many cases, State law can be a 
barrier to those, or they simply don't have the resources.
    And as you mentioned, the LIHWAP program that was adopted 
during the pandemic has made a huge difference for many, many 
people. It has helped over 1 million households nationwide 
maintain access to water or sewer service. But of course, it 
was established as a temporary program, and it is currently 
about to expire, yet the need is not going away.
    So, we need to address it through the adoption of a 
permanent program, whether that is LIHWAP made permanent or a 
program at a different agency. We are pretty open to the 
different options, but any permanent program that makes 
households automatically eligible for participation if they are 
already participating in another Federal income-qualified 
assistance program, that would really boost participation. 
Right now there have been a number of barriers to enrollment 
that have reduced participation rates.
    Mrs. Sykes. Thank you so much. And my final question I want 
to direct to Ms. Johnson.
    In your testimony, you mentioned, in relation to compliance 
with the Davis-Bacon Act, that you did not find that there was 
an issue, it ``isn't an issue.'' This morning, the 
International Union of Operating Engineers submitted a letter 
to members of the committee--or shared, I would say--and they 
identified that there, in fact, is an issue, at least according 
to their assertion. Over 10,000 workers, upwards of $30 million 
in wages, have not been appropriately disbursed. What is your 
response to that?
    Ms. Johnson. So, from my experience with the Davis-Bacon 
wage rate act is the issue is more of the compliance 
procedures, not necessarily the wage rates, especially in 
today's tight labor markets, where contractors are having to 
pay above and beyond the wage rates to attract skilled workers. 
The actual wage rates are not the issue, but it is actually the 
burdensome administrative oversight of the act.
    Mrs. Sykes. Thank you.
    Mr. Chair, I tried to be under my 5 minutes so I could get 
cheered on, too, but I apologize. I yield back.
    Mr. Rouzer. That is all right.
    Mr. Collins--I mean, Mr. Ezell. My apologies.
    Mr. Ezell. No problem. We do kind of talk alike, so, we are 
from the same area of this country.
    Mr. Rouzer. You two are sitting down there beside each 
other.
    Mr. Ezell. That is right. So, I want to thank all of you 
for coming today. I know it is a lot going on right now, but I 
just thank you all for being here today. And Mr. Chairman, 
thank you for the opportunity.
    Mr. Proctor, in previous hearings, I have raised some 
similar concerns that you highlighted in your testimony. I 
agree we cannot allow these issues to hinder the improvement of 
critical water systems in Mississippi and across our Nation. 
One of the issues that both you and I have emphasized is the 
infrastructure funding passed by Congress and the impending 
deadlines.
    As you noted, EPA has not yet recommended water quality 
criteria or issued effluent limitations guidelines for PFAS. I 
understand there is a lack of testing capacity for PFAS, and 
particularly in rural States. How does this affect the States' 
ability to meet the deadlines placed on these funds?
    Mr. Proctor. Well, in the absence of certainty about what 
targets they are going to have to meet from a regulatory 
standpoint, as I mentioned earlier, it makes it very difficult 
to figure out how to design the projects, what technology you 
need, what systems you need, and that sort of thing. And so, 
the longer that clarity doesn't occur, the more utilities are 
going to start bumping up against these deadlines.
    And you know, again, one of the concerns that we have from 
the standpoint of the people that are going to provide the 
products that go into that is, if we get up against those 
deadlines and all of a sudden there is a massive surge in 
demand, that could create bottlenecks that could increase cost 
to the projects and potentially put the project itself at risk.
    Mr. Ezell. Thank you. What factors would you recommend for 
the EPA to consider when planning on requiring testing for 
PFAS?
    Mr. Proctor. I am sorry.
    Mr. Ezell. What would these factors--what would you 
recommend for the EPA to consider when planning on requiring 
testing for PFAS?
    Mr. Proctor. Well, I don't really have an opinion on what 
the standards ought to be. But as I said earlier, it is a very 
complex topic, and it is something that is going to require a 
lot of private-sector participation to evaluate those 
standards.
    Mr. Ezell. All right, thank you. I want to move on.
    Ms. Johnson, EPA recommends that States utilize the full 
Drinking Water State Revolving Fund 2 percent small system 
technical assistance set-aside and the newly available Clean 
Water State Revolving Fund 2 percent technical assistance funds 
to enhance or build programs that proactively identify, engage 
with, and provide assistance to rural, small, and Tribal 
publicly owned treatment works and drinking water systems, 
particularly in disadvantaged communities. Have you benefited 
from these technical assistance dollars?
    Ms. Johnson. So, the requirement in the Clean Water SRF 
programs is that the 2 percent technical assistance, if 
utilized, has to be utilized to State agencies or nonprofit 
entities, while in the Drinking Water SRF program, it also 
allows contracting with private firms and entities to 
distribute that technical assistance.
    So, many States around the country, under the Clean Water 
SRF programs, have technical assistance programs outside of the 
2 percent technical assistance that they have been 
administering for many years through their administrative fees 
that they charge on the loans to help their borrowers.
    Mr. Ezell. Thank you. And you know, everybody in here wants 
clean water. We all do that. And we want to do whatever we can 
as a Congress to help you and to help us move along. But 
sometimes we've just got to get through some of this redtape to 
help these smaller communities like places in my home State.
    So, thank you, Mr. Chairman. I yield back.
    Mr. Rouzer. The gentleman yields back.
    Ms. Hoyle.
    Ms. Hoyle of Oregon. Thank you, Mr. Chair. I would like to 
make a comment, as opposed to a question.
    I have heard through testimony--your testimony, Ms. 
Johnson, and some of my colleagues'--where you talk about 
Federal regulation increasing costs. And I think it is really 
important to be transparent that I believe what you are 
referring to is Davis-Bacon prevailing wage, among other 
things. And so, I just think it is important that we take a 
step back as to why we have prevailing wage for projects built 
with Federal dollars.
    In 1931, the Davis-Bacon Act was passed, and this was a way 
to ensure that when we use taxpayer dollars, that those dollars 
were spent for the highest quality work. Because this--we are 
building things that we want to last for generations. And so, 
what we don't want is for sub-par contractors--and as labor 
commissioner, I worked with business, I worked with labor, and 
the vast majority of businesses do want to do the right thing, 
the vast majority of contractors. However, there are people 
that don't.
    And so, if we allow in Federal projects--and in Oregon on 
projects that use State dollars--to bid just on price, then 
what happens is you get low-bid contractors and bad things 
happen. More workers die. Those projects don't last. Buildings 
cave in. It is unsafe.
    Now, I personally, having run an agency that had been not 
invested in in four decades prior to my coming in, I am 
actually very passionate about streamlining Government 
bureaucracy, about making sure that we are not being 
duplicative, making sure that people can understand Government, 
that--again, that we have our Federal employees at the 
Department of Labor or wherever else having the resources, 
meaning that they have IT resources, that they have enough 
people to do the job, that our businesses and our workers can 
access Government easily. That may be an odd thing to be 
passionate about, but we have all been stuck in places. And I 
can tell you, I talk to Federal employees all the time that are 
frustrated that they don't have the tools to actually directly 
do what we need to do.
    Now, the Biden administration has a final rule that will go 
into effect next month to ease the compliance burden and reduce 
some of the duplicative, overly technical nature of complying 
with the Davis-Bacon laws. And that is important. But what we 
don't need to do--because I would disagree that we don't need 
Davis-Bacon anymore because everybody is just going to pay the 
right wage. Again, coming from a State with little Davis-Bacon 
and enforcing wage and hour laws, routinely when we would come 
in and find that there was egregious wage theft on a 
construction site too often, so often, we would have workers 
from States that had right-to-work-for-less laws that didn't 
understand that they needed to be paid a prevailing wage. So, 
workers do need protections, not because of the vast majority 
of contractors, but because there are people that would take 
advantage of the law.
    But we also aren't going to always have a strong economy 
like the kind of economy where you can't find workers, right? 
The prevailing wage laws means that the best contractors that 
have really strong apprenticeship programs, that invest in 
their workforce safety, that they get to compete and that our 
local contractors get to compete instead of having a national 
low-bid contractor come in.
    So, I agree that we need to reduce the regulatory burden, 
but in doing that, we should not undermine the protections that 
Davis-Bacon offers to our taxpayers so that we can get the best 
value for our taxpayer dollars, the protections that prevailing 
wage offers to workers, and the benefit that we give to level 
the playing field for those contractors that will pay more and 
do better. Because we deserve to have the absolute best bang 
for the buck with our Federal dollars.
    So, I just wanted to point that out. I really don't have a 
question, but I want to--I am happy to work with you on the 
streamlining piece, but also, we have to invest in the agencies 
we want to do the job. Because if you don't have enough people, 
and you don't have the right resources, and you don't have--you 
are still working on a COBOL system, it is impossible--it is 
impossible--to achieve the things we want to achieve. So, it is 
a both/and.
    Thank you very much.
    Mr. Rouzer. The gentlelady yields back. Mr. Duarte.
    Ms. Hoyle of Oregon. I yield back.
    Mr. Duarte. Thank you, Mr. Chairman. It is great to be here 
today. I have been waiting for this committee hearing. Thank 
you.
    I represent a community in California's Central Valley that 
has a lot of small farm towns with great needs for, of course, 
California compliance standards on wastewater and drinking 
water, very, very high, and many of these towns don't have a 
lot of new growth to put the cost of a new treatment plant onto 
developer fees. So, they have got very few options, very small 
tax base. And many of these farmworker towns, this is a Voting 
Rights Act district with two-thirds Hispanic voters. And so, it 
is my pride to represent them, but nonetheless, we have some 
challenges.
    So, Ms. Johnson, Mr. Swingle, it sounds like you have got 
quite a bit of experience with the proverbial honeypots of 
funding for clean water projects and sewer and wastewater 
projects. And I would just like you to survey for me really 
quick what you think--we spoke to some specific programs today, 
but where you think some of the different Government sources of 
funding are for these types of projects in smaller rural towns.
    Ms. Johnson. So, I am not sure I completely understand the 
question.
    Mr. Duarte. How do I--aside from the grants we are talking 
about today specifically, what are the different grant programs 
and funding sources within the Federal Government for clean 
water and wastewater treatment, particularly in smaller rural 
towns?
    Ms. Johnson. OK. Besides the Clean Water SRF program, I am 
aware of some other smaller grant programs, the Sewer Overflow 
and Stormwater Reuse Municipal Grant program, often referred to 
as OSG Grant program. And I believe there are other programs at 
other Federal agencies. Rural development has CDBG grants and 
other grant programs.
    I am not sure of all of the funding programs out there. I 
know the Indian Health Service offers grant programs to small 
communities within their Indian nations.
    Mr. Duarte. OK, Mr. Swingle, you are reaching for it.
    Mr. Swingle. Well, and I would just like to add that I 
think it is complicated. We have talked about the largest ones 
today, and that is evident. But there are others, and we would 
be happy to follow up and provide what we have as far as an 
inventory.
    But I think that is also the complexity of ensuring that 
these other programs that are in place, that they are 
accessible, and that they truly do meet the needs, which right 
now, based on the testimony you have heard from throughout this 
panel, is that the growing needs across the water sector just 
aren't being met.
    Mr. Duarte. Thank you very much. In terms of Federal 
resources, I also understand that the Clean Water Act has a 
block grant program that goes to each State individually, 
annually. I know that--I understand that California's is over 
$300 million.
    Are you familiar with these moneys and how they are used in 
your States?
    And how would I go about comparing that to what is 
happening in California?
    I just have a feeling they are not getting to clean water 
programs as I would define them.
    Ms. Johnson. Yes, I would encourage you to reach out to 
your States, for sure, on what all funding sources are 
available to the communities within your States.
    In Oklahoma, we work collaboratively with other funding 
agencies in our State to maximize the resources available to 
our communities within Oklahoma so that they have every 
opportunity to get either grant or loan funding for their 
critical infrastructure needs, based on their situation. And I 
know many other States have similar programs.
    Mr. Duarte. Yes, thank you.
    Yes, sir, Mr. Proctor.
    Mr. Proctor. As we talk about available resources, one of 
the things that we shouldn't forget is the opportunity for 
public-private partnerships. If we could expand the use of 
those partnerships, that gives us the ability to tap into 
private-sector funding to alleviate a lot of these problems, as 
well as whatever may be available from the Federal Government.
    Mr. Duarte. Thank you.
    And Ms. Hammer, you are with the NRDC, an environmental 
activist group--advocacy group, let's call it. The San Joaquin 
Delta of California has 60 municipalities releasing not 
tertiary-treated discharge into the delta, causing algal blooms 
and other environmental problems. Is this on your radar, and is 
your group pressuring for some kind of remedy here?
    Ms. Hammer. I am not sure. We have an office in San 
Francisco that I believe handles California-specific issues, 
so, I would be happy to consult with them and get back to you.
    Mr. Duarte. I would really appreciate that.
    Ms. Hammer. Sure thing.
    Mr. Duarte. Thank you to the chair, and I will yield back.
    Mr. Rouzer. The gentleman yields back. Ms. Norton.
    Ms. Norton. Thank you, Mr. Chairman.
    Ms. Hammer, the District of Columbia, like States, has 
benefited greatly from the Bipartisan Infrastructure Law and 
clean water infrastructure State revolving funds. You mentioned 
that the increased frequency of storms caused by climate change 
is leading to higher pollution in our Nation's waterways, and 
thus, increased treatment costs for two-thirds of our country's 
drinking water. The District of Columbia, which I represent, is 
one such jurisdiction, and DC is wholly reliant on the Potomac 
River for our drinking water, meaning DC's drinking water is 
continuously at risk.
    How can greater transparency in clean water infrastructure 
financing increase equity for historically marginalized and 
underserved communities, particularly communities of color that 
are impacted disproportionately by pollution?
    Ms. Hammer. Thanks for that question. So, we, NRDC, 
recently conducted a study looking at the past 10 years of 
funding decisions under the Clean Water State Revolving Fund 
program.
    First of all, I would say that transparency is a challenge 
with the data through that program. It is very difficult to 
access project-level information in terms of who is receiving 
funds. So, that was the reason for my recommendation for a 
public online dashboard that EPA could manage.
    But the study that we did found that smaller communities 
and communities with higher populations of color were 
statistically less likely to receive Clean Water SRF awards 
during that 10-year period. So, it is really important for 
State SRF program managers to keep that in mind, to assess what 
are the barriers to participation in the program, are there 
policies in place that may be blocking certain communities from 
accessing funds.
    Ms. Norton. Thank you, Ms. Hammer. You also mentioned that 
urban flooding currently results in $9 billion in damages each 
year. What are the benefits of dedicated climate resilience 
funding for wastewater and stormwater infrastructure in flood-
prone areas, and how do the costs compare?
    Ms. Hammer. Well, wastewater and stormwater infrastructure 
are facing a wide range of threats from climate change. 
Flooding is certainly one, sea level rise is another. Many 
wastewater facilities are located right on waterways.
    And the--one of the best approaches there is--just more 
funding is needed, in general, to help utilities manage those 
threats. The more dedicated funding we can provide to 
sustainable green infrastructure, the better. Those approaches 
are really adaptable, flexible. They can be scaled up or down. 
Unlike hard infrastructure, they can be scaled easily and 
quickly. They provide multiple benefits to communities such as 
reducing the urban heat island effect and others.
    So, we would support dedicated funding, particularly 
through the continued existence of the Green Project Reserve.
    Ms. Norton. Mr. Swingle, you said that there are currently 
no available technologies that both effectively and affordably 
destroy PFAS in drinking water at the scale necessary for 
public water utilities. How can Congress aid with developing 
these necessary technologies and ensuring that public clean 
water utilities can afford them?
    Mr. Swingle. That exists on both the clean water and the 
drinking water side, where there is a need for additional 
research. And tying into--this is a place where I do very much 
agree with the private sector to make sure that we have got 
those private-sector partnerships on developing and deploying 
and validating technologies that can be produced at scale. 
Because while the technologies are there, they are often not 
affordable at the scale when we are talking communitywide 
systems.
    Ms. Norton. Thank you. I yield back, Mr. Chairman.
    Mr. Rouzer. The gentlelady yields back. Mr. James, you are 
recognized.
    Mr. James. Thank you, Mr. Chairman. I would like to thank 
the chair for this opportunity to speak, and I would like to 
thank the witnesses for being able to make it up to Capitol 
Hill today and testify in front of this committee regarding the 
state of clean water infrastructure.
    Throughout my service, I recognize that we all have a great 
duty not just to our servicemembers and veterans, but right 
here, starting in the District of Columbia, representing the 
folks in our district--me, back in the 10th Congressional 
District in Michigan. And part of that is making sure that we 
have the very basic needs met, clean drinking water.
    I have heard a number of great conversations here today, 
but I would like to piggyback on my colleague's last statements 
specifically related to rain and stormwater.
    Two-inch-plus rain events have steadily increased in 
frequency since 1964. Specifically, there was an 89-percent 
increase for the State of Michigan 1964-2013, a 128-percent 
increase for southeast Michigan. Specifically, for whomever can 
answer, what types of wastewater treatment projects at 
wastewater treatment facilities are eligible for CWSRF emerging 
contaminants funding?
    Any ideas?
    Ms. Johnson. I can try to address that. The CWSRF emerging 
contaminant funding is a very narrow eligibility under the 
CWSRF program, but has specific funding through the 
Infrastructure Investments and Jobs Act. The guidance for that 
funding was delayed in coming out, and so, State SRF programs 
are trying to understand the particulars with administering 
those funds currently. They are quite prescriptive, from what 
we have been told, and that the CWSRF programs cannot use the 
funding for monitoring to detect emerging contaminants. And so, 
an emerging contaminant would have had to have been previously 
detected in order to use those funds. And without those being 
regulated contaminants, a lot of especially small communities 
are not actively testing for those contaminants.
    Additionally, the CWSRF emerging contaminant funding is not 
allowed to be used for detecting the source of contamination. 
So, once identified, they can't use the funds to figure out 
where it is coming from. So, the Clean Water SRF----
    Mr. James [interrupting]. That is interesting, Ms. Johnson. 
I am going to have to look into that. Thank you.
    Ms. Johnson. Thank you.
    Mr. James. One more quick question in the limited time that 
we have. After speaking with my colleague and former 
Representative, Candice Miller, discussing combined sewerage 
overflow projects in order to fully protect Michiganders from 
increasingly devastating floods, we have determined that nearly 
$181 million in design and construction will be needed to 
protect our homes. This includes nearly $70 million for the 
Nine Mile emergency bypass rehabilitation, $22 million for 
electrical system replacements, and nearly $30 million for 
canal rehabilitation in our district alone.
    In 1\1/2\ minutes, anybody who can answer, what kinds of 
planning and assessment activities are eligible for the CWSRF 
as we examine this moving forward?
    Ms. Johnson. The CWSRF programs can fund a wide range of 
planning activities. Some of the problems with using those 
funding sources for planning activities is the Federal 
procurement requirements for engineering services. Oftentimes 
the State and Federal requirements for procuring those services 
contradict each other. And so, compliance with procuring 
services in a State doesn't always meet the Federal 
requirements, so, they use funding sources outside the CWSRF to 
utilize for their planning efforts.
    Mr. James. Thank you very much. I know the chairman shares 
my passion for regulatory reform and streamlining. So, I am 
excited to work with the chairman and my colleagues on that.
    With that, sir, thank you. I yield back.
    Mr. Rouzer. Mr. Moulton.
    Mr. Moulton. Thank you, Mr. Chairman. When you drive up to 
my hometown from Boston, you go along this beautiful beach 
right between Lynn and Swampscott. It is called King's Beach, 
literally fit for a king, and yet it is closed 90 percent of 
the time. It is the most polluted beach in Massachusetts. Now, 
Lynn is a majority minority community, and you will often see 
families out there, even when the beach is closed, because it 
is the only beach they have access to at all. So, it is a major 
issue for the community.
    The problem is that, with most of the clean water funding 
available through the Bipartisan Infrastructure Law and other 
legislative vehicles only available as loans, many local 
governments just don't have the tax base large enough to pay 
them back. And Massachusetts doesn't have a county system 
anymore, so, it is hard to coordinate different cities and 
towns working together, although Lynn and Swampscott are moving 
in that direction.
    So, Mr. Swingle, what should we be doing to support a more 
regional approach to water quality issues like those that are 
plaguing King's Beach?
    And what mechanism would you suggest we use when our 
current system is so segmented?
    Mr. Swingle. Across the water sector, I think part of this 
is ensuring that we have organizations and use organizations 
like NACWA for best practice sharing. We have many large 
utilities across the country that do have expertise and 
capabilities.
    And in my State, in Florida, through our association, which 
is the Florida Water Environment Association Utility Council, 
we do a lot to help and provide that resourcing in terms of 
just assistance and consultation for smaller utilities. So, I 
think that is very important, on State levels, is utilities 
helping utilities and working together and creating 
partnerships with the regulatory environment.
    The second piece that I emphasize that remains absolutely 
critical is that diversity of funding approaches. I don't 
believe that there is any singular funding approach that will 
work for everyone. And so, having funding approaches that make 
sense for the different communities that we serve and their 
differences is absolutely critical in order to be successful to 
address the situations that are----
    Mr. Moulton [interrupting]. Ms. Hammer, I want to ask about 
this, specifically. Picking up on where Mr. Swingle left off, 
what should we be doing to ensure that Federal infrastructure 
funding is accessible for environmental justice communities 
like Lynn in the amount required to make a difference?
    Ms. Hammer. Thanks. As we have discussed a few times today, 
it is extremely important that funding continue to be available 
in the form of additional subsidization grants and principal 
forgiveness that doesn't have to be repaid, which is the only 
option for many communities that can't afford a loan.
    Technical assistance is also incredibly important. A number 
of communities don't have the on-staff resources to navigate 
the process. Preparing an application for SRF assistance can 
cost tens of thousands of dollars. So, the more technical 
assistance resources that we can provide to EPA, to other 
providers, would make a huge difference.
    Mr. Moulton. So, we also in Massachusetts have a big issue 
with combined sewerage overflows. We have heard that brought up 
by several of my colleagues today already.
    North of King's Beach is the Merrimack River, and I have 
got six towns in my district that the Merrimack River flows 
through. And as we are having more frequent bad rainstorms with 
climate change, there are a lot more CSO events, and it is a 
real problem. And a lot of the upriver towns that are not 
necessarily in my district but contribute to the problem here 
just don't have the money to upgrade their sewerage systems to 
handle this.
    So, Ms. Hammer, I am glad to see that the Bipartisan 
Infrastructure Law authorizes a program specific to combined 
sewerage overflow issues, but can you comment on how that 
program works and how it could help my district and other 
districts upstream on the Merrimack River?
    Ms. Hammer. We were also really glad to see that program 
get included. It has taken a really long time to get it up and 
running.
    Mr. Moulton. Why has it taken so long to get it up and 
running?
    Ms. Hammer. I am not entirely sure. I know that the amount 
of funding that was appropriated for it was a lot less than was 
authorized. So, getting that appropriation level up would be 
helpful, but just administrative delays----
    Mr. Moulton [interrupting]. Are there ways that we should 
expand the program, as well?
    Ms. Hammer. Sorry?
    Mr. Moulton. Are there ways we should expand the program, 
as well?
    Ms. Hammer. Expand the program? I don't have any specific 
recommendations on that right now, other than increased 
appropriations.
    Mr. Moulton. All right. Thank you, Mr. Chairman. I yield 
back.
    Mr. Rouzer. The gentleman yields back. Mr. Westerman.
    Mr. Westerman. Thank you, Chairman Rouzer and Ranking 
Member Napolitano. These hearings are obviously very important 
as you work towards keeping that record going on getting a WRDA 
bill done, and I look forward to being part of that. Thank you 
to the witnesses for being here today.
    Ms. Johnson, I come from your neighboring State of 
Arkansas. I represent a rural district. The areas in Arkansas 
are much like the areas in Oklahoma. And I wanted to ask you 
your thoughts on how the current structure of the Clean Water 
SRF better serves rural areas like ours as opposed to some kind 
of federally mandated system.
    Ms. Johnson. Thank you for the question. Yes, Oklahoma is a 
very rural State, and we have been funding projects in rural 
Oklahoma for the past 30 years, not just with the recent 
attention on small, disadvantaged communities. Those 
communities are the backbone of rural States across the Nation 
and definitely are in need of funding.
    The Clean Water Act already authorizes the SRF programs to 
utilize 10 percent of the funding for additional subsidization. 
And with a maximum of 30 percent, the additional in the 
appropriations bill is generally duplicative, but States 
already have the authority to do that. And it is a State issue, 
and States understand the affordability challenges within their 
States and know where to direct those fundings to.
    One thing I will say about small, rural communities is that 
they are resilient. But their priorities are different than the 
larger communities. While larger communities have processes in 
place for fiscal sustainability, small communities are trying 
to maintain compliance and not raise their rates for their 
households within their communities. And so, it is a challenge 
for those communities.
    But increasing grant programs through the SRF program, 
while it is great for the recipients of those grants, it 
increases the cost to small or disadvantaged communities that 
didn't get a grant by having to raise our interest rates 
because of the lack of loans coming back into the program 
because it is going out as grant funding.
    Mr. Westerman. Thank you. And one of the suggestions you 
made for streamlining compliance really caught my attention. I 
just want to read this. It is your first bullet point in your 
testimony on suggestions. It says to, ``Modernize the contract 
threshold and index the threshold to inflation: Davis-Bacon 
applies to water infrastructure projects that cost more than 
$2,000, a threshold that hasn't been updated since the law was 
enacted in 1931.'' You said, ``For context, the average cost of 
a water infrastructure project in a small community (fewer than 
10,000 people) was $1.8 million in 2022.''
    I first learned about this by working with the folks at the 
Corps of Engineers on the MKARNS, and I was shocked when I 
found out that to change the tires on a backhoe, you had to put 
out a formal bid. And something that would cost maybe $2,500, 
you end up literally spending $15,000, and most of that is 
paperwork. The cost for the tires on the backhoe is the same 
that it would be if you just went and got new tires on your 
backhoe.
    So, in further investigation on this, between 2018 and 
2020, just in the Little Rock and Tulsa Districts, had this 
threshold been adjusted for inflation, which it was $2,031, I 
think it would have been $36,000 at that point and $40,000 or 
more now--it would have saved $18 million over a 2-year period.
    Can you speak to that more, and talk about how--and the 
reason--I tried to put this in WRDA last time, and it got 
rejected because people thought it was going to affect Davis-
Bacon. This has nothing to do with the wage rates. It has to do 
with raising the limit that you can purchase without having to 
go through a formal bidding process.
    Ms. Johnson. Yes, there is definitely a need for 
modernizing the compliance procedures for not only Davis-Bacon, 
but other Federal requirements. Like you said, it's not about 
the wages. It's about compliance of these requirements.
    In Oklahoma, we had a community that had to turn back 
Federal funding because, literally, the project covered two 
different wage rate areas. So, while they were working on one 
side of the street, they had to be in compliance with one wage 
rate, and while on the other side of the street, they had to be 
in compliance with a separate wage rate. So, this is a mid-
sized community that had sophisticated processes for compliance 
and still wasn't able to get it right.
    So, as we have mentioned several times today, it really 
needs to be streamlined and modernized.
    Mr. Westerman. Thank you, and I yield back.
    Mr. Rouzer. Mr. Garamendi.
    Mr. Garamendi. Thank you, Mr. Chairman. This is a rather 
important hearing, considering where the appropriation process 
is going. We ought to be pretty much aware that this is likely 
to be ``pie in the sky/dream on'' if the appropriations that 
are proposed by my colleagues on the Republican side actually 
happen. So, let's dream on for a few moments. We have got some 
dreams that we would like to put forward.
    This question is for you, Mr. Proctor. This past January, I 
reintroduced my bipartisan Clean Water State Revolving Fund 
Parity Act with Congressman Bost of Illinois. This would expand 
eligibility for the U.S. EPA Clean Water State Revolving Fund 
program to privately owned wastewater treatment systems, but 
only to that portion of money that we would hope would be 
allocated in the future over and above the present $1.63 
billion fund.
    So, Mr. Proctor, do you agree--I hope--that Congress should 
also provide low-cost Federal financing loans that would be 
repaid with interest to help modernize the wastewater treatment 
systems for those millions of Americans that rely upon 
privately owned systems?
    Mr. Proctor. I do. I think there are somewhere around 
35,000 water systems across the country, 85 percent of which 
serve fewer than 10,000 people. And they simply lack the 
resources to be able to take care of all the needs for their 
customers.
    And one of the things that could alleviate that concern 
would be allowing public-private partnerships, allowing private 
entities to come in and access some of that funding to provide 
additional resources.
    And not only that, regionalization, which I think is sort 
of related to what your bill addresses, is a way to increase 
scale that would provide and bring more resources to solve the 
problem, as well.
    One other thing that I would mention is, of those 10,000--
or of those smaller utilities that are out there, many of them 
are in noncompliance because they do lack the expertise and 
resources. But there is a poison pill out there that prevents 
the private sector from coming in to provide assistance, and 
that is that if a private-sector entity, or, for that matter, a 
public-sector entity, comes in and takes over or assists with 
the operation of that utility, they could incur whatever past 
liabilities, penalties, whatever may have accrued from past 
sins.
    Mr. Garamendi. [Inaudible.]
    Mr. Proctor. So, providing some form of safe harbor for 
larger utilities that come in in a Good Samaritan role to help 
these smaller utilities would eliminate that as an obstacle.
    Mr. Garamendi. Additional work to be done, for sure, and we 
will pick that up.
    The bill that we are proposing, we would hope it would be 
included in the markup from this House's WRDA bill so that we 
can then negotiate with the Senate, which is always a good 
idea.
    This next question goes to you, Ms. Johnson. The Council of 
Infrastructure Financing Authorities has yet to chime in on 
this brilliant piece of legislation that Mr. Bost and I are 
putting forward. Would you like to opine today on your position 
in support of, hopefully, this legislation?
    Yes, indeed, I am trying to set up a system in which this 
might be included in a bill that we might take up in markup.
    Ms. Johnson. Yes, CIFA does not oppose the expansion of the 
Clean Water SRF-eligible entities, to include private. 
Ultimately, States will have to make the decisions on if they 
fund to public or private entities.
    Mr. Garamendi. Yes, if they have the opportunity.
    Ms. Johnson. Yes.
    Mr. Garamendi. And once again, this would be money over and 
above the present level of appropriations. So, it would be the 
additional money which we would hope would be included. But 
right now, it appears as though we are going in the opposite 
direction.
    This next question goes to--well, I will put the question 
out there, and Mr. Swingle, good luck answering.
    The annual appropriation has remained stagnant for the last 
30 years. This was the opening statements that all of you made. 
We cannot solve this problem if we don't have additional money. 
And if we are going backwards and reducing the appropriations, 
it is going to get a whole lot dirtier out there.
    Would you agree with that, Mr. Swingle?
    Mr. Swingle. Yes, we support increasing investment in clean 
water. It is absolutely critical to our communities.
    Mr. Garamendi. And I heard you opine earlier that going the 
opposite direction would create a significant issue of 
contamination.
    Thank you very much. I yield back.
    Mr. Rouzer. Mr. LaMalfa.
    Mr. LaMalfa. Thank you, Mr. Chairman. Thank you, panelists.
    In my district occurred almost 5 years ago was something 
called the Camp Fire, which destroyed the town of Paradise, 
about 150,000 acres, 20,000 buildings, caused the evacuation of 
about 50,000 people, and, most tragically, 85 deaths. So, we 
are working hard to help that town rebuild and recover, and 
actually eventually be stronger than it was. So, they need to 
be equipped in the future to do so.
    So, just to set the scene, Paradise is a town on a ridge 
above the larger town of Chico in Butte County, California. 
Chico, being larger, has a college, more resources, et cetera. 
So, after Paradise endured what was called the Camp Fire, the 
priority became connecting their wastewater system to a 
centralized wastewater solution down in Chico. The two towns 
are cooperating on a regional system that will benefit both in 
that setup. So, a pipeline would be needed to run from Paradise 
up on the ridge southwest, approximately about 18 linear-miles 
to the city of Chico for their plant.
    So, for the town of Paradise, the lack of a sewer system 
has hampered their economy actually for decades, and especially 
post-fire. And post-fire, it has helped stall the recovery 
efforts that they are seeking. So, they are trying to build 
affordable housing, but without the system of sewers to do so, 
it is really hard to do high density.
    And as you know from replacing septic with a system like 
this, it has a better potential to improve groundwater or not 
have groundwater be harmed, as sometimes septic can do.
    So, there have been multiple funding sources that have come 
for this project from Federal and State government. We are 
seeking the Federal funds through the connection payment, just 
under $15 million through the Clean Water State Revolving Fund. 
Unfortunately, the connection was ineligible for funds, as it 
was not seen as an upgrade to the system.
    So, there is a push and a trend towards increasing 
regionalization like we are talking about with these two towns 
and consolidation of wastewater treatment facilities. So, 
regionalization would save considerable money, have economies 
of scale, and improve the overall operation. It seems like a 
good trend where it fits the folks involved.
    So, in this case they both agree it is best for this 
locality. And what we are finding, though, is that the 
revolving fund was not set up to incentivize this particular 
instance. So, I have heard of other instances where certain 
projects are ineligible because they are not explicitly 
upgrading the system, as I mentioned.
    So, the bottom line, have any of you on the panel heard of 
these situations where a project would not be a benefit--where 
it would be a benefit but was not eligible for the funds? I am 
sorry. So, what were the reasons the projects would be 
ineligible? Have you heard of this sort of thing?
    Do you want to start, Ms. Johnson, Mr. Swingle?
    Ms. Johnson. In the Clean Water SRF programs, I know 
regionalization is a local decision. I am not aware what the 
particulars of that particular project to say whether or not--
--
    Mr. LaMalfa [interrupting]. Well, other instances where 
regionalization or the ineligibility--that they aren't able to 
pull down the revolving funds. Have you heard of other 
instances like that?
    Ms. Johnson. Of where regionalization is eligible?
    Mr. LaMalfa. Yes.
    Ms. Johnson. Yes. Yes, consolidation and regionalization, 
as far as I am aware, is an eligible activity.
    Of course, these are State-run programs and have State 
requirements to follow, as well. So--and again, I am not aware 
of the particulars of this project. I can't say for certain on 
why they would----
    Mr. LaMalfa [interrupting]. Yes. I am just wondering in 
general.
    Ms. Johnson [continuing]. Determine it ineligible.
    Mr. LaMalfa. Let me go to Mr. Swingle, please. Thank you.
    Ms. Johnson. Yes.
    Mr. LaMalfa. Have you--are you hearing of, because of 
regionalization, it doesn't meet the upgrade criteria?
    Mr. Swingle. That is not something that I have the details 
on, whether there is--on specific eligibility for that type of 
activity.
    Mr. LaMalfa. OK. Mr. Proctor.
    Mr. Proctor. I don't have any details on that, as well.
    The one thing I would note, though, is I think this, in 
part, is something that Mr. Garamendi's bill would address, is 
that your private utilities currently--because they are 
ineligible for Clean Water SRF funding, if they do decide to 
come in and partner with a public utility, any outstanding SRF 
loans have to be paid back immediately, and that is a 
substantial barrier to those sort of assistance efforts.
    Mr. LaMalfa. OK, all right, I already burned through the 
time, so, thank you, panelists.
    We shouldn't have this barrier because, even though 
regionalization is a plus, it should also be considered an 
upgrade to the overall system. Indeed, you are getting overall 
improvements and better water quality. So, we need to look at 
how we can improve that eligibility and help towns like that.
    I yield back. Thank you, Mr. Chairman.
    Mr. Rouzer. Mr. DeSaulnier.
    Mr. DeSaulnier. Thank you, Mr. Chairman. Thank you, Ranking 
Member and panelists.
    It is interesting, following two neighbors, northern 
Californians, Mr. Garamendi and Mr. LaMalfa, both who are good 
friends. And I have stories I can share, and they can have some 
for me, too, as well. But in the context of this hearing, Mr. 
Garamendi and I represent portions of the delta, both of us 
different times in our careers in redistricting.
    So, Ms. Hammer, in the context of the State and local title 
of this hearing, in northern California and California in 
particular, we have been working on the challenges for climate 
change, and our economy, and our workforce, and our environment 
for a long time. Certainly in the delta, protecting our levees. 
We know that a lot of them were engineered and built a long 
time ago. So, all of this--there is a synergy. Fortunately, we 
prepared. We have got the issue in southern California with the 
Colorado River and our partnerships.
    But my question to you first is, because we have prepared--
and not enough--we can spend this money, the $50 billion from 
the infrastructure bill. We are more prepared, we have got more 
oversight in many ways. Other parts of the country do, 
reflecting their constituency. And in the current budget 
request by the administration, we are increasing by $250-$270 
million our infrastructure for clean water.
    But if the appropriations bill, as currently constructed, 
there would be a 67-percent cut. So, in the context of your 
background, preparing for future generations, preparing for 
clean water in a complicated environment, we can't back away. 
Any kind of interruption has serious consequences.
    And to the other conversation about workforce development--
Mr. Proctor, maybe if we have time you can chime in on this--
our experience with my local districts in the bay area is we 
have a workforce because of our Davis-Bacon and stronger 
provisions, and nonunion contractors can compete, as well, if 
they want to invest in apprenticeship programs. But we are 
going into high schools and recruiting people in the building 
trades, the operating engineers, a lot of disadvantaged kids. 
So, that is a challenge. But where we really have a challenge 
is on the professional side, where we are trying to get kids 
into engineering schools. We have partnerships with the 
University of California because we don't have enough.
    So, that is a long-winded--first part is, how do we prepare 
for the environment we are in so that we can avoid the cost, as 
Mr. LaMalfa talked about, these catastrophic climate-induced 
challenges, whether it is Paradise or whether it is flooding 
throughout the country?
    Ms. Hammer. Of course, climate change is something that all 
communities need to be preparing for.
    Speaking of wildfire, just the wildfires that just happened 
in Hawaii had significant impacts on water and wastewater 
systems in Maui. It is going to be very expensive to address.
    One thing I haven't heard--we have been talking a lot about 
wet weather impacts of climate change. But one thing we haven't 
discussed as much today is drought. And there are a number of 
projects that could be eligible for Clean Water SRF funding to 
address drought, such as water reuse and recycling projects, 
which tend to be very cost intensive. So, we do need to keep 
the funding levels up enough to support these important 
projects that are going to help communities continue to be 
resilient into the future.
    And then, in the past we have also supported proposals to 
have applicants consider climate impacts as they are planning 
and designing projects. If they are receiving Federal funds, 
that they could be required to take a look at how climate 
change might affect the design of the project that they are 
applying for funding for. That is something we would continue 
to support.
    Mr. DeSaulnier. Mr. Proctor, I want to ask you something 
just that you triggered.
    But first off, I just had a meeting with my BlueGreen 
Alliance folks, and it is working. Even without the regulation, 
we are making a business argument that we can transition, and a 
lot of this is on the air quality side.
    Mr. Proctor, the question about--in California it used to 
be a north-south argument about water. Now it is more east-
west. A lot of the stuff that we did in the legislature, the 
industrial agriculture industry is actually moving to be more 
efficient about reuse, and it is benefiting them from a 
financial standpoint. So, we still want to protect them and 
almond farmers like Mr. LaMalfa to a certain degree, but we 
also want to be ready for the change.
    I wonder if you could opine on just the business model of 
reuse and more efficient use of water, particularly for the 
business community.
    Mr. Proctor. Well, I can give you a concrete example of how 
industry can be creative on this point. We have a plant in New 
Jersey that has a complete stormwater capture system. It 
captures all the stormwater that falls on our plant site, it 
recirculates it, it treats it, and then uses that water in the 
manufacturing process so that we don't have to use potable 
water or other precious resources like that.
    And so, there are a lot of opportunities out there to do 
just that. Water reuse generally, whether it is in industrial 
applications like I was talking about, or using gray water for 
other applications--flushing toilets, that sort of thing--are 
all important ways to try and conserve what we recognize is an 
increasingly scarce resource, clean water.
    Mr. Rouzer. Well, thank you very much. I appreciate our 
panelists being here today.
    Seeing no other Member that hasn't already had an 
opportunity to comment and ask questions, I ask unanimous 
consent that the record of today's hearing remain open until 
such time as our witnesses have provided answers to any 
questions that may be submitted to them in writing.
    Without objection, so ordered.
    I also ask unanimous consent that the record remain open 
for 15 days for any additional comments and information 
submitted by Members or witnesses to be included in the record 
of today's hearing.
    Without objection, so ordered.
    The subcommittee stands adjourned.
    [Whereupon, at 12:11 p.m., the subcommittee was adjourned.]

                       Submissions for the Record

                              ----------                              


Letter of October 4, 2023, to Hon. Sam Graves, Chairman, and Hon. Rick 
Larsen, Ranking Member, Committee on Transportation and Infrastructure, 
from Sean McGarvey, President, North America's Building Trades Unions, 
          Submitted for the Record by Hon. Grace F. Napolitano
                                                   October 4, 2023.
The Honorable Sam Graves,
Chairman,
Committee on Transportation and Infrastructure, U.S. House of 
        Representatives, Washington, DC 20515.
The Honorable Rick Larsen,
Ranking Member,
Committee on Transportation and Infrastructure, U.S. House of 
        Representatives, Washington, DC 20515.
    Dear Chairman Graves and Ranking Member Larsen:
    During the September 28, 2023, hearing of the Subcommittee on Water 
Resources and the Environment titled, ``Clean Water Infrastructure 
Financing: State and Local Perspectives and Recent Developments,'' the 
Council on Infrastructure Financing Authorities (CIFA) submitted 
testimony that reflects a fundamental misunderstanding of the Davis-
Bacon Act--a law that enjoys broad bipartisan support among the Members 
of the Transportation and Infrastructure Committee, as well as the full 
House. On behalf of the over 3 million skilled craft professionals that 
comprise North America's Building Trades Unions (NABTU), I write to 
strongly oppose the misguided recommendations of CIFA which seek to 
dilute a framework that has, for over 90 years, protected the wages of 
construction workers and their families.
    The Davis-Bacon Act (DBA) of 1931 protects the wages and benefits 
of construction workers by prohibiting contractors on federal projects 
from paying less than the locally going rate, known as the prevailing 
wage. Congress passed the DBA out of concern that aggressive bidding in 
federal procurement was producing a race to the bottom in local area 
wages and benefits. Since the enactment of the DBA, Congress has passed 
over 100 laws applying prevailing wage requirements to projects that 
receive various forms of federal assistance, including grants, loans, 
guarantees, insurance, bonds, and clean energy tax credits. For nearly 
a century, NABTU and its affiliates have advocated for prevailing wage 
protections because such laws help construction workers maintain a 
decent standard of living, and they ensure that contractors compete for 
contracts on the basis of merit, rather than on who can exploit the 
cheapest workforce.
    To be effective, prevailing wages must reflect actual wages paid to 
workers in their communities, not mathematically contrived averages. 
For this reason, in determining the prevailing wage, the U.S. 
Department of Labor (DOL) has consistently given priority to the modal 
rate--that is, the wage rate that appears most frequently in a 
community for a given classification. CIFA's recommendation that DOL 
adopt wages published by the Bureau of Labor Statistics (BLS) when job 
classifications are missing from a wage determination is directly at 
odds with Congress's intent in enacting the DBA because BLS rates do 
not reflect actual wages paid to workers in their communities. For 
example, BLS does not collect fringe benefit data, nor does it collect 
data by county level or by construction type.
    BLS therefore produces imprecise watered-down average rates paid to 
no one.
    CIFA's criticism of DOL's conformance process is also misguided. 
Conformance is the method DOL uses to add missing classifications to 
wage determinations. Conformances are necessary where DOL wage surveys 
yield insufficient data to publish a prevailing wage for a 
classification. Under the current system, contractors are responsible 
for submitting to the contracting agency a form with the proposed 
classification and rate of pay to be added. The contracting agency then 
submits that form to DOL for final approval. Contrary to CIFA's claim 
that the process is riddled with delays, DOL responds to most requests 
within 30 days. See U.S. DOL, Prevailing Wage Resource Book, Davis-
Bacon Additional Classification Process (Conformances), at 4 (May 
2015). What's more, the new DBA regulations which take effect this 
month further streamline the process by authorizing DOL to proactively 
add missing classifications to wage determinations, instead of relying 
exclusively on contractor requests. 29 C.F.R. Sec. 1.3(f)(as amended in 
88 Fed. Reg. 57526).\1\
---------------------------------------------------------------------------
    \1\ CIFA also recommends that DOL consider adopting prevailing wage 
rates established by state governments pursuant to their own prevailing 
wage laws. The new DBA regulations authorize DOL to do just that where 
the state's criteria for establishing the prevailing wage is 
``substantially similar'' to DOL's. 29 C.F.R. Sec. 1.3(g)-(i) (as 
amended in 88 Fed. Reg. 57526)
---------------------------------------------------------------------------
    CIFA also argues that the ``paperwork'' associated with DBA 
enforcement is ``prescriptive'' and ``burdensome,'' especially for 
contractors who operate in states with state prevailing wage laws. On 
all DBA-covered projects, contractors and subcontractors must submit 
weekly certified payroll reports (CPR) to the government to ensure 
compliance with prevailing wage requirements. Contrary to CIFA's 
claims, CPR reporting is a rather simple and straightforward process 
typically managed through payroll software. And the data collected in 
CPRs is not much different than the data responsible contractors 
already collect for their daily logs. CIFIA also argues that the 
reporting requirements under the DBA are duplicative. It is important 
to note here that state prevailing wage laws vary a great deal with 
respect to compliance monitoring and enforcement. Some state laws 
include periodic reporting requirements, while others do not. See, 
e.g., Mont. Code Sec. 18-2-423; Tex. Gov't Code Sec.  2258.024; Va. 
Code. Sec. 2.2-4321.3(H). The scope of coverage also varies from state 
to state and, contrary to CIFA's suggestion, state prevailing wage laws 
will not automatically apply to DBA-covered projects. For example, 
Maryland and Colorado's state prevailing wage laws do not apply to 
contracts for construction that receive federal funding or that are 
otherwise covered by the Davis-Bacon Act. See, e.g., Colo. Rev. Stat. 
Sec.  24-92-201 et seq.; MD Code State Fin. & Proc. Sec.  17-202(b)(2).
    The DBA's reporting requirements are critical to enforcement. CPR 
submissions are an important deterrent against dishonest contractors 
because CPRs can serve as the basis for federal prosecution. Section 
3145(b) of the Act provides that falsification of a certified payroll 
may amount to a criminal violation under 18 U.S.C. Sec. 1001, that can 
result in a fine, up to 5 years in prison, or both. The falsification 
of payrolls can also be grounds for a lawsuit under the False Claims 
Act, 31 U.S.C. Sec.  3730. Accordingly, reporting requirements protect 
construction workers on federal and federally assisted projects, as 
well as the taxpayer from instances of fraud and abuse.
    The DBA's compliance monitoring framework, which relies primarily 
on CPR submissions, is particularly important given that the 
construction industry consistently ranks among the top three industries 
for noncompliance. U.S. DOL Website, WHD by the Numbers 2022, https://
www.dol.gov/agencies/whd/data/charts/low-wage-high-violation-
industries; see also GAO-21-13 at 17 (Dec. 2020).
    In fact, just three days before CIFA submitted its testimony to the 
Committee, DOL announced that it had recovered $101,287 in back wages 
and benefits for 51 workers who were short-changed by contractors on 
various DBA-covered projects in California. One week earlier, DOL 
announced that it had recovered $947,000 in back wages from four 
contractors on DBA-covered projects in Oregon and Washington.
    While the hearing did address many important questions, our members 
simply cannot allow misleading claims and attacks against a 
foundational standard to go unanswered. A strong, bipartisan majority 
of the Committee understand the importance of the Davis-Bacon Act to 
construction workers across the nation. NABTU looks forward to working 
with you and other strong supporters of Davis-Bacon on the Committee to 
ensure the consistent application of prevailing wage standards.
            Sincerely,
                                             Sean McGarvey,
                 President, North America's Building Trades Unions.

                                 
  Letter to Hon. Sam Graves, Chairman, and Hon. Rick Larsen, Ranking 
Member, Committee on Transportation and Infrastructure, and Hon. David 
    Rouzer, Chairman, and Hon. Grace F. Napolitano, Ranking Member, 
  Subcommittee on Water Resources and Environment, from Mark McManus, 
      General President, United Association of Union Plumbers and 
   Pipefitters, Submitted for the Record by Hon. Grace F. Napolitano
                                 General Office File Reference: GP.
The Honorable Sam Graves,
1135 Longworth HOB,
Washington, DC 20515.
The Honorable Rick Larsen,
2163 Rayburn HOB,
Washington, DC 20515.
The Honorable David Rouzer,
2333 Rayburn HOB,
Washington, DC 20515.
The Honorable Grace Napolitano,
1610 Longworth HOB,
Washington, DC 20515.
    Dear Chairman Graves, Chairman Rouzer, Ranking Member Larsen, and 
Ranking Member Napolitano,
    The more than 370,000 hardworking men and women of the United 
Association of Union Plumbers and Pipefitters (UA) are incredibly proud 
to go to work every day to deliver clean and safe water to all 
communities across our great nation. For generations, Davis-Bacon 
prevailing wage provisions have protected the ability of working 
families to earn fair wages.
    The Clean Water State Revolving Funds (SRFs) are an essential 
component to our shared mission of protecting the health of the nation. 
Your leadership on this issue has meant the United States continues to 
be a world leader on water infrastructure, and a model for the world to 
follow. Unfortunately, in recent testimony submitted to the 
subcommittee, the important role Davis-Bacon provisions play to protect 
working families came under baseless attacks from the Council of 
Infrastructure Financing Authorities (CIFA), who claimed that Davis-
Bacon requirements on Clean Water SRFs are onerous on state agencies 
and businesses, and that compliance with Davis-Bacon requirements are 
``not an issue'' given the tight labor market.
    This testimony misses the mark and is nothing more than an attempt 
to undercut fair wages and ensure unscrupulous contractors can continue 
to profit off the backs of the hardworking men and women who protect 
our water infrastructure. Davis-Bacon is an essential tool to protect 
fair wages and to crack down on wage theft. In fact, the U.S. 
Department of Labor's Wage and Hour Division continues to enforce these 
provisions and collect millions in back wages for workers who were 
cheated out of their hard-earned fair wages.
    Simply put, CIFA's proposed changes to SRF funding would not only 
hurt American workers; it would weaken our standing on the world stage 
as a leader in clean water infrastructure and put our communities at 
risk. I applaud the strong bipartisan majorities on this Committee and 
Subcommittee who understand and support the tremendous value Davis-
Bacon provides, and our continued partnership to ensure that the 
Plumber always protects the health of the nation.
            Sincerely yours,
                                              Mark McManus,
       General President, United Association of Union Plumbers and 
                                                       Pipefitters.

                                 
    Statement of Patricia Sinicropi, Executive Director, WateReuse 
   Association, Submitted for the Record by Hon. Grace F. Napolitano
    Thank you for providing the opportunity to submit written testimony 
on Clean Water Infrastructure Financing: State and Local Perspectives 
and Recent Developments. I submit this testimony today on behalf of the 
WateReuse Association and its members to highlight the importance of 
financing water reuse and recycling to build resiliency and strengthen 
America's infrastructure.
    WateReuse is a not-for-profit trade association for water 
utilities, businesses, industrial and commercial enterprises, non-
profit organizations, and research entities that advocate for water 
recycling. WateReuse and its state and regional sections represent 
nearly 250 water utilities serving over 60 million customers, and over 
200 businesses and organizations across the country. The WateReuse 
Association's mission is to engage its members in a movement for safe 
and sustainable water supplies, to promote acceptance and support of 
recycled water, and to advocate for policies and funding that increase 
water reuse.
    Water reuse, also known as water recycling, is the process of 
intentionally capturing wastewater, stormwater, saltwater or graywater 
and cleaning it as needed for a designated beneficial freshwater 
purpose, such as drinking, industrial processes, irrigation, 
groundwater replenishment, and watershed restoration. The fundamental 
principle of water reuse is using the right water for the right 
purpose, everywhere and all the time. By advancing water reuse, we 
protect public health and the environment while supporting strong and 
growing local economies.
    Across the country, water, wastewater, and stormwater managers have 
shown that water recycling is often a central feature in innovative, 
integrated approaches to solving water management challenges. In the 
West and South, the integration of water recycling has often been 
driven by water supply challenges and the need for drought-resilient 
supplies. Elsewhere in the country, water recycling has been used to 
help manage stormwater, address water quality challenges, and relieve 
overburdened combined sewer-stormwater management systems. Water reuse 
is helping communities along our coasts manage sea level rise and 
saltwater intrusion by replenishing depleted coastal aquifers. It is 
also increasingly used as an economic development tool, attracting 
businesses and growing jobs by providing a stable water supply and a 
pathway to protect local groundwater and surface water.
    To help communities achieve these goals, Congress reauthorized the 
Pilot Program for Alternative Water Source Grants (33 U.S.C. 1300) as 
part of the Infrastructure Investment and Jobs Act (IIJA) of 2021. 
Through the program, EPA will make competitive grants to state, 
interstate, and intrastate water resource development agencies to 
engineer, design, construct, and test alternative water source systems, 
including water reuse and stormwater management systems. The House FY 
2024 Interior-Environment Appropriations bill includes start-up funding 
of $3 million for the program, whereas the Senate companion includes 
none. We urge this Committee to work with appropriators to ensure that 
the final FY 2024 appropriations package makes this important 
investment in water recycling.
    In addition to funding the Pilot Program for Alternative Water 
Source Grants, we urge you to work with the Appropriations Committee to 
fully fund the Clean Water and Drinking Water State Revolving Fund 
(SRF) Programs in final FY 2024 appropriations legislation. The cuts 
proposed in the House Interior-Environment Appropriations bill would 
severely limit communities' ability to access financing for water 
recycling and other water infrastructure projects. Moreover, we ask 
that Congress fund Clean Water and Drinking Water earmarks on top of 
and in addition to rather than from within funding for SRF 
capitalization grants. The current approach of funding earmarks from 
within the SRF capitalization grants budget is undermining states' 
ability to operate and maintain viable revolving loan programs.
    Investments in water reuse build communities that are modern, 
sustainable and stable--ready for families to flourish and businesses 
to grow. We urge Congress to act swiftly to provide communities the 
tools and resources they need to modernize their infrastructure, build 
resilience, and protect the environment and public health.
    Thank you for considering our testimony. Please do not hesitate to 
reach out to the WateReuse Association's Policy Director, Greg Fogel, 
with any questions.

                               Appendix

                              ----------                              


   Questions to Lori Johnson, Assistant Chief, Financial Assistance 
 Division, Oklahoma Water Resources Board, on behalf of the Council of 
      Infrastructure Financing Authorities, from Hon. David Rouzer

    Question 1. In her written testimony, fellow hearing witness Ms. 
Hammer stated that, ``Under the Green Project Reserve (GPR) 
requirement, states do not have strong incentives to educate potential 
applicants about the benefits of green projects and the availability of 
GPR funding, nor to assist them with their funding applications.'' \1\ 
Does Oklahoma--and other states in general--need mandates to finance 
green projects?
---------------------------------------------------------------------------
    \1\ Clean Water Infrastructure Financing: State and Local 
Perspectives and Recent Developments, Hearing before the Water 
Resources and Environment Subcomm. of the H. Comm. on Transp. and 
Infrastructure, 118th Cong. (Sept. 28, 2023) (written testimony of 
Rebecca Hammer, Deputy Director, Federal Water Policy, Natural 
Resources Defense Council).
---------------------------------------------------------------------------
    Answer. The Clean Water State Revolving Funds (SRFs) are effective 
because states can customize their programs to meet the unique public 
health, environmental and affordability challenges of their 
communities. Allowing each state to prioritize projects is foundational 
to the success of the SRFs; flexibility under the broad federal 
framework ensures the SRFs can be responsive to the most important and 
ever-evolving needs of people and the environment in each state.
    Congress doesn't provide additional funding for green projects. 
Instead, Congress mandates that a percentage of annual federal funding 
be used to fund green projects as defined by the U.S. Environmental 
Protection Agency (EPA). While well-intended, federal mandates to fund 
specific types of projects, whether grey or green, undermines this 
proven state prioritization process. Displacing state priority projects 
with federally mandated projects may jeopardize public health and 
environmental protection.
    Moreover, the SRFs are subsidized loan programs. Unlike grant 
programs, loan programs depend on demand from borrowers, who also 
prioritize funding for projects that are most important, such as for 
compliance with rigorous water quality standards. In some cases, SRFs 
must use federal funding as grants or principal forgiveness, instead of 
subsidized loans, to incentivize green projects. Using federal funding 
for grants and principal forgiveness permanently eliminates a recurring 
source of revenue for water infrastructure projects in the future.
    As you can see below, Oklahoma has invested 44% of cumulative 
federal funding since 2008 for green projects, well above the ten 
percent mandate in recent annual appropriations bills. In fact, every 
SRF has exceeded the ten percent mandate, largely due to growing demand 
from borrowers. Because not all water infrastructure projects report 
their green components, it's very likely that these percentages 
underrepresent the total actual investment in green projects.
    New or ``permanent'' mandates are unnecessary. Perhaps more 
importantly, eliminating the federal mandate for green projects would 
have little, if any, impact, since many communities, today, routinely 
incorporate green strategies into their capital improvement plans and 
projects as a way to improve service, resiliency, outcomes and the 
bottom-line.

----------------------------------------------------------------------------------------------------------------
                                                                   Federal Funding    Spending on Green
                              State                                   since 2008     Projects \\     %
----------------------------------------------------------------------------------------------------------------
Alabama.........................................................      $ 253,793,500        $ 44,288,913      17%
Alaska..........................................................      $ 135,627,800        $ 27,246,401      20%
Arizona.........................................................      $ 142,447,100        $ 40,476,351      28%
Arkansas........................................................      $ 137,939,900       $ 198,723,531     144%
California......................................................    $ 1,509,112,307     $ 2,051,670,442     136%
Colorado........................................................      $ 169,344,400        $ 46,288,996      27%
Connecticut.....................................................      $ 258,521,800        $ 35,649,893      14%
Delaware........................................................      $ 103,252,400       $ 100,514,706      97%
Florida.........................................................      $ 715,349,493       $ 236,163,068      33%
Georgia.........................................................      $ 374,964,216       $ 311,458,609      83%
Hawaii..........................................................      $ 163,088,800        $ 67,743,334      42%
Idaho...........................................................      $ 103,252,400       $ 131,875,350     128%
Illinois........................................................      $ 954,463,933       $ 314,966,571      33%
Indiana.........................................................      $ 508,606,048       $ 621,510,310     122%
Iowa............................................................      $ 294,674,200       $ 130,180,072      44%
Kansas..........................................................      $ 190,453,500        $ 85,701,073      45%
Kentucky........................................................      $ 268,585,200        $ 62,622,640      23%
Louisiana.......................................................      $ 239,430,500        $ 36,684,426      15%
Maine...........................................................      $ 163,319,600        $ 80,690,046      49%
Maryland........................................................      $ 510,421,657       $ 216,489,252      42%
Massachusetts...................................................      $ 716,522,029       $ 140,677,580      20%
Michigan........................................................      $ 907,431,252       $ 233,160,195      26%
Minnesota.......................................................      $ 398,426,165       $ 149,335,778      37%
Mississippi.....................................................      $ 186,500,093        $ 19,981,710      11%
Missouri........................................................      $ 603,702,512       $ 236,607,038      39%
Montana.........................................................      $ 103,252,400        $ 27,376,031      27%
Nebraska........................................................      $ 107,626,700        $ 52,857,503      49%
Nevada..........................................................      $ 103,252,400        $ 44,900,863      43%
New Hampshire...................................................      $ 217,636,900        $ 69,498,053      32%
New Jersey......................................................    $ 1,053,501,973       $ 141,788,838      13%
New Mexico......................................................      $ 111,076,700        $ 42,979,820      39%
New York........................................................    $ 2,753,037,314       $ 397,612,493      14%
North Carolina..................................................      $ 352,199,248       $ 148,484,429      42%
North Dakota....................................................      $ 103,926,700        $ 85,773,132      83%
Ohio............................................................    $ 1,226,374,893       $ 295,019,116      24%
Oklahoma........................................................      $ 170,457,300        $ 74,155,749      44%
Oregon..........................................................      $ 238,382,700        $ 43,945,073      18%
Pennsylvania....................................................      $ 835,963,728       $ 158,030,647      19%
Rhode Island....................................................      $ 141,607,900        $ 30,651,118      22%
South Carolina..................................................      $ 212,081,670        $ 42,909,865      20%
South Dakota....................................................      $ 103,252,400        $ 12,723,217      12%
Tennessee.......................................................      $ 306,571,400       $ 119,457,472      39%
Texas...........................................................      $ 923,051,700       $ 325,840,020      35%
Utah............................................................      $ 110,905,500        $ 22,452,523      20%
Vermont.........................................................      $ 106,526,700        $ 38,792,107      36%
Virginia........................................................      $ 431,900,531       $ 192,568,905      45%
Washington......................................................      $ 367,033,331       $ 115,470,269      31%
West Virginia...................................................      $ 329,262,879        $ 45,098,026      14%
Wisconsin.......................................................      $ 570,537,777       $ 387,221,250      68%
Wyoming.........................................................      $ 103,252,400        $ 19,030,389      18%
Puerto Rico.....................................................      $ 284,720,041        $ 51,553,042      18%
                                                                 -----------------------------------------------
                                                                   $ 21,376,623,990     $ 8,606,896,235      40%
----------------------------------------------------------------------------------------------------------------
\\ Spending on green projects from 2008 to 2021.

    Question 2. You noted that the Federal mandate requiring state 
revolving fund (SRF) loan applicants to demonstrate adherence to 
Federal prevailing wage laws is very prescriptive, and creates a 
significant compliance burden, without actually providing any 
additional financial benefit to workers.
    However, a letter entered into the record during this hearing from 
the International Union of Operating Engineers suggests that Davis-
Bacon compliance is an issue for workers.\2\
---------------------------------------------------------------------------
    \2\ Letter from James T. Callahan, General President, Int'l Union 
of Operating Engineers, to Sam Graves, Chairman, H. Comm. on Transp. 
and Infrastructure, David Rouzer, Chairman, Subcomm. on Water Resources 
and Environment, Rick Larsen, Ranking Member, H. Comm. on Transp. and 
Infrastructure, and Grace Napolitano, Ranking Member, Subcomm. on Water 
Resources and Environment (Sept. 28, 2023) (on file with Comm.).
---------------------------------------------------------------------------
    Question 2.a. How do you respond to the suggestion that ``cheating 
on prevailing wages is rampant?'' \3\
---------------------------------------------------------------------------
    \3\ Id.
---------------------------------------------------------------------------
    Answer. The Clean Water SRFs don't have knowledge of ``rampant 
cheating'' and the International Union of Operating Engineers didn't 
provide any empirical evidence of ``rampant cheating'' on water 
infrastructure projects funded by the Clean Water SRFs.
    However, the SRFs acknowledge that the prescriptive nature of Davis 
Bacon can certainly lead to cases of unintentional non-compliance. In 
states with prevailing wage laws, it is understandable that state and 
federal requirements, which are different, may be confused. Even 
federal requirements that seem simple, such as paying weekly, can 
create the chance of non-compliance for businesses that pay on a 
different schedule for privately funded work. Lack of published wages 
for water workers in rural areas can also lead to unintentional 
noncompliance.
    For example, as I mentioned in my testimony, one borrower whose 
project spanned two counties didn't change the wages when workers 
crossed the county line, which led to non-compliance. However, honest 
mistakes shouldn't be characterized as ``rampant cheating.''

    Question 2.b. How may simplifying compliance procedures actually 
reduce non-compliance and ensure workers are compensated correctly?
    Answer. Simplifying the compliance processes and procedures would 
provide the ability to differentiate between contractors who are 
intentionally underpaying workers from those who may be unintentionally 
non-compliant. If the processes and procedures are clear and easy to 
follow, it would be evident which contractors are intentionally 
breaking the law and not paying the mandated wages.

    Question 3. Since 2021, the Build America, Buy America Act has 
required all Federally funded SRF projects to use iron, steel, 
construction materials, and manufactured products in the United 
States.\4\ However, inconsistent guidance towards similar types of 
water infrastructure projects amongst Federal agencies, and even within 
Environmental Protection Agency (EPA) have caused uncertainty and extra 
regulatory headaches for important projects. How can the Federal 
Government streamline Build America, Buy America guidelines without 
raising the cost and extending the timeline for important projects?
---------------------------------------------------------------------------
    \4\ Infrastructure Investment and Jobs Act, Pub. L. No. 117-58, 135 
Stat. 429.
---------------------------------------------------------------------------
    Answer. Congress should require a uniform set of rules and 
requirements for compliance with domestic procurement requirements in 
the Build America, Buy America Act (BABAA) and should eliminate the 
duplicative mandate for American Iron and Steel (AIS), which adds more 
paperwork without more protection. Different rules and requirements for 
the same types of water infrastructure projects will lead to confusion 
across the water sector and increase the potential for unintentional 
non-compliance. Consistency will also provide clarity and reliability 
to manufacturers.
    Congress should mandate a timeframe, such as 15 days, for EPA and 
the Office of Management and Budget Made in America Office (MAIO) to 
make decisions on waiver requests. Since both EPA and the MAIO must 
approve each and every BABAA waiver, implementing a deadline for 
expeditious review will ensure projects stay on time, on track and on 
budget.
    Congress should also consider codifying exceptions or waivers for 
public health. Unlike other sectors, water infrastructure projects use 
complex water treatment technologies that are needed to meet rigorous 
federal water quality standards for safe drinking water and pollution 
prevention. Public health protections should not be weakened or delayed 
for compliance with procurement requirements.
    Congress should implement the requirements in three phases--phase 
one for iron and steel, phase two for construction materials, and phase 
three for manufactured products. Because manufactured products in water 
infrastructure projects can be highly technical equipment, more time is 
needed to ensure implementation leads to the long-term success of 
BABAA.

    Question 4. Following passage of the Infrastructure Investment and 
Jobs Act (IIJA) (P.L. 117-58), the EPA issued a memorandum outlining 
signage requirements for SRF projects receiving IIJA funding.\5\
---------------------------------------------------------------------------
    \5\ Memorandum from Raffael Stein, Director, Water Infrastructure 
Division, Office of Water, EPA, and Anita Maria Thompkins, Director, 
Drinking Water Infrastructure Development Division, Office of Water, 
EPA, to Water Division Directors, Regions I-X (Dec. 8, 2022), (on file 
with Comm.).
---------------------------------------------------------------------------
    Question 4.a. What requirements do this, and other similar 
memorandums, add to SRF projects and how do such requirements increase 
costs?
    Answer. Although not required by law, The White House Office of 
Management and Budget (OMB) requires recipients of federal funding from 
the IIJA, even in the form of loans, to post signs at construction 
sites. EPA applies this mandate as a term and condition of receiving 
annual federal funding through the SRF capitalization grant.
    ``The recipient will ensure that a sign is placed at construction 
sites supported in whole or in part by this award displaying the 
official Investing in America emblem and must identify the project as a 
``project funded by President Biden's Bipartisan Infrastructure Law'' 
or ``project funded by President Biden's Inflation Reduction Act'' as 
applicable. The sign must be placed at construction sites in an easily 
visible location that can be directly linked to the work taking place 
and must be maintained in good condition throughout the construction 
period.''
    Signs must display the ``Building A Better America Emblem and must 
identify the project as a project funded by President Biden's 
Bipartisan Infrastructure Law.''
    Signage requirements apply to projects that are supported by 
appropriations in the IIJA:
      Construction projects identified as ``equivalency 
projects'' for general supplemental capitalization grants;
      Construction projects that receive additional 
subsidization (grants or forgivable loans) made available by general 
supplemental capitalization grants;
      All construction projects funded with emerging 
contaminants capitalization grants;
      All construction projects funded with lead service line 
replacement capitalization grants.

    Signage mandates increase the cost of water infrastructure 
projects, especially if the signs need to be repaired or replaced 
multiple times during a lengthy construction period. Additionally, 
prescriptive signage requirements may not accurately or proportionally 
represent multiple sources of funding, including non-federal sources 
that exceed the federal contribution, for some projects. Perhaps most 
problematic is that these signs may lead communities to believe that 
these water infrastructure projects are funded with a federal grant, 
instead of a subsidized loan which must be repaid, with interest, by 
ratepayers.
    In addition to increasing the cost of water infrastructure projects 
and potentially misleading the public about the nature of the federal 
financial assistance (loan vs. grant), the public may confuse these 
official government notices as campaign signs based on guidance in the 
brand guide. (See attached.)
                              Attachments
              ``Investing in America Signage Guidelines''
                                 -and-
                ``Project Funding Source Sign Assembly''
    [Editor's note: ``Investing in America Signage Guidelines,'' issued 
by the White House Office of Digital Strategy, is retained in committee 
files and is available online at https://www.whitehouse.gov/wp-content/
uploads/2023/02/Investing-in-America-Brand-Guide.pdf. ``Project Funding 
Source Sign Assembly'' is an older version of the aforementioned 
guidelines and is retained in committee files.]

    Question 4.b. Are such signage requirements also in place for 
projects that are receiving funding from sources aside from IIJA?
    Answer. The EPA requires SRF loan recipients to post signs on 
construction sites of federally funded or equivalency projects. 
However, EPA allows other forms of notifications such as press 
releases, inserts in water bills, and online and social media postings, 
which provides a cost-effective alternative.

    Questions to Todd P. Swingle, P.E., Chief Executive Officer and 
  Executive Director, Toho Water Authority, on behalf of the National 
      Association of Clean Water Agencies, from Hon. David Rouzer

    Question 1. Innovation is key to moving our clean water 
infrastructure into the 21st century.
    Question 1.a. Please explain what new technologies and approaches 
such as integrated planning have the potential to do for the wastewater 
sector in terms of innovation and regulatory flexibility.
    Answer. Integrated Planning (IP) and the use of new technologies go 
hand-in-hand. IP enables utilities and the communities that they serve 
to take a more proactive role in determining the manner and sequencing 
of how they will meet their Clean Water Act obligations. And by 
providing this flexibility, IP also allows utilities and their 
communities to investigate new technologies and approaches that may 
provide the same or better environmental performance for less cost. For 
instance, if a utility is seeking to reduce the amount of sewer 
overflows they are experiencing during wet weather events, the use of 
green infrastructure through an integrated plan instead of building 
more tunnels may allow for better environmental results at lower cost 
and improved affordability for communities.

    Question 1.b. What is the latest status of EPA's rollout of 
integrated planning?
    Answer. EPA Headquarters, from NACWA's perspective, has been very 
supportive of IP in both the permitting and enforcement context. 
Unfortunately, where we have seen some resistance from EPA to IP, 
especially in the permitting context, is from EPA regional offices. 
Some regional offices are very supportive, others are not. We have also 
seen that many states are also resistant to IP. This is unfortunate, 
because if a state is not willing to support a utility's IP efforts, 
there is very little the utility can do.

    Question 1.c. What effects does innovation have on affordability 
for local wastewater utilities and ratepayers?
    Answer. The more innovation the better from an affordability 
standpoint. Innovation allows utilities to meet their Clean Water Act 
goals in more affordable ways, which in turn places less stress on 
rates and can hopefully lead to smaller rate increases.

    Question 2. In your written testimony, you mentioned concerns with 
the EPA's new financial capability guidelines. How do incomplete or 
incorrect financial capability guidelines affect water affordability 
for treatment facilities and homeowners?
    Answer. EPA's Financial Capability Assessment (FCA) Guidance is a 
critical tool designed to gauge the impacts of CWA mandates and how 
much a community can afford to pay to meet those compliance 
requirements.
    With the ever-increasing water affordability challenges communities 
are facing, it's imperative that any FCA guidance truly looks at the 
impacts of CWA mandates and related bill increases on low-income 
households within a community.
    Countless American households, both urban and rural, are struggling 
to pay their increasing water and sewer bills all while public 
utilities are seeing increased costs related to regulatory compliance, 
maintaining infrastructure, energy, supplies, etc.
    NACWA and its utility members, who work directly on the ground with 
low-income households, partnered with other water sector and municipal 
groups over the past several years to advocate for a new EPA 
affordability approach that looks at the impacts of new CWA mandates 
and related bill increases on actual low-income households within an 
impacted community, as opposed to more broad-brush comparisons of 
community and national level metrics that often mask the actual impact 
on individual households. This was done collaboratively and 
productively with both the Obama and Trump Administrations.
    Unfortunately, the new EPA FCA Guidance fails to take this 
household level approach, meaning that the true impacts on these 
households may not be fully considered and leaving them to continue 
paying a disproportionately higher amount of their income on clean 
water bills. It is critical that Congress continue strict oversight of 
how EPA is implementing its new FCA Guidance and the ways in which it 
is harming low-income households the most.

    Question 3. A National Association of Clean Water Agencies (NACWA) 
member testified before this Subcommittee earlier this year about the 
importance of regulatory certainty, especially for local water 
utilities. How can targeted reforms to the Clean Water Act allow 
localities to more effectively and affordably plan their wastewater 
infrastructure projects and operations?
    Answer. Codification of EPA's longstanding permit shield policy 
would ensure that permittees are provided the finality granted by 
Congress and upheld by the Supreme Court by clarifying the proper scope 
of CWA Section 402(k). This action would help protect due process and 
the regulatory certainty necessary to make appropriate infrastructure 
investments and address affordability challenges for municipalities 
nationwide.
    Similarly, removing boilerplate language and requiring clear NPDES 
permit terms would force federal and state permit writers to do their 
jobs in a manner that permittees can rely on; limit opportunities for 
unwarranted posthoc permitting requirements; protect permit holders 
that are following their duly issued NPDES permits; and shield public 
utility ratepayers and consumers from shouldering the potentially 
significant costs mandated by unanticipated permitting requirements.
    These are both critical as public clean water utilities try to 
affordably plan and invest in their long-term infrastructure needs and 
meet their compliance obligation under the CWA.
    Making EPA recommended water quality criteria subject to APA notice 
and comment rulemaking requirements would also ensure a more 
transparent process. This is important because these criteria often 
lead to the imposition of incredibly stringent and costly permitting 
requirements on both the public and private sectors.

  Questions to James M. Proctor II, Senior Vice President, Legal and 
   External Affairs, McWane, Inc., on behalf of the U.S. Chamber of 
                    Commerce, from Hon. David Rouzer

    Question 1. In your written testimony you stated that, ``wastewater 
is often viewed as a source of pollution but should be promoted as a 
resource to provide sustainable nutrients and energy.'' \1\ What are 
some examples of recycled wastewater applications?
---------------------------------------------------------------------------
    \1\ Clean Water Infrastructure Financing: State and Local 
Perspectives and Recent Developments, Hearing before the Water 
Resources and Environment Subcomm. of the H. Comm. on Transp. and 
Infrastructure, 118th Cong. (Sept. 28, 2023) (written testimony of Mr. 
James M. Proctor, II, Senior VP, Legal and External Affairs, and 
General Counsel, McWane Inc., on behalf of United States Chamber of 
Commerce).
---------------------------------------------------------------------------
    Answer. There are several ways that wastewater can be used to 
generate energy.
    Biogas production: Wastewater treatment plants often produce biogas 
as a byproduct of the treatment process. Biogas is a mixture of 
methane, carbon dioxide, and other gases that can be burned to generate 
electricity.
    Anaerobic digestion: In anaerobic digestion, microorganisms break 
down organic matter in wastewater to produce biogas. This process can 
be used to generate either electricity or heat.
    Fuel cells: Some wastewater treatment plants are using fuel cells 
to generate electricity. Fuel cells use an electrochemical reaction to 
convert the chemical energy in a fuel (such as biogas) into 
electricity.

    In addition, the most commonly discussed application is the use of 
nutrient-rich biosolids, a byproduct of the wastewater treatment 
process. Biosolids can be applied to agricultural lands as a nutrient-
rich fertilizer, providing essential elements like nitrogen, 
phosphorus, and organic matter to improve soil fertility. Some 
utilities have even made this type of fertilizer commercially available 
for everyday garden fertilizing (e.g., Milorganite fertilizer produced 
from treated sewage sludge from Milwaukee MSD). Other applications 
include groundwater recharge, wetland restoration, and certain 
industrial processes.

    Question 2. You expressed concerns about the slow commencement of 
projects in your testimony.
    Question 2.a. What are some ways Congress can help streamline 
permitting processes to move Clean Water SRF-funded projects forward?
    Answer. Our nation cannot improve the state of water and wastewater 
infrastructure especially in our most vulnerable communities without 
permitting reform. The U.S. Chamber of Commerce launched the Permit 
America to Build campaign to urge federal policymakers to streamline 
permitting across the board, including wastewater projects under the 
SRF and other Clean Water Act authorities.
    Incremental efforts such as timebound reviews and simplifying 
approval procedures for issues like the Section 401 certification and 
Section 404 dredge and fill permits would be useful.
    NEPA is by far the biggest obstacle to SRF-funded projects, such as 
the installation of linear collection and distribution systems, 
construction of new reservoirs, and siting new treatment plants. 
Climate-resilient projects, such as floodplain management and flood 
mitigation projects, have also been delayed by the NEPA review process. 
Among other things, Congress should streamline the NEPA review process 
by imposing deadlines for agency review, limiting page limits, 
establishing a statute of limitation on the litigation process, and 
increasing agency staff needed to review NEPA documentation.
    In 2015, Congress passed the Fixing American's Surface 
Transportation (FAST) Act which has proven successful with fast-
tracking many infrastructure projects. The Permitting Institute 
chronicles many of those successes.\2\ We would encourage Congress to 
consider replicating many of the streamlining provisions of the FAST 
Act.
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    \2\ Success stories available at: https://
www.permittinginstitute.org/success-stories.

    Question 2.b. How important are critical minerals for moving 
projects forward, and how can we increase critical mineral supply in 
the United States?
    Answer. A domestic supply of critical minerals and associated 
processing is essential to meet our ambitious climate and 
infrastructure goals and is integral to the nation's energy transition 
and manufacturing sector. The U.S. Chamber held a critical minerals 
summit to highlight the need to elevate critical minerals as a national 
priority and to promote the importance of permitting reform to 
advancing key projects. Here is a link to a blog summarizing the 
outcomes from the event.
    A recent report by ConservAmerica offered the following 
recommendations:
    Minerals for Clean Energy--The clean energy future relies on 
minerals that must be extracted and refined in processing facilities. 
American minerals--just like American energy--are more cleanly and 
safely produced than in many other countries. To demonstrate that 
superior environmental and labor performance, industry should work with 
other stakeholders to evaluate voluntary programs that disclose, 
certify, and promote the use of minerals produced under these higher 
standards.\3\
---------------------------------------------------------------------------
    \3\ See ConservAmerica report titled Strengthening America's 
Mineral Security: Net Import Dependence, Supply Chain Vulnerability, 
and the Case for Critical Minerals, March 2022, available at: https://
static1.squarespace.com/static/5d0c9cc5b4fb470001e12e6d/t/
622a1d250cc6526f
5950b16e/1646927142692/CA_critical_minerals_wp_04.pdf
---------------------------------------------------------------------------
    Resources for Resources--The federal government must properly fund 
and administer the various minerals programs that it has launched and 
that have been authorized. For example, Congress and the public should 
monitor and demand compliance with the mandated establishment of new 
battery facilities, federal lending mechanisms, and mineral data 
collection. Congress should also consider developing renewable-style 
tax credits for minerals, as well as expedited permitting. Lastly, the 
federal government must partner with our Canadian and Australian 
allies, who also enjoy vast natural resources.
    Strengthening Supply Chains--Partnering with our Canadian and 
Australian allies, who also share the commitment to sound environmental 
practices, must be a top priority. The United States should also 
accelerate its domestic mapping program, consider a new civilian 
stockpile for critical minerals, and continue to build relationships 
with other mineral-rich partners.

    Question 3. If private entities were able to access Clean Water SRF 
funding, what would the effects be on clean water infrastructure?
    Answer. The 15 largest U.S. private water companies invest $5 
billion annually to improve community drinking water systems.
    Providing access to CWSRF by private entities would offer 
additional funding flexibility to communities and result in the 
acceleration of rebuilding our nation's aging wastewater systems, 
including financially distressed and disadvantaged communities. In 
2020, Congress provided additional subsidy authority to the states 
under the DWSRF. Although private entities are not currently eligible 
for CWSRF funding, the Safe Drinking Water Act and Clean Water Act 
allow states to transfer funds between the CWSRF to the DWSRF to 
address their most pressing water needs. Under this flexibility, the 
State of Delaware was able to provide funding to the Artesian Water 
Company for the benefit of the Town of Frankford, a financially 
distressed community. The funding was used for replacing regional water 
mains, constructing a new regional water plant, and expanding its main 
renewal program to incorporate Frankford while spending about $1 
million on renewal projects. The project was so successful that 
Artesian was awarded U.S. EPA's AQUARIUS Excellence in Community 
Engagement Award. Changing the eligibility criteria under the CWSRF 
would result in more projects such as this effort.
    Question 3.a. What would the impact on the Clean Water SRF program 
be?
    Answer. Although the impact on the CWSRF program is currently 
unknown, it is likely to be insignificant, as many private entities 
will continue to pursue other forms of market and tax-exempt financing, 
e.g., private activity bonds. From 2010-2020, only 2 percent of DWSRF 
funds went to for-profit utilities.\4\ In addition, state SRFs have the 
authority and discretion to decide what entities receive funding. 
Toward this end, although the Federal Safe Drinking Water Act 
authorizes assistance to privately owned community water systems, some 
states have laws or policies that preclude privately owned utilities 
from receiving DWSRF assistance.\5\
---------------------------------------------------------------------------
    \4\ See Government Accountability Office, Report GAO-21-291, 
Private Water Utilities: Actions Needed to Enhance Ownership Data, 
March 2021, available at: https://www.gao.gov/assets/gao-21-291.pdf
    \5\ See Congressional Research Service, Drinking Water State 
Revolving Fund: Overview, Issues and Legislation, Oct. 2, 2018, p. 2, 
available at: https://crsreports.congress.gov/product/pdf/R/R45304

    Question 3.b. Are there lessons to be learned from the Drinking 
Water SRF?
    Answer. Yes, the fact that the DWSRF program has not been adversely 
impacted by expanding eligibility to private entities should alleviate 
any concerns that opening CWSRF funding to such entities would impact 
funding levels. Once again, each state has the authority and discretion 
under both the CWSRF and DWSRF to determine which communities and 
infrastructure projects are most pressing and worthy of funding.

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