[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]
BUILDING A 21ST-CENTURY INFRASTRUCTURE FOR AMERICA: WATER STAKEHOLDERS'
PERSPECTIVES
=======================================================================
(115-25)
HEARING
BEFORE THE
SUBCOMMITTEE ON
WATER RESOURCES AND ENVIRONMENT
OF THE
COMMITTEE ON TRANSPORTATION
AND INFRASTRUCTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTEENTH CONGRESS
FIRST SESSION
__________
SEPTEMBER 26, 2017
__________
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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COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE
BILL SHUSTER, Pennsylvania, Chairman
DON YOUNG, Alaska PETER A. DeFAZIO, Oregon
JOHN J. DUNCAN, Jr., Tennessee, ELEANOR HOLMES NORTON, District of
Vice Chair Columbia
FRANK A. LoBIONDO, New Jersey JERROLD NADLER, New York
SAM GRAVES, Missouri EDDIE BERNICE JOHNSON, Texas
DUNCAN HUNTER, California ELIJAH E. CUMMINGS, Maryland
ERIC A. ``RICK'' CRAWFORD, Arkansas RICK LARSEN, Washington
LOU BARLETTA, Pennsylvania MICHAEL E. CAPUANO, Massachusetts
BLAKE FARENTHOLD, Texas GRACE F. NAPOLITANO, California
BOB GIBBS, Ohio DANIEL LIPINSKI, Illinois
DANIEL WEBSTER, Florida STEVE COHEN, Tennessee
JEFF DENHAM, California ALBIO SIRES, New Jersey
THOMAS MASSIE, Kentucky JOHN GARAMENDI, California
MARK MEADOWS, North Carolina HENRY C. ``HANK'' JOHNSON, Jr.,
SCOTT PERRY, Pennsylvania Georgia
RODNEY DAVIS, Illinois ANDRE CARSON, Indiana
MARK SANFORD, South Carolina RICHARD M. NOLAN, Minnesota
ROB WOODALL, Georgia DINA TITUS, Nevada
TODD ROKITA, Indiana SEAN PATRICK MALONEY, New York
JOHN KATKO, New York ELIZABETH H. ESTY, Connecticut,
BRIAN BABIN, Texas Vice Ranking Member
GARRET GRAVES, Louisiana LOIS FRANKEL, Florida
BARBARA COMSTOCK, Virginia CHERI BUSTOS, Illinois
DAVID ROUZER, North Carolina JARED HUFFMAN, California
MIKE BOST, Illinois JULIA BROWNLEY, California
RANDY K. WEBER, Sr., Texas FREDERICA S. WILSON, Florida
DOUG LaMALFA, California DONALD M. PAYNE, Jr., New Jersey
BRUCE WESTERMAN, Arkansas ALAN S. LOWENTHAL, California
LLOYD SMUCKER, Pennsylvania BRENDA L. LAWRENCE, Michigan
PAUL MITCHELL, Michigan MARK DeSAULNIER, California
JOHN J. FASO, New York
A. DREW FERGUSON IV, Georgia
BRIAN J. MAST, Florida
JASON LEWIS, Minnesota
(ii)
Subcommittee on Water Resources and Environment
GARRET GRAVES, Louisiana, Chairman
ERIC A. ``RICK'' CRAWFORD, Arkansas GRACE F. NAPOLITANO, California
BOB GIBBS, Ohio LOIS FRANKEL, Florida
DANIEL WEBSTER, Florida FREDERICA S. WILSON, Florida
THOMAS MASSIE, Kentucky JARED HUFFMAN, California
RODNEY DAVIS, Illinois ALAN S. LOWENTHAL, California
MARK SANFORD, South Carolina EDDIE BERNICE JOHNSON, Texas
ROB WOODALL, Georgia JOHN GARAMENDI, California
TODD ROKITA, Indiana DINA TITUS, Nevada
JOHN KATKO, New York SEAN PATRICK MALONEY, New York
BRIAN BABIN, Texas ELIZABETH H. ESTY, Connecticut
DAVID ROUZER, North Carolina CHERI BUSTOS, ILLINOIS
MIKE BOST, Illinois JULIA BROWNLEY, California
RANDY K. WEBER, Sr., Texas BRENDA L. LAWRENCE, Michigan
DOUG LaMALFA, California PETER A. DeFAZIO, Oregon (Ex
A. DREW FERGUSON IV, Georgia Officio)
BRIAN J. MAST, Florida, Vice Chair
BILL SHUSTER, Pennsylvania (Ex
Officio)
(iii)
CONTENTS
Page
Summary of Subject Matter........................................ vii
TESTIMONY
Hon. Joy Cooper, Mayor, City of Hallandale Beach, Florida, on
behalf of the U.S. Conference of Mayors........................ 5
James M. Proctor II, Senior Vice President and General Counsel,
McWane, Inc.................................................... 5
David Pedersen, General Manager, Las Virgenes Municipal Water
District, on behalf of the Association of California Water
Agencies and the California Association of Sanitation Agencies. 5
David St. Pierre, Executive Director, Metropolitan Water
Reclamation District of Greater Chicago, on behalf of the
National Association of Clean Water Agencies................... 5
Hector Gonzalez, Government Affairs Manager, El Paso Water
Utilities, on behalf of the Association of Regional Water
Organizations.................................................. 5
Christopher Franklin, President and CEO, Aqua America, on behalf
of the National Association of Water Companies................. 5
Lawrence M. Levine, Senior Attorney, Natural Resources Defense
Council........................................................ 5
PREPARED STATEMENTS SUBMITTED BY WITNESSES
Hon. Joy Cooper.................................................. 45
James M. Proctor II.............................................. 52
David Pedersen................................................... 67
David St. Pierre................................................. 79
Hector Gonzalez.................................................. 84
Christopher Franklin............................................. 91
Lawrence M. Levine............................................... 98
SUBMISSIONS FOR THE RECORD
Hon. Garret Graves, a Representative in Congress from the State
of Louisiana, submission of the following:
Letter of September 26, 2017, from Diane VanDe Hei, Chief
Executive Officer, Association of Metropolitan Water
Agencies, to Hon. Garret Graves, Chairman, and Hon. Grace
F. Napolitano, Ranking Member, Subcommittee on Water
Resources and Environment.................................. 122
Written statement of the American Public Works Association... 126
Letter of September 26, 2017, from American Rivers et al., to
Hon. Garret Graves, Chairman, and Hon. Grace F. Napolitano,
Ranking Member, Subcommittee on Water Resources and
Environment................................................ 131
Letter of September 25, 2017, from Elizabeth Hyman, Executive
Vice President, Computing Technology Industry Association
et al., to Hon. Garret Graves, Chairman, and Hon. Grace F.
Napolitano, Ranking Member, Subcommittee on Water Resources
and Environment............................................ 137
Letter of September 26, 2017, from Kim Glas, Executive
Director, BlueGreen Alliance, to Hon. Garret Graves,
Chairman, and Hon. Grace F. Napolitano, Ranking Member,
Subcommittee on Water Resources and Environment............ 138
Adam D. Link, Director of Government Affairs, California
Association of Sanitation Agencies, supplement to hearing
testimony...................................................... 141
Lawrence M. Levine, Senior Attorney, Natural Resources Defense
Council, supplement to hearing testimony....................... 144
ADDITIONS TO THE RECORD
Written statement of the National League of Cities............... 147
Written statement of Piedmont Municipal Power Agency............. 156
Written statement of Ben Cote, Vice President, Sanexen
Environmental Services, Inc.................................... 157
Written statement of Bruce Hollands, Executive Director, Uni-Bell
PVC Pipe Association........................................... 163
Written statement of WateReuse Association....................... 166
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BUILDING A 21ST-CENTURY INFRASTRUCTURE FOR AMERICA: WATER STAKEHOLDERS'
PERSPECTIVES
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TUESDAY, SEPTEMBER 26, 2017
House of Representatives,
Subcommittee on Water Resources and Environment,
Committee on Transportation and Infrastructure,
Washington, DC.
The subcommittee met, pursuant to notice, at 10:03 a.m., in
room 2167, Rayburn House Office Building, Hon. Garret Graves
(Chairman of the subcommittee) presiding.
Mr. Graves of Louisiana. The subcommittee will come to
order.
Good morning and thank you all for being here. I want to
welcome everyone to our hearing today on ``Building a 21st-
Century Infrastructure for America: Water Stakeholders'
Perspectives.''
But before we begin, I would like to extend our thoughts
and prayers to victims of Hurricane Irma, Hurricane Harvey, and
Hurricane Maria. I know that we have millions of Americans that
are continuing to suffer and struggle through recovery efforts
across the United States.
And I also know that there has been extraordinary
generosity from members of the public across the United States
and across the world, reaching out and offering resources and
help, and many donations and services to a lot of our victims.
But I ask that we all continue to keep the victims in our
thoughts and prayers. And Mexico. Thank you very much.
As the chairman of the subcommittee with oversight over the
Army Corps of Engineers and the Environmental Protection
Agency, I can assure everyone that we are working closely with
our Federal agencies to ensure a speedy recovery for the States
and communities that have been impacted by these awful storms.
Since the subcommittee's first hearing in March, we have
explored a variety of potential ideas for inclusion in an
infrastructure package, and of course our water needs. Water
and wastewater are an important component of that. But I am
happy that today we have a diverse panel that is very well-
invested into water and wastewater infrastructure to help
inform some of our efforts moving forward.
We are all well aware of the needs for communities to
address water and wastewater infrastructure, that they are
substantial, and that these needs are going to continue to grow
moving forward. In many communities, the water and wastewater
infrastructure is long past its design life, its intended
service life. It is in need of urgent repair, replacement, and
upgrading.
As a result, leaks and blockages are all too familiar an
experience across the United States and represent a massive
waste of vital, and sometimes scarce, resources. We have many
needs in regard to combined sewer overflows, sanitary sewer
overflows, and other challenges that are affecting the
performance and environmental impacts and of course,
ultimately, the impacts on the end user of many of these
systems.
Shrinking municipal budgets, insufficient independent
financing capabilities, and increasingly burdensome regulations
without commensurate Federal support have compounded these
problems and the communities' efforts to address them across
the United States.
According to the EPA, the documented needs for sustainable
wastewater infrastructure, CSO [combined sewer overflow] and
SSO [sanitary sewer overflow] correction, and stormwater
management are over $270 billion over the next 20 years, an
extraordinary figure. I will say that again. The needs over the
next 20 years are estimated to be approximately $270 billion.
The needs for drinking water infrastructure drive this figure
to over $600 billion. And these are very conservative
estimates.
So with talk of a major infrastructure package, today we
ask the not-so-simple question: What can we do? We ask the
question: What should we do? What is the role of the Federal
Government in these infrastructure investments moving forward?
And how do we best invest these scarce resources to efficiently
achieve the objectives that we all share in regard to water and
wastewater infrastructure?
I believe it is going to take an all-hands-on-deck approach
to reverse the decline of our Nation's infrastructure. Federal,
State, and local investment will be necessary but cannot be
relied upon to solve all our problems.
Instead, we need to move away from business as usual and
utilize every tool that is in our toolbox. This means searching
for new sources of funding. This means increasing collaboration
between public and private entities. This means doing a better
job more efficiently investing the scarce resources that we
have available.
Earlier this year we had a hearing on improving water
quality through integrated planning, talking about
opportunities for efficiency there, and ensuring that we are
actually investing dollars to achieve the problems rather than
spending dollars on process.
We need smarter asset management and increased efficiencies
in our water systems, and to do so, we need to incentivize the
adoption of new and innovative technologies that will cut costs
and improve water quality.
And as Hurricanes Harvey, Irma, and Maria showed us this
past month, we need to build resiliently. Treatment plants in
Texas, Louisiana, Florida, and elsewhere have been unable to
cope with the influx from Harvey, Irma, and Maria, causing
poorly treated wastewater and raw sewage to flow into city
streets and nearby waterways. This has not only caused numerous
public health and environmental concerns, but also challenges
our national security.
We need to carefully prioritize our investments in water
infrastructure to ensure that we are adequately protecting the
public health, promoting the economic growth of our
communities, and preventing the degradation of the environment.
I look forward to hearing thoughts from our witnesses
today. And I now recognize Ranking Member Napolitano for an
opening statement.
Mrs. Napolitano. Thank you, Mr. Chairman Graves, because
you are highlighting this critical need to address all of our
drinking water-related infrastructure.
Next month is the 45th anniversary of the enactment of the
Clean Water Act, the main reason why our Nation's waterways
experienced historic improvements in water quality even as the
population increased by over 50 percent. To a large degree, the
success of that act resulted from a strong Federal commitment
to invest in its wastewater infrastructure improvements around
the country.
In recent years, States and communities have started to
question whether the Federal commitment to invest in our water
and wastewater continues or whether Congress now believes, as
former Presidents Nixon and Reagan highlighted in their vetoes
of prior clean water bills, that the construction of wastewater
infrastructure is ``properly the responsibility of States and
local governments.''
Today trends on the Federal investment in the Nation's
water-related infrastructure are, in my opinion, going the
wrong direction. Recently the Congressional Budget Office
issued a report highlighting how the Federal contribution
towards addressing our Nation's infrastructure was declining,
and how State and local governments are forced, where possible,
to make up the difference.
This trend on a decreasing Federal commitment to addressing
our water infrastructure challenges reflects the trend on how
the Federal Government provides its contribution to address
these challenges.
For example, in 1972 the Clean Water Act Construction
Grants Program covered 75 percent of the cost of constructing
water infrastructure for all our needs. However, when President
Reagan proposed to substitute the Construction Grants Program
for the Clean Water State Revolving Fund Program, the result
was that the Federal contribution towards individual projects
was reduced. This again compelled local communities to shoulder
a greater share of the costs of individual projects.
More recently, when Congress created another financial
mechanism, the Water Infrastructure Finance and Innovation Act,
WIFIA, again the Federal contributions toward the construction
of individual projects was further reduced and communities were
again forced to look elsewhere to make up the difference.
To be clear, each of these mechanisms for infrastructure
investment grants, SRF loans and federally leveraged private
capital, have a place in solving our water-related
infrastructure crisis. Yet I spot a trend and make this point:
As the administration and Congress continue to discuss
potential mechanisms to address our crumbling infrastructure,
we recognize that the Federal Government already is
contributing less towards the cost of individual projects today
than just a few decades ago.
Yet there is no free lunch when it comes to solving our
infrastructure crisis. When the Federal Government contributes
less to the cost of these projects, somebody has to pick up the
difference, and often that somebody is local government or
municipality or the individual ratepayer that is already
struggling to make ends meet.
If we are serious about closing our water infrastructure
needs gap, we must recognize the unique challenges facing all
our individual communities. For those communities with
financial capability to use the WIFIA program or private
capital, that may be the appropriate mechanism of addressing
their local needs.
However, we know that other communities continue to rely on
mechanisms such as the Clean Water State Revolving Fund to
obtain the financial assistance. To that end, the committee
should quickly approve the legislation such as the bipartisan
Water Quality Protection and Job Creation Act, which I
cosponsor with Ranking Member DeFazio and Mr. Duncan of
Tennessee, to reauthorize increased funding levels for this
important program.
For those communities that still have the affordability
challenges using these existing mechanisms, we need to explore
ways to target Federal assistance to the neighborhoods or
households least able to afford water and wastewater services.
This will help communities meet their local infrastructure
challenges in a way that does not disproportionately impact
those least able to afford the cost.
In addition, I am concerned that any forthcoming
infrastructure proposal from this administration will be light
on real infrastructure spending and heavy on gimmicks such as
environmental streamlining that would do nothing to solve our
infrastructure needs. That would be a significant missed
opportunity.
We will not be able to address our local water
infrastructure with slogans that may sound like we are doing
something but in fact we are not. Without question, our
communities expect and demand safe and desirable water
resources for their consumption, use, and enjoyment. It is our
responsibility to ensure that these communities have adequate,
affordable resources to address these needs, and that is that.
Thank you, Mr. Chair.
Mr. Graves of Louisiana. Thank you, Mrs. Napolitano.
Before I begin introducing our witnesses this morning,
allow me to dispense with some unanimous consent requests.
I ask unanimous consent the written testimony submitted on
behalf of the following be included in the hearing's record:
the Association of Metropolitan Water Agencies; the American
Public Works Association; a letter from the American Rivers and
other conservation organizations; a joint letter from Computing
Technology Industry Association, Smart Cities Council, and
Smart Waters Network Forum; and a letter from BlueGreen
Alliance. Is there any objection?
[No response.]
Mr. Graves of Louisiana. Without objection, so ordered.
[The aforementioned letters are on pages 122-140.]
I ask unanimous consent the record remain open 15 days for
additional comments and information submitted by Members or
witnesses to be included in the record of today's hearing. Is
there any objection?
[No response.]
Mr. Graves of Louisiana. Without objection, so ordered.
I ask unanimous consent that the record of today's hearing
remain open until such time as the witnesses have provided
answers to any questions that may be submitted to them in
writing. Without objection, so ordered.
I am going to have to leave this hearing early today and I
have asked the vice chair, Mr. Mast, to take over the chair at
some point. I want to apologize to you for that. We have some
conflicting committee business today. But I want to thank you
all very much for being here.
The first witness today is the Honorable Joy Cooper, the
mayor of the city of Hallandale Beach, Florida. Mayor Cooper, I
am going to break, I am sure, rules, protocol, and everything
else. I just want to ask you very quickly, could you just give
a quick update on how things are in your community from the
impacts of Hurricane Irma?
Ms. Cooper. Thank you very much, Mr. Chair. Thankfully,
Hallandale Beach is 98 percent recovered. We were very, very
fortunate. We were on the brink on flooding, but were not, and
we are very fortunate, unlike Brickell. The Keys will be
hopefully up and running for business, believe it or not, in
November. And we are recovering.
Certainly many communities still need assistance. You are
right on point. Thank you very much for kind comments to those
that are suffering.
Mr. Graves of Louisiana. You bet. Look, I think I speak on
behalf of every member of this committee on both sides when I
say that we all stand ready to continue assisting to find ways
to help improve the efficiency of recovery efforts, and
certainly continuing to keep your community and many others in
our thoughts and prayers.
But with that, please move forward with your testimony.
TESTIMONY OF HON. JOY COOPER, MAYOR, CITY OF HALLANDALE BEACH,
FLORIDA, ON BEHALF OF THE U.S. CONFERENCE OF MAYORS; JAMES M.
PROCTOR II, SENIOR VICE PRESIDENT AND GENERAL COUNSEL, MCWANE,
INC.; DAVID PEDERSEN, GENERAL MANAGER, LAS VIRGENES MUNICIPAL
WATER DISTRICT, ON BEHALF OF THE ASSOCIATION OF CALIFORNIA
WATER AGENCIES AND THE CALIFORNIA ASSOCIATION OF SANITATION
AGENCIES; DAVID ST. PIERRE, EXECUTIVE DIRECTOR, METROPOLITAN
WATER RECLAMATION DISTRICT OF GREATER CHICAGO, ON BEHALF OF THE
NATIONAL ASSOCIATION OF CLEAN WATER AGENCIES; HECTOR GONZALEZ,
GOVERNMENT AFFAIRS MANAGER, EL PASO WATER UTILITIES, ON BEHALF
OF THE ASSOCIATION OF REGIONAL WATER ORGANIZATIONS; CHRISTOPHER
FRANKLIN, PRESIDENT AND CEO, AQUA AMERICA, ON BEHALF OF THE
NATIONAL ASSOCIATION OF WATER COMPANIES; AND LAWRENCE M.
LEVINE, SENIOR ATTORNEY, NATURAL RESOURCES DEFENSE COUNCIL
Ms. Cooper. Thank you. Good morning, Chairman Graves and
Ranking Member Napolitano and members of this committee. My
name is Mayor Joy Cooper. I am the mayor of Hallandale Beach. I
would like to thank you for having this hearing today and
inviting me to provide you with my city's perspective, as well
as recommendations of the U.S. Conference of Mayors, on
rebuilding our water infrastructure.
Hallandale Beach is a 90-year-old community in southeast
Florida. We are 4.4 square miles, with a population of 38,000
that swells to 50,000 during our winter season. Our annual
budget is $110 million, with a general fund of $70 million.
A full evaluation of our infrastructure needs was
constructed in 2014. That included underground and aboveground
infrastructure. The price tag is well over $200 million. We
have committed over $12 million in our water supply and
treatment systems, $30 million in the next 5 years on our
sanitary sewers, and we plan on spending approximately $1
million per year to deal with sea level rise and associated
flooding.
The proposed city budget has increased various service fees
from 10 to 51 percent to cover projected expenditures. In the
case of stormwater management, the increase is 220 percent.
With a median income of $24,000 and 15 percent of our residents
living on $15,000 a year, the rising fees are difficult to
afford. And there is a growing concern that those households
unable to make payments will place a significantly greater
burden on those that can.
While we are committed to invest substantial amounts on
public water and sewer services, we have a glaring need to
invest in resiliency measures. Hurricane Wilma-related floods
impacted numerous main roads in our community and resulted in
damages to many homes.
In response, an extensive pumping system for two targeted
areas with repetitive flood-related losses had to be designed
and constructed at a cost of more than $25 million. We are
currently constructing phase 2 of the project. To complete the
project and maintain it required the 220-percent increase in
fees I mentioned earlier.
This project would not have been possible without the help
of FEMA both in financial and technical consultation. This is
the type of model of intergovernmental partnership that works
best.
Overall, local governments in Florida have invested over
$88 billion in water and sewer from 2000 to 2014, $7.1 billion
in 2014 alone. This amounts to investing $19.5 million every
day. Sewer revenues increased 116 percent from 2000 to 2013,
and water revenues increased 80 percent over the same time
period.
I just described my city and Florida's experiences and
investments. In my written testimony, there is an outline of
national needs, along with how they should be determined, along
with specific actions that would boost spending. But a majority
point is--the major point, pardon me--is for local governments,
by far the main investments in water and sewer, around 95 to 97
percent.
We are trying to do our part, but it is clear that we are
not--but clearly it is not adequate to meet our Nation's
infrastructure needs without unduly burdening our citizens. We
need a more robust infrastructure plan with more resources and
tools. The Conference of Mayors has recently released a
framework for addressing the Nation's local infrastructure
needs.
We ask you to do the following:
Prevent any efforts to cap or limit tax-exempt municipal
bonds;
Allocate resources directly to cities and counties for
priority water and sewer infrastructure projects that will
support low- and moderate-income neighborhoods;
Support the use of public-private partnerships;
Amend the Internal Revenue Code to remove the State volume
caps for private activity bonds used to finance public purpose
water and sewer facilities;
Direct at least $5 billion in additional funding to low- or
no-interest grants, to State Revolving Funds;
Codify integrated planning and affordability legislation in
Mr. Gibbs' bill, H.R. 465;
Build infrastructure that increases resiliency; and
Increase Army Corps of Engineers funding and spend the full
amount of the annual Harbor Maintenance Trust Fund on its
intended use.
I again want to commend this committee for addressing this
important issue, and I hope you are successful in passing a
comprehensive infrastructure bill. Thank you.
Mr. Graves of Louisiana. Thank you, Ms. Mayor.
The next witness is James Proctor, from McWane,
Incorporated.
Mr. Proctor?
Mr. Proctor. Chairman Graves, Ranking Member Napolitano,
and members of the subcommittee, good morning. My name is Jim
Proctor with McWane, and thank you for the opportunity to
testify about an issue vital to our Nation's health, economy,
and security.
Water is our most precious resource, one that is essential
to human health and life. Access to water depends upon a
reliable water infrastructure system that preserves, treats,
and delivers safe drinking water to our Nation's communities.
For almost 200 years, our team members at McWane have proudly
provided the building blocks for our Nation's water
infrastructure, supplying products that transport clean water
to communities and homes across the country.
Despite its obvious importance, ``out of sight, out of
mind'' best describes the Nation's attitude toward water
infrastructure. But the reality is that much of America's
wastewater and water infrastructure is nearing the end of its
useful life, and over $1 trillion is needed over the next 20
years to rebuild and rehabilitate these systems.
However, our water infrastructure challenges cannot be
solved simply by providing more Federal funding. Rather, a
fundamental shift away from the traditional approaches must
occur, through a combination of new sources of funding, greater
accountability, and improved governance.
For the past 9 months, an inclusive group of prominent
associations in the water infrastructure sector have been
working together to discuss and develop a set of ideas that can
provide this positive and transformative change. The
participants in these discussions include the spectrum of
publicly and privately owned systems, rural and urban
communities, and drinking and wastewater systems.
This package of ideas the group has discussed is broadly
organized around three themes: first, removing barriers to
investment and better management; second, funding; and third,
innovation. I will discuss each of these in turn.
Removing investment barriers: Water and wastewater services
in the United States are delivered by more than 70,000
entities, over 80 percent of which serve fewer than 10,000
customers. In fact, 50 percent serve fewer than 500 customers.
These small operators sometimes struggle to achieve the scale
of operations and expertise necessary to meet the challenges
that they face.
Voluntary partnerships with other entities can help them
scale up to develop the necessary financial, operational, and
technical capacity to solve this problem. There are many paths
to such partnering arrangements, including public to public,
public to private, private to private, and private to public
partnerships, as well as concessions, operating agreements, or
even the consolidation of assets or services.
But let me emphasize, nothing I say today should be
construed as favoring one path over another. Rather, all paths
should remain available at the discretion of the local entity.
Such partnerships should be encouraged by, among other
things, more financial incentives, a regulatory safe harbor,
removing the defeasance penalty, encouraging effective utility
management and best practices, including requiring full-cost
accounting, and empowering local decisionmaking.
Congress should also increase Federal funding for the water
sector. Since the recession, annual appropriations for water
infrastructure have been decreasing while the funding need has
been increasing.
To correct that unfortunate trend, Congress should extend
WIFIA and increase its funding to $45 million, increase funding
to the State SRFs to $3 billion for each program, provide more
technical assistance to small and rural systems, remove the
volume cap on private activity bonds for water projects, retain
tax exemptions for municipal bonds, and expand eligibility for
SRF loans to private water providers.
In addition to funding, Congress should help increase
innovation by authorizing and funding the creation of a
national water infrastructure test bed network, and establish a
national program for collaboration in the sharing of best
practices among utilities. Congress should also task the
Department of Labor with developing a workforce development
program for water and wastewater systems of tomorrow.
These ideas have all been discussed by the various water
constituencies mentioned above, and in concept they all enjoy
the unanimous support of the group, subject to agreement on the
actual legislative language. But I should point out that the
consensus is a product of compromises that balance diverse
perspectives and the resulting premise that all the various
components are linked.
These are only a few of the issues and solutions that merit
discussion. The key takeaway, however, is that the scope and
scale of America's water infrastructure needs require a
forward-looking and creative response. Reform and
reauthorization of the Clean Water Act programs like the SRFs
and WIFIA are crucial to that effort, and we at McWane are glad
to have the opportunity to contribute to that process.
Thank you very much.
Mr. Graves of Louisiana. Great. Thank you.
Our next witness is David Pedersen from Las Virgenes
Municipal Water District.
Mr. Pedersen.
Mr. Pedersen. Good morning, Chairman Graves, Ranking Member
Napolitano, and members of the subcommittee. My name is David
Pedersen, general manager of Las Virgenes Municipal Water
District in Calabasas, California. We are a municipal water/
wastewater agency that serves about 100,000 people in western
Los Angeles County.
Thank you for the opportunity to testify on behalf of the
California Association of Sanitation Agencies and the
Association of California Water Agencies. CASA and ACWA
represent hundreds of local agencies in California on water
quality issues and drinking water needs. Today I will summarize
four important issues that are described in more detail in my
written testimony, which I ask be accepted for the record.
First, CASA and ACWA ask the subcommittee to support a
robust infrastructure funding partnership between the Federal
Government and local communities, including both grants and
loans. California and much of the Nation face deteriorating
infrastructure, increased regulatory compliance costs,
unpredictable weather conditions, and general population
growth.
The U.S. EPA State revolving loan fund program right now is
currently the most important and effective water infrastructure
financing program available to local agencies. In fact,
projects that were constructed with SRF funds, including and
especially those for water recycling, were key and instrumental
in reducing the impact of the statewide drought that we
experienced in California.
In addition to robust funding, we recommend that the
subcommittee update the formula that is used to allocate those
limited funds to States.
Moving to our second issue, we ask that the subcommittee
extend National Pollutant Discharge Elimination System permit
terms from 5 to 10 years. We believe this change would provide
significant benefits to States and to the local public and
wastewater agencies.
In the 45 years that the program has been in place, NPDES
permits have become increasingly complex, and the treatment
technologies have become substantially more expensive and time-
intensive to implement. As a result, many local agencies are
faced with negotiating the terms for a new permit while they
are still working to implement the improvements for their
current permit.
The 5-year term that was established in 1972 no longer
reflects today's clean water challenges, and it is an obstacle
for long-term planning. My agency is a prime example of the
advantages of a 10-year permit. In July of 2013, the U.S. EPA
established a TMDL for our watershed that created some of the
toughest nutrient standards in the country. Upgrades to our
treatment plant were estimated to be in the neighborhood of
$160 million.
Through a stakeholder-driven process, we developed the Pure
Water Project Las Virgenes-Triunfo, a surface water
augmentation project that provides a new source of drinking
water for us and also meets our regulatory needs. The $95
million project is estimated to take 13\1/2\ years to complete,
yet we will be faced with renewing our NPDES permit every 5
years during that process. Sacramento Regional County
Sanitation District experienced a similar challenge in that
they were making over $1 billion in improvements to their
treatment facilities when they were faced with a 5-year permit
renewal.
Ten-year permit terms would give local water and wastewater
agencies adequate time to comply with their existing regulatory
requirements before new ones are imposed, and also States could
direct their resources to higher priority issues. Importantly,
the new 10-year permits would include the existing permit
reopener provisions that allow new conditions to be addressed
into the permit during the term of the permit.
Third, CASA and ACWA support integrated planning as an
effective means for public agencies to address multiple Clean
Water Act requirements. We support proposals recognizing the
value of integrated plans, particularly those that are
developed by our colleagues at NACWA [National Association of
Clean Water Agencies] and in collaboration with the EPA.
Integrated plans promote more comprehensive water planning
while stretching limited local resources.
And as our final request, we ask that Congress avoid
proposals that include consolidation or reorganization of local
water and wastewater agencies as a criterion for Federal
funding or to rank projects for Federal funding. Consolidation
may be appropriate in certain instances, but we believe these
decisions are best left to the policymakers at the local level.
In summary, we urge the subcommittee to maintain robust
funding for the vital SRF program, extend NPDES permit terms to
10 years, support the use of integrated plans, and avoid
consolidation or reorganization as a criterion for Federal
funding.
Thank you for your consideration.
Mr. Graves of Louisiana. Thank you. Our next witness is
David St. Pierre from the Metropolitan Reclamation District of
Greater Chicago.
Mr. St. Pierre.
Mr. St. Pierre. Chairman Graves, Ranking Member Napolitano,
and members of the subcommittee, thank you for the opportunity
to appear before you today. My name is David St. Pierre, and I
am the executive director of the Metropolitan Reclamation
District of Greater Chicago. I also serve as vice president of
the National Association of Clean Water Agencies, which is a
not-for-profit trade association that represents the interests
of public clean water agencies nationwide.
The need for greater investment in our Nation's
infrastructure, including water, is well-known. Nationally, our
Nation's clean water infrastructure has received a D-plus grade
from the American Society of Civil Engineers, and the EPA
calculates national investment needs to fully comply with the
Clean Water Act under current conditions at approximately $271
billion over the next 20 years.
Those of us who work in this sector understand that the
true investment needs are likely much higher. And while local
clean water investments are often driven by Federal statute or
enforcement actions, over 90 percent of water investment in the
U.S. is funded by local dollars.
Earlier this year, then-President-elect Trump called for a
tripling of Federal funding to the State Revolving Funds to
help address water infrastructure investment needs. NACWA
applauds this recognition of the important and successful role
of the State Revolving Funds.
We are grateful for the work the subcommittee has done to
support strong SRFs. As discussions advance regarding Federal
infrastructure investment, it is imperative that the SRFs play
a prominent role and that real investment dollars for water are
on the table to ensure clean water gains continue to be made.
Private investments facilitated by the Clean Water SRF may
be appropriate in certain situations but should not come at the
expense of financing for publicly owned systems which serve the
overwhelming majority of the U.S. sewered population.
Another very timely area of interest to NACWA and its
members is the potential for regionalization, public-public,
and public-private water utility partnerships to help advance
clean water, particularly in areas where there are
opportunities for economies of scale or sharing of resources
and expertise.
In the Chicago region, our agency provides technical and
financial support to 125 communities in Cook County to address
infrastructure needs and build resilient communities. These
efforts have encouraged local community investment and
collaboration and increased efficiency in addressing
infrastructure needs. These regional efforts allow solutions to
problems in local communities and decrease State and Federal
liabilities.
Another element of sustainable long-term financial footing
is moving toward full-cost accounting. But given the complex
and dynamic nature of this calculation, we do not support it as
a barrier to the SRFs. Municipalities face enormous pressure to
maintain rates based on the abilities of low-income households
to pay, which can inhibit charging the full cost of the service
provided, or lead to deferred investments. A safety net for the
lowest income households would better position utilities to
charge rates that fully reflect the true cost of service and
address the infrastructure investment gap.
In addition, utilities need flexibility to address today's
challenges. These challenges underlie why the clean water
sector is encouraged by the U.S. EPA's integrated planning
framework. The integrated planning approach provides
communities an opportunity to consider their clean water
obligations holistically, to develop compliance schedules that
can maximize each ratepayer dollar, focused first on the
investments that are of top priority for the community and
environment, and ensure the greatest possible net environmental
benefit is achieved.
We greatly appreciate the work that the subcommittee has
done today on integrated planning and to address affordability
concerns. We recognize Representative Gibbs, former chairman of
the subcommittee, who sponsored H.R. 465, the Water Quality
Improvement Act.
Similarly, we recognize several members of the
Transportation and Infrastructure Committee, including
subcommittee Ranking Member Napolitano, Representative Bustos,
and Representative Smucker, cosponsors of H.R. 2355, the Water
Infrastructure Flexibility Act. These efforts signify nothing
less than trying to bring the Clean Water Act into the 21st
century.
In closing, I would like to thank the subcommittee,
Congress, and the administration for their focus on clean water
infrastructure investment. I believe that investment in water
is a nonpartisan issue which protects public health and the
environment, creates jobs, and is essential for economic
development. As Congress looks to advance the 21st-century
infrastructure for America, clean and safe water must be a top
investment priority supported by a true local, State, and
Federal partnership.
Mr. Graves of Louisiana. Thank you, Mr. St. Pierre. I think
you ended right at 5 minutes. Perfect timing.
Our next witness is Mr. Hector Gonzalez, El Paso Water
Utilities.
Mr. Gonzalez.
Mr. Gonzalez. Good morning, Chairman Graves and members of
the subcommittee. My name is Hector Gonzalez. I am here
representing El Paso Water. El Paso Water provides water,
wastewater, reclaimed water, and stormwater services for the
residents of El Paso and some of the surrounding areas.
I am also on the board of directors of the Association of
Regional Water Organizations, which supports policies and
infrastructure funding programs that will help regional water
and wastewater systems in unserved and underserved communities.
Thank you for the opportunity to share my thoughts on key
priorities for infrastructure legislation. The first of the
priorities deals with how the Association of Regional Water
Organizations is focused on how best to help rural water
systems in unincorporated areas receive better service at a
lower cost. Outside of the city limits of El Paso,
approximately 35,000 people are not connected to a public
wastewater system. An estimated $500 million is required to
provide the needed connections.
Laws prohibit our utility from spending ratepayer money
outside the service area, but we have loaned expertise and
partnered to identify Federal funding and manage projects.
Various Federal agencies have helped extend potable water
service, but without wastewater connections, homes often have
failing septic systems, which pose a public health hazard.
There are thousands of similar stories across rural
America, where communities are underserved and must rely on
inadequate septic systems. There are an estimated 50,000
community water systems across the country, and all but the
largest have a difficult time accessing capital, which prevents
major infrastructure improvements from moving forward.
These are challenges that need attention in the new
infrastructure bill. Programs with Federal matching grant
funding are needed to fill these gaps. The Association of
Regional Water Organizations sees regionalization through both
private-public partnerships and public-public partnerships as
the best solution to improve water resource planning and
increase access to capital. Through partnerships, we can fill
the gaps and execute major capital investments and deliver
results.
The second priority that I would like to focus on is water
reuse. With the frequency of drought and growing challenges
from declining freshwater resources, more and more communities
are turning to impaired groundwater, wastewater, and stormwater
to meet their future needs.
El Paso Water is active with the WateReuse Association,
which represents various communities and effectively advocates
for policies and funding to increase water reuse. They
emphasize the value of water reuse as a safe, reliable, locally
controlled water supply that protects the environment, sustains
economic growth, and provides a high quality of life.
Several decades ago, El Paso Water faced water scarcity
fears. Yet, because of our pioneering efforts in reuse and
conservation, we are now considered a leader in water resource
innovation. But we, and many communities throughout the arid
West, will need to expand the reuse of water resources to
ensure freshwater supplies for the future.
I will share two water reuse examples from my home city. El
Paso Water owns and operates the Kay Bailey Hutchison
Desalination Plant. This is the largest inland desalination
plant in the world. It provides a drought-proof supply for our
city, and also sometimes serves the needs of Fort Bliss. We
will need to significantly expand this plant in the future.
In another reuse project, El Paso plans to build an
advanced water purification facility that will transform
wastewater into high-quality drinking water and send it
directly to our customers. Both of these water reuse projects
are expensive, at about $100 million apiece. Both projects are
essential to our future water supply.
Many other communities face similar challenges, and with
Federal funding opportunities, these types of projects can move
forward, spur innovation, and ultimately bring down the cost
for water reuse overall.
I would like to mention a couple of considerations as you
take up the infrastructure bill. El Paso has partnered with the
U.S. Army Corps of Engineers in various stormwater projects.
Infrastructure legislation should expand Corps funding for dams
and flood control systems. New focus areas should include the
capture and treatment of stormwater for reuse.
Military base partnerships with local water utilities
deserve attention. El Paso Water provides 100 percent of the
wastewater service to Fort Bliss, and infrastructure at times
serves municipal and military base purposes and would benefit
from Federal funding program opportunities.
Finally, I would encourage streamlining of regulatory
requirements, especially related to water reuse, and
simplifying the Federal funding application process. Excessive
delays could be removed with a new one-stop approach of
prequalification based on a master application and a single
comprehensive review.
In closing, continued utility innovation success depends on
partnership with Federal Government agencies and the ability to
obtain funding assistance for innovation projects. Thank you
for the opportunity to be here today.
Mr. Graves of Louisiana. Thank you, Mr. Gonzalez.
Our next witness is Mr. Christopher Franklin from Aqua
America.
Mr. Franklin.
Mr. Franklin. Thank you, Chairman Graves, Ranking Member
Napolitano, and members of the subcommittee. I am Chris
Franklin, and I am president and CEO of Aqua America and
president-elect of the National Association of Water Companies,
on whose behalf I speak today.
The NAWC is the association that represents the regulated
water and wastewater industry. In many ways, our companies
operate water utilities in the same ways that large gas and
electric utilities operate. NAWC members are located throughout
the Nation, and range in size from multibillion-dollar
companies to some smaller and more localized water utilities.
The company I lead is called Aqua America, and it is a
water and wastewater utility that serves about 3 million people
in 8 States across the country. In fact, we have operations in
at least seven members' districts of this subcommittee. I would
like to focus my time today on the actions the Federal
Government can take to unleash solutions to meet the Nation's
significant water and wastewater infrastructure needs.
Now, as a result of our size and our management strategies,
regulated water utilities are able to take advantage of
economies of scale. Spreading the cost of infrastructure
improvements, operating costs, and billing and customer service
over more people creates a benefit for customers.
Now, on a typical 3-year cycle, Aqua America spends over a
$1 billion in capital replacing water and wastewater pipe. Over
the last decade, we replaced an average of 130 miles of water
main each year. Due to the large amount of pipe we purchase, we
can buy pipe at bulk prices considerably lower than many other
utilities. And by the way, all of this work has dropped the
frequency of our main breaks to far less than the national
average.
Now, you know very well the challenges faced by small and
mid-sized city mayors. Public safety, human services, streets--
for a mayor, finding capital dollars to replace water and
wastewater mains underground where nobody will take notice is a
challenge. We understand these political and financial
challenges facing elected officials. And frankly, it is one of
the reasons we believe that NAWC can be part of the solution.
Today the annual appropriation for the clean water and
drinking water State revolving loan funds are approximately $2
billion. Importantly, the six largest members of our
association collectively are spending $2.7 billion every year
on their systems. So for the committee's consideration, I would
like to talk about two policies that would lead to more
efficiencies.
The first recommendation is the Federal Government should
incentivize partnerships in the water sector. Let's face it,
there are more than 50,000 water systems in the country and
16,000 different wastewater systems. I have been an executive
and a board member of water and electric utilities now for more
than two decades, and I can tell you that without economies of
scale, it is tough to be viable in the utility business for any
length of time.
That is one of the reasons why most environmental agencies
and public utility commissions have long ago adopted policies
to encourage consolidation of water and wastewater systems.
Incentivizing partnerships and consolidation is the partnership
we recommend to you today.
I want to acknowledge my colleagues on the panel and across
the municipal sector for the fine work they do. There are many
well-run municipal systems, particularly in larger towns and
cities where economies of scale are apparent. But within those
65,000 water and wastewater systems, there are also many
smaller systems that continue to struggle.
Now, the second recommendation that we will make is that
the Federal Government mandate effective utility management and
require financial viability and accountability for performance.
Noncompliant water and wastewater systems not only create a
growing financial burden, but they pose significant risks to
public health and the environment.
According to the EPA, there are presently thousands of
domestic wastewater systems that are in significant
noncompliance. These failing systems should not be subsidized
with Federal dollars without demonstrating a path toward long-
term financial and operational viability.
We recommend that all applicants for public dollars
demonstrate that they have fully accounted for the long-term
costs of their projects, including any risks inherent in
construction, operations, and maintenance costs.
I appreciate the invitation to appear before the
subcommittee today, and at the appropriate time, will be happy
to answer questions.
Mr. Graves of Louisiana. Thank you, Mr. Franklin.
Our last witness is Mr. Lawrence Levine from the Natural
Resources Defense Council.
Mr. Levine, thank you for being here. You are recognized
for 5 minutes.
Mr. Levine. Thank you. Good morning, Chairman Graves,
Ranking Member Napolitano, and members of the subcommittee. I
am Lawrence Levine, a senior attorney with Natural Resources
Defense Council. I appreciate the opportunity to testify today.
First-class infrastructure to protect clean water and
public health is among our most basic and most important needs
as a Nation. Yet in much of the country, our aging
infrastructure is simply not up to the twin tasks of providing
everyone with access to the safe water and sewer services they
need, and keeping our waterways free of harmful pollution.
In too many communities, both large and small, urban and
rural, the public is still drinking water with contaminants
that pose serious health risks from systems that leak a
substantial portion of the water they produce. Meanwhile,
sewage and polluted runoff make our waters both unsafe for
human use and too degraded to support the fisheries and natural
habitat we need for sustenance, recreation, and natural flood
mitigation.
The effects of climate change, droughts, floods, storms,
sea level rise, all threaten to degrade or damage our water
infrastructure even further, as the devastation caused by
Hurricanes Harvey, Irma, and Maria over the last month so
drastically illustrates.
To protect our communities and our natural environment,
there is a critical need for major new investments in water,
wastewater, and stormwater infrastructure. Critically, the
scale of the need is so vast that without a large and lasting
commitment of new funds from the Federal Government, leveraged
with additional funds from the States, our communities simply
will not be able to fund the investment they need so badly to
bring their water systems into the 21st century.
Major new Federal investments, like all of our Nation's
infrastructure investments, can be deployed to simultaneously
deliver economic, social, and environmental benefits, spur
innovation in clean and efficient water and energy systems,
invest in climate-resilient infrastructure projects and smart
technology, ensure accountability for every dollar, allocate
flexible funding for local and regional planning, and create
good, forward-looking jobs beyond the construction phase of
infrastructure projects.
For water, wastewater, and stormwater infrastructure
funding specifically, NRDC also urges Congress to embrace a
number of key principles, including the following:
Expand the State Revolving Funds and leverage additional
investment by States and local governments;
Direct new funds to natural and nature-based infrastructure
solutions;
Ensure that projects are designed, sited, and built with
the full consideration of the future impacts of climate change;
Ensure that communities and families in the greatest need
are not left behind;
Amplify benefits to the economy by incorporating ``buy
American'' domestic sourcing requirements, prevailing wage
provisions, and green job opportunities.
Based on these overarching points, NRDC offers the
following specific priority recommendations to Congress.
First, increase funding and improve use of existing
funding. Increase the current annual appropriations to the SRFs
to $6 billion, which would mark a return to a similar level,
adjusted for inflation, as was appropriated under President
Reagan for the Clean Water SRF alone, and it would be the level
the President promised during last year's campaign.
Direct the additional funds to water use efficiency, green
infrastructure, stormwater capture and reuse, hardship
communities, source water protection, nutrient reduction, lead
service line replacement, water loss control, and climate
resilience.
Provide incentives to States to leverage Federal funds and
invest more State dollars in water infrastructure by allowing
States that exceed the minimum required match for Federal SRF
capitalization grants to distribute a larger share of their SRF
funding as grants rather than loans.
Reauthorize and improve the sewer overflow control grant
program under Clean Water Act section 122.
Improve implementation of existing requirements, which
Congress enacted in 2014, that promote the use of water
efficiency, recapture, and reuse strategies in Clean Water SRF-
funded projects.
Second, ensure water and sewer service remains affordable
for low-income households even as utilities generate additional
local revenue to meet clean water needs. This includes:
Prioritizing disadvantaged communities in water
infrastructure grant programs;
Creating a Federal low-income water and sewer assistance
program, analogous to LIHEAP [Low Income Home Energy Assistance
Program] for energy, to help maintain affordable costs at the
household level, and using Federal policy to spur creation of
complementary State and local assistance programs to promote
more equitable water and sewer rate structures;
And to increase utilities' use of asset management, green
infrastructure, and water efficiency strategies that reduce
costs for all customers.
Third, reinstate the Federal Flood Risk Management Standard
to protect the value of Federal water infrastructure
investments by reducing the risk of severe damage and flooding
disasters, as S. 1798 would do, introduced 2 weeks ago.
Fourth, support tools for effective prioritization of pipe
replacement and leakage control, as in title 3 of H.R. 3275.
And finally, preserve and strengthen source water
protections, including the Clean Water Rule, to protect health
and reduce treatment costs.
Thank you.
Mr. Graves of Louisiana. Thank you, Mr. Levine.
I have a couple of quick questions and Mr. Mast and I are
going to switch up here. I am curious. We can sit here and talk
for hours about the need for Federal resource needs in water
and wastewater, and it seems as though the Federal Government's
role has continued to grow and evolve over time.
As we focus on building a new infrastructure package, a new
infrastructure approach at the Federal level, one of the things
that I believe we need to do is we need to determine what the
Federal objectives of this infrastructure package is. What are
the Federal priorities? And then to develop effective criteria
or metrics for us to advance those and actually complete those
objectives, as opposed to taking a shotgun-type approach where
we throw a nickel at every $10 problem across the country.
I am curious if--Mayor Cooper, could you reflect a little
bit on what you view the Federal Government's role is in water
and wastewater infrastructure?
Ms. Cooper. Thank you, Mr. Chair. Over the past 10 years in
working with integrated planning and looking at what we can do,
I believe that in my testimony, in my written testimony, in the
suggestions that we can move forward is really work on the SRF
funds and free up some more money as far as grants. We have
been focused on that as well. I think that would help offset a
lot of the affordability.
Also, as far as integrated planning, give the timeframes
that many of the members have suggested here. And many times it
is about integrated planning, fair and equitable distribution
of the funds, and the SRF plan that we are asking to fund, and
the other list of recommendations from the U.S. Conference of
Mayors.
Mr. Graves of Louisiana. Anyone else care to quickly
comment on that, on what you see the Federal Government's role
being in water and wastewater investment? Mr. Franklin?
Mr. Franklin. Mr. Chairman, I would suggest, as well as you
could, encourage partnerships--partnerships within municipals,
partnerships between municipal and investor-owned regulated
utilities. The more we can bring economies of scale to bear
where we can handle these heavy, heavy costs over more people
and spread that cost more widely, I think long term we get rate
stability.
And certainly there is a role for Federal dollars.
Certainly there is a role for the Federal Government. But the
encouragement of these partnerships I believe is critical.
Mr. Graves of Louisiana. Thank you. Being a recovering non-
Federal sponsor with many water projects in south Louisiana,
one of the challenges we had was the Federal Government would
say, OK, here is an area where we can participate, but the
certainty associated with their funding stream was always very
unpredictable.
And so, my two cents, it seems as though if we can move in
a direction of better prioritizing what the Federal
Government's role is and improving predictability of certainty
of the funding, that is going to provide a much better
situation for folks trying to implement water and wastewater
projects at the State and local level.
Mr. Levine, I want to ask you a question. Toward the end,
you made reference to the Federal Flood Risk Management
Standard. That is something I struggled with.
If you are going to tell communities that they cannot
rebuild--for example, Mayor Cooper's State--that they cannot
rebuild or invest any Federal funds unless they meet a 500-year
standard or the alternatives that were in place, yet FEMA is
not allowed to compensate you for that higher or more resilient
standard, how do you recover a community that is already
challenged with recovery, with perhaps, in the case of Florida,
billions and billions of dollars in recovery, loss of taxes,
loss of property values, and things along those lines?
It seems like you are actually throwing a curve ball to a
community that is already undermined. And this is not a curve
ball question. I really am curious about this because I have
struggled with this question for over a year now.
Mr. Levine. Sure. Thanks for the question. In our view, it
is really a commonsense approach. Right? If we are going to--it
goes to your question, really, of prioritization and how we are
going to spend Federal dollars in the most effective way.
Right?
If we are putting Federal dollars towards projects that are
likely to see the same damage over and over again from floods,
from larger storms that, as we all know, are more likely to
occur more frequently over the future, and we have already been
seeing that, if we put Federal dollars towards that and do not
design those projects in a way that is resilient to minimize or
avoid that flood risk damage, that flood risk, it is not a wise
use of Federal funds.
And so there is simply a need to find the right projects
built in the right way to serve those local needs. But it does
not serve either the needs of the Federal Government or the
needs of the local community if things are rebuilt in ways that
are not going to be resilient and be continually able to
function and provide those basic local services.
Mr. Graves of Louisiana. Thank you. My point--I mean,
everyone, I think, supports resilience. The problem is that
without the corresponding resources for a community that is
already dealing with recovery, then you are going to be unable
to rebuild your community.
If you are requiring that rebuilding occur at a higher
standard, you are going to be unable to rebuild your community
without the corresponding resources. So I am just concerned. I
am not a town, but I am just concerned about the relationship
there, and I think we need to think through this a little bit
more.
But with that, I want to thank you all very much. I have
some other questions we are going to submit in writing to you
and would appreciate your responses there. But I am going to
recognize Mrs. Napolitano and am going to switch with Mr. Mast.
So thank you very much for being here.
Mrs. Napolitano. Thank you, Mr. Chair.
In my opening statement, I did express some concern about
recent trends on how Congress provides Federal assistance to
wastewater infrastructure projects. Several of you noted,
rightfully, that the Federal share of individual projects has
been decreasing over time to a point that, some of you noted,
the Government invests less than 10 percent of annual water and
sewer capital costs.
Several of you also note that the current mix of federally
subsidized loans and leveraged Federal financing does not work
for every community. Is it time for Congress to rethink the
trend, as my colleague has stated, envision a renewed Federal
water and wastewater program, to address the infrastructure
needs of communities facing affordability concerns, such as
those with lower income populations or smaller or rural
communities?
Also, the Federal Government played a significant role in
financing the first generation of water and wastewater systems
immediately following the enactment of the Clean Water Act. Is
it time for us to renew the role for certain communities to
implement in the next generation of projects? Mr. Pedersen?
Mr. Pedersen. Thank you, Ranking Member Napolitano. Good
question, and in California we certainly support efforts to
look at affordability for water and also affordability and
investment in disadvantaged and economically challenged areas.
We believe that there is a great need for grant programs to
continue. We recognize that the funding landscape has changed
dramatically, and loans are actually a very valuable tool, the
SRF program. But in addition, grants for those economically
challenged areas, we think, are very helpful to both fund their
capital needs, and perhaps in the future, O&M needs.
With regard to the Safe Drinking and Clean Water State
Revolving Fund, as my colleagues on the panel have urged the
subcommittee, increased levels of funding are very important.
We are really on our third, perhaps even our fourth, cycle of
improvement since the adoption of the Clean Water Act, and
those improvements are becoming more expensive and more time-
intensive to implement. And so that funding is vital to support
our local agencies.
Mrs. Napolitano. Mr. St. Pierre?
Mr. St. Pierre. So I think lower income concerns are a
major issue and a barrier to charging the full price for water
services. I think at the Federal level, it really would be
helpful for some kind of a program, whether it is a water
ratepayer assistance program, to make water affordable.
I think that, at the local level if we could charge full-
cost pricing, a lot of these things become a lot more
affordable. But that is the issue. It is lower income
affordability concerns that really keep water from that full-
cost price.
Also, I do believe in partnerships with other communities.
Chicago, we do provide grant programs for disadvantaged
communities. The economy of scale issue, I have 5 million
customers; I certainly can afford a lot more than a system that
has 100,000 customers. So I can afford that kind of help.
I think that the economy of scale issue needs to be looked
at, and the regionalization of water needs to be considered in
a variety of venues.
Mrs. Napolitano. Ms. Cooper?
Ms. Cooper. Thank you, Ranking Member Napolitano. I believe
there is a place for public-private partnerships as far as--the
one thing that it needs to be looked at is community by
community. That is why we have been focused on this integrated
planning.
For example, in Florida, we actually share a municipal
service with a municipal service district with five other
communities, but our water is independent. So when you are
looking at this, we have been looking at at least being granted
the ability to address it on a local demand need.
As far as affordability, again going back to my statements
in the presentation on evaluation, we do not want to displace
those costs on the people that can afford. I believe that ties
into a grant system, that we should go back to the original, so
wisely put in your presentation and your questions, in regards
to going back to a mix of grants and State Revolving Fund
increases. I do not think there is another way to avoid the
displacement of some of those costs without some kind of
program, such as you are recommending.
Mrs. Napolitano. Mr. Franklin?
Mr. Franklin. Thank you, Ranking Member Napolitano. I guess
I would make one point. I would like to see access to the State
revolving loan fund for clean water available to all. A lot of
people are under the misconception that companies like mine,
utilities, can make money on low interest. And that is a
fallacy.
The reality is public utility commissions only allow us to
pass through interest. And since all Federal taxpayers pay into
these through their taxes, we should allow all Federal
taxpayers, including the customers of utilities, to access
these low-interest funds.
Mrs. Napolitano. Thank you, Mr. Chair.
Mr. Mast [presiding]. Now we are going to go to my friend
and fellow bomb technician, Representative Crawford.
Mr. Crawford. Thank you, Mr. Chairman. Appreciate it.
I have a couple of unique challenges. They are not
necessarily unique to my district, but it is unique to rural
geographies. And that is small towns, rural communities, remote
areas, where it is difficult to fund wastewater treatment
systems and things of that nature.
I have suggested sort of working collectively with small
communities in a given area, and just would like to get some
feedback from you on the panel, if anybody wants to weigh in on
this. In a municipal area, obviously, a metropolitan area, you
have a funding mechanism that exists.
How do we drive funding for a scenario that I just
described along the lines of what a metropolitan area has,
given the population challenges that we have? I certainly think
that consolidation is one approach. But does anybody want to
address the funding in the consolidation? Mr. St. Pierre, you
look like you have something on your mind.
Mr. St. Pierre. Yes. One of the things we are working with
U.S. EPA on is a peer-to-peer network for smaller communities.
And instead of an enforcement type program with the States, for
small communities being able to bring in technical support from
larger utilities that can help those utilities really put
together a plan for their infrastructure.
Also, be able to access SRF funds, which really, for
smaller communities, if they do not have technical expertise,
can be quite difficult; and really help put them on a platform.
We have a meeting with a lot of utility leaders next Sunday and
U.S. EPA to really look at this model and see if there can be a
support service that is supported from a national level,
created at a State level, where we can provide value to rural
communities.
Mr. Crawford. Mr. Gonzalez?
Mr. Gonzalez. Yes. In the case of El Paso, we have some
funding challenges to deal with. During the next 10 years, we
expect to spend $1 billion, estimated, in order to serve the
residents within the city.
We also have some challenges in trying to help many of the
small communities that are located outside the city. We have
got a long history of working with various Federal agencies.
Many times, some of the regulations that are in place prohibit
us from being able to apply directly for funds for some of
these small communities.
We have got one specific example that comes to mind, an
area that has about 1200 connections or so. The area already
receives water service, but has a lot of failing systems. The
cost to be able to serve this particular area is well over $30
million or so.
It is impossible for the residents to be able to pay for
the needed service. The utility cannot provide the service and
the Federal Government is saying that because of the
regulations, we are not able to directly apply for funding and
serve them. And so they are kind of caught in the middle.
Being able to address those kinds of regulations, and to be
able to capitalize, if you will, on utilities such as ours that
have a willingness to go out and spend some of our own
resources in terms of management and identifying funds and
applying for funds, would go a long ways.
Mr. Crawford. Let me ask you this. The population of El
Paso, roughly?
Mr. Gonzalez. We have got about 800,000.
Mr. Crawford. 800,000?
Mr. Gonzalez. That is within the county.
Mr. Crawford. How far out are you reaching into some of
those outlying areas that is reasonably accessible
logistically?
Mr. Gonzalez. Well, we are designated as the regional
planner and provider of service, and so we come within a couple
of miles from the State line to New Mexico, I would say 5 to 7
miles from the State line. We provide retail service and also
have some wholesale accounts.
But those areas that kind of fall, like I said, in between,
not being organized and not having the resources, we are
willing to help. But again, in dealing with some of the Federal
agencies, our hands are tied because we do not qualify for
getting the assistance.
Mr. Crawford. What would it take for you to expand that
range to 50 miles, 60 miles? Is that possible, logistically
feasible? Can you do that?
Mr. Gonzalez. I do not know if it is feasible going that
far. But we are looking at much closer areas, like I said. The
area I just mentioned is only probably 5 miles or so from the
closest line, and yet we are in need of $30 million or so just
to be able to serve this very area.
Overall, like I said, just in wastewater needs, the
majority of the funds that are needed are for rehabilitation,
with some new infrastructure in place.
Mr. Crawford. So the challenge, I guess, that we face in my
district in particular is that many of the small towns, 200
population, less than 1,000, most of the time of the year there
are going to be boil orders that are issued just for drinking
water, just for use in the home. And it is a quality of life
issue, and it is a challenge for us going forward.
So I appreciate your insights and I look forward to working
with you in the future with some more ideas how we can address
that need. And I yield back. Thank you, Chairman.
Mr. Mast. Thank you, Mr. Crawford.
Ms. Esty, the floor is yours.
Ms. Esty. Thank you, Mr. Chairman. I want to thank the
chairman and ranking member for holding today's important
hearing.
Three topics I really wanted to touch on today, one of
which I added because of the enlightening conversation between
Mr. Levine and the chairman. And that has to do with resiliency
of water infrastructure. My State of Connecticut was hit very
hard with Superstorm Sandy.
We expended considerable resources in rebuilding and
learning about more resilient infrastructure, about how to
absorb fast-flowing water, work done in part at the`
institution that Mr. Levine attended, where he was one of my
husband's students at the Yale School of Forestry and
Environmental Studies. And that does cost money, and my State
spent that money to do so. And so did New York.
And so I think in the interest of saving lives and saving
dollars, it is incumbent on us to do that because it is not
only a misuse of dollars, but much more importantly, it is not
using the best learning about how we save lives and save
property going forward.
So I would just say that I think we have to find a way to
do that. And it would be wrong for the folks in Texas and in
Florida and in Puerto Rico and in the Virgin Islands not to
take best practices forward. And we are just going to have to
figure out a way to do it. And we should not lower standards
and put people's lives at risk and their property.
So I think that is not only being stewards of the Federal
tax dollars, but recognizing other States have figured out a
way to do that and did not get extra support. We did it because
it is the right thing to do.
The two topics I really wanted to touch on were about
public drinking water and about brownfields. On public drinking
water, my State is one of the many in the country that has
found we have unacceptable lead levels in our schools, in
condominiums, in apartment buildings, in State offices
buildings. As you may know, we found recently in the Cannon
House Office Building that we had unacceptable lead levels and
had to shut down all of the water fountains there.
So this is a problem we are going to need to address. And
it costs real money, and with aging infrastructure it has to
happen. We saw it in Flint. We saw it in Toledo. And as a
cochair of the Corrosion Prevention Caucus, I would urge us to
look at that.
And I will ask a couple of you specifically about that
because there just is too much at stake. We cannot afford to
poison our people, especially not our children, and too many of
these in our schools, and we will never recoup their lost
ability. And it is just wrong. We need to figure out how to do
that.
And the other is on brownfields, which is part of this
portfolio as well. I want to thank the ranking member and
Chairman Graves, who we have been working hard on a bill, have
one that passed unanimously out of committee, and we are hoping
to get it to the floor soon.
But nearly one-third of the projects do not get funded
because EPA does not have sufficient funding. Two of those
projects were in my district, and they are important projects.
There are 533 that did not make the cut last time, not because
they did not qualify, not because they were not good projects,
but because, simply, we did not have enough money.
So sometimes, unfortunately, it does take money. We are
making some improvements to Mr. Franklin's point and to Mayor
Cooper's point about trying to do P3s, public-private
partnerships, where appropriate. We have learned from
practices, working with the League of Cities and with the
mayors to improve the bill. And we would urge your support, and
try to get this through to the floor soon. But again, we would
like to see more robust funding for EPA for these programs, and
then we can leverage the private dollars.
So maybe, Mr. Pedersen, you talked a little bit about--if
you can opine both on brownfields with some additional funding,
recognizing that every one of those dollars leverages a lot--
and on lead, what you are seeing in our water systems on lead.
Thanks very much.
Mr. Pedersen. Sure, absolutely. Good questions. Lead is a
major challenge across the country. Fortunately, on the west
coast, we do not have as severe a lead problem because a lot of
our pipelines are not lead-based pipes. But I think,
absolutely, you are exactly right. We cannot be having lead
levels exceeding standards, especially in our schools.
California has been very proactive in this. In fact, the
legislature just passed a bill that actually increased the
current Federal standards for lead and copper testing whereby
community water systems would actually pay to do testing of
schools, which is not currently a requirement.
The other thing is corrosion control. It is very effective.
It is cost-effective. It does not require necessarily
replacement of all the lead pipes, but if you can control
corrosion and ensure that you are building that layer of
deposit on the pipes and not leaching out lead.
And with regard to the funding, I agree 100 percent. We
need more robust funding. The funding can be leveraged at the
local level. It should be.
And then with regard to resiliency, in California it is an
issue that we are very aware of. We have situations where we
face both drought emergencies and flood emergencies
simultaneously, and so we need to be thinking of both. And we
frequently focus on drought, but flood is also an issue that we
need to be very aware of and prepare for. And we are doing
that, but we need to do more.
Ms. Esty. I see my time is expired. Thank you, and I yield
back.
Mr. Mast. Thank you, Ms. Esty.
Going to Texas. Mr. Babin, the questioning is yours.
Dr. Babin. Yes, sir. Thank you, Mr. Chairman. Appreciate
it.
I want to thank all the witnesses for being here as well.
Water issues are a huge issue. In Texas, it is an enormous
issue. And as you know, countless communities across our
country, and in my district in particular, nine counties that I
represent in southeast Texas, from Houston to Louisiana, have
been impacted by devastating hurricane-force winds. And it is
not just my district. We had 39 counties impacted, not just my
9. But just to give you a little perspective, Hurricane Harvey
set a new continental U.S. rainfall record of 51.88 inches in
Crosby, Texas, in Harris County just a few weeks ago.
Can you explain what practices and methods that you all
have learned in your collective experiences, especially since
Hurricanes Katrina and Rita in 2005, to ensure that our
drinking water infrastructure maintains its reliability after
the storms like the ones we have just seen where, literally,
trillions of gallons of water inundate our communities in just
a matter of a few days?
And I would just like to open it up to the entire panel.
Mr. Proctor?
Mr. Proctor. Yes, sir. Thank you. One of the first things
that needs to happen is something I alluded to in my
testimony--life-cycle costing and full-cost accounting. Many of
the groups that are represented here today joined in something
called the ``Effective Utility Management Practices Book,''
which talks about the need to understand what is your full
life-cycle cost as you operate a utility. And once you
understand those costs, then you can make investment decisions
about how best to preserve those assets and make certain that
they will serve for a long period of time.
And when you talk about resiliency in the context of storm
events and so forth, that is one of the factors that needs to
be taken into account. You need to look forward and try and
anticipate what the frequency of storms might be, what the
impacts might be, and include that in your cost calculation in
designing the infrastructure that you build, and then make
certain that when you build that infrastructure, that you build
with the most resilient designs, resilient materials, and
everything else so that they will withstand those sorts of
events.
Dr. Babin. Thank you very much. Anyone else like to--Mr.
Franklin?
Mr. Franklin. Congressman, this is a critical issue and a
lot of learnings. We had a lot of customers in your district.
Many were on boiled water most recently. And I think there are
several things that can be done, especially in serving rural
communities, which is largely what we serve in Texas and North
Carolina and other States.
But number one, a monitoring system should be installed on
as many of these systems as possible so you know when they are
down remotely.
Secondly, staging of generators, prestorm work. Right?
Generators should be staged to make sure that those wells,
those community water systems and wastewater systems are
operational as long as possible, even though they are remote
and difficult to get to many times.
And third, as many mutual aid discussions that we can have
with other utilities to back each other up. The electrics have
had it for many years. We do not have quite the same system in
place for water and wastewater. But those mutual aid
discussions are really important.
I will give you one example, Beaumont, Texas. We sent a
team down there, and we were in Beaumont, and that was a very
difficult situation. But we were able to put our expertise----
Dr. Babin. That is my home town. That is where I grew up.
Mr. Franklin. Yes, sir. They had real trouble. Right? One
hundred eighteen thousand people out of water.
Dr. Babin. Absolutely. And many--we lost power and water in
many of our communities. And when you talk to folks, they will
tell you, ``If I had to choose, I would rather lose my
electricity than lose my water.'' And I can agree with that
because we experienced that.
Thank you, Mr. Franklin. Anybody else like to add to that?
Yes, ma'am?
Ms. Cooper. If I may, I did not get a chance to add,
because I did not go back as far, about 10 years ago we
actually built a water plant for about $25 million. We have
water independence in our city. It was one thing that I was
steadfast against. We support, as U.S. Conference of Mayors,
all our public-private partnerships.
And I should have started with--I am sorry for your
struggles and your losses there.
Dr. Babin. Thank you.
Ms. Cooper. It is not an easy situation, especially if you
are not familiar with it. But there is a lot of lessons
learned. As U.S. Conference of Mayors, I assure you we have
been working with your mayors, and look forward to working with
you if you have any questions on resiliency and building out
equipment. Being from Florida, we have a lot of experience in
it as well. And our president, Mitch Landrieu, of course, is
here to help as well.
Dr. Babin. Absolutely. Thank you very much.
Mr. Chairman, I think I will yield back the balance of my
time. And I want to thank every one of you for your experiences
and your advice.
Mr. Mast. Thank you, Mr. Babin.
Mr. Lowenthal, the floor is yours.
Dr. Lowenthal. Thank you, Mr. Chair. And first I want to
echo the comments of Ranking Member Napolitano and many of the
panelists also--and I want to thank the panelists for being
here--about how important the Clean Water State Revolving Fund
is to water agencies, especially water agencies in California
and across.
And I think, as my own two cents, that we should be moving
legislation, like H.R. 2510, to reauthorize the vital program
and provide direct investment in wastewater infrastructure. But
I want to follow up on some things that the panelists said for
my own understanding about what are the benefits and maybe some
of the problems.
And Mr. Pedersen, I am going to start with you. You
advocated in your testimony an amendment to the Clean Water Act
to allow for the 10-year permit under the NPDES, I think it
was. And you talked about how--some of the rationale why Aqua
would like to have it. I would like to hear a little bit more.
But I want to also hear--are there any down sides? I mean,
you promoted the up side of why it would be better for
investment. But what would be--are there any issues involved
that we should be addressing if we go from 5 years to 10 years
in those permits? Are there problems that we--are there
unintended consequences?
Mr. Pedersen. We have looked at that issue. We do not
believe that there are, and we have not heard those. And we are
open to listening. But we think, really, there are three key
benefits of doing this.
One is the longer terms promote, we think, a more efficient
regulatory process while recognizing and preserving the water
quality protections under the Clean Water Act, which is
important. We also believe it encourages longer term planning
and thinking, which is something we all need to do now, and
every panelist has spoken about that.
And then third, it better aligns the investments that we
are making in the 21st century in infrastructure with the
timeframes that are needed. And so we think it accomplishes
those three things and actually helps to make the process more
efficient.
Dr. Lowenthal. I am going to follow up with Mr. Levine on
that. NRDC has used the NPDES permit system to urge enforcement
of the Clean Water Act, to guard against contamination. Talking
about that, how would a longer timeframe affect enforcement and
contamination safeguards? Because we have to balance these
kinds of issues.
Mr. Levine. Yes. Thank you for the question. There are some
serious down sides, and we very much oppose changing that 5-
year term of permits, which has always been a core part of the
act, and look back to the legislative history of when the act
was first passed, was highlighted by the sponsors by floor
statements as really a key thing.
And the reason for that is that standards and technologies
and water quality needs do in fact change over timeframes much
shorter than 10 years. The entire scheme of the NPDES
permitting program, not only for wastewater treatment plants
but for all dischargers, was to recognize and to have EPA
focusing on improvements in technology and ensuring that the
best pollution control measures are used and that we do not
have a 10-year gap between when a permit is written and
catching up to the next best technology.
And similarly, our knowledge of water quality, impairments
of our water bodies, changes over a period of 10 years. And the
plans that we develop to clean up those water bodies changes
over a period of 10 years.
So, for example, development of total maximum daily loads
under section 303(d) of the Clean Water Act, those are
basically pollution diets that identify how much reduction is
needed from different pollution sources to a water body. Right?
And those plans have consequences for permitting. They require
permits to then meet those pollution diets, those pollution
load reductions. And if those permit cycles get extended to 10
years, we are going to see substantial delay in making those
water quality improvements we needed.
Now, I will add, if I can, just two quick related points.
It has been suggested that by allowing for reopeners of
permits, that would solve this problem. We do not think that
that really solves the problem. If the default is you have got
10 years on a permit and there is no action-forcing mechanism
to revisit that permit for 10 years, you are cutting out the
public and you are cutting out EPA and undermining EPA's
authority.
So whenever there is a permit renewal, the public has an
opportunity to come in and seek further protections, which they
do not have--the public cannot do a reopener. Right? The State
permitting authority has the sole power to do a reopener.
Similarly, EPA cannot come in in the way that they exercise
their oversight responsibilities. When a State has a draft
permit, EPA has a role and a responsibility to review it, see
if it complies with the act, and the authority to object and
ensure the State strengthens it.
So if you put these things off for 10 years, you are taking
those key safeguards, checks and balances, out of the process.
Dr. Lowenthal. Thank you. And I yield back.
Mr. Mast. Thank you, Mr. Lowenthal.
Mr. Weber, the floor is yours.
Mr. Weber. Thank you, Mr. Chair.
Mayor Cooper, I want to visit with you for a second. I was
on city council for 6 years in the little town of Pearland back
then, which had like 26,000 people. We had 20 police officers,
by the way, and I knew them all. Now Pearland has grown to
about 110,000, has 160 police officers, and I do not think
anybody knows them all.
But anyway, I have been through that growth spurt. So you
are mayor of Hallandale Beach, Florida. I want to come back to
your discussion, I think, with Dr. Babin. If I understood you
correctly, you said that you all went for water independence 10
years ago and it cost $25 million, and you said you were
against that. Did I hear that correctly?
Ms. Cooper. No. I was in full support of it.
Mr. Weber. You were supporting it. OK. You were for that.
Well, I am sorry. I misunderstood that. And how long have you
been mayor?
Ms. Cooper. I have been mayor 14 years.
Mr. Weber. Fourteen years. So you started when you were
like in sixth grade?
[Laughter.]
Ms. Cooper. Well, thank you for that kind remark.
Mr. Weber. Sure. We instituted what is known as an impact
fee for people moving into Pearland--we are south of Houston, I
am not there now, but that is where I grew up, in that area--at
a rapid rate.
Pearland was one of the fastest growing cities in the
country. So we realized that the people coming to our little
sleepy neighborhood town were going to have an impact on sewer
systems, on our water system, on infrastructure--fire, police,
EMS, and so on and so on. Do you all use an impact fee?
Ms. Cooper. Well, you are a smart mayor for doing that, and
we----
Mr. Weber. Well, I never said I was mayor. I was city
council. Yes, sure.
Ms. Cooper. Oh, I am sorry. Oh, council. Well, we are all
equal. We just--I run a meeting, so----
Mr. Weber. Right.
Ms. Cooper. But we do have impact fees, and we do--any new
development pays their fair share of the impacts that they are
putting on our community. We are actually in the process--I run
a tight ship, so we just did our full evaluation of our basis
of design report, which is that $200 million price tag. So if
you are going to come up and do business, we want you to be a
community partner, and you will be paying your fair share into
our community.
Mr. Weber. I noticed, according to Wikipedia--and you know
if it is on Wikipedia or on Facebook, you know it is true----
[Laughter.]
Mr. Weber [continuing]. But your 2010 census was 37,113
people. Their estimate of 2016 was 39,500 people. So you have
grown by just a couple thousand people in the last 6 years. Is
that accurate?
Ms. Cooper. Yes. Yes.
Mr. Weber. OK. Does the State play a role in you all's
development in the State of Florida?
Ms. Cooper. We actually have a robust comprehensive plan
through the Broward County district. We have a county seat that
does planning. And we actually are very involved. I actually
put all our growth management tools in the toolbox about 10
years ago, so we are pretty independent when it comes to
approving development now.
Mr. Weber. OK.
Mr. Levine. Could I speak to that question about the impact
fees real briefly?
Mr. Weber. Yes, sir. Feel free.
Mr. Levine. Thanks. It really speaks to a broader issue
about equitable rate structures, right, for the reasons you
said. If you have got folks coming in, development coming in,
they should be paying their fair share into that.
The question of affordability of water and sewer service
for residential customers, we have got the assistance, the low-
income assistance, approach which is necessary, like the LIHEAP
type approach, right, that we have talked about that, Federal
assistance for that, State assistance for that, to help reduce
bills directly.
But you have also got the underlying rate structure. Right?
So if you are giving somebody a credit or a voucher to help pay
their bill, what was the bill to begin with, right, and what
was the rate structure that resulted in that bill?
Mr. Weber. And who pays that difference?
Mr. Levine. Sure. That is right. And that is providing the
assistance. Right? But if the rate structure itself is
equitable, that is going to mitigate the amount of outside
assistance that is needed.
And so just to take an example, what I mean by that, so if
you have got tiered rates for water, right, inclining block
rates, where those who use enough for their basic needs are
paying a relatively lower per-gallon price and those who are
profligate water users are paying a higher per-gallon price for
those higher increments, that is going to support folks of
modest means who use modest amounts of water, and lower their
bill simply by changing the way the rate is structured in the
first instance.
And you see the same dynamic with the use of stormwater
fees, for example, based on impervious area, where you get
people paying in corresponding to the contribution of runoff
they have into a system. And that will help residential
customers quite often.
Mr. Weber. So it is safe to say, and I am running out of
time, that that calculation, that formula, does not take into
account two things, perhaps: old, outdated equipment, lead
pipes or others, whatever happens; and then, also, disasters
like hurricanes and stuff. Is that safe to say?
Mr. Levine. Sure. Well, that gets to the full-cost pricing,
full-cost accounting issue, right, is making sure that whatever
the rate structure is, that it is applied in a way that
generates the total amount of revenue needed for the utility.
And that in turn links with how much outside assistance the
utility is getting for those capital costs, which underscores
the need for Federal and State investment.
So it is a set of puzzle pieces that all fit together.
Right? The utility needs to be able to generate revenue for its
share. It needs to be able to do it in an equitable way. But
that share also needs to be not so outsized that it is
impossible to do that. And the way to keep it from getting so
outsized is to make sure that the financial assistance is
coming in from the Federal and State level where it is needed.
Mr. Weber. Well, we will have that discussion later. Mr.
Chair, I will yield back.
Mr. Mast. Thank you, Mr. Weber.
Mrs. Lawrence? It is all you.
Mrs. Lawrence. Thank you so much.
As a former mayor, I just really want to say we should
listen to our mayors, who are dealing with this issue every
day. It is amazing. When there are crises, you always see the
mayor as the go-to person to deal with the crisis. Let's get
the mayors involved and make sure their voices are heard to
prevent some of these disasters.
So let's talk about the data that we should. We heard my
former colleague, Mayor Cooper, talk about the basis of design
support. To be able us to truly address the issue of water
infrastructure in our country, we need data. It should be
mandatory that every city conducts this type of review of their
water infrastructure.
So many of us will--as we talk about investment in our
infrastructure, water should be a priority. Ladies and
gentlemen, I represent Michigan, and what we went through with
Flint and across the country, it was a shock to us to
understand that water is not a luxury. It is a need to live.
And it is not something that should be predicated upon the
wealth of your community.
So there are some things that I think we really need to
have on point. Water main breaks: People used to ask me as the
mayor, ``What keeps you awake at night?'' It was not things
that you think about. Potholes--yes, I did not like the
potholes and I got beat up a lot about it. But water main
breaks--when you flush your toilet, when it rained was it going
to back up in your basement, those things kept me awake at
night. It is a quality of life issue.
We have 240,000 water main breaks. And what we are doing,
we are wasting 2 trillion gallons of treated drinking water.
And there are communities who are struggling right today in
America to get clean drinking water, going through the
conservation issues that you talked about, Mr. Gonzalez, to
just survive and have water quality. And we are wasting it
every single day.
The Army Corps of Engineers has a backlog of $56 billion.
And what does that include? The levees and the dams that are
breaking every time we have these natural disasters, and
coastal inlets. These are issues that we must make water
infrastructure--so Mr. Levine, I am going to ask you this
question, Mr. Levine.
Across the country we are now dealing with this water
issue, affordability with low-income communities. How do we
create a 21st-century water infrastructure that ensures that we
are, in America--as we talk about healthcare and tax structure,
that the basic human need of water is being addressed?
Mr. Levine. Thanks. So there are many legs to the stool.
Right? It is a combination. What we really need in order to
make sure that at the level of an individual household, of
every individual household, that there is that access to
affordable water and sewer and stormwater service. Right? Is to
make sure that the cost that is borne locally is a cost that
the utility can fairly collect from those who are served.
Right?
And so that is a function of knowing what the cost is,
identifying what the needs are, what the priority spending is,
things like water loss, water----
Mrs. Lawrence. Can you include in that, how does
encouraging or incentivizing these communities to consolidate?
Because while as mayor I loved to have everything on my own,
but then a poor community a couple miles down the road, they
cannot afford water. But I am doing well. Can you put that in
your statement as well?
Mr. Levine. Sure. Yes. No, there is absolutely a place for
that, and as other witnesses have talked about, you can have
literal consolidation of the physical plant of different
utilities when they are close enough to each other and when
that makes sense.
You can also have regionalization in ways that allow
utilities to share management expertise and purchasing power to
get economies of scale. And those are absolutely important
things to look at. They do not by themselves solve the problem,
but they help.
And so solving the problem, as I said, there is the Federal
money and the State money to make sure that the amount that
needs to be spent locally is manageable. There are efficiencies
and strategies at the local level to reduce the costs of
providing the service. And there is assistance to individual
households, equitable----
Mrs. Lawrence. Mr. Proctor, before my time runs out, I am a
strong, strong proponent of skilled trades. And your company
talks all about the jobs that will be created through this
investment in our infrastructure, especially water. Can you
please, in the time remaining, talk about that?
Mr. Proctor. Well, every $1 billion of water infrastructure
investment produces about 28,000 jobs, I think the statistics
show. So when we invest in our water, not only are we providing
something essential for the health of our communities, but we
are also helping those communities get off the ground by
providing good-paying jobs that they can then put back into
those communities.
Mrs. Lawrence. It is a win/win. I close with this. We are
looking at our tax structure tomorrow, I understand. We cannot
take away those tax-exempt municipal bonds. It is critical that
we keep that. Thank you so much, and I yield back.
Mr. Mast. Thank you very much.
And the floor is for Mr. LaMalfa.
Mr. LaMalfa. Thank you, Mr. Chairman. Thank you, panelists,
for assembling here today.
In California, the State Water Resources Control Board
recently released their annual compliance report, and it found
that in 2016, nearly 5 million people were affected by their
definition of water violations, which is triple the amount
affected in 2015.
In my district alone, the First District of northeast
California, there were 800 of these what they are defining as
violations in that new year, which shows a lot of work to be
done to fix these issues and ensure the water is clean and
safe, as defined.
Fixing these violations can be quite a challenge in the
absence of funding. Again, in NorCal there is a large amount of
very small and unincorporated communities that do not have the
tax base, do not have the prospering industries that they once
had, and so the challenges are huge.
And raising the funds for a project in the short term and
maintaining these projects in the long term, it is a great
strain on these small towns and unincorporated areas, these
villages that do not have the budgets that they once had, even
countywide.
When they are able to raise the funds, ensuring that each
project that they come forward with, that they comply with a
long list, Mr. Chairman, of regulations and redtape from both
the Federal level and California's crushing State regulations
can be darn near impossible for these small towns.
And the questions I want to pose, Mayor Cooper, and to also
Mr. Pedersen: Given the uncertainty of increased Federal
funding, what we are dealing with around here, what are some of
the regulatory burdens and other structural issues and problems
that this committee could be tackling in order to help the
dollars go farther in small, unincorporated communities or
counties where, again, industry has been basically run off--to
stretch these dollars farther? So would both of you like to
take a run at that?
Ms. Cooper. Thank you very, very much for the question. I
want to go back to two issues, first address yours.
The regulatory process is something we have been working on
as U.S. mayors for the past 10 years. And I do believe that we
should go back to address some of the questions. I know Mr.
Lowenthal had asked about the 10-year process. I think that is
critically important.
We are all stewards of our water. We have come a long way
over the past 40 years and the Clean Water Act. So I believe
science as well as social equity needs to also be looked at,
and that we have to be looking at these regulations as they
evolved.
So the 10-year period, I think, is critical so we can
implement plans over the time period that we have been working
on with Mr. Gibbs' bill. As far as what we----
Mr. LaMalfa. Let me also allow time for Mr. Pedersen, too,
so----
Ms. Cooper. I know. I am sorry. And then as far as the
monetary, that goes back, I believe, to the grants and a lot of
distressed areas. Right now we can borrow money, and some
cities have better borrowing capacity than others. In these
distressed areas, we will continue to ask for grants and
flexibility as far as implementing our plans for the best and
most effective utilization of both our financial resources as
well as boots on the ground doing the projects.
Mr. LaMalfa. OK. Thank you.
Ms. Cooper. Sorry, sir, for too much time.
Mr. LaMalfa. That is OK. Thank you.
And then please speak a little more to the structural
problems that the regulatory burden is causing. Now, in
California, again, we have our own problems with the resource
control board. There seems to be further definition of these
rules, of these laws that are changing and making the burden
even higher. As I mentioned in my comments, 2015, the number
tripled in 2016 to what they allege are violations.
In the remaining time, please. What should we be doing to
help address that?
Mr. Pedersen. Thank you, Congressman. Quickly, this is a
challenge we face. It is probably the number one challenge
following the aging infrastructure issue. As we better
understand the science of water, naturally there will be new
regulations that we need to meet.
We need to be smart about how we comply with those
regulations, looking at things like integrated planning, where
we can look at complying with multiple regulations----
Mr. LaMalfa. How you comply. But how reasonable are the
regulations to begin with as they evolve?
Mr. Pedersen. And that speaks to the public process. As
agencies, we need to all weigh in. We do that. And we need
additional opportunities to give our input and feedback and
share the science on both sides of the issue so that we develop
balanced regulations.
Mr. LaMalfa. I do not believe the public knows what it is
paying for as these regulations morph on and on. And I think if
they really understood, they would be more up in arms about
what it is costing them, to not have this new infrastructure
they should have.
So Mr. Chair, I will yield back. Thank you.
Mr. Mast. Thank you, Mr. LaMalfa.
Mr. Garamendi, we are up to you. It is your turn.
Mr. Garamendi. Thank you.
There has been a lot of discussion here about what to do
with the various hurricanes and the rebuilding of systems. And
I note that in August, the President revoked the Flood Risk
Management Program. It seems to me that it might be useful to
keep that in mind. Much discussion from the witnesses about how
to be resilient in the face of floods.
But I guess the Federal Government is not going to require
that in funding programs, that we do not pay any attention any
longer to flood risk management. It seems to be a rather stupid
thing to do, but we ought to pay attention to that. So that
ought to go back onto the agenda. And if the President does not
want to reinstate that, then perhaps we ought to. Otherwise, we
are wasting a lot of money.
Secondly, every one of the witnesses has asked for more
money. Correct? Is there any one of you that did not ask for
more money? No. All of you did. And we need more money.
Tomorrow the Republicans in this House are going to hold a
half-day seminar on how to reduce Federal revenues. Now, tell
me how that is going to work if you want more money.
I think we ought to keep in mind the totality of the issues
that come before us and the way in which they interact. We can
do all kinds of tax reduction policy, which is what I am sure
will come out of tomorrow's meeting. And you want more money
for water systems, for wastewater management, for flood
systems, for highways, for new nuclear weapons, on and on.
Just tell me how we are going to do all of that when we are
reducing Federal tax revenue. Who would like to answer the
question?
Mr. Franklin. Congressman, if I could, let me just give you
the art of the possible.
When I joined our company in 1992, we took the amount of
pipe that we were replacing every year against the total amount
of pipe that we had in the ground. We would have had went on a
900-year replacement cycle. Far from sustainable. Right? It is
not going to last that long.
In the 20 years or so that I have been at the company, we
have taken that from 900 years down to 90 years. Our main
breaks are half of the national standard, AWWA, and we have
done it without Federal money. And we have done it on our
rates. Our monthly rates are about $50 per month per customer.
That is the art of the possible. It can be done, but it has
to be done over larger groups of people. We have 450,000
customers in that particular division. But it can be done.
Mr. Garamendi. Excuse me. Was that pipe American-made?
Mr. Franklin. That pipe is American-made by one of the
people sitting at the table here.
Mr. Garamendi. But you did ask for access to Federal
dollars, did you not? Right?
Mr. Franklin. Yes, sir. If we----
Mr. Garamendi. Now, my question was not about how you could
be more efficient, which is meritorious. But my question was
about how do we get more Federal dollars to meet the needs that
all of you have when we are actually reducing Federal revenues,
or there are many who want to reduce Federal revenues?
Ms. Cooper. If I may?
Mr. Garamendi. Yes, please.
Ms. Cooper. Thank you. And I do not want to repeat my whole
testimony today. But I believe, really, what municipalities
have been focusing on is not just money--and we face money
issues, our balanced-budget city, on a daily basis--but really,
the encouragement of integrated planning, flexibility, support
of public-private partnerships, the bill that is being
presented by one of the Members, Mr. Gibbs.
So there are other opportunities. Money is important, the
flexibility in the existing funds in the State Revolving Fund.
Mr. Garamendi. Excuse me. Excuse me, but you are dancing
around the fundamental issue that I have raised. Every one of
you have asked for more Federal money for a variety of
purposes, all good. And at the same time, the Congress of the
United States is in the next--tomorrow and the days following,
setting out to reduce Federal revenues.
So how do we deal--and the larger infrastructure issue, a
trillion-dollar infrastructure issue. Are you suggesting it
does not require Federal money? It can all be done in public-
private partnerships? Yes, sir?
Mr. Proctor. I am certainly not going to suggest that
everything can be done with public-private partnerships. But I
think there are three things that could be done that would
leverage what we do have.
Number one, when we invest in water infrastructure, that is
not a static development. Every dollar of water infrastructure
spending generates economic activity, I think another $6 in
GDP, that in turn generates additional tax revenues that could
help offset that.
Number two----
Mr. Garamendi. Excuse me. Are we talking chicken and egg
here? Which comes first, the Federal revenue or the growth that
occurs without the Federal revenue?
Mr. Proctor. Most certainly the growth will--the growth in
spending will sustain the growth in tax revenues. So there is
perhaps an element of that. But there two other ways to get
that, perhaps, that avoids that conundrum.
One is the expansion of the WIFIA program. Right now WIFIA
provides a leveraging opportunity through the use of credit
insurance that would enable the few Federal dollars that we do
have to greatly leverage into additional spending through
private sector investment as well, which in turn would generate
that economic activity, which would then in turn generate
additional revenues.
And then the last thing I would mention is lifting the cap
on private activity bonds. The estimates are there--I think the
last CBO estimate was----
Mr. Garamendi. I am going to interrupt you, sir. But do any
of those meet the needs of the infrastructure, water
infrastructure? They are a piece of the puzzle. But by
themselves, they are totally insufficient.
Mr. Proctor. I would agree that none of those things by
themselves solves the problem.
Mr. Garamendi. That brings me back to the point that I am
really raising here, in that we talk about a trillion-dollar
infrastructure program. We talk about water, drinking water and
clean water and on and on and on.
At the end of the day, it requires Federal resources, which
are going to shrink if the current policies being enunciated by
the President and by my colleagues on the Republican side, are
able to go forward.
Thank you for the extra time. Mr. Mast.
Mr. Mast. Thank you, Mr. Garamendi.
We are going to move to Mr. Gibbs.
Mr. Gibbs. Thank you, Mr. Chairman. I want to apologize for
being late. I had another commitment.
First of all, I got a response for my good friend from
California. He says we are meeting to reduce Federal revenues.
No. We are trying to put policies in place, a tax plan in
place, that will create economic growth.
If you believe that reducing the rates will reduce Federal
revenues over the long term, then, my friend, we ought to just
increase the rates. In that philosophy, the revenue is going to
go up then.
And I think most of us can agree increasing the tax rates
will not bring in more revenue, but to get the economic growth
instead of having the new normal 1 percent, 1\1/2\ percent GDP
growth, let's get that up to 3 or 4 percent growth by having a
tax policy that works for our American families and businesses.
And that is where my friend from California is a little
misunderstood.
I want to move into my questions here. First of all, Mayor
Cooper, I enjoyed working with the Conference of Mayors, and
all the kudos--it is the most kudos I have ever gotten in my
life from today, I think, on my integrated planning bill. I
really appreciate that. And I appreciate the mayor's council
support, and also in their written statement, the American
Public Works Association.
Mayor, can you maybe elaborate a little bit, if this
integrated planning bill goes through, how that will help your
community on flexibility? Can you maybe emphasize that a little
bit, the flexibility and how it impacts you?
Ms. Cooper. Well, when we are looking at resiliency
measures and we are looking at green infrastructure measures,
this will give us an opportunity to prioritize the investments
of what little dollars that we do have. And I know I hear that
through the water council continually across the Nation and the
Nation's mayors that are represented on our board.
So going back to the discussion, it is not just about
money. Money is important. Investment breeds return on dollars
and helps some of the most needy in our community. But your
bill and that process, after working on it for 10 years, and
the timeframes, and the flexibility, I think will bring a new
era in partnership, in intergovernmental partnerships, to work
together to address this need.
Mr. Gibbs. Would you agree--I heard earlier this question
from the gentleman, Mr. Levine. The 5-year. My bill keeps the
5-year permitting. It would have been easier to write a 10-year
permitting bill for this, it stays at 5 years, and I like to
think of it as adaptive management or fine-tuning.
When that 5 years comes up, we can fine-tune it to reach
the goals that our local municipalities need to reach in work
with the EPA. Would you concur?
Ms. Cooper. Yes. I have been fortunate not to be under
consent decrees and not being on the enforcement end of water
issues. And those become quite arduous, and what happens is you
are paying and spending more money after addressing something
that might be not necessarily fundamentally scientific in
nature.
And I am certainly not a technician, and I have to at least
yield that, that my understanding and working knowledge of
water issues, that sometimes they are arduous.
Mr. Gibbs. I agree. I got to move on because my time.
Mr. Proctor, good to see you again. Can you talk--I got a
couple points in testimony. Can you explain encouraging full-
cost accounting leads to water systems being more efficiently
run and help compliance with the Clean Water Act? Can you
elaborate on the full-cost accounting?
Mr. Proctor. Yes. Good to see you as well. Like any
economic activity, understanding your full cost is essential in
making certain that you make the smartest decisions possible.
And full-cost accounting would go a long way toward doing that.
It would not only perhaps help utilities better price their
product, which is something that we have talked a little about
here today, but also to find the areas that are driving those
costs so they can try and reduce those costs to do more with
less.
And so whether you get to full-cost pricing down the road,
you may not actually get there, but at least full-cost
accounting is an essential first step. And just to state it
philosophically, none of us can get a loan from a bank either
to buy a car or buy a house or fund a business unless we have a
good understanding of what our expenses and costs are. And the
taxpayers really deserve the same thing as the lenders in this
process.
Mr. Gibbs. I have a theory on this, at least on the public
side. We kind of live on depreciation. We do not count for
depreciation, where on the private water side they probably are
to stay in business. Would you concur that is part of the
problem? We do not account for depreciation on the public side?
Mr. Proctor. I think, in large part, a lot of utilities do
not account for depreciation, which is another word for the
future cost of investment in future infrastructure to sustain
itself over the long term. That is where life-cycle costing,
which is an element of full-cost accounting, would provide a
great service to taxpayers, so they understand what it costs to
provide this service over the long term.
Mr. Gibbs. My time is expired. I yield back.
Mr. Mast. Thank you, Mr. Gibbs, and also for your insight
on decreasing burden as we increase revenue. I think,
unquestionably, one of the biggest things we need to avoid in
this institution is the notion that somehow our grade goes up,
our grade on the report card goes up, solely based on what we
spend; that if we spend one extra dollar, we somehow get a
better ranking.
That cannot be the way that this institution functions,
especially when we consider it is the fruits of other people's
labor that we deal with here. And in that, I want to move to
Ms. Brownley. The floor is yours.
Ms. Brownley. Thank you, Mr. Chairman. And Mr. Chairman and
Ranking Member, I just wanted to give a little bit of a shout-
out to Mr. Pedersen and the Las Virgenes Municipal Water
District. They have been recycling water since 1972, and I
consider them one of California's pioneers. So thank you for
all of your good work.
I had three questions, and I think Mr. Lowenthal really
asked the first one. But I do want to comment, and I heard Mr.
Levine's response to Mr. Lowenthal's question as well. But I
think this notion of an extension of 5 years to 10 years for
the NPDES permit is an interesting idea, and I think it is
worth exploring to see if we can find a happy medium here in a
win/win process, understanding that not every situation is
exactly the same across the country. So I certainly would
encourage continuing that conversation.
The second question that I have goes back to recycled
water. And Mr. Pedersen, you had mentioned in your testimony--
you talked about a new project in your district with the
Triunfo Sanitation District that would create up to, I think,
5,000 acre-feet of drought-resistant water supplies.
So I wanted to ask you, in putting together the financing
package for this, can you tell us which Federal programs you
have found to be most helpful and whether you have any
suggestions for Congress on how to augment or improve those
programs to help spur more of these types of projects?
Mr. Pedersen. Sure. Thank you, Congresswoman. The project
that you are referring to is our Pure Water Project Las
Virgenes-Triunfo. It will ultimately develop 5,000 acre-feet of
new drought-resilient water through reservoir augmentation. It
is one of only three projects of its type in California.
Certainly we have built up some reserves, to the tune of
about $20 million locally to pay for that project, recognizing
that local monies need to be dedicated to these projects. But
in terms of the Federal framework for infrastructure financing,
the SRF program is essential and very important to us.
Granted, it is a loan program. But the low-interest loan
provides great value to us and the ability to finance those
improvements, which are about $100 million, for an agency that
is relatively small, a rate base of about 20,000 customers or,
combined with our partner, Triunfo Sanitation District, about
35,000 customers.
The WIFIA program that was recently initiated is a
fantastic program. We were 1 of 40-some applicants that
submitted a letter of interest. There were many CASA and ACWA
members who were invited back to submit full applications, and
we think it is a valuable program and will be helpful.
And then of course, the Bureau of Reclamation title 16
program and a variety of research programs and programs for
demonstration projects are very helpful for projects of this
type. We really think water recycling is the future for
resiliency in California, along with other local projects.
Ms. Brownley. Thank you very much, and I will just add that
in this particular water district, there is no local water
source at all. And now Las Virgenes actually provides 20
percent of the region's demand with recycled water.
The other question, Mr. Pedersen, I wanted to ask, too, is
in 2014, our committee requested a report on the Clean Water
State Revolving Fund allocation formulas. The report was just
finalized earlier this year, and can you comment on the report
and the recommendations in it?
Mr. Pedersen. Yes, absolutely. So the report--this was a
report requested by the subcommittee. It is included as an
exhibit to my written testimony. An excellent report, prepared
by the U.S. EPA. It is an impartial report that uses data to
analyze the distribution of Federal SRF funds to States.
And what the report essentially found, in short, is that
those formulas are dated and that they require updating. And
the main reason is that those formulas were established based
on 1987 data, both for population and demographics of all the
States, and also the clean water needs of those States. And we
know both of those issues, both of those figures, have changed
dramatically in that time, and there is really a need to take a
look at updating them.
The report includes a number of options, and any one of
those options would be a big step forward. And we would
encourage the subcommittee to take a look at that report and to
work with the EPA on bringing forward those recommendations for
action.
[``Review of the Allotment of the Clean Water State Revolving
Fund (CWSRF)'' Report to Congress issued by the U.S. EPA in May
2016 is available at the EPA's website at https://www.epa.gov/
sites/production/files/2016-05/documents/
review_of_the_allotment_of_the_cwrsf_report.pdf]
Mr. Levine. Could I speak very quickly to two of your
questions?
Ms. Brownley. Yes, please.
Mr. Levine. On the 10-year extensions, I will not rehash
the concerns I raised earlier, but I do believe that they are
very valid.
The underlying issue, it seems, of the reasons that this
10-year extension and the integrated planning issue are being
raised, is a desire for flexibility in prioritizing and
recognizing the time that it takes to implement expensive
capital improvements. Right? And that general principle is not
something that I think is controversial.
There is a letter submitted, signed not only by NRDC but by
a number of other environmental organizations, before this
hearing pointing out the values, the virtues of integrated
planning as per EPA's framework that was issued a few years
ago.
As far as the role of Congress and this committee, what is
important, I think, to understand is that the existing Clean
Water Act provides that flexibility, and the EPA framework
document lays that out.
The issue of the length of compliance schedules is
something that Congress has asked the National Academy of
Public Administration to look into the financial capability
assessment guidance that EPA has that governs negotiations
around those compliance schedules. The academy is due out with
that study this month. That provides an opportunity for EPA to
consider those findings and revisit the guidance.
On WRRDA and recycled water I will just point out, and it
is mentioned in my testimony, Congress in 2014 inserted
provisions requiring that Clean Water SRF-funded projects used
to the maximum extent that they can in a cost-effective way--
water reuse, water efficiency--it is not being implemented
particularly well. And I urge the committee to support EPA,
push EPA to implement that better.
Ms. Brownley. Thank you. And my time is up. Thank you, Mr.
Chairman.
Mr. Mast. Thank you very much.
And I just want to open with a couple of questions for the
entire panel. Everybody is anticipating a large infrastructure
package. It is something we are all waiting for. We are excited
about. I see the smiles that it puts on your faces as we even
mention it because it is exciting. So that is where I want to
get a little bit into the public-private partnerships.
Give me your view. What is your go-to on this? Where do you
see it? And it is open to the entire panel. And from there, if
you want to, give me what is your favorite? What is your go-to
for any sort of consolidation that you see between public and
private, and the number one program that you would want to work
towards? By all means. Mr. Pedersen.
Mr. Pedersen. Thank you. Two important issues to us. We do
believe that there is value in public-private partnerships,
although we do not believe in any way they are a panacea for
infrastructure financing. As a public agency, we have engaged
in P3s. We found them to be effective in certain areas of our
business--renewable energy, solar, where there are tax credits
that the private companies can take advantage of.
But we do not believe that for big infrastructure projects
like our recycling project that we can generate more value for
our ratepayers and lower rates through public-private
partnerships, uncategorically.
With regard to consolidation and regionalization, we do
have some concerns with both of those issues. Again, we do
think there are circumstances that warrant agency
consolidation, and we think that that is currently happening,
and we see that happening in California. And there are
incentives to do that already.
But we do not think a Federal policy, especially a broad-
based Federal policy to push for consolidation, is a good
thing. We think that these issues are better handled at the
local level where local folks are familiar with some of the
nuances involving geography, hydrology, climate differences
that really govern these decisions. And so we would recommend
that the committee keep that at the local level.
Mr. Mast. Anybody else? Carte blanche. Yes, sir, Mr.
Franklin.
Mr. Franklin. I would agree that a lot of these things
should be handled at the State and local levels. Often, what we
serve, and the million customers or so that we serve, it is
small local level, small community well systems, community
wastewater systems.
But I will underscore that the $1 billion-plus that we
spend every 3 years does not have a single Federal dollar in
it. And the expertise we put out there, and the results that we
put out there, are put in our proxy, our proxy statement
required by the SEC, that would underscore the connection we
have made for also pay-for-performance--in other words, how our
high standards are what we pay our people for. That is what
they are incented to do.
And I guess, in terms of Federal dollars, all I would say
from the NAWC standpoint, the access that we would like is
access to the existing SRF funds for wastewater. We are not
asking for additional, but the existing. Thank you.
Mr. Mast. Yes, ma'am?
Ms. Cooper. Public-private partnerships, I believe, and I
do not want to be repetitive, are important, but I do not think
there should be a mandate for any public partnership tied to
these programs. They are not a one-size-fits-all, and different
private-public partnerships fit different circumstances.
In a municipality, we can do it for wastewater. We do have
an intergovernmental municipal partnership. Water, we do not.
We build buildings; a lot of them are shared public-private. So
our main concern is we are learning lessons learned of this new
era of public-private partnerships.
But to tie them to mandates also impacts the ability to
create local jobs. And that was one of the concerns we faced in
Florida this year, even through the State mandates, that they
wanted to tie it to--they wanted to tie into our contracts to
mandate hiring. And we want to create local jobs as well as
regional jobs, so it is----
Mr. Mast. Yes. By all means. Mr. Proctor. And do not worry
about being repetitive; this is Congress.
[Laughter.]
Ms. Cooper. I am sorry. I am so sorry.
Mr. Mast. Everything has been said, but not everybody has
said it yet.
[Laughter.]
Ms. Cooper. Thank you very much.
Mr. Proctor. Our working group very much believes that this
decision is a local one, and a voluntary one as well. But there
is a difference. One of the things I think we all ought to
focus on is, it is one thing to talk about incentives. But it
is also another thing to talk about disincentives.
Presently there are some barriers in place that prevent
local municipalities and other utilities from even considering
partnerships where they would like to--for example, the
defeasance penalty if you go into a concession; and also just
simply the cost associated with planning, negotiating, then
implementing a P3.
For a small utility of 500 people, a legal bill of $50,000,
$75,000 may be an actual impediment to even having the
conversation about whether a P3 is in their best interest. Now,
the Clean Drinking Water SRF does allow some funding for that
sort of activity. But it is perhaps less so on the clean water
side. But my point is, make certain that we do not create
disincentives as we go through this process.
And then one other thing I would like to mention is this,
that we have not really touched on in much detail, and that is
nonfinancial partnerships. I mentioned it in my written
testimony.
The opportunities for collaboration among large utilities
and small utilities for the implementation of technology that
can save money, make the administration and management of these
utilities more effective, preserve human health and the
environment, are incredible. And there are a lot of things that
can be done to help make that happen that fall way short of
consolidation or regionalization. They could really move the
needle.
Mr. Mast. Thank you. Thank you for those responses.
Mr. Levine. If I can?
Mr. Mast. We are actually going to move into a second round
of questioning. So I am going to go to Ranking Member
Napolitano here, and if we get back to you for an opportunity
to respond to that, so be it.
Mrs. Napolitano. Well, you could have gone ahead because we
are just you and me and Mr. Gibbs.
It is difficult for me to make sense of how the
administration believes the best to address our Nation's water-
related infrastructure because as a candidate, he proposed
tripling the requests for Clean and Drinking Water State
Revolving Funds. But that did not materialize in his budget. It
sure did not come through in his fiscal year 2018 budget.
And now we hear that the majority of his forthcoming
infrastructure investment proposal will involve leveraged
private sector financing rather than infusion of additional
Federal capital into the State Revolving Fund programs. In my
view, the model leaves behind many mid-sized and small
communities, and rural, of course, that may be unable to
compete with larger cities and unable to afford the costs of
leveraged private capital.
In your view, all of you, if the plan is heavily dependent
on leveraged private capital, would this miss the mark in
addressing infrastructure needs of many mid-sized and small
communities? And if you were to make recommendations to
Congress on the appropriate mechanisms to address these needs,
what programs would you recommend to fund and what levels?
Anybody? Everybody?
Mr. Levine. Ranking Member? So yes. As the----
Mrs. Napolitano. A short answer, please.
Mr. Levine. Yes, certainly. As others have said, private
money is not a panacea, and the bottom line on it is that when
private money comes in to invest in a system, there has to
still be a revenue stream to pay back that private investment.
And so it ultimately comes down to whether the community,
whether the ratepayers, can afford that expense without
financial assistance, especially in the form of grants, from
the Federal Government and from State government. So private
money is simply not a panacea.
Mr. Mast. Go ahead, Ms. Cooper.
Ms. Cooper. Thank you. Definitely, the recommendation for
the Internal Revenue Code to remove the State volume caps for
private activity bonds as well as preserving our muni bonds.
Mrs. Napolitano. That would help.
Ms. Cooper. Yes. Definitely.
Mrs. Napolitano. Mr. Proctor?
Mr. Proctor. And going back to the WIFIA program, right now
that program is set up for the most part to deal with $20
million projects, $5 million in a smaller setting. But as it is
currently structured, it does tend to favor projects that are
probably financed OK to begin with.
If there is a way that program can be tweaked and tap into
its leveraging feature so that it could help out more
distressed utilities, that would be a positive thing.
Mrs. Napolitano. Mr. Pedersen?
Mr. Pedersen. Thank you. I think certainly there is value
to leverage private capital. But I think we cannot overlook the
importance of continuing to capitalize the SRF program. And we
support your bill and your recommendation, and look at even
enhancing that program to the $3 billion to $4 billion range.
Mrs. Napolitano. Mr. St. Pierre.
Mr. St. Pierre. I will just repeat that. When you are
loaning money for 1.75 percent versus 3 percent or 6 percent,
what you are doing is you are reducing the amount of work that
you can do. Obviously, there is a lot of work to do. A full
support of SRF funding is critical.
Mrs. Napolitano. Mr. Gonzalez?
Mr. Gonzalez. Yes. We have got a history of working with
Corps of Engineers, the Bureau of Reclamation, the SRF, and so
forth. And most of these funds have dried up. We are looking at
pretty significant increases in rates to be able to accommodate
some of these projects.
And as I mentioned, the projects we are looking at are in
excess of $100 million. And so when you look to a Federal
agency and all they can provide is $20 million over a 3- to 4-
year timeframe because they are having to compete with other
entities, it is not even close to saying it is not going to
have a significant impact on ratepayers.
Mrs. Napolitano. OK. Mr. Franklin.
Mr. Franklin. Thank you. Whether municipal or regulated
utility, I think there are a myriad of answers to this, not a
single bullet. And I think we have all come to that conclusion.
I will say, though, that probably half of the customers we
service are in small rural areas. And it is the economies of
scale, whether municipal or not, that really come to bear. Even
if these systems are not interconnected, they are the same
people so they can share employees, share knowledge. And so
that ability to reduce this 50,000 water systems in the country
to some manageable number that really allows us to bring
economies of scale will make us all long term more viable.
Mrs. Napolitano. Thank you very much. And I would ask that
if you have those recommendations, please put them in writing
so this committee can look at them and take them into
consideration. There are lots of impacts to the business
community that if you do not have clean water, you do not have
an economy. So it is important for them, too.
Thank you, Mr. Chair.
Mr. Mast. Thank you, Ranking Member Napolitano.
And Mr. Gibbs?
Mr. Gibbs. Thank you, Mr. Chairman.
I just want to elaborate a little bit on the private-public
partnerships. If we cannot do it in this area, I do not know
where we can do it. I am so hopeful. And I understand what you
said about the 1\3/4\ percent and 3 percent. We just got to
figure this out.
Now, one thing, Mr. Proctor, you talked about the WIFIA
program. I am pleased that the EPA is going to expect the issue
in the first round of grants. And I guess can you--to all, but
Mr. Proctor I want to start--how can we improve the WIFIA, and
the SRF program, for that matter, considering a larger
infrastructure package to make this work?
And I would include the private-public partnerships in here
because you always can do a blending thing. You get capped off
in the money you get from SRF and stuff and you still need
more, maybe blend that interest rate to make this thing work.
But my big concern is if we cannot come up with public-
private partnerships in this area where we have ratepayers,
where you have a stream of revenue coming in, I do not know how
you would do it anywhere else in Government.
And so I will just open it up. What suggestions? And maybe
we might have to put those in writing and offer them to the
committee to get more detail. But just kind of generalize right
now.
Mr. Proctor. Yes, sir. Thank you. Well, with respect to
WIFIA, one of the first things Congress could do would be to
extend it. I think it expires as a pilot in 2018. Is that
right? So extending it at least another 5 years, but even
better, making it permanent so that the markets can react and
know what they are going to deal with over the long term would
be important.
Obviously, increased funding. I have alluded to it several
times over the course of my testimony. But the leveraging
feature through credit insurance as a way to bring in private
capital is extremely powerful. You can leverage every Federal
dollar that goes into the program by almost $65 by utilizing
the funds that go into WIFIA for credit insurance as opposed to
loans or other grants and that sort of thing. And that is a
pretty hefty return on your dollar there.
Mr. Levine. Can I speak to that leveraging issue?
Mr. Gibbs. Yes. Go ahead.
Mr. Levine. The SRFs as well provide an opportunity for
leveraging, which most States do not take advantage of as much
as they could. In my written testimony, I get into some
extensive detail about a proposal that we offer that would
incentivize States to leverage to a greater extent by allowing
them to raise the cap on what is called additional
subsidization, meaning the use of SRF funds as grants.
To the extent that they leverage and put more State money
into their SRF, under our proposal that would allow the States
to use more SRF funding as grant funds rather than loan funds.
We illustrate how that would work to help States that have
already been investing their own funds and how it would
incentivize more States to do so and take advantage of those
leveraging opportunities they already have.
Mr. Gibbs. Yes. Mr. Pedersen?
Mr. Pedersen. One other quick suggestion. The EPA has done
a phenomenal job kicking off the WIFIA program. Kudos to them
and their staff. But we think there could be value in
coordinating the SRF program that is handled at the State level
with the EPA WIFIA program. And there is some interest in the
EPA in doing that, and I think that would help local
communities.
Mr. Gibbs. Yes. The intent was WIFIA to help supplement the
SRF. I know a lot of people are getting heartache thinking that
it is going to eliminate SRF. That is not the intent at all of
the WIFIA program, to make that clear.
Yes, Mr. Franklin?
Mr. Franklin. Congressman, I would just use as an example,
say, for the 300,000 people that we serve water to and
wastewater to in Ohio, they are all Federal taxpayers. And to
be excluded from the ability to lower the cost of debt for
those customers, since we do not have access to the Clean Water
SRF, is really a disadvantage to those customers.
So my strong recommendation would be that even the
regulated utilities like ours get access to that same so that
we could keep that cost down for customers, whether they are
municipal or they are investor-owned.
Mr. Gibbs. Yes. Mr. St. Pierre?
Mr. St. Pierre. I would just speak to the P3 partnership. I
would not discount public-to-public partnerships. The issue
here is there is a revenue stream. It is a set revenue stream.
And it is economies of scale, and it is efficiencies.
And so you have 75,000 utilities across the country. That
model is not working well in rural areas. There is a need to
consolidate. There is a need for regionalization, whether that
is public-public or public-private. That economy of scale
provides a margin and an investment that is needed in
communities that cannot support it on their own.
Mr. Gibbs. Well, that is helpful. And if you want to submit
any more stuff in writing, examples, we can do that. Because
hopefully we will get to infrastructure bill, and this could be
a key component because there are so many jobs created and
there is so much need out there because this infrastructure, we
know, is 80 years old, on average. So we have got to fix it.
So thank you, Mr. Chairman.
Mr. Mast. Thank you, Mr. Gibbs.
If there are no further questions, I would just like to
thank each and every one of you for your very thoughtful
testimony this morning. It was very informative, very helpful.
And without anything else to add, this committee stands
adjourned.
[Whereupon, at 12:19 p.m., the subcommittee was adjourned.]
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