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34–773 PDF 2007

THE NEED FOR RENEWED INVESTMENT IN CLEAN WATER INFRASTRUCTURE

(110–1)

HEARING

BEFORE THE

SUBCOMMITTEE ON 

WATER RESOURCES AND ENVIRONMENT

OF THE

COMMITTEE ON 

TRANSPORTATION AND 

INFRASTRUCTURE 

HOUSE OF REPRESENTATIVES

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

JANUARY 19, 2007

Printed for the use of the 

Committee on Transportation and Infrastructure

(

COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE 

JAMES L. OBERSTAR, Minnesota, Chairman 

NICK J. RAHALL, II, West Virginia 

PETER A. DEFAZIO, Oregon 

JERRY F. COSTELLO, Illinois 

ELEANOR HOLMES NORTON, District of 

Columbia 

JERROLD NADLER, New York 

CORRINE BROWN, Florida 

BOB FILNER, California 

EDDIE BERNICE JOHNSON, Texas 

GENE TAYLOR, Mississippi 

JUANITA MILLENDER-MCDONALD, 

California 

ELIJAH E. CUMMINGS, Maryland 

ELLEN O. TAUSCHER, California 

LEONARD L. BOSWELL, Iowa 

TIM HOLDEN, Pennsylvania 

BRIAN BAIRD, Washington 

RICK LARSEN, Washington 

MICHAEL E. CAPUANO, Massachusetts 

JULIA CARSON, Indiana 

TIMOTHY H. BISHOP, New York 

MICHAEL H. MICHAUD, Maine 

BRIAN HIGGINS, New York 

RUSS CARNAHAN, Missouri 

JOHN T. SALAZAR, Colorado 

GRACE F. NAPOLITANO, California 

DANIEL LIPINSKI, Illinois 

DORIS O. MATSUI, California 

NICK LAMPSON, Texas 

ZACHARY T. SPACE, Ohio 

MAZIE K. HIRONO, Hawaii 

BRUCE L. BRALEY, Iowa 

JASON ALTMIRE, Pennsylvania 

TIMOTHY J. WALZ, Minnesota 

HEATH SHULER, North Carolina 

MICHAEL A. ACURI, New York 

HARRY E. MITCHELL, Arizona 

CHRISTOPHER P. CARNEY, Pennsylvania 

JOHN J. HALL, New York 

STEVE KAGEN, Wisconsin 

STEVE COHEN, Tennessee 

JERRY MCNERNEY, California 

JOHN L. MICA, Florida 

DON YOUNG, Alaska 

THOMAS E. PETRI, Wisconsin 

HOWARD COBLE, North Carolina 

JOHN J. DUNCAN, JR., Tennessee 

WAYNE T. GILCHREST, Maryland 

VERNON J. EHLERS, Michigan 

STEVEN C. LATOURETTE, Ohio 

RICHARD H. BAKER, Louisiana 

FRANK A. LOBIONDO, New Jersey 

JERRY MORAN, Kansas 

GARY G. MILLER, California 

ROBIN HAYES, North Carolina 

HENRY E. BROWN, JR., South Carolina 

TIMOTHY V. JOHNSON, Illinois 

TODD RUSSELL PLATTS, Pennsylvania 

SAM GRAVES, Missouri 

BILL SHUSTER, Pennsylvania 

JOHN BOOZMAN, Arkansas 

SHELLEY MOORE CAPITO, West Virginia 

JIM GERLACH, Pennsylvania 

MARIO DIAZ-BALART, Florida 

CHARLES W. DENT, Pennsylvania 

TED POE, Texas 

DAVID G. REICHERT, Washington 

CONNIE MACK, Florida 

JOHN R. ‘RANDY’ KUHL, JR., New York 

LYNN A WESTMORELAND, Georgia 

CHARLES W. BOUSTANY, JR., Louisiana 

JEAN SCHMIDT, Ohio 

CANDICE S. MILLER, Michigan 

THELMA D. DRAKE, Virginia 

MARY FALLIN, Oklahoma 

VERN BUCHANAN, Florida 

(II)

SUBCOMMITTEE ON WATER RESOURCES AND ENVIRONMENT

EDDIE BERNICE JOHNSON, Texas, Chairwoman 

GENE TAYLOR, Mississippi 

BRIAN BAIRD, Washington 

DORIS O. MATSUI, California 

JERRY F. COSTELLO, Illinois 

TIMOTHY H. BISHOP, New York 

BRIAN HIGGINS, New York 

RUSS CARNAHAN, Missouri 

JOHN T. SALAZAR, Colorado 

MAZIE K. HIRONO, Hawaii 

HEATH SHULER, North Carolina 

HARRY E. MITCHELL, Arizaon 

JOHN J. HALL, New York 

STEVE KAGEN, Wisconsin 

JERRY MCNERNEY, California 

ELEANOR HOLMES NORTON, District of 

Columbia 

BOB FILNER, California 

ELLEN O. TAUSCHER, California 

MICHAEL E. CAPUANO, Massachusetts 

GRACE F. NAPOLITANO, California 

MICHAEL A ARCURI, New York 

JAMES L. OBERSTAR, Minnesota 

(Ex Officio) 

RICHARD H. BAKER, Louisiana 

JOHN J. DUNCAN, JR., Tennessee 

WAYNE T. GILCHREST, Maryland 

VERNON J. EHLERS, Michigan 

FRANK A. LOBIONDO, New Jersey 

GARY G. MILLER, California 

ROBIN HAYES, North Carolina 

HENRY E. BROWN, JR., South Carolina 

TODD RUSSELL PLATTS, Pennsylvania 

BILL SHUSTER, Pennsylvania 

JOHN BOOZMAN, Arkansas 

CONNIE MACK, Florida 

JOHN R. ‘RANDY’ KUHL, JR., New York 

CHARLES W. BOUSTANY, JR., Louisiana 

JEAN SCHMIDT, Ohio 

CANDICE S. MILLER, Michigan 

THELMA D. DRAKE, Virginia 

JOHN L. MICA, Florida 

(Ex Officio) 

(III)

(V)

CONTENTS 

Summary of Subject Matter .................................................................................... vi

TESTIMONY 

Page 

Ambs, Todd, Administrator, Division of Water, Wisconsin Department of Natural Resources ...................................................................................................... 11

Chavez, Hon. Martin J., Co-Chair, Mayors Water Council, U.S. Conference 

of Mayors .............................................................................................................. 11

Coy, Debra G., Director/Research Analyst - Water, Janney Montgomery Scott, 

L.L.C, Washington, D.C. ...................................................................................... 35

Gilinsky, Dr. Ellen, Director, Division of Water Quality Programs, Association 

of State and Interstate Water Pollution Control ............................................... 11

Grumbles, Hon. Benjamin H., Assistant Asministrator for Office of Water, 

U.S. Environmental Protection Agency .............................................................. 11

Soderberg, Kurt, Executive Director, Western Lake Superior Sanitary District, Duluth, Minnesota, on behalf of National Association of Clean Water 

Agencies ................................................................................................................ 35

Stoner, Nancy, Director, Clean Water Project, Washington, D.C., on behalf 

of Natural Resources Defense Council ............................................................... 35

Stutler, Jim, President, Tierdael Construction Company, Denver, Colorado, 

on behalf of National Utility Contractors Association ...................................... 35

Ward, J. Kevin, Executive Administrator, Texas Water Development Board, 

Dallas, Texas, on behalf of Council of Infrastructure Financing Authorities . 35

PREPARED STATEMENT SUBMITTED BY MEMBERS OF CONGRESS 

Arcuri, Hon. Michael A., of New York ................................................................... 60

Brown, Hon. Henry E., Jr., of South Carolina ...................................................... 61

Costello, Hon. Jerry F., of Illinois .......................................................................... 110

Hall, Hon. John, of New York ................................................................................. 143

Johnson, Hon. Eddie Bernice, of Texas .................................................................. 146

Matsui, Hon. Doris, of California ........................................................................... 150

Mitchell, Hon. Harry, of Arizona ............................................................................ 151

Salazar, Hon. John T., of Colorado ........................................................................ 155

PREPARED STATEMENTS SUBMITTED BY WITNESSES 

Ambs, Todd ............................................................................................................... 53

Chavez, Hon. Martin J ............................................................................................ 63

Coy, Debra G ............................................................................................................ 113

Gilinsky, Dr. Ellen ................................................................................................... 122

Grumbles, Hon. Benjamin H .................................................................................. 131

Soderberg, Kurt ....................................................................................................... 157

Stoner, Nancy ........................................................................................................... 165

Stutler, Jim .............................................................................................................. 178

Ward, J. Kevin ......................................................................................................... 184

SUBMISSIONS FOR THE RECORD 

Chavez, Hon. Martin J., Co-Chair, Mayors Water Council, U.S. Conference 

of Mayors, National City Water Survey 2005, report ....................................... 75

Grumbles, Hon. Benjamin H., Assistant Asministrator for Office of Water, 

U.S. Environmental Protection Agency, responses to questions from Rep. 

Mitchell ................................................................................................................. 140

ADDITIONS TO THE RECORD 

American Society of Civil Engineers, statement ................................................... 191

Page

VI

American Supply Association, Joe Becker, President, statement ........................ 195

CIFA Priorities for the Reauthorization of the Clean Watwer Act ..................... 197

Clean Water Construction Coalition, Robert A. Briant, Chairman, statement .. 201

Food and Water Watch, Wenonah Hauter, Executive Director, statement ........ 206

National Association of Water Companies, statement ......................................... 210

Rural Community Assistance Partnership, statement ......................................... 214

Water Environment Federation, statement ........................................................... 218

Western Coalition of Arid States, Charlie Nylander, Chairman, Water Infrastructure Financing Subcommittee, Legislative Committee, statement ......... 221

(vi) 

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34773.180
(1)

THE NEED FOR RENEWED INVESTMENT IN 

CLEAN WATER INFRASTRUCTURE 

Friday, January 19, 2007

HOUSE OF REPRESENTATIVES, COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE, SUBCOMMITTEE ON WATER RESOURCES AND ENVIRONMENT, Washington, DC. 

The subcommittee met, pursuant to call, at 9:34 a.m., in room 

2167, Rayburn House Office Building, Eddie Bernice Johnson 

[Chairwoman of the subcommittee] presiding. 

Ms. JOHNSON. Good morning. 

I call the subcommittee to order, and I welcome everyone to the 

first meeting of the Subcommittee on Water Resources and Environment for the 110th Congress. Today, the subcommittee meets to 

discuss the Nation’s wastewater infrastructure needs and the importance of a renewed commitment to addressing these needs. As 

this is the first meeting of the subcommittee of this Congress, I believe it is a good opportunity to outline the near-term agenda for 

this subcommittee and our efforts to address many of the water resources challenges in the country. 

First, let me say how pleased I am to serve as the chairwoman 

of the Subcommittee on Water Resources and Environment, and I 

look forward to meeting with each of my colleagues, learning of 

their own individual water resource needs and working together to 

address many of their concerns. I am also pleased with the opportunity to work with my Republican colleague, Congressman Richard Baker of Louisiana. He has not arrived yet, but I am sure he 

will be here shortly. He has been a long-time active member of this 

subcommittee, and I look forward to working with him in his new 

role as ranking Republican. 

I am also going to miss Mr. Duncan, who was the Chair of this 

subcommittee, my good friend. Mr. Duncan often comments that 

this subcommittee has the broadest agenda of any of the Transportation subcommittees, covering the Corps of Engineers, projects 

and authorities, the EPA’s Clean Water and Super Fund Programs, 

Brownfield, the Tennessee Valley Authority, the St. Lawrence Seaway, and programs carried out by the National Oceanic and Atmospheric Administration and the National Resources Conservation 

Service. 

The subcommittee will have an active agenda in the coming 

weeks. Starting with today’s hearing, the subcommittee will return 

to some of the unfinished work of the previous Congress, beginning 

with an examination of the wastewater infrastructure needs of the 

Nation and the importance of a renewed Federal commitment to 

2

meeting these needs. The subcommittee hopes to move expeditiously toward the reauthorization of the Clean Water State Revolving Fund. It is my hope that we can build upon the prior bipartisan efforts of this subcommittee and move this legislation through 

the committee to the floor of the House before the President’s Day 

District Work Period. 

In addition, the subcommittee hopes to take up other bipartisan 

legislative proposals considered by this committee in the previous 

Congress that were not enacted into law. Two examples are legislation to reauthorize appropriations for EPA’s combined Sewage 

Overflow Grant Program and the pilot program for alternative 

sources of water. An equally important priority of the subcommittee is to complete work on the Water Resources Development Act of 2006. 

Late in the 109th Congress, the staffs of the House and Senate 

authorizing committees were close to completing what we have 

waited for 6 years to accomplish, moving a joint House-Senate recommendation for the Army Corps of Engineers to the President. It 

is my hope that we can quickly pick up where these negotiations 

left off so that vital water resources development legislation can be 

enacted and the backlog of essential flood control, navigation and 

ecosystem restoration projects can finally be authorized. 

Finally, in February, the committee and the subcommittee will 

hold hearings on the administration’s budget request for fiscal year 

2008. While I do not have high expectations for full funding of 

those programs and policies that fall within the jurisdiction of this 

subcommittee, I look forward to beginning the dialogue on funding 

this committee’s priorities in the coming fiscal year. 

Returning to the topic of today’s hearing, it is fitting that the 

subcommittee’s first hearing is on the need for renewed investment 

in clean water infrastructure. To a great extent, the improvements 

in water quality achieved since the enactment of the Clean Water 

Act have resulted from significant investments by Congress towards wastewater infrastructure improvements throughout the 

country. Since 1972, the Federal Government has provided more 

than $82 billion for wastewater infrastructure and other assistance, which has dramatically increased the number of Americans 

enjoying better water quality and has improved the health of the 

economy and the environment. 

During the same period, overall investment in wastewater infrastructure from Federal, State and local sources has been over $250 

billion. Investment in wastewater infrastructure has been one of 

the greatest investments made by the Federal Government and has 

provided significant environmental, public health and economic 

benefits to our Nation. First through the Construction Grants Program and now through the Clean Water State Revolving Funds, 

these investments have been integral to improving the Nation’s waters as well as ensuring the well-being of our Nation’s citizens. 

In addition, as noted in the testimony for today’s hearing, investment in wastewater infrastructure directly benefits our Nation’s 

economy, not only through the creation of well-paying jobs here in 

the United States but also through ensuring that our Nation’s infrastructure stands ready to address the challenges of the 21st century. 

3

However, these achievements are now at risk, as noted in a 2000 

report of the Environmental Protection Agency. Without continued 

improvements in wastewater treatment infrastructure, future population growth will erode away many of the clean water achievements. Without a renewed commitment toward investment from all 

parties, in less than a generation the United States could lose 

much of the gains made in improving water quality. 

This subcommittee stands ready to renew the Federal commitment to our Nation’s wastewater infrastructure. While reauthorization of the Clean Water State Revolving Fund alone cannot entirely 

close the gap between current needs and expenditure, it does send 

a strong message on the importance of achieving the goals of fishable and swimmable waters established over 30 years ago. 

Before I recognize Mr. Baker for his statement, I will also mention that we have a few members returning to the subcommittee 

and a fair number of new members joining us this year. Congressmen Filner and Capuano have both served on the subcommittee in 

the past, and we welcome them back in the 110th Congress. The 

new members of the Democratic Caucus are Congresswoman Doris 

Matsui, who represents the Fifth District of California, Congresswoman Mazie Hirono, who represents Hawaii’s Second Congressional District, Congressman Heath Shuler, who represents North 

Carolina’s 11th Congressional District, Congressman Harry Mitchell of Arizona, the Fifth Congressional District, Congressman John 

Hall of New York’s 19th Congressional District, Congressman 

Steve Kagen of Wisconsin’s Eighth Congressional District, Congressman Jerry McNerney of California’s 11th Congressional District, Congresswoman Grace Napolitano of California’s 38th Congressional District, and Congressman Michael Arcuri from the 24th 

District of New York. 

I welcome all of these new members and our returning members 

from both sides of the aisle to this subcommittee. 

I now recognize ranking member, Mr. Mica, I guess, who is not 

the ranking member, but he is going to represent our Republican 

members of the subcommittee, for any statements you might make. 

Mr. MICA. Well, thank you, Ms. Johnson. 

I am the ranking member of the full committee, and I do serve 

as an ex officio member on each of the subcommittees. That honor 

and responsibility that Mr. Oberstar had when he had the ranking 

position is extended to me. Mr. Baker, who we are very pleased will 

be the leading Republican on the Water Resources and Environment Subcommittee, will be here shortly, but I am pleased to join 

you this morning, and I welcome you to your new leadership position. We have worked closely together on a number of issues, particularly transportation in Texas, and I look forward to doing that 

now in my new position. From time to time, I intend to stick my 

head and my business into the subcommittee business of each of 

our subcommittees. 

Today, I want to just start with a few comments as ranking Republican leader, a member, and hopefully set some of our priorities 

forward. As we know today, the Subcommittee on Water Resources 

and Environment takes up an issue that impacts every American, 

and that is the availability of clean water. I come from the State 

of Florida, and I am keenly aware of the importance of clean water, 

4

not only directly to the homes and businesses of my constituents 

but also to the tourists who come to enjoy Florida’s beaches. One 

of our primary assets is the natural aquatic areas, including our 

Everglades, a national treasure. 

Today, the goal of cleaning up the natural waters in America is 

being threatened by the inability of aging wastewater infrastructure to keep up with the population growth and also the economic 

development. While I believe that wastewater infrastructure is primarily a local responsibility, there is, in fact, a national public interest in having clean water, and so I believe that it is an appropriate Federal role. 

Over the years, this subcommittee has held hearings that have 

documented the fact that investments in wastewater infrastructure 

at all levels—public and private, Federal, State, and local—have 

unfortunately not been sufficient to meet the needs for clean water. 

The gap is huge, perhaps as much as some $400 billion over the 

next 20 years. We know we have a problem. The issue is really how 

we are going to address the problem and where the responsibility 

and resolution of the problem lie. In other words, to be quite frank, 

where are we going to get the funds and the money to do and complete this important job? 

I believe part of the answer should be the reauthorization and 

more funding for the State Revolving Loan Fund administered by 

the EPA, but the Federal Government is not going to be able to 

solve this problem by itself. Greater investments at all levels of 

government and also from the private sector are absolutely necessary. I am delighted that we have one witness today—and that 

one, I believe, was provided by our side—Ms. Debra Coy, from the 

investment banking sector, who can tell us about the large 

amounts of private sector capital that is ready, willing and able to 

invest in our water infrastructure. 

In addition, I hope other witnesses today will suggest ways in 

which we can address this problem beyond just seeking more 

money from the taxpayer. Perhaps some better technologies, more 

conservation and innovative financing techniques, including publicprivate partnerships, can, in fact, put more resources into providing clean water for all Americans. 

So those are some of my goals and my priorities. I appreciate the 

time being yielded to me to state them, and I wish all of the members on both sides of the aisle well, and I see Mr. Baker is back. 

I am not sure if you want to yield to him now. I see Mr. Oberstar 

is here. Maybe you can get to Mr. Oberstar and then get back to 

Mr. Baker, and thank you again for the courtesy extended to me 

this morning. 

Ms. JOHNSON. Thank you very much. 

We now recognize the chairman of the full committee, Mr. Oberstar. 

Mr. OBERSTAR. Thank you, Madam Chair, and congratulations on 

your new role as Chair of the Subcommittee, a very important subcommittee, on Water Resources. You have laid out a broad agenda 

that lies before the subcommittee this year, and I know that from 

your years of service on the committee you are prepared and ready 

for the challenge ahead. 

5

I welcome our full committee ranking member, Mr. Mica. He and 

I have worked together on aviation issues and a wide range of surface transportation matters during the time that he has served in 

Congress, beginning in 1992, and I appreciate the partnership that 

we have developed over the years and look forward to a very productive time ahead. 

To Mr. Baker, the ranking member on the subcommittee, from 

Louisiana, I was particularly impressed by Mr. Baker’s leadership 

during Hurricane Katrina when the Subcommittees on Water Resources and FEMA and Economic Development, under the direction 

of Mr. Shuster, made an inspection tour starting in Baton Rouge 

and New Orleans and then through into Mississippi and Alabama. 

Mr. Baker led the briefing at Baton Rouge, demonstrating a full 

grasp of the subject matter at hand, the issues confronting the Federal Government, the State governments, the local governments, 

and conducted himself in an extraordinarily competent and diligent 

manner, and I welcome his participation as ranking member of this 

subcommittee. 

And our former Chair of the subcommittee, Mr. Duncan, who all 

through his chairmanship of the Aviation Subcommittee and the 

Water Resources Subcommittee displayed that judicial temperament that characterized his service before he ran for Congress as 

a judge, and again is a mastery of the subject matter at hand. 

We are very blessed on the committee to have members on the 

Republican side who have served in leadership positions, as with 

Mr. Young, who is now the ranking member on the Resources Committee but who was our chairman for 6 years, and Mr. Mica 

chaired the Aviation Subcommittee, and Mr. Duncan chaired the 

Water Resources Subcommittee, and others, and Mr. Shuster I 

mentioned earlier, all bring a valuable experience that they gained 

in chairing subcommittees during the years of Republican majority. 

Those skills, the knowledge, the experience gained by our colleagues on the Republican side will be of great benefit as we move 

together in this committee in a bipartisan spirit to carry on the important work of rebuilding America, and I welcome those skills and 

talents. 

As I look on the Republican side, I see from the Great Lakes 

Candice Miller—I want to thank you for choosing to serve on this 

committee—representing the Port Huron area that I know very 

well. My uncle lived there for 25 years or so. I visited many times 

in Port Huron, and Thelma Drake, representing Tidewater, Virginia. 

As I look at the Republican side just as on the Democratic side, 

we have got all of the coasts covered—Mr. Boustany on the Louisiana Gulf area, Mr. Gilchrest representing the Eastern Shore—

the world’s greatest estuary, the Chesapeake Bay—who has developed his own special reputation and skill in environmental protection, Mr. LoBiondo on the Atlantic Seaboard in New Jersey, and 

Henry Brown further down on the Atlantic Seacoast, who is a oneman tourism promoter for South Carolina—he is famously known 

for that—and so many others who bring special skills to this subcommittee and to the full committee. We welcome your partnership. 

6

We have a big responsibility ahead of us. It was not too many 

years ago—about 4 years, 5 years after I began service on the committee as Clerk of the Subcommittee on Rivers and Harbors, the 

antecedent of this subcommittee—that the Cuyahoga River caught 

on fire. Lake Erie was pronounced dead. People thought it would 

never come back. Fish had died. The fish kills in Lake Erie were 

astonishing. The Walleye Head Fishery had just totally disappeared, and soapsuds were coming out of the faucets of citizens 

living along the Ohio, Illinois, Mississippi River systems because of 

the soap being discharged without treatment into our waterways. 

It galvanized the public into action. My predecessor John Blatnik, 

whose portrait is over there in the corner, who was not only Chair 

of the full committee but Chair of the Rivers and Harbors Subcommittee, authored the first Federal Water Pollution Control Act 

in 1956 and all of its subsequent improvements, including the 

Clean Water Act of 1972, the result of which was a massive investment, a Federal-State partnership, a Federal-private sector partnership to clean up the Nation’s waterways. On the Great Lakes 

alone, industry invested some $10.5 billion to clean up industrial 

discharges into the Great Lakes, one-fifth of the freshwater in all 

of the world. Municipalities invested another $10 billion, the Federal Government about $15 billion, and Lake Erie miraculously 

came back. The Walleye Head Fishery has returned, Lake Erie 

similarly, but there are still problems with the toxic hotspots in the 

Great Lakes, 43 toxic hotspots, 26 of which are wholly in the 

United States, 5 shared between the United States and Canada, 

the other 12 in Canada. We need to address resources of our government and the Canadian government to clean up those toxic 

hotspots because they continue to return pollutants into the water 

column and into the vegetative and aquatic life of the Great Lakes. 

Most of America lives along the water. Seventy-five percent of 

the population of this country lives either on the saltwater coasts 

or on the Great Lakes freshwater coasts. In the Great Lakes area, 

we have one-third of the Nation’s industry, one-fifth of the Nation’s 

industrial jobs, one-third of the Nation’s exports, but our most precious resource is that of freshwater, and we still have a huge job 

of protecting it. 

While a great deal of progress has been made in dealing with 

point sources, we have still a long way to go to meet the goal of 

the Clean Water Act of 1972 of fishable, swimmable waters, and 

maintaining the physical, biological and chemical integrity of the 

Nation’s waters. That must continue to be our goal. The new frontier, if you will, of clean water is non-point source runoff from development lands, housing developments, shopping center developments, and agricultural runoff. 

We have to work with all of the those sectors and strengthen 

their resolve and with local efforts supported by the Federal Government to stem discharges and runoff from non-point sources 

which continue to deteriorate the Nation’s freshwater reserves. We 

are going to attack those issues this year. We started in bipartisan 

fashion 6 years ago with the State Revolving Loan Fund reauthorization for various reasons. Even though Chairman Young and I 

and nearly every member of the full committee were cosponsors of 

the bill, we could not get it to the House floor. That obstacle has 

7

been resolved. We are going to bring that bill to the floor. We are 

going to replenish the States’ reserves of funding to attack the 

unmet needs of building sewage treatment plants and water resources and of water and sewer needs and combined sewer overflow 

needs. 

So the hearing today has, as its purpose, to give an overview of 

the Nation’s aging water infrastructure needs. Some areas in the 

Northeast are still delivering water with wooden pipes. That is not 

right. We need to help cities fix that problem. We are going to do 

that. That is what the State Revolving Loan Fund will accomplish. 

So I think we will achieve a great record in this committee and in 

this subcommittee in the course of this Congress. As Ms. Johnson 

said, it has wide-ranging responsibility, and I look forward to working with each and every one of the members on both sides of the 

aisle toward the goals of restoring the Nation’s clean water, and 

that includes massive rebuilding in the gulf and restoration of the 

gulf wetlands as the buffer against hurricanes that may and likely 

will attack in the future. 

Thank you very much, Madam Chair. 

Mr. Baker, welcome to the subcommittee as ranking member. 

You represent a very vital ecosystem area of the country. I look forward to your comments. 

Ms. JOHNSON. Mr. Baker. 

Mr. BAKER. Chairman Oberstar, Chairwoman Johnson, Ranking 

Member Mica, I am particularly appreciative to be participating in 

this capacity today. I would note for the record a particular irony 

in my late arrival. 

In speaking of the wooden pipe delivery system of which Mr. 

Oberstar made reference, apparently they still survive in the condo 

building in which I live because, with an unannounced maintenance action, they curtailed water service this morning, requiring 

a particular set of ingenuity on my part to make it here at all. So 

I thought interesting that I would be coming to a water hearing on 

the morning of that event, but notwithstanding that———

Mr. OBERSTAR. Would the gentleman yield? 

Mr. BAKER. I would be happy to. 

Mr. OBERSTAR. Some years ago we were having a hearing of the 

committee, and it was on Corps of Engineer projects, and the Chief 

of Engineers was unable to make the hearing. He had had a water 

main break in his home and his basement was flooded. That was 

appropriate, too. 

Mr. BAKER. He probably lives in my building, I have a suspicion. 

In any event, I am certainly pleased to be here and wish to at this 

time welcome the new members on the Republican side of the aisle 

to the subcommittee who are not, however, new members to the 

Congress, all of whom have served in various capacities but come 

to the Water Resources Subcommittee in this Congress. 

The gentleman from New Jersey, Mr. Frank LoBiondo, is new to 

the subcommittee; the gentleman from North Carolina, Mr. Robin 

Hayes, who is not yet here this morning; the gentleman from Pennsylvania, Mr. Platts; the gentleman from New York, Mr. John 

Kuhl; the gentlelady from Michigan, Candice Miller; and the 

gentlelady from Virginia, Thelma Drake. 

8

We are certainly pleased to have the availability of their services 

and insight on this important matter, and let me quickly add, from 

the review of the testimony this morning, there is no doubt that 

there are clear, well-established, and critical infrastructure needs 

across the Nation. No matter what community one may live in, no 

matter what type of urbanization or rural setting, we all have 

water problems of one sort or the other. 

The real issue before us, I believe, is how are we to finance and 

provide the resources necessary going forward to make sure delivery systems are modern, adequate and reliable with particular emphasis in my case on reliability. I find that there are alternative 

financing mechanisms available which have been greatly underutilized. 

As an example, the Federal Home Loan Bank, which is the creation of this Congress, has a regional bank in Dallas, Texas that 

we had gone to to establish a pilot program for the funding of municipal water improvements. The bank system is unique in the way 

in which it offers its financing product, extending credit up to 30 

years at a very low-interest cost. The bank system set aside a $25 

million fund which would have been matched by localities to address certain rural water community needs, and to my shock, there 

was not one applicant for the available funding that was established. I believe it to be a reality that many at the local and State 

levels were merely not aware that these alternative funding 

sources were available. The government-sponsored enterprises, 

Fannie Mae and Freddie Mac, are today greatly constrained in the 

types of water projects which they may finance in association with 

multifamily or low-income housing developments. There is no reason for that limitation, and it should be examined. 

The issuance of private bonds or revenue bonds are sources of financing which I believe should be explored by the committee going 

forward, and as we renew and perhaps expand the State Revolving 

Fund, we should find it incumbent to explore all of these alternative financing mechanisms as I believe it is very difficult to go 

through the appropriations process, given the Nation’s difficult financial circumstance, and to expect a great amount of resources to 

be plowed into this particular need. 

And for those reasons, Chairwoman Johnson, I am excited about 

the potential the committee provides. I am confident in working together going forward that we can achieve the needed steps to provide critical water services to communities, and I am pleased that 

Ranking Member Mica has given me this opportunity and also 

pleased that Chairman Oberstar has expressed such deep and abiding interest in this matter and am particularly grateful for his personal time and visit to the State of Louisiana when we were having 

a most difficult time and where we are continuing to struggle with 

a recovery effort. 

I look forward to working with all members, and for those who 

are new to the committee, let me again say what has been, I think, 

said repeatedly. This is an extraordinarily bipartisan committee, 

one of the few in the Congress that has been historically, and I certainly believe it will remain so as we go forward. 

I yield back the balance of my time. 

Ms. JOHNSON. Thank you very much. 

9

I am going to recognize Mrs. Tauscher, the gentlewoman from 

California. 

Mrs. TAUSCHER. Thank you, Madam Chairman. It is wonderful 

to say that, and congratulations to you and to my colleagues. I really want to thank you for having this hearing, really, on this dire 

need for critical investments in our Nation’s clean water infrastructure. I would also like to thank you for allowing me the opportunity 

to make a brief statement today. 

We all know the need to ensure clean water and to protect our 

Nation’s waterways should be of paramount importance to all of us, 

and as stewards of the Clean Water Act, we have the responsibility 

to provide for the infrastructure necessary to ensure the act’s proper implementation. The need is not unknown, but in fact the EPA’s 

own survey shows a needed investment over the next 20 years of 

between $300 billion and $400 billion. One would assume that such 

a sobering assessment would spur the current administration to action, but unfortunately this administration has treated the EPA a 

lot like a red-headed stepchild, cutting its budget and tying its 

hands on several common-sense initiatives. 

Instead of ignoring his own agency’s assessments, the President 

should get behind immediate reauthorization of the State Revolving Fund Program. Such action would require the President to reverse the course he has taken over the last few budget cycles, 

though. In fiscal year 2007 alone, the administration’s budget proposed cutting the Clean Water SRF by 22 percent. That request 

was on the back of a similar proposed cut in fiscal year 2006 of 

$370 million. Remember the President’s own EPA has identified 

billions of dollars of need. 

I have long been a supporter of reauthorizing the Clean Water 

SRF and infusing much needed funding into our Nation’s clean 

water infrastructure. In fact, in the 106th, 107th, 108th, and 109th 

Congresses, I joined my colleague Sue Kelly in authoring legislation to reauthorize the SRF Program. Unfortunately, the Republican-controlled Congress never acted on this important legislation. 

That is why I am so pleased that Chairman Oberstar and Chairman Johnson have pledged their support to the passage of the 

State Revolving Fund’s reauthorization in this 110th Congress. I 

look forward to working with them closely on this issue which we 

have all pushed for the last 8 years. 

Additionally, Madam Chairman, it is my hope that our committee’s attention to this matter will make it clear to the administration that the President’s fiscal year 2008 budget request should reflect a strong investment in clean water infrastructure. 

Again, Madam Chairman, congratulations on your new role, and 

I thank you for holding this important hearing, and I yield back 

the balance of my time. 

Ms. JOHNSON. Thank you very much. 

The Chair now will recognize Mr. Duncan, my friend. 

Mr. DUNCAN. Well, thank you, Madam Chair. 

In my 18 years in the Congress, I very seldom give an opening 

statement except in the subcommittees which I have had the privilege to chair, and as Chairman Oberstar mentioned, I had the 

privilege of chairing this subcommittee for the past 6 years and, before that, chairing the Aviation Subcommittee for 6 years and, beVerDate 0ct 09 2002 09:11 Aug 03, 2007 Jkt 000000 PO 00000 Frm 00021 Fmt 6633 Sfmt 6633 P:\DOCS\34773.TXT HTRANS1 PsN: JASON
10

fore that, serving for 2 years as ranking Republican on the Public 

Building Subcommittee. I have always really enjoyed the work of 

this committee. I think it is the greatest committee in the Congress, and I did want to take just a moment to congratulate our 

new leadership of this committee. 

First of all, I do not think there is anybody in the Congress that 

respects and admires Chairman Oberstar more than I do. I saw 

him have a dream come true by becoming chairman of this committee, and I want to congratulate him. I want to congratulate the 

ranking member and my friend, John Mica, who has given me the 

privilege of serving as ranking on the Highway Subcommittee, and 

I look forward to that new challenge and opportunity. I want to 

congratulate my friend Richard Baker, who has been a good friend 

for a long time, and like Chairman Oberstar, I certainly admired 

his presentation in Baton Rouge, and I have admired him for many 

other reasons, but I especially want to say congratulations to my 

buddy, Eddie Bernice Johnson. We have worked together for the 

past 6 years. She is now moving into the seat that I held, and she 

will do a great job. 

We had an active subcommittee here. We passed the Water Resources and Development Act twice. The Senate fell down in their 

responsibilities, but we did a lot of good work on that legislation 

that I hope will lay the basis for that bill early in this Congress. 

We passed many other bills like the Brownfield Redevelopment 

Act, legislation to clean up and help assist in the Long Island 

Sound and the Chesapeake Bay and many other things. 

There is a lot of work that needs to be done. Everybody has pretty well covered that, so I will not go into that. I will say, in regard 

to this hearing today, I think the need for this hearing was 

summed up best by one of the witnesses on the second panel, Mr. 

Stutlet, who is with the National Association of Utility Contractors, 

and he says this. He says, ′′Utility contractors build and repair 

America’s unglamorous but vital water and wastewater infrastructure. What is out of sight and out of mind to most people is clearly 

visible to NUCA members every day. We routinely uncover rotting 

pipes with gaping holes that spill raw sewage into the surrounding 

ground of residential neighborhoods,′′ and he tells us about an incident in Denver that just was within inches and seconds of collapsing that would have led to spills of 2,000 gallons of raw sewage 

per minute down the street, through a public park and neighborhood and so forth, and the reason I particularly like his testimony 

is I have said for years that in this country there is nothing that 

we take for granted like our clean water and wastewater systems 

in this country. 

This is a very important subcommittee, and I can tell you this. 

I love to come to the hearings because I have never been to a hearing yet where I did not learn at least a little something, so I just 

wanted to say that and congratulate you and say that I look forward to working with you in this Congress. Thank you very much. 

Ms. JOHNSON. Thank you very much, Mr. Duncan. 

I know that many of our members may have statements this 

morning. However, we are going to ask you to submit your statements for the record. We are going to have votes soon, and I would 

11

suggest that we get on with the witnesses, but you will have time 

to make statements at a later meeting. 

We are pleased to have a very distinguished panel of witnesses 

on our first panel here this morning. We have the Honorable Benjamin Grumbles, who should have a special seat on this subcommittee, who is the Assistant Administrator for the Environmental Protection Agency’s Office of Water, and next we have the 

Honorable Martin Chavez, Mayor of Albuquerque, New Mexico, 

who serves as Cochair of the U.S. Conference of Mayors and Mayors Water Council, and finally, we have Dr. Ellen Gilinsky, the Director of Virginia’s Department of Environmental Quality, Division 

of Water Quality Programs, who is testifying on behalf of the Association of State and Interstate Water Pollution Control Administrators, and the agenda for the hearing also mentions Mr. Todd Ambs, 

who is the Administrator of the Wisconsin Department of National 

Resources, Division of Water. He was to testify on behalf of the 

Council of Great Lakes Governors. However, he is experiencing 

traveling difficulties this morning and will not be able to attend the 

hearing. If you listen to the weather reports, I am sure that you 

understand that. So I ask for unanimous consent that his testimony be made a part of the record. 

Ms. JOHNSON. Without objection, we are pleased to have our 

other witnesses here with us this morning. Your full statements 

will be placed in the record. We ask that witnesses try to limit 

their testimony to 5 minutes, an oral summary of their written 

statements, as a courtesy to other witnesses. We will continue to 

proceed in the order in which the witnesses are listed in the call 

of the hearing. 

So I now acknowledge and recognize Mr. Grumbles. 

TESTIMONY OF HON. BENJAMIN H. GRUMBLES, ASSISTANT 

ADMINISTRATOR FOR OFFICE OF WATER, U.S. ENVIRONMENTAL PROTECTION AGENCY; HON. MARTIN J. CHAVEZ, 

CO-CHAIR, MAYORS WATER COUNCIL, U.S. CONFERENCE OF 

MAYORS; TODD AMBS, ADMINISTRATOR, DIVISION OF 

WATER, WISCONSIN DEPARTMENT OF NATURAL RESOURCES; AND DR. ELLEN GILINSKY, DIRECTOR, DIVISION 

OF WATER QUALITY PROGRAMS, ASSOCIATION OF STATE 

AND INTERSTATE WATER POLLUTION CONTROL 

Mr. GRUMBLES. Thank you, Madam Chair, and thank you, Mr. 

Chairman, Chairman Oberstar, and Congressman Baker, for the 

opportunity to appear before you. It was always an honor to work 

on the other side of the table on the committee staff. It is even a 

greater honor to appear before you on behalf of the EPA and the 

administration and to discuss innovative, sustainable, marketbased solutions for infrastructure financing and management. 

Congressman Baker, I would like to state for the record that, to 

my knowledge, I had nothing to do with the water shortage you experienced this morning. 

I would also like to say to former subcommittee chairman, Mr. 

Duncan, how much we appreciate your efforts over the years to 

draw attention to the importance of infrastructure. 

12

And, Madam Chair, I cannot tell you how important it is and 

how much we appreciate the fact that your first action is to draw 

attention to the importance of infrastructure. 

So often, we all focus in this town on areas where we disagree. 

Where we do agree is the importance of infrastructure to ensuring 

that water is clean, safe and secure. We look forward very much 

so to having a constructive dialogue with the committee on appropriate Federal roles and ways to accelerate environmental progress 

while maintaining our country’s economic competitiveness. 

Administrator Steve Johnson has emphasized that one of his 

highest priorities is to work with partners, work with Congress, 

work with Governors, all involved in this great debate, on developing innovative, sustainable and market-based solutions for water 

infrastructure financing and management. 

I have learned a lot over the years working on this committee, 

and I would say that we are focused right now in the agency on 

helping to usher in the third wave of water infrastructure financing 

and investment in water infrastructure. The first wave was really 

with the historic Clean Water Act, in the early 1970’s, focused on 

that first wave of Federal grants and subsidies. The second wave 

was really another historic moment in transitioning to the State 

Revolving Fund process to bring in more leveraging to stretch that 

dollar further, and I would say that the third wave right now is 

really to focus on sustainability, long-term success and, as Congressman Baker emphasized, bringing in private equity. Providing 

for the Nation’s water infrastructure needs is obviously a public responsibility, a public trust. Involving private sector dollars is an 

important component to that. 

So what we are focused on is identifying the needs and developing sustainable solutions. Your hearing is describing the importance of the needs, and I would say that EPA is focused on identifying and documenting the needs across the country. The 2000 

Needs Survey identified over 150 billion in needs for wastewater 

infrastructure meeting Clean Water Act mandates. We focus even 

more on the gap. In 2004, the agency released a gap that identified 

a gap of $122 billion in the difference between the needs over a 20-

year period, the capital needs, and the expected revenues. That 

number is actually $21 billion if you factor in a 3 percent increase 

in revenues above inflation. Our focus is on four pillars of sustainability and on innovative financing to help narrow that gap. In the 

remaining amount of time I have I want to focus on a couple of 

those pillars. 

Asset management, improved management of the utilities, working as partners with the utilities is key, and we are committed to 

developing attributes of successful asset management to reduce the 

demand on infrastructure. 

A second pillar of sustainability is full-cost pricing. This country 

underprices the value of water that is delivered in systems, and so 

we are committed to working with utilities to help identify the 

right rates, local rates, so that investment is adequate and sustainable. 

Water efficiency is the other key pillar of sustainability for us to 

help reduce the demand on water infrastructure. 

13

And the fourth is having an overall watershed-based approach 

that helps improve water quality so it is fishable and swimmable 

and also reduces the demands on utilities. 

I would just say in conclusion, Madam Chair, that the other key 

component to part of the third wave that we are focused on and 

committed to working with you on is the innovative financing—private activity bonds, loan guarantees, leveraging—trying to reduce 

some of the barriers to including the private sector in the funding 

of public works. 

And so we look forward to working with you, and I would be 

happy to respond to questions or comments that you have throughout the hearing. Thank you. 

Ms. JOHNSON. Thank you very much. 

We will go directly to the Honorable Martin Chavez. 

Mr. CHAVEZ. Good morning, Madam chairwoman and members of 

the committee. I am delighted to be here. 

I am Martin Chavez, Mayor of the City of Albuquerque. I am 

Trustee of the U.S. Conference of Mayors and Cochair of the Mayors Water Council. I have representation from New Mexico here. I 

am very pleased that Congressman Salazar is here. For those of 

you who do not know, New Mexico still claims southern Colorado 

as part of our own. In saying that, I am not unmindful of the fact 

that some from Texas claim parts of New Mexico still to this day. 

I do appreciate being invited to testify today. The National Conference of Mayors represents approximately 1,200 cities, over 

30,000 across the country. We are very much aware that providing 

wastewater and water services does not get anybody elected, but 

not providing them guarantees no reelection, and it is one of the 

critical things that we do, particularly at the urban level, day in 

and day out. 

In the year 2005, the National Conference of Mayors did one of 

the first ever surveys of America’s cities, asking mayors and their 

senior staff what their water needs were. It was really the first 

time we had simply asked ′′What are your needs?′′ we had 414 cities that responded. The three most important water resource priorities facing America’s cities are, first, rehabilitating aging water 

and wastewater infrastructure, second, the security and protection 

of water resources infrastructure and, third, frankly, water supply 

availability, and while there is a substantial investment needs gap 

of which the committee is very much aware, local investment in 

wastewater and water infrastructure is very, very robust. Half of 

the cities have made major capital investments between 2000 and 

2004. Another half have major capital investments planned between 2005 and 2009, and this is a sustained, ongoing type of investment. As the committee is probably aware, the cities pay approximately 90 percent of the dollar when it comes to these. 

The different financing modalities—the ′′pay as you go′′ course is 

still the most popular among cities; revenue bonds is the second 

most common approach; State Revolving Funds, obviously, are very 

important and are third, general obligations fourth; private activity 

bonds are last, and we are hopeful that there will be continued 

flexibility from the Congress, and enhanced flexibility in these activity bonds so that we can use them as well is an important tool. 

14

The State Revolving Fund is used by approximately 60 percent 

of the cities across the country, and—I am sorry—approximately 40 

percent, and we are looking for, certainly, increased funding because that, again, is a very important tool for America’s cities, and 

that funding and the flexibility in those programs is essential in reducing the needs gap. 

The Conference of Mayors’ policy priorities are as follows: One, 

grants to municipalities either directly or through the States for 

water and wastewater infrastructure, certainly where there are affordability issues for communities or when we have severe environmental problems that we are confronted with. Second, expanding 

some portion of the current 20-year loan category to include a 30-

year, no-interest loan category or a 30-year low-interest loan payback period on the State Revolving Fund Program for water and 

wastewater infrastructure investment. Third, modifying current tax 

law by removing State volume caps in private activity bonds, to 

which I alluded earlier, used for public purpose water and wastewater infrastructure projects. Again, the increased use of the activity bonds for public purpose water infrastructure will help us boost 

the aggregate spending on water infrastructure and then narrow 

the needs gap, which is critical. 

We need your help, and we advocate increasing the SRF for clean water to $1.355 billion or more, drinking water to $850 million or 

more, and I believe that this will reverse the trend with which we 

are confronted in the needs gap, particularly when it comes to confronting the Federal mandate, which we are happy to comply with, 

but as always, we prefer to have it come funded up front. 

We support, again, extending the eligible SRF activities to include the replacement of major rehabilitation of wastewater infrastructure, and also we support extending SRF eligibility projects 

involving direct Federal resources to help our communities deal 

with water infrastructure-related issues, including $50.6 billion for 

combined sewer overflows, $88.5 billion for sanitary sewer overflows of stormwater management. We are supportive of asset management provisions, but we would ask for flexibility so that it does 

not put us into a situation where we end up spending more money 

in compliance than we actually save. 

With that, I would be happy to take questions as the committee 

deems appropriate, and thank you very much for allowing me to 

testify today. 

Ms. JOHNSON. Thank you very much. 

Dr. Gilinsky. 

Ms. GILINSKY. Madam Chair and committee members, thank you 

for the honor of appearing before this distinguished committee and 

for the opportunity provided for considering reauthorization of the 

State Revolving Loan Fund so early in this session of Congress. 

As I was introduced earlier, I am Ellen Gilinsky. I am the Water 

Division Director in Virginia, and I am also a board member of the 

Association of State and Interstate Water Pollution Control Administrators, composed of many of my fellow water directors throughout the country. 

You have our written testimony. I am here to spend my time 

sharing the Virginia experience with the Clean Water Revolving 

Loan Fund. The Fund has been instrumental in the achievement 

15

of water quality improvement and protection in Virginia. Moreover, 

with the enormous needs Virginia faces in the immediate future, 

maintaining this important Federal-State Partnership Program is 

more critical now than ever before. 

To date, the program has funded over $1.5 billion in clean water 

projects in Virginia. These projects include wastewater treatment 

upgrades, combined and sanitary sewer overflow elimination 

projects, decentralized sewer system replacements, agricultural 

best management practices, land conservation priorities, and 

Brownfields development. 

With escalating construction costs, increased regulatory requirements, the importance of restoration of the Chesapeake Bay, and 

the aging of our infrastructure, demand for loan funds has grown 

astronomically. Just this year we approved funding for a State 

record $302 million in loan funds, but we also had to deny funding 

to an additional $464 million in requests due to a lack of resources. 

We fully expect this level of demand to continue or to actually increase in the foreseeable future. 

Through aggressive use of fund leveraging in Virginia, we have 

been able to provide over a 225 percent Federal return on investment to the program to date, and we are expecting this figure to 

exceed a 300 percent return on investment by 2009. Our administrative costs are low, less than 2 percent of the total funds distributed to date. The expenditure and use of resources is very timely. 

Well over 90 percent of the program’s funds have already been provided to recipients, and the remaining funds are fully committed to 

projects under design. 

Projects funded through the SRF make a real difference in water 

quality improvements and our quality of life. I would like to take 

a moment to share some real examples with you. The City of Lynchburg has used over $70 million in SRF Loan 

Funds to finance their Combined Sewer Overflow Program. This 

has resulted in the elimination of over 100 of the 132 overflow 

points, taking raw sewage discharges out of neighborhood streams 

as well as out of the James River. 

A small, low-income community of Dawn in Caroline County 

used $2.85 million from the Revolving Loan Fund in conjunction 

with the housing and community development assistance to install 

alternative sewage collection and an on-site treatment facility, 

eliminating a health hazard from failing septic systems. 

In our coalfield region of Southwest Virginia, many small towns 

have been able to replace their old primary sewage treatment facilities with upgraded secondary systems using the Fund. Hundreds of our farmers have been able to install non-point source pollution controls such as animal waste facilities, stream fencing and 

off-stream watering facilities or purchase no-till planters to protect 

water quality as a result of these low-interest loans. 

In Congresswoman Drake’s district, we fund a lot of projects. I 

am sure she is well aware of those. A few notable ones are in the 

City of Norfolk. Over $64 million has been borrowed for corrections 

to their deteriorating sewage collection system, and for the town of 

Onantock on the Eastern Shore, they have been getting a $6.2 million loan to upgrade their new treatment removal in their sewage 

treatment plant. 

16

That leads me to our single greatest water quality challenge in 

Virginia and our surrounding bay States, and that, of course, is the 

restoration of the Chesapeake Bay. The estimates for wastewater 

treatment upgrade costs in Virginia alone exceed $2 billion. Virginia has stepped up with a strong commitment to provide substantial grant funding for a significant portion of the costs by allocating 

over $400 million in grant money from our own Water Quality Improvement Fund. 

To continue the commonwealth commitment, Governor Kaine has 

recently proposed a Bay Bond bill, which, if passed by the General 

Assembly, will provide another $250 million over the next 4 to 5 

years, supplying enough funding to achieve our point source commitments in the bay restoration. 

Virginia is also committed to aggressively leveraging the State 

Revolving Loan Funds to provide loan funding for the remaining 

local share to realize these improvements. This combination of 

funding is essential to making the Chesapeake Bay restoration efforts achievable and affordable for our citizens. 

In summary, Virginia’s strategy to improve our water quality, 

while funded in substantial part by our own State funds, relies on 

the State Revolving Loan Fund to provide the difference on low-interest loans and to allow us to leverage our financial resources. Our 

story is not unique. It is essential that Congress continue to support clean water through increased appropriations to the Clean 

Water State Revolving Loan Fund. 

Thank you again for allowing me this opportunity to speak before 

you. 

Ms. JOHNSON. Thank you very much. 

In beginning the first round of questions, I am going to recognize 

the Chair of the full committee, Mr. Oberstar. 

Mr. OBERSTAR. Thank you, Madam Chair, and I want to thank 

our witnesses for their splendid presentations, very well-documented, thorough presentations. I read the material last night, and 

I was very pleased with the documentation. We have colleagues—

the Governors who are represented and who form the State of Virginia, Dr. Gilinsky speaking for the Governor, and Mayor Chavez 

who are on the front line of clean water. That is really where it 

begins, and there is a Federal, State and local partnership, long established in our committee and in the Clean Water Act, so we are 

grateful for your participation. 

Mr. Grumbles, Ben, welcome back to the committee again. As 

you said, it is a little different being on that side of the table than 

on this side, but I appreciate your service here, beginning with 

service for my former colleague from the State of Minnesota when 

you served in the House. I particularly appreciated your comment 

that water is a public trust. I have two questions after some observations. 

I liked your reference to a water efficiency pillar, the watershed 

approach to cleanup. I think that is vitally important. I have emphasized that time and time again, and that is tied in with the 

non-point source approach to cleanup. We have to do it on a watershed-by-watershed basis. I look forward to your March national 

conference on paying for sustainable water infrastructure. That 

should be very interesting. We will have committee staff attend, 

17

and if possible, I would like to be there myself, but there is a question of sort of the philosophy about cleanup and responsibilities. 

President Eisenhower signed the first Clean Water Act in 1956. 

He vetoed the second with a veto message that read ′′Pollution is 

a uniquely local blight. Federal involvement will only impede local 

efforts at cleanup.′′ I remember it very well—it was his veto message of the bill advanced by my predecessor, John Blatnik, who 

also authored the 1956 act and then—that was on the table, and 

then President Kennedy augmented the act, and legislation was 

passed in the Kennedy and Johnson years, and then President 

Reagan came along, and in 1987, he vetoed a bill with a message 

that said this, meaning funding for pollution abatement is a matter 

that historically and properly was the responsibility of State and 

local governments, and then President Nixon vetoed the 1972 

Clean Water Act with a veto statement saying that dramatic increases in Federal spending to address inherently local issues 

would bankrupt the U.S. Treasury. Well, it did not bankrupt the 

U.S. Treasury. It did lead to cleanup. The Nixon veto was overridden by 10 to 1, meaning overwhelming support on both sides of 

the aisle. 

I just want to know what is the thought process of this administration on responsibilities for cleanup. Secondly, we are going to 

move a bill, as I said and Ms. Johnson said, in this committee, that 

has been crafted over the last 6 years on both sides of the aisle, 

by Ms. Kelly, who is no longer in the Congress, and Mrs. Tauscher, 

but it is a bipartisan effort. We have fashioned this bill to bring 

it to the House floor, but we were not able to in the past. We are 

going to do it in this session of Congress, and I have already had 

a conversation with the Chair of the Senate committee. We have 

harmonized our approach to this and other issues so that we can 

move bills that in the past were matters of bipartisan support but 

for one reason or another got stuck. We are not going to let them 

get stuck anymore, so the administration will face a State Revolving Loan Fund bill. What will be its response? 

Mr. GRUMBLES. Thank you, Mr. Chairman. 

The first thing I would say is that the EPA is very proud of its 

role and the importance of the Federal Government in the Clean 

Water Act, setting national standards and encouraging local solutions, and of course local solutions sometimes require regional solutions when you are talking about the Chesapeake Bay or other 

areas of great importance and that have interstate implications. So 

we think it is extremely important, and even EPA is proud of the 

role that Congress has given us in the Clean Water Act. 

When it comes to infrastructure investment, the President’s plan is to provide $6.8 billion through 2011 for capitalization of the 

State Revolving Funds. That is a continued commitment in an effort to help in that transitioning to a third wave, which is true sustainability, and also breaking down barriers so that private equity 

and investment can help towards public works and advancing infrastructure. 

So we think it is extremely important to work towards ensuring 

that the Clean Water SRF Program continues to be a great success, 

and as it revolves, it also evolves, and our focus is working with 

the Congress on ensuring flexibility so that it can be an important 

18

tool but certainly not the only tool to meet water infrastructure financing needs, and we truly do look forward to working with Congress in a constructive dialogue on the appropriate Federal role, 

the role of local government and of the private sector in funding 

problems and the solutions to the problems that definitely confront 

this country, and you pointed out yourself—and other members 

have as well—the importance of having flexibility to get at the real 

problems that the localities and the States determine are the key 

problems for a particular cherished water body, and oftentimes 

that is non-point source pollution or stormwater or wet weather 

flows. 

With so many of the problems, the reason that there is a gap is 

due to the aging, the natural aging of the infrastructure, and population pressures in some areas and also the underpricing of the 

value of water. 

And we look forward—that is one of the beauties of the water efficiency effort of the agency right now, is the watershed program. 

It instills an ethic of water efficiency and conservation that can 

help reduce the demand, the energy costs and the overall costs for 

utilities in running their wastewater systems, and we look forward 

to working with you and other members. 

Mr. OBERSTAR. Thank you. 

If I can summarize your response, the administration does embrace Federal, State and local partnership approach to cleanup. 

Mr. GRUMBLES. We definitely embrace the partnerships with 

State and local government and also the private sector. The publicprivate partnership, Mr. Chairman, is—some say it is a code for 

privatization. We say we think it is code for progress. 

Mr. OBERSTAR. That is a matter that we will address later. 

The second question I asked was about the clean water revolving 

loan fund bill. What will be the administration’s response to that? 

Mr. GRUMBLES. We look forward to working with Congress and 

developing positions and also providing technical assistance as you 

have questions or want our views on clean water SRF matters. 

Mr. OBERSTAR. To be continued. Thank you. 

Ms. JOHNSON. Thank you, very much. 

Mr. Baker. 

Mr. BAKER. Mr. Grumbles, in the Mayor’s testimony, he made 

reference to concern of Federal mandates to a municipality to take 

certain corrective actions to ensure water quality or enhance levels 

of water treatment requirements and that often those are not accompanied by the funds necessary to implement the new standard. 

That clearly is a concern. 

I wish to take it one step further, however, in identifying that 

much of the operative concern in water quality goes to that of private enterprise. In my own case, industries located along the southern reach of the Mississippi River take water out, are required to 

process, utilize it in their manufacturing circumstance, and when 

the water goes back into the River, it is cleaner than when they 

took it out. 

Now we are at the end of a very long tube, and there are a lot 

of other people washing their hands upstream that don’t have similar requirements. That may all still be fine in the scope of keeping 

water quality as the number one goal here, but it would seem to 

19

me that there should be in the construction of these programs 

something on the incentive side, rather than just on the penalty 

box side. 

If you don’t do it, you go to jail; if you do it, you just lose money. 

Neither seems to be a really good kind of construct. 

What about, in looking at programs as we go forward, the concept of if you are doing it timely, you are doing it at the standard 

or better—because we have a lot of creative people who probably 

could figure out a better way of doing some of these things in private industry—if you got tax credits of some sort or the other that 

would yield a benefit of some consequence to the complying business enterprise, the consequence of this today is that we are no 

longer just competing with industry in Mississippi and California. 

We are competing globally. The folks around the world are not 

complying with EPA standards. They are taking water where they 

get it, using it as they see fit and contributing to the world problem. 

The end consequence is the local industry becomes less and less 

competitive in all measures because of government regulation that 

inhibits their own creativity and thinking. Why can’t we get to an 

incentive-based program that will enable industry to use its own 

resources in the most effective manner possible? 

Mr. GRUMBLES. Congressman, thank you. 

Our charge that the Administrator received from the President 

is to accelerate environmental progress while maintaining the 

country’s economic competitiveness and the point about making 

sure that Clean Water Act standards and programs are effective 

but also efficient and equitable. 

I can tell you that one of the Agency’s priorities as we focus on 

implementing and enforcing Clean Water Act requirements is to 

also accelerate performance track, which is a program that is looking to provide incentives for those who are going above and beyond, 

rather than penalties, providing some types of incentives for the 

regulated community, whether it is industry or municipalities. 

So the notion you are making is a very attractive one, and it is 

one that we want to work with you and other colleagues on so that 

we can be sure that we are maintaining performance and high 

standards under the Clean Water Act but also increasing the efficiencies so that more will choose to be good stewards or will be rewarded for reducing their water consumption or the input of pollutants. 

Mr. BAKER. Thank you. 

Mr. Mayor, you may want to follow-up just quickly on the subject 

of EPA requirements and municipal compliance and whether there 

are any tangible benefits to some of these requirements that are 

really downstream consequences. They are not really necessarily 

going to affect the people from your community because it is a discharge from your community going somewhere else. 

And, secondly, when these mandates are required of you, how 

often are accompanying funds made available? 

Mr. CHAVEZ. Madam Chairwoman, Congressman, the City of Albuquerque is ringed by sovereign Indian nations. We are on the Rio 

Grande, Spanish for great river. If you see it, you wouldn’t be impressed, but if you live in the high desert, it is a great river. 

20

Pueblos have State stats for purposes of setting EPA water 

standards. When I was first elected 12 years ago, the Pueblo 

downriver enhanced the status of the State level. I had to put out 

$65 million to improve our discharge, and that is back when $65 

million was real money. And in the point of fact, the water discharge for the City of Albuquerque was cleaner than the water receiving from the Pueblos and the communities to the north. We had 

to foot the bill entirely for that; and my sense would be that everybody should just clean up their own mess and that would be very, 

very helpful. 

Very rarely in my experience have we had any meaningful Federal dollars———

Mr. BAKER. If I may interrupt on that specific point—sorry to interrupt, merely to observe that appropriate professional conduct, in 

fact, was not rewarded. It was penalized. Because you had to spend 

$65 million and perhaps you didn’t necessarily have it in a sock 

drawer for a benefit downstream that was not brought on by the 

actions of your own community. 

Mr. CHAVEZ. Absolutely. 

Mr. BAKER. Thank you. I yield back. 

Ms. JOHNSON. Thank you very much. 

Ms. Hirono from Hawaii. 

We will be calling on members as we have done in the past as 

you enter the room, as we alternate. 

Mr. Baird, does he have any questions? 

Mr. BAIRD. I would like to thank the witnesses here and ask a 

question of Mr. Grumbles. You mentioned that the administration—I think you said $6.4 

billion———

Mr. GRUMBLES. 6.8. 

Mr. BAIRD. 6.8. How does that compare to the projected need? 

Mr. GRUMBLES. The gap report that we developed after intensive 

analysis identified a gap of $21 billion over a 20-year period with 

respect to capitalization needs—not O&M but capitalization—with 

the added assumption that revenues would increase by 3 percent. 

So we made that assumption, that economic assumption. 

We then looked at that number and said, if we are successful in 

implementing our four pillars of sustainability, which also includes 

full cost pricing, we believe that we will make significant progress 

in reducing that gap if we provide that funding into the State Revolving Fund to the tune of $6.8 billion over a period of 2004 to 

2011. The calculation was made that what that would do was that 

would then lead to a revolving fund on an annual basis, approximately from 2018 to 2040, of about $3.4 billion that would be going 

out in the way of loans and providing financial assistance for local 

infrastructure needs. 

We have always said that that isn’t the single solution, but that 

is an important part to capitalize on and make continued progress 

through the SRFs, because that is the explanation of that $6.8 billion. 

Mr. BAIRD. I so appreciate the need for a more comprehensive 

approach, but the bottom line question I am trying to get at is, I 

would warrant that every member on this dais has some communities out there knocking on our doors, saying we are being reVerDate 0ct 09 2002 09:11 Aug 03, 2007 Jkt 000000 PO 00000 Frm 00032 Fmt 6633 Sfmt 6633 P:\DOCS\34773.TXT HTRANS1 PsN: JASON
21

quired to meet improved sanitation and sewage treatment, and we 

don’t have the money to do it and the available money to borrow 

is vastly oversubscribed. And I want to get just a simple number 

from you, is what is the oversubscription number? Give me a time 

frame and tell me how much more money do we need than the administration is prepared to make available? 

Mr. GRUMBLES. Tell me more about—by overprescription number———

Mr. BAIRD. Overprescribe, my point being, give me an estimate 

of demand, simple estimate of demand over a fixed time period and 

how much the administration plans to put towards meeting that 

demand so that we know what the shortfall is. 

Mr. GRUMBLES. Well, first point, I know you are asking for a single number, and I am not going to be able to give you a single 

number. I certainly will want to get back to you and talk more 

about. 

Mr. BAIRD. I don’t understand that. If I may, if I were trying to 

estimate—if I were a businessman trying to estimate the need of 

something, I would say, what is the cost of the need? What are our 

available resources? What is the shortfall? And that would be a 

pretty basic number from which to work. 

And I understand these are complex matters, but I am just trying to get it so that I can talk to my constituents and say, here is 

how short we are, or here is how long we are, if we have a surplus. 

Can you give me that number? 

Mr. GRUMBLES. I can tell you, from a national standpoint, if you 

look at the gap report that we have, we estimated a $21 billion gap 

between those years of around from 2 000 to 2020. 

Mr. BAIRD. So that we will be short $21 billion of infrastructure 

investment for clean water? 

Mr. GRUMBLES. If you don’t factor into account the four pillars 

of sustainability and the increase, an increase beyond the 3 percent 

estimate for rate increases, revenue increases over the years. 

Mr. BAIRD. If you don’t? 

Mr. GRUMBLES. So, basically, what we are saying is that it is 

more important than ever to embrace this concept of full cost pricing. And the point I want to emphasize as well, Congressman, is 

there are other agencies that provide funding, grants and loans for 

water infrastructure, USDA and HUD, but from an EPA Clean 

Water Act standpoint, we think that $6.8 will make substantial 

progress towards the $21 billion gap and that what we really need 

in addition to that is innovative financing. 

See, that gap doesn’t take into account that potential. We would 

say while the needs are growing, the solutions are growing, too, 

and that if we can really think about approaches above and beyond 

just the SRF, as a country, we will see progress. 

Mr. BAIRD. I would just observe that the need seems to be growing faster than the funding, the solution. 

And, secondly, I would observe that while this administration repeatedly and very recently continues to talk about not wanting to 

have to raise taxes, they do not seem to have a problem with raising fees on people. At the end of the day, if you are a person trying 

to make ends meet, if your water costs more, you are still paying 

22

an increase out of your pocket somewhere. So it is a little bit of 

sleight of hand I would just suggest———

Ms. JOHNSON. Time has expired. 

Mr. BAIRD. If I may, we are leaving these communities with a 

mandate to meet certain requirements but without the resources to 

do that. 

Ms. JOHNSON. Thank you. 

Mr. Duncan. 

Mr. DUNCAN. Thank you, Madam Chairwoman. 

Mr. Grumbles, you said in your testimony that the public is 

greatly underpaying for their clean water and wastewater services 

and getting a real bargain in that way; and I would agree with 

that. But the staff did a rough calculation for me that people pay 

anywhere from 30 to 50 times or perhaps even more for the bottled 

water, as opposed to the public water; and I remember seeing on 

60 Minutes a few years ago where some of these bottled water companies were getting their water from the public water sources. 

And I know that we have had a lot of the public water people 

in here saying their water is really just as clean. But can you give 

us a rough estimate of how the water is—our water infrastructure 

and services are being paid for today? What percentage is being 

paid for by Federal sources of all types? Are the State governments, are the local governments and how much is being paid for 

by the ratepayers, percentagewise? Do you have information like 

that? 

Mr. GRUMBLES. I am going to get back to you with some more 

specific information. I will underscore that clean water SRF, which 

is about to celebrate its 20th birthday on February 4th, over the 

course of that program, EPA has provided $24 billion. 

I have agreed with the Mayor’s comments that a good rough estimate rule of thumb has been over the years that 90 percent of local 

infrastructure projects come from local or State sources. 

The Federal commitment continues to be strong in the sense of 

the clean water SRF, the drinking water SRF, but the whole plan 

for the administration is that those funds were established by this 

committee and other committees to—at some point in time to 

revolve without that initial Federal capitalization or capital subsidy, and so we are laying out a transition to the third wave of 

water investment. 

But, in the meantime, the plan includes $10.2 billion for drinking 

water infrastructure programs through 2018 and 6.8 billion for 

clean water SRF capitalization moneys through the Federal Government through 2011. 

Mr. DUNCAN. Let me ask you this, has the EPA done any studies 

and analysis to determine is the problem greater or the needs more 

in older cities in the Northeast or where, you know, they are losing 

population but their infrastructure is older, or in the newer areas 

where the growth is just exploding? 

Mr. GRUMBLES. I know the Mayor may have some views on that, 

too, based on the surveys that his organization has done, but I 

would say, yes, Congressman, EPA has been doing a study. We are 

currently working on a 2004—well, it is a needs survey that we 

hope to release. It is going through interagency review. And an important part of that analysis is not just identifying what types of 

23

needs are the greatest such as for wastewater overflows or 

nonpoint source pollution but also getting a sense of which States, 

which areas of the country are seeing needs grow more rapidly. 

And you are absolutely right. The basic instinct of in certainly 

some areas that the infrastructure as the older and has aged, those 

may be facing some of the biggest price tags. Also, areas where the 

population growth is occurring are experiencing greater needs. 

Mr. DUNCAN. Let me just ask the other two witnesses very quickly, do you see more use of much public-private partnerships in the 

future? And, Mayor, are you doing that in Albuquerque in some 

ways? 

Also, I will ask both witnesses, have your associations seen the 

need for a Federal clean water trust fund as we have for highways 

and aviation and so forth? 

Mr. CHAVEZ. Congressman, at this time, the Council of Mayors 

is opposed to a trust fund. It seems like it is going to be a new tax, 

and if not a new tax we are actually worried about where the 

money might come from. But we certainly would urge as much 

flexibility in financing modalities as possible, whether it be public 

or private SRF. Just give us as many options as possible and let 

us solve them as it meets the needs of our particular communities. 

Mr. DUNCAN. Do you have any type of public-private partnership 

in Albuquerque? 

Mr. CHAVEZ. We don’t. We are primarily financed with IRGs. 

Mr. DUNCAN. Dr. Gilinsky. 

Ms. GILINSKY. Thank you. I would say the trust fund could be 

one option. Again, we need more options the better for the financing, and we are certainly not adverse to public partnership. But we 

found that the partnership between the State and the Federal dollars has really worked very well in Virginia, and Virginia citizens 

have stepped forward to bear their fair share of the bill along with 

the Federal dollars. 

Mr. DUNCAN. Thank you very much. 

My time is up. I thank the Chairwoman. 

Ms. JOHNSON. Thank you. 

Unfortunately, we will recess for long enough to have one vote 

and return. So we won’t be away too long. 

[Recess.] 

Ms. JOHNSON. The Chair recognizes Mr. Boustany. 

Mr. BOUSTANY. Thank you, Madam Chair. 

By looking at the testimony, Mr. Grumbles, I note on page 3 you 

mentioned down toward the bottom, as of January, 2007, States 

have provided water body information on $11.1 billion of their Revolving Loan Funds, and information indicates these loans support 

the goals of the Clean Water Act. 

I know that Ms. Gilinsky has also stated in her testimony that 

this has been one of the most successful Federal programs in terms 

of leveraging funds and so forth, and yet we have heard a lot of 

testimony not only here today but in prior episodes where the 

needs versus revenue gap is a significant problem. 

We know that State Revolving Loan Funds have been disbursed 

generously and leveraged, gaps persist and generally we seem to be 

losing ground. I would like to know what oversight is being carried 

out not so much on a Federal level, because you have outlined that 

24

fairly well in your respective testimony, what is being done at the 

State level? What is being done at the local level to make sure that 

money is being spent in a very cost-effective way to build the necessary infrastructure and to take care of this gap? And what are 

we going to do to minimize administrative costs? 

Mr. GRUMBLES. I would like to take a shot at trying to respond 

to your questions and then turn to others if they———

Mr. BOUSTANY. Sure. 

Mr. GRUMBLES. —and Dr. Gilinsky, if she would like to talk 

about State efforts. 

A couple of things, Congressman. One is that, as we oversee implementation of the Clean Water Act, it is a unique partnership. 

The Clean Water Act is—the interesting thing about the Clean 

Water Act is, more than other Federal environmental statutes, 

there is a very prominent role, a primary role for the States to 

carry out the Clean Water Act, to establish the standards which we 

approve and to—basically, 45 of those States carry out the permitting programs where the rubber meets the road to really get the 

projects going and complying with the law. 

We meet with the States on a very frequent basis to see how implementation of the SRF—how that is going. One of the things, 

messages that resonates very well with this administration is the 

need to continuously improve the streamlining of and operation of 

the State Revolving Funds, that those are very successful but there 

should continue to be a focus on red tape and cross cutters and to 

see where we can work together to reduce potential administrative 

barriers. 

I think it is also important, as Congress recognizes, to ensure 

that some of the funds, Federal funds that go into the State—the 

seed money into the State SRFs is also for administrative costs. A 

key point for us, too, is to—which we think of every time we come 

up with where we are required either because of the terms of the 

Clean Water Act or we think it is the right thing to do—to come 

up with new regulations. We have to take into account there are 

already existing needs and communities have non-Clean-WaterAct-related needs as well, and that should be taken into account. 

Mr. BOUSTANY. Because I know, as we look at the funding gap 

and all the discussion we have had on this, I want to make sure 

we are covering all bases and doing all the necessary oversight to 

be sure these dollars are spent in a very cost-effective way and we 

do minimize our administrative costs. 

Mr. GRUMBLES. We think another very important concept of sustainability is to explore—not to mandate but to explore the notion 

of incentives for States to have permit fees where those who are 

actually discharging pollution under Clean Water Act permits 

would pay for some of the costs associated with that to help free 

up State budgets to focus on other Clean-Water-Act-related needs. 

So we are working on that, exploring incentives so that States can 

help meet their the clean water needs. 

Mr. BOUSTANY. Dr. Galinsky, do you care to comment? 

Ms. GILINSKY. Yes, if I may let you know about the oversight 

that is done at the local level. Once we give out these loan funds, 

we go out, we inspect the construction, we have an Office of Wastewater Engineering that is separate from the loan program. It is 

25

paid for by State funds. But we have our engineers review the 

plans and specs, make sure everything is done in the most efficient 

manner; and there is grants requirements about what can be used 

for administrative costs. So it is very tightly controlled and very efficient. 

Mr. BOUSTANY. Are we looking at best practices, comparing one 

State to the next to find out what really works? 

I know my time is up, but I was hoping to get a little more information on this. 

Ms. GILINSKY. If I may, yes, we are. And, again, through our 

Wastewater Engineering Department, we are up on the latest technologies and make sure that these localities use them. 

Mr. BOUSTANY. I thank you. 

Ms. JOHNSON. Ms. Hirono.

Ms. HIRONO. I would like to ask Mayor Chavez to clarify something for me. 

In your testimony, you noted that, while these SRF programs 

exist, that many of the cities do not take advantage of them because of various kinds of limitations; and you note in your testimony that we should have clarifying language to make the term of 

repayment longer and also to provide for no interest and low interest provisions. 

Is that something that is currently not in the authorizing bills 

that you would like to have clearly in these bills? 

Mr. CHAVEZ. Congresswoman, some parts are in there, some 

parts aren’t. Some parts are discretionary at the State level; and 

if there is not language at least encouraging, then they ought not 

to do it. For example, going from a 20- to a 30-year period. 

The defensible reason why municipalities choose not to go 

through the SRFs is because they can, frankly, get better rates on 

their own investment with industrial revenue bonds and some of 

the other modalities that are available. 

Ms. HIRONO. So, clearly, if we were to encourage them through 

no interest loans that would facilitate their utilization of these 

funds? 

Mr. CHAVEZ. Absolutely. Free money has always been the best 

money. 

Ms. HIRONO. I think that to the extent that the need is great we 

should encourage the municipalities to use whatever array of methods to finance this infrastructure. And I also note that in your resolutions that were passed that you do not make those points that 

you would like to have language for no interest loans. I really don’t 

know how much—what the impact of that would be, but since 

where I am coming from is I want to encourage the municipalities 

to utilize these loans as long as we are authorizing this legislation, 

would you—it is not in your resolutions that you attached. 

Mr. CHAVEZ. Congresswoman, it is very much a part of the overall platform of the National Council of Mayors. If you have a no 

interest loan, at least some point you get at least 60 percent of it 

that turns out to be grant, frankly. 

Ms. HIRONO. Thank you very much. 

Ms. JOHNSON. Mr. Gilchrest of Maryland. 

Mr. GILCHREST. Thank you, Madam Chairwoman. 

26

I would like each of you to respond to this inquiry. Now Ben 

talked about three stages: Federal grants, State Revolving Loan 

Funds and now the sustainability aspect of this. And under sustainability, Ben, you described asset management, full cost pricing, 

water efficiency, and overall watershed approach. Hence my question. 

If the emphasis is on clean water and then we look at the overall 

watershed approach and then we look at swimmable, drinkable, 

fishable and all those things, we are then, I suppose, looking at, 

in the watershed approach, the hydrologic cycle which determines 

the sustainability and the endless flow through that natural physical hydrologic cycle and the hydrologic cycle then has its own infrastructure in the biosphere. It is a natural—nature’s designed infrastructure in which we have tapped into because we depend upon 

it. 

Now when we look at nature’s infrastructure and we are looking 

at watershed approach and we are looking at human infrastructure, wastewater treatment plants, do we have in mind the engineering design of making human infrastructure compatible with 

nature’s infrastructure so we don’t unnecessarily disrupt the hydrologic cycle which is there to produce clean water so it is fishable, 

drinkable and swimmable and so on? 

So as we approach that perspective, when we look at State Revolving Loan Funds, Federal funds, all those things, in part do we 

look at the difference between upgrades which produces toxins, nitrogen, phosphorus that we saw in the Potomac River this past 

year or so, endocrine disrupters as a result of toxins flowing into 

the Potomac River—and it has happened in a number of other 

places including the Susquehanna, which flows into the Chesapeake Bay. So do we look at the difference at least as far as our 

role for keeping water clean in upgrades, as compared to expanding 

capacity? 

Because when you expand capacity that means you offer indirect 

opportunities for more problems, more impervious surfaces, more 

storm water problems, more volume of nitrogen and phosphorus, 

more air degradation and all those things. 

So I guess I am looking at the emphasis on, Ben, your four aspects of sustainability, overall watershed approach. Is that really 

emphasized? And do we look at, when we are getting these dollars, 

to expand the infrastructure, making it compatible with nature’s 

infrastructure? But is there a significant difference in your approach when you look at upgrades when compared with expansion 

of capacity? 

Mr. GRUMBLES. Thank you. 

You are emphasizing the importance of things such as low impact development and green infrastructure, looking at a broader 

watershed context beyond the pipe, beyond the property lines and 

the fences of the utility itself to try to come up with ways to reduce 

the demand and the costs of perhaps unnecessary, perhaps avoidable expansion. That is the idea, you know, trying to recognize the 

hydrologic cycle but also the terms and definitions under the Clean 

Water Act and how broad our regulatory authority is. 

So what we want to do on a voluntary basis as much as we can 

with States and localities and utilities is to be thinking about ways 

27

to reduce the costs of operating infrastructure or meeting infrastructure needs by rediscovering and advancing green infrastructure, low impact development. It can help. It is a significant component, a pillar of the sustainable approach to infrastructure. 

Mr. GILCHREST. Thank you. 

Mr. BAIRD. [Presiding.] Mr. Chavez. 

Mr. CHAVEZ. Congresswoman, Albuquerque last month won the 

world leadership award in London for our utility project called San 

Juan-Chama. It is a project for bringing water out of the Rio 

Grande and treating it for drinking purposes. 

Prior to that, we were using aquifer for our entire water source; 

and it was engineered in an entirely different type of way, with fish 

passageways, with ability to change the flow, so that we didn’t dramatically impact the natural ecosystem because we found that that 

had costs—unintended often—down the road that we couldn’t pay 

for, problematic in how do you budget for those things and how do 

you really cost something out 40, 50 years down the road. If you 

build in a certain way, it has an unintended impact on the natural 

ecosystem you have to pay for later; and I don’t have an answer 

for that one. But, clearly, smart engineers today are doing a better 

job. 

Ms. GILINSKY. Congressman, if I may, our Chesapeake Bay program, the Federal-State local partnership that Virginia and Maryland are in, along with Pennsylvania, is a perfect example of what 

you were speaking about and our tributary strategy, which basically we are holding the line on the nutrients and the chemicals 

that are coming into the tributaries and we are using innovative 

solutions such as nutrient trading between discharges to address 

that, but we are allowing growth within those caps. To me, that is 

a perfect example of what you are speaking of. 

Mr. GILCHREST. Thank you very much. 

Thank you, Madam Chairwoman. 

Ms. JOHNSON. [presiding.] Mr. Bishop. 

Mr. BISHOP. Thank you, Madam Chairwoman. Thank you for indulging my schedule. 

To the panel, thank you very much for coming this morning; and, 

Mr. Grumbles, it is nice to see you again. 

I wanted to follow up on some of the questions that Congressman 

Baird was asking. You several times this morning have used the 

term, a $6.8 billion commitment through 2011, correct? What is the 

starting point of the commitment? Is it 2008 through 2011; 2004 

through 2011? 

Mr. GRUMBLES. 2004—through the history of the Clean Water 

Act, the SRF, the Federal Government, EPA through congressional 

appropriations has provided $24 billion. But the plan, the administration to help transition towards this third wave of greater sustainability is to say, continue to provide Federal seed money for the 

Clean Water Act, the SRF between 2004 and ’11. 

Mr. BISHOP. That is the point I wanted to focus in on. Because 

I appreciate the issue of greater sustainability associated with the 

third wave, and I was interested to hear your four pillars. But it 

seems to me that there should be a fifth pillar, and that is a maintenance of Federal effort. 

28

In 2004, the Federal commitment to the SRF was $1.34 billion. 

The 2007 budget request from the administration was $680 million. 

So over a 3-year period a decline of a third. And so my question 

is, aren’t we raising the bar on all of the other areas associated 

with sustainability by diminishing the Federal commitment to 

maintaining the revolving funds? 

Mr. GRUMBLES. I think that there is a greater Federal commitment in other aspects of the equation. It is not just the Federal 

seed money. But I understand your point about maintenance of effort, and I would respectfully disagree when it comes to the level 

of funding for the Federal seed money into the SRF. 

The view, the vision that we still hold to that was in the original 

legislation authorizing the clean water SRF would be that there 

would be a phase-down of the Federal seed money over time and 

that would further the leveraging and the sustainability of the 

State funds. That is not———

Mr. BISHOP. But you do acknowledge that the need is growing? 

We have at least a $21 billion gap by your numbers if not a $120 

billion gap? 

Mr. GRUMBLES. In various respects, the need is growing. As we 

discover more about and keep more focus on nonpoint source pollution, the documented needs for nonpoint source pollution grows, 

but I also believe, Congressman, that the just as certain needs are 

growing, the overall solutions are growing, too, and they are—there 

are more innovative approaches that are really budding and that 

are being carried out in various cities and communities across the 

country. 

Mr. BISHOP. And I am not suggesting that we abandon any of 

those. I guess all I am saying is it seems to me that we are raising 

the bar or placing a greater burden on all of the other elements 

that contribute to the solution here when the Federal Government 

is sort of systematically diminishing its piece of the solution. 

Mr. GRUMBLES. Well, I would say we are focused on accelerating 

progress in other respects such as utility management, environmental management systems, reducing the footprint of utilities, 

looking at red tape, potential for problems in accelerating the assistance through the SRF———

Mr. BISHOP. Let me just ask one last question. I know we are 

about to get the administration’s budget request for Congress for 

fiscal ’08. Do you anticipate that the Federal Government’s participation in the revolving fund will continue on a downward trend as 

it has for the last several years, or will you be asking for the same 

amount that you requested in ’07, or will we see an increase? 

Mr. GRUMBLES. I anticipate being able to talk about the President’s budget when it comes out in February and really seriously 

working as best I can to answer your questions and in levels of detail. I know Long Island Sound and other areas that you yourself 

are so committed to. We look forward to engaging with you on the 

’08 budget. 

Mr. BISHOP. I will look forward to that opportunity. Thank you 

very much. 

Thank you, Madam Chairwoman. 

Ms. JOHNSON. Mrs. Drake. 

29

Mrs. DRAKE. Thank you, Madam Chairwoman; and I certainly 

would like to welcome all of you here. This is my first meeting on 

this committee so I am delighted to be a part of it. 

As you know, in the portion of Virginia that I represent, there 

are very tremendous needs, from the very old city of Norfolk to the 

very economically depressed cities on the Eastern Shore, very, very 

small communities. But I have listened a lot this morning to the 

President’s budget and what he is going to propose. Is there something different about this type of funding, that Congress doesn’t 

have the ability to change it if they chose to? 

We keep talking about the President’s budget, but my understanding was Congress has the ability to hold the purse strings; 

and if Congress made the choice to increase the funding, wouldn’t 

that be possible? 

Mr. GRUMBLES. The administration fully recognizes it is Congress that actually enacts the budget and when the budget is released in February, I know from an EPA perspective we really look 

forward to working with you and others in the committees and the 

Appropriations Committee. Part of the message that we are sending in the context of this hearing on needs for water infrastructure 

is the overall need not only to sustain the State Revolving Fund, 

because that is a model, and to have continued involvement at the 

Federal level and the State and local level, but also to be thinking 

about this third wave of greater sustainability, including private 

sector. We are very interested in continuing to review innovative 

financing proposals that may involve other committees and congressional———

Mrs. DRAKE. That is what I heard a lot from you, is that we 

undervalue water. We heard yesterday on the floor that bottled 

water—we pay $400 a barrel for what we use in bottled water. So 

I have heard you say that. 

I have heard you talk about permitting, and I think this committee is very interested in how do we address this problem? How 

do we increase funding to deal with this particular problem? 

So it is like in other committees I have served on. I think we all 

have the same end goal. It is just how do we get there. But nothing 

would prevent Congress, if they chose to, to increase the funding 

for the revolving funds. 

Mr. GRUMBLES. Right, and we are hoping that Congress will also 

increase opportunities for good Samaritans to clean up abandoned 

mine sites. We think that is a great role for Congress to add another tool to the toolbox, which will also help free up public moneys 

for other types of Clean Water Act needs. 

Mrs. DRAKE. I also join Congressman Boustany in being concerned about what are the requirements in here and how are we 

requiring people to spend money and are we doing things that we 

could do differently and spend the money more effectively? 

But I would also like to ask you, in doing these revolving funds 

grants and helping localities meet this need, is there any requirement in there for them to have a planning process for down the 

road? Because it seems to me 50 years from now the Members of 

Congress are going to have that same discussion as that infrastructure begins to deteriorate. 

30

Mr. GRUMBLES. That is an excellent question; and the answer is, 

yes, there are some planning requirements. One of the principles 

that we have when it comes to Congress reviewing the clean water 

SRF is to look at ways to incorporate asset management, up-front 

planning even more so than it currently is. But there are some 

States and communities that are doing a great job. But we think 

that is an area that is definitely worthy of congressional input. 

Mrs. DRAKE. I would just like to ask Dr. Galinsky quickly because you know the rural communities that I represent on the 

Eastern Shore. Is there something with the Commonwealth that 

helps them—because small communities don’t have the access to 

have the same staff that, say, Norfolk or Virginia Beach would 

have, is there help for them or are they on their own planning and 

what needs to be done? 

Ms. GILINSKY. Congresswoman Drake, we do have different rules 

for how we give out the loans to more rural communities. They get 

lower interest loans. They get more grant money than loan money 

from the Water Quality Improvement Fund in Virginia and that 

helps them hire the contractors. We don’t actually do the work for 

them at the State level, but they do get more help financially. They 

get a better loan. 

Mrs. DRAKE. Do they get help in expertise from a staff level as 

well? 

Ms. GILINSKY. Lower interest loans. They would hire the consultant. 

Mrs. DRAKE. Instead of having someone that would be available? 

Ms. GILINSKY. We don’t have the staff that would actually design 

it. 

Ms. JOHNSON. Thank you. 

Mr. Mitchell. 

Mr. MITCHELL. Thank you, Madam Chair. 

I would like to ask Mr. Grumble a couple questions. Essentially, 

with the allocation of the SRF funds, does EPA review these, the 

formula for this at all? 

Mr. GRUMBLES. Well, we implement the formula that Congress 

provided us on a clean water SRF funds, so we review it in the context of making sure we are following the statute in—the allotment 

formula in the statute. 

Mr. MITCHELL. You mentioned, Mr. Grumbles, earlier that it 

was—one of your concerns is to look at the needs; and I would say 

that, looking at this formula, the needs have not been taken into 

effect or into account. Do you think that the current distribution 

is equitable? 

Mr. GRUMBLES. Well, our basic approach is that, ultimately, it is 

really a congressional decision when it comes to the allotment formula that involves equities and policies. Certainly on needs we feel 

duty bound to report on what we find and what the States provide 

us in terms of their needs, and we do have information on growing 

needs in certain States or areas of the country. But, ultimately, I 

think historically the view of the agency, regardless of who the administration is, has been the allotment formula itself is typically a 

role that Congress focuses on. 

31

Mr. MITCHELL. I would like to just mention that I think that this 

formula which was based on 1970 population figures. Is that correct? 

Mr. GRUMBLES. Yes. 

Mr. MITCHELL. And Arizona, as an example, has doubled in size, 

in population. I notice by some of your own figures that we are 

ranked 10th in needs, we are ranked 20th in population, and 38th 

in funds received and, in fact, we are at 53rd in per capita. And 

I would suggest that Arizona now is the fastest-growing State. I 

would hope that there might be some input from EPA to re-evaluate this and make some recommendation if you are concerned 

about needs, because I think this formula is really out of whack. 

Mr. GRUMBLES. Congressman, we and our staff would be very 

happy to work with you, particularly looking at the Safe Drinking 

Water Act amendments of 1996 that Congress enacted that specifically tie revisions of the allotment formula to EPA needs surveys 

as they come up, to tie that to the revisions to the allotment formula based on the needs survey. 

Mr. MITCHELL. Thank you. 

Thank you, Madam Chair. 

Ms. JOHNSON. Thank you. 

Mr. Hall. 

Mr. HALL. That you, Madam Chairwoman; and thank you all. 

You are illustrious witnesses. 

According to the ASCE 2005 infrastructure report card, New York has over $20 billion in wastewater needs. My district in New 

York’s Hudson Valley is one of many in the country, particularly 

in the Northeast, where a growing population and higher usage is 

threatening to overwhelm an aging clean water infrastructure. 

The infrastructure in place is becoming overwhelmed. Old septic 

systems are being overrun. In many instances, there are new needs 

for infrastructure where none exists at all. 

In a world of competing needs and limited dollars, what is the 

decision-making process in place to try and assure that growing 

non urban areas will be able to get adequate assistance; and, in 

general, what priorities are considered in the distribution of 

CWSRF funds? 

Mr. Grumbles, I guess that would be to you first. 

Mr. GRUMBLES. Well, I would say two things; and the second one 

is going to be to commit to have—for me and staff to get back to 

you for a longer discussion about the specific criteria that are used 

in the congressionally directed allotment formula. 

In terms of the needs survey, as we are working on the next 

needs survey, we can also describe to you in more specific terms 

some of the criteria we look at. But we definitely recognize, Congressman, that the country changes. It is changing, and population 

shifts mean different needs, water quality needs in other areas of 

the country and that growth in some areas, whether it is suburbs 

or rural areas that are growing, will have different infrastructure 

and water quality needs than they did in the ’70’s. 

One of the things that we are very interested in is advancing a 

comprehensive strategy from the grass-roots level but with EPA assistance on decentralized systems. Septic systems provide a significant role for communities across the country and, obviously, in 

32

rural areas but also in suburban and some urban areas; and we 

think it is important to make better, more effective use of funds 

and technologies to prevent malfunctioning septic systems and provide information. Because it can be a public health issue if septic 

systems are not properly operated. 

Mr. HALL. Thank you. 

Director Gilinsky, do you have anything to add from your experience? 

Ms. GILINSKY. Yes, only that I am sure, as in your State of New 

York, we have at the State level—once we have funds available, we 

prioritize based on what communities need the money, where they 

have other sources of funds, how quickly they can get ready, and 

we try to stage different projects so that you can spread the money 

out as much as possible. Because, obviously, the urban projects 

take a lot more money than some of the more rural projects. But 

that doesn’t mean they are more important. So we try and spread 

the dollars, and I am sure your State does that as well. 

Mr. HALL. Yes. Thank you very much. 

One more question which concerns the whole watershed approach. My district is also home to the Indian Point Nuclear Plant, 

which is currently leaking strontium and tritium into the groundwater and into the Hudson River, which is the source of drinking 

water for Peekskill, Poughkeepsie and many smaller communities 

on the River, whose processing plants I don’t believe are cable of 

separating radionuclides from the River water. 

Understandably, water concerns are rising partly because of 

groundwater contamination, also dumping of trichloroethylene from 

manufacturing plants into the ground, which has contaminated 

wells in Hopewell Junction in Dutchess County. So part of this, I 

guess, would be asking for other branches of EPA to do their job 

better so that we don’t look—we are not faced with a drinking 

water consumption problem that is either well related or municipal 

system related because they are taking drinking water out of contaminated water out of the River. 

But I was wondering if you had a comment on what EPA’s suggestions would be for these kinds of problems and do you have any 

new—since you mentioned technological assistance, do you have 

any ideas as to how to remove strontium–90 from river water so 

we can drink it? 

Mr. GRUMBLES. Two things, Congressman. One is source water 

protection and then the other one is that—your technology question 

or point about that. 

On source water protection, it is a term which is really in the 

Safe Drinking Water Act that EPA administers with our partners 

in the States. Focus is recognizing we all live downstream, so there 

ought to be efforts to prevent pollution upstream that get into your 

drinking water supplies. And oftentimes the tools to protect that 

source water is not under the Safe Water Drinking Act, it is under 

the Clean Water Act, or it could be under Superfund or RCRA. I 

think the point that you are getting at—or other statutes, depending on the types of activities involved. So that is what the watershed approach is encouraging. 

From an EPA perspective, I know there are various offices beyond my office involved in some of the environmental challenges in 

33

your district; and I will certainly share that information with the 

Superfund office and other offices, enforcement office, so we can 

use tools that are available and work with the State and with the 

community. 

On the technology front, technology is definitely part of the solution to meeting infrastructure needs and watershed protection 

needs across the country. 

EPA, the President’s budget request for ’07 included significant 

initiative for funding for research and development for innovative 

technologies, primarily for underground wastewater systems and 

drinking water systems, too, but dealing with the pipes and distribution systems to try to repair and upgrade those in the most 

cost-effective way possible. 

But the point is, I don’t have an answer—specifically one to your 

technology questions about removing that type of contaminant. We 

think technology is an important part of it, and I will share with 

our research office and also Superfund office your questions, and 

we commit to get back to you. 

Mr. HALL. Thank you very much; and thank you, Madam Chairwoman. 

Mr. BAIRD. [Presiding.] Mr. Arcuri will be next. 

Mr. ARCURI. I thank the Chair. I realize no one wants to hear 

from the last person asking questions after a 2-hour plus hearing, 

so I will be very brief, but I would like to thank the panel. 

Mayor, just a couple of very quick questions for you. I believe you 

indicated earlier that private activity bonds are the least used—utilized vehicle for financing these type of projects. Is that a correct 

characterization of your testimony? 

Mr. CHAVEZ. That is correct, Congressman. 

Mr. ARCURI. Do you know the reason why they are used the 

least? 

Mr. CHAVEZ. My sense is that it is because of the volume caps 

on those, and if those were—had more flexibility, were removed, 

they would be more widely used. 

Mr. ARCURI. I realize it is not the jurisdiction of this committee, 

but, if they were removed, would that be a vehicle that would assist municipalities in funding these type of projects? 

Mr. CHAVEZ. Congressman, it would be one more tool that we 

would have at our disposable, absolutely, yes. 

Mr. ARCURI. Thank you. 

Mr. BAIRD. Mr. Kagen. 

Mr. KAGEN. Thank you all for being here, and I apologize for 

really being the last person to ask a question this morning. 

Mr. Chavez, what are the three things that we can do to help 

you? And the next question, what are the three things that your 

counterpart to your right at the EPA could be doing, three things 

to help you do your job better? 

Mr. CHAVEZ. Congressman, thank you. 

The priorities for the mayors are threefold. One, expanded grants 

to municipalities, either directly or through the States, preferably 

directly, for these water and wastewater projects, particularly 

where there is affordability issues or when you have a serious environmental issue with which we are confronted; expanding the current 20-year loan category to a 30-year no interest loan category or 

34

30-year low interest loan payback period through the SRF; and 

then modifying the current tax law to remove the State volume 

caps on the private activity bonds. 

Underlying all this is just more flexibility, more tools and then 

we can see which tool best meets the needs of an individual city. 

And in terms of Mr. Grumbles, just as long as he keeps his wonderful, marvelous disposition and then make him give us more 

money. 

Ms. JOHNSON. [Presiding.] Mr. Boustany. 

Mr. BOUSTANY. Thank you, Madam Chair. 

Dr. Gilinsky, do smaller communities have adequate staff and expertise to properly evaluate and manage their assets, water assets? 

Ms. GILINSKY. Yes. Some—I am sure it varies. I don’t have direct 

information, Mr. Congressman, but that is part of the grant, is that 

they hire consultants who do work with them to get that expertise. 

We try to hook them up with consultants, and we probably go out 

and spend a little more time with those smaller communities to let 

them know what is out there. 

Mr. BOUSTANY. Thank you. 

One final question for the panel. What is the effect of applying 

Davis-Bacon prevailing wage laws to the State Revolving Fund and 

does this mean that fewer projects could be constructed? Do we 

have any data on this? 

Mr. GRUMBLES. Congressman, I appreciate the question, and I 

feel that the best answer would benefit from some more time and 

comparing the notes that we have and to get back to you on that, 

the impacts of that. 

Mr. BOUSTANY. I would appreciate some information on that. 

Thank you. That is all I have. 

Ms. JOHNSON. Thank you very much. 

Mr. Baird. 

Mr. BAIRD. Mr. Grumbles, earlier you spoke about administration 

commitment of $6.8 billion over 6 years, do you remember? 

Mr. GRUMBLES. 2004 through 2011. 

Mr. BAIRD. OK, so 7 years. To the best of your knowledge, how 

much do we spend in Iraq in 1 week? 

Mr. GRUMBLES. I don’t know, Congressman. 

Mr. BAIRD. It is roughly $2 billion, and I just point that out because it seems to me that our commitment nationwide from this 

administration to SRF is roughly the equivalent of about 3 and a 

half weeks in Iraq compared to 7 years in the United States of 

America to provide clean water for our own citizens, and it is worth 

keeping that in context. 

I yield back. 

Ms. JOHNSON. Thanks to all of the panel members. I will probably submit some questions later, but we have kept the second 

panel waiting a long time. So thank you very much for coming. 

The second panel of witnesses consists of Mr. Kurt Soderberg, 

the Executive Director of the Western Lake Superior Sanitary District, Duluth, Minnesota, testifying on behalf of the National Association of Clean Water Agencies; Mr. J. Kevin Ward, Executive Administrator of the Texas Water Development Board, and testifying 

on behalf of the Council of Infrastructure Finance Authorities; Ms. 

Nancy Stoner, Director of the Natural Resources Clean Water 

35

Project; Mr. Jim Stutler, President of the Tierdael Construction 

Company, located in Denver, Colorado, and current President of 

the National Utility Contractors Association; and Ms. Debra Coy, 

Director and Research Analyst of water-related issues for Janney 

Montgomery Scott. 

As I noted to the first panel, your full statements will be placed 

in the record, and we ask that you try to limit your testimony to 

5 minutes as a courtesy to other witnesses. 

STATEMENTS OF KURT SODERBERG, EXECUTIVE DIRECTOR, 

WESTERN LAKE SUPERIOR SANITARY DISTRICT, DULUTH, 

MINNESOTA, ON BEHALF OF NATIONAL ASSOCIATION OF 

CLEAN WATER AGENCIES; J. KEVIN WARD, EXECUTIVE ADMINISTRATOR, TEXAS WATER DEVELOPMENT BOARD, DALLAS, TEXAS, ON BEHALF OF COUNCIL OF INFRASTRUCTURE 

FINANCING AUTHORITIES; NANCY STONER, DIRECTOR, 

CLEAN WATER PROJECT, WASHINGTON, D.C., ON BEHALF OF 

NATURAL RESOURCES DEFENSE COUNCIL; JIM STUTLER, 

PRESIDENT, TIERDAEL CONSTRUCTION COMPANY, DENVER, 

COLORADO, ON BEHALF OF NATIONAL UTILITY CONTRACTORS ASSOCIATION; AND DEBRA G. COY, DIRECTOR/RESEARCH ANALYST - WATER, JANNEY MONTGOMERY SCOTT, 

L.L.C, WASHINGTON, DC. 

Ms. JOHNSON. Again, we will proceed in the order in which the 

witnesses are listed on the call, so, Mr. Soderberg, please proceed. 

OK, Mr. Ward is next. 

Mr. WARD. As I understand, Mr. Soderberg is having a discussion with someone right now, so I will, if you allow me. 

Madam Chair, Members of the Committee, I greatly appreciate 

being here. I am the Executive Administrator of the Texas Water 

Development Board, but I am also here today because I am testifying on behalf of the Council of Infrastructure Financing Agencies. 

That is an organization that represents virtually every State and 

the territories and both the State revolving fund that is a clean 

water revolving fund as well as the drinking water State revolving 

fund—should I continue or should I yield to the member? 

Ms. JOHNSON. Go ahead and continue. 

Mr. WARD. Thank you. 

I want to say what a great honor it is to be the first witness from 

Texas to testify before your committee, Madam Chair. There are an 

awful lot of needs in the State of Texas, and I believe that we represent a broad base of needs that would reflect most of the States 

in the United States who don’t really have the CSO issues that you 

might see and some that you brought up as one of your priorities. 

But, nonetheless, we can relate to that because of issues we have 

had in some of our major cities. 

First off, I would like to express on behalf of CIFA our gratitude 

and, of course, how pleased we are on the fact that this committee 

is taking up as a priority reauthorization of clean water State Revolving Funds. As I have heard already from many of the members 

here, they know that you have been working on this issue for quite 

some time, and it would be very nice for it to bear fruit this time. 

36

Certainly nonsource point problems throughout the United 

States as well as in Texas are ones that have not been addressed 

yet with the program. 

But with any program, you have to look at what the partnership 

has been and what the success has been, and over time, I think 

that this program demonstrates that partnership is really the key. 

You have to have the ability to afford flexibility to the States. The 

beauty of the Clean Water Revolving Fund has been that it was 

delegated from the old EPA grants program fully to the States; and 

the States became owners, if you will, of those programs and began 

bringing forward those priorities through intended-use plans and a 

formal structure that you glean data from and you are able to get 

information from. Because of that, you can see that there has been 

a lot of momentum in this program. It has waned in recent years. 

We have a gap survey that we prepared. I heard some comments 

earlier. I think Congressman Baird asked the question, ′′What is 

the ’gap’?′′ we have not done a formal estimate of that, but I would 

say that we estimate about 2,000 projects are seeking loans right 

now for over $9 billion, and historically, with the higher level of 

funding the States have been leveraging, the Federal grants 

produce about $3 billion to $5 billion a year in loans. So, if you met 

the low end of that, the $3 billion from the $9 billion, then you 

have got about a $6 billion gap of need that has been expressed for 

this fund. 

Now, regardless of whether you think in the future there are alternative sources for some of that, if through sustainability you are 

able to get the entities to take responsibility and fund it themselves on full-cost pricing and all of those issues, it is still the stated needs of your constituents that those are what they say they 

need. 

So we have watched the same thing you have. Over the past 4 

years, recent appropriations have been dwindling; it has been cut 

in half. We see this as a trend that really is counter to what the 

trends are from our customer base right now. We are seeing a lot 

more disadvantaged community need. We are seeing an awful lot 

more need for innovative financing. Certainly, we look at this issue 

of trying to bring more capital into the program as vital. 

One of the issues that there has been for Texas, as well as for 

our membership, has been for expanded flexibility and the cap allocation under private activity bonds. Right now, you know, it is debatable as to whether that will cause privatization to an extent 

where actually the services are not being provided by a public entity anymore. I think the real key is, it provides a mechanism, a conduit, to bring private capital into the system in a way that we have 

not been able to in the past because we compete against other interests in the private activity cap. 

In Texas, we did take an innovative approach. The governor several years ago asked the legislature to pass a bill under ′′Get 

Passed′′ to give an allocation to the Water Development Board each 

year for small communities, for rural communities, if you will. It 

also gave us the ability to ask for large water projects up to $100 

million of the cap. So we have seen that already acted on by our 

legislature, and certainly, it is an issue that I think that many 

States have brought to you. 

37

Arbitrage rebate relief, that is another issue that we see as something that could also bring more capital into the program. It is just 

an easy mechanism. This committee has talked about it before. Obviously, your jurisdictional issues need to be worked out, but certainly, we are here to provide whatever information you need on 

that. 

In 2005, we see about 900 projects that were finished. That is 21 

billion gallons of water collected and treated every day, 193,000 

construction and 77,000 permanent jobs created, and over $1.1 billion in savings over the next 20 years for those entities. Those incentives are why those people came to the program. 

I think it also accentuates the fact that it is an investment program. It is not just a drain on Federal capital. This is an investment program that creates jobs. It provides a capital base out there 

in both the State infrastructure and human infrastructure that was 

mentioned earlier as well as the capital infrastructure in a permanent way. It revolves. It will always revolve. Any investment that 

goes in here is required by law to revolve. It has administrative 

oversight on a continuing basis. 

Examples in the State of Texas vary from an infiltration and inflow reduction and correction problem in the city of Houston that 

could affect up to 5,300 miles of sewer pipes, that are as old as 50 

years, to innovative and very environmentally sensitive projects 

like in High Island Independent School District in Galveston County, where it was cited by EPA for the environmental and economic 

benefits that it produced. 

Finally, additional water supplies have been created for the city 

of San Antonio. We have had 35,000 acre-feet of water replaced all 

because of a reuse project that used 64 miles of transmission line 

to reuse that wastewater in a beneficial way. 

We have a lot of recommendations that are specific that we could 

provide to the committee. Rather than go over any more of my testimony, I have highlighted, I think, the points that are pertinent 

for you, and I will be here at the end for questions. 

Ms. JOHNSON. Thank you very much. 

Mr. Soderberg. 

Mr. SODERBERG. Thank you, Madame Chairman, and members of 

the committee. I was unavoidably detained. I did get the opportunity to speak with Mr. Chair, so I took advantage of that. 

My name is Kurt Soderberg. I am the Executive Director for the 

Western Lake Superior Sanitary District in Duluth, Minnesota. I 

would represent the small sewer district. Although, I am here 

speaking on behalf of the National Association of Clean Water 

Agencies, NACWA. We represent some of the largest entities 

around the country, 300 or more agencies, the largest often in each 

State. We do reclaim more than 18 billions of gallons of wastewater 

every day, which is the majority of the wastewater reclaimed 

around the U.S. 

Much of what was in our testimony you have already heard from 

other speakers, and often, it was more eloquent than I, so I will 

try to give you more of the local perspective. 

We have seen tremendous progress in 35 years, but we have also 

seen the fact that this is not the time to pat ourselves on the back. 

There clearly are unmet needs. You heard the statistics already in 

38

some of the members’ comments at the beginning. Our point, 

though, that we made in the testimony is that the Federal Government’s abandonment of the States and municipalities as these fullfledged partners in funding clean water will have unacceptable consequences, and we are urging you to move forward again with a 

partnership. 

There are some specific areas that NACWA has comments. We 

are asking you to fully fund the Clean Water Act, to reauthorize 

the State Revolving Loan Fund, to provide loans, loan subsidies 

and grants. The needs out there, you have already heard, clearly 

outstrip the supply; $20 billion to $30 billion is the number that 

has been used in other contexts, but there is also a need for a dedicated revenue source. 

We ask you to work with us in finding a dedicated revenue 

source for the State Revolving Loan Fund, provide funding for 

sewer overflow control projects. H.R. 624, already enacted, provided 

$250 million per year over a 5-year period. This would help us, our 

district, as well as many others around the country in trying to 

eliminate the problem of combined and sanitary sewer overflows. 

Work with us on a National Institute for Utility Management. Help 

us to help utility managers work more effectively and efficiently. 

We are also looking at the Federal Government for greater investment in research, wastewater treatment technologies, greater 

research on emerging chemicals of concern, and technologies to 

treat these chemicals and green technologies for our industries, and 

also work at comprehensive management—not storm water, not 

clean drinking water, not wastewater; look at water as being water, 

and try to manage away from some of the silos. 

In the remaining time, I would just like to bring it down to our 

level. We did a master planning process. Our facilities are worth 

about $550 million. If we were to replace them, we have got a capital program of about $100 million over the next 10 years. The 

State of Minnesota takes maximum advantage of the State Revolving Loan Fund. They fund about $100 million in loans annually. 

Yet, there is another $200 million that goes unmet every year, and 

Minnesota is one of those States that does take advantage of those. 

So we are looking at the fact that there is not enough State Revolving Loan Fund money out there. 

We are also seeing at the local level this increased cost of compliance and escalating operating and capital costs. This is a perfect 

storm right now in looking at greater costs and how the global 

economy is also impacting us. We will be talking about this at our 

national conference coming up here just later in the month. 

We really need more money on the table. That is the bottom line. 

With the State Revolving Loan Fund, we look at the possibility, 

and we have asked about the possibility of a reemergence of some 

additional funding that would be long-term funding. 

When Mr. Grumbles talked about the four pillars, he talked 

about the fact that part of it is that municipalities are not charging 

sufficient rates. That is not what our data shows. Our data would 

show that average service charges have increased over the past 

years that double the rate of inflation. In Region 5, where we come 

from, rates increased over 13 percent in 2005 alone. In our case, 

our rates went up by 4.9 percent this 2006 to 2007. Our industrial 

39

customers are saying that they cannot stand those sorts of increases. They are dealing in a global economy with the pulp and 

paper industry, and they are not believing the full-cost pricing. 

So, Madame Chair, we thank you for this opportunity. I will be 

available to answer questions, and we really are appreciative that 

you are drawing attention to this very important issue of clean 

water funding in this new Congress. 

Thank you very much. 

Ms. JOHNSON. Thank you very much. 

Ms. Nancy Stoner. 

Ms. STONER. Good morning, Madame Chair, and members of the 

subcommittee. I am Nancy Stoner, Director of the Clean Water 

Project of the National Resources Defense Council. 

Thank you for holding this hearing today on the reauthorization 

of the Clean Water State Revolving Fund. This is a tremendous opportunity for the Congress to step up our investment and to spend 

smarter so that the U.S. continues to make progress in ensuring 

that there is clean, safe, usable water for the next generation. 

The Federal Government’s investment in wastewater treatment 

over the past 35 years has brought tremendous progress in cleaning up our waterways. Yet, the issue of whether there is a Federal 

role in water infrastructure investment is a recurring question. To 

my mind, that issue was resolved appropriately by Congress in 

1972. 

Water pollution knows no State bounds. As Mr. Grumbles said 

earlier today, we all live downstream. Failure to protect water resources in one State pollutes downstream surface and groundwater 

resources. That is why Congress passed the Clean Water Act in the 

first place and why the Federal role is so important today. 

But the Clean Water SRF is also a good investment. It provides 

water quality and community benefits such as reduced discharges 

of raw sewage into rivers and lakes, less waterborne illness, enhanced wildlife habitat, biodiversity, and safe drinking water 

sources. It also protects businesses that are dependent upon clean 

water—tourism, fishing, beverages, and even development. 

It creates hundreds of thousands of jobs for skilled workers every 

year, and because it is matched at the State and local levels, it 

leverages non-Federal investment at a rate of 2.23 times the Federal dollar. I call your attention to the photo there, which is a picture of a green roof in Milwaukee, which is part of its system for 

controlling raw sewage discharges. 

But it is clear that our level of investment is inadequate. There 

is an upward trend for beach closings, red tides, dead zones, waterborne illness, water shortages, coral reef damage, nutrient pollution, and as the chart shows, sewage pollution. At our current rate 

of investment, sewage pollution is expected to be as high in 2025 

as it was in 1968, that is, before the passage of the Clean Water 

Act and when, as Mr. Chairman noted earlier, Lake Erie had been 

declared dead. 

Even while the problems are growing, Federal contributions to 

the SRF are shrinking, which is what the chart shows. The funding 

gap is large and increasing, and investment in research and development that could save us money in the long run has been cut in 

half. 

40

The picture is bleak. The sewer systems are getting older, more 

antiquated, more likely to fail, and they have more work to do due 

to increasing population, land development that occurs at a rate 

more than twice the rate of population growth, global warming, 

and an increasing population of Americans vulnerable to illness. 

The pie graphs there are showing the decaying of the pipes in the 

systems, indicating an increased likelihood that they will fail and 

break and cause sewer overflows. 

We recommend that you address the situation by substantially 

increasing funding over at least the next 10 years, identifying a 

dedicated source of funding and better targeting resources to 

achieve Clean Water Act goals. 

I will focus on the last of these three recommendations for the 

rest of my time. 

The photo here is actually from a restored wetland in Houston, 

Texas, profiled in a recent Sierra Club publication that just came 

out, Building Better II. It filters runoff from a 30-acre urban residential watershed and reduces the likelihood of flooding. 

To increase the efficiency of SRF funding, we need to fund existing needs, not sprawl; fund green infrastructure, which I will be 

talking more about; fund the highest priorities looking at water resources in an integrated way; provide more funding for R&D to 

identify better, cheaper approaches; and enhance public involvement and transparency to get better results. 

The photograph is a rain garden used to treat parking lot runoff 

at the Washington Naval Yard. It comes from a publication that 

NRDC did with a low-impact development center called Rooftops to 

Rivers. 

We need to fund existing needs, not sprawl. Development significantly increases water pollution, and sprawl development increases 

it the most. The more pavement the more pollution, that is extremely well-documented by now, yet, the SRF still funds new collection systems, new treatment plants at excess capacity, all of 

which just fuel development. According to EPA’s 2005 report, 20 

percent of the SRF was used to fund new sewers. Sprawl should 

pay for itself; it should not be subsidized by the American taxpayers. 

Instead, we urge you to increase funding for green infrastructure, 

an emerging technology that uses soil and vegetation to restore 

urban and suburban waterways. Green infrastructure approaches 

include both engineered approaches that mimic natural functions, 

such as rain roofs and rain gardens, and the protection of natural 

areas—wetlands, stream buffers and forests—to provide water capture and purification functions naturally. 

The photo is a green infrastructure approach used by Seattle to 

treat runoff. 

Green infrastructure has so many benefits that it is hard to fit 

them on one side, and I do not have time to tell you about them 

all right now, but they include improved water quality, hydrology, 

wetland/wildlife habitat, beautifying an area, increasing property 

values, and often saving money. 

The photograph is from Portland. 

In addition, we would like to see other program improvements in 

place to spend smarter—integrated water resource management 

41

planning, research and development enhance public involvement 

and a commitment by Congress to fund those projects that provide 

the greatest value first or address immediate public health threats. 

This photo is of a restored marsh in Toronto that used to be a 

landfill. 

The last slide is on additional resources available———

Ms. JOHNSON. Which you will submit. 

Ms. STONER. —which I will submit, and I appreciate the opportunity to speak with you this morning. 

Ms. JOHNSON. Thank you very much. 

The Chair recognizes Mr. Baird. 

Mr. BAIRD. Madame Chair, I thank you. 

I want to thank all of the panelists for their observations. We 

will have questions in a moment, but I want to take this moment 

to extend a special welcome to a long-time friend. Jim Stutler is 

here. He is the President of Tierdael Construction in Denver, Colorado, also of the National Utility Contractors Association. 

I am especially glad to see Jim. We were in a Scout troop together back in La Fruto, Colorado. Even though our fathers are not 

able to see us here today, I would like to think our Scout master, 

John Barkus, would have some pride that a couple of his young 

charges managed to make it fairly well in the world. 

Jim, thanks for your testimony, and thanks for being here. 

I also want to apologize to the witnesses. I have to do duty in 

the chair on the floor, so if I depart, it is not for lack of interest; 

it is for mixed responsibilities. 

Thank you, Jim, and I look forward to your comments as of all 

of the witnesses. 

Mr. STUTLER. Thank you, Congressman. 

Madame Chairman and honorable members of the committee, as 

Brian said, I am Jim Stutler, and I am the President of Tierdael 

Construction. We are a utility contracting company in Denver of 

about 108 employees. I am very grateful for the opportunity to participate in this hearing on behalf of the National Utility Contractors Association. 

You may not know that NUCA also serves as Chair of the Clean 

Water Council, which is a coalition of 26 national organizations 

committed to ensuring sound environmental infrastructure; and for 

your reference, a list of the CWC members is attached to my written testimony. 

NUCA and the CWC have taken the lead for years in the legislative efforts to reauthorize the Clean Water State Revolving Loan 

Fund, or the SRF Program, that we have talked so much about 

here today. We are extremely pleased that this committee and the 

110th Congress will again attempt to pass SRF reauthorization legislation to begin to address these overwhelming wastewater infrastructure needs that we have been talking about here today, and 

we look forward to doing our best part in helping make that happen. 

Because utility contractors build and repair these systems, what 

is out of sight and out of mind to most people is clearly visible to 

us as NUCA members every day. I have referred to them and 

heard them referred to as the underground potholes that nobody 

else sees; and Congressman Duncan earlier referred to a story that 

42

I had told in the written testimony, and I would like to share that 

with you. And while my crews deal with dilapidated sewer and 

water systems routinely, I do want to recall this particular situation that was pretty intense that happened to us a few years ago 

in southwest Denver. 

We were under contract with a local district there to replace a 

24-inch-diameter interceptor sewer line. A 24-inch interceptor is 

not the biggest in the world, but it is a pretty good chunk of sewer 

coming at you, and during one of the earlier shifts in the project, 

we were upstream a couple of blocks, checking the alignment, and 

our superintendent popped a manhole lid, and he discovered a 

surging, live sewer flow coming up to the top of that manhole, and 

it was literally within inches of blowing that manhole lid off and 

coming out into the street, and you must remember that a live 

gravity sewer line does not have a shut-off valve. In acting quickly, 

our crews were able to immediately set up some temporary pumping to kind of take the head off of the line, and then we set about 

excavating there where we thought the blockage was. 

To make a long story short, we discovered that the entire crown, 

or the top part, of this 24-inch sewer line was gone; it was completely deteriorated, and what was left of the pipe and the earth 

and backfill that was overburdened had collapsed into the line very 

nearly blocking it. Had the collapse occurred at any other time 

than in approximately the half-hour or so that we had prior to discovering it, the block flows of this 2.8 million gallon per day capacity line would have surcharged that manhole and sent 2,000 gallons of raw sewage per minute down the street, through a park, 

into a tributary, and eventually into the Platte River. Even an hour 

of inaction, if we had been off shift, would have put approximately 

120,000 gallons of untreated sewage into the streets and waterways. We considered ourselves and, indeed, the district considered 

themselves very fortunate. 

The need to increase Federal funding is clear. The numbers have 

been presented previously. It is not worth going back over that 

plowed ground, but we firmly believe that Federal investment 

needs to be stepped up. 

The American Society of Civil Engineers, an active member of 

the Clean Water Council, evaluates the Nation’s infrastructure and 

reports on the status of it every few years, as you well know. Only 

4 years after receiving a ′′D′′ in 2001, America’s wastewater infrastructure fell to a ′′D minus′′ in their 2005 report card for America’s 

infrastructure. 

Meanwhile, as previously testified to, these cuts to the SRF funding occur at a time when the Nation simply cannot afford it. The 

SRF Program plays a key role to enhance public health and safety, 

to protect the environment and to maintain a strong economic base. 

It creates scores of jobs, and do not forget these are quality, highpaying jobs right here in America, and these are not jobs that can 

be shipped overseas. 

Again, the time for SRF reauthorization is now. Many organizations are advocating the establishment of a clean water trust fund 

or some other vehicle to provide a dedicated source of revenue for 

improvements to America’s water and wastewater infrastructure. 

NUCA supports the concept of a dedicated funding source even 

43

though we recognize it will take significant time to pass legislation 

such as this and allow that to happen. In the meantime, SRF legislation will take immediate steps to begin to address this problem 

by authorizing higher funding levels for this existing and successful 

program, which has done so much for our environment already. 

Although there are several policy issues that will be debated 

throughout this legislative process, NUCA encourages the committee to focus on the big picture. The impasse over Davis-Bacon 

provisions has stymied this legislation for too long, and it is our 

understanding that Davis-Bacon provisions will be included in the 

coming legislation. And we want to be clear that NUCA represents 

both union and nonunion contractors, and Davis-Bacon is not an 

issue of contention for our members. We will fully support the bill 

as introduced until it is passed. 

I do want to briefly mention in closing that the CWC’s and Americans for Pure Water Media Awareness Campaign, which will generate local media attention, is a campaign that is targeted in areas 

to raise awareness about this issue and to motivate everyday people, if you will, to engage in the debate; and I would encourage you 

to visit the APW Resource Center at Americansforpurewater.com. 

Thank you very much for the opportunity to speak with you this 

morning, and I am happy to answer any questions you may have. 

Ms. JOHNSON. Thank you very much. 

Ms. Debra Coy. 

Ms. COY. Yes. Thank you, Madame Chair, and members of the 

committee. I appreciate the opportunity to be here today, and I represent a little different point of view coming from a brokerage firm. 

My name is Debra Coy. I work with Janney Montgomery Scott, 

and have worked with a number of brokerage firms based in Washington for my entire career, and have observed the water industry 

for investors. So, looking from a capital market’s perspective, I am 

really here today to point out an irony, an irony because I sit in 

Washington and listen to the debate on funding for water and 

wastewater infrastructure, and obviously, we are hearing again 

today about the inadequate funding for infrastructure, and yet—

and yet—when I look at the vast amounts of money that are being 

made available in the capital markets for infrastructure, it creates, 

I think, a huge irony that is interesting for us in Washington to 

begin to address in terms of capital markets’ interest. 

′′infrastructure′′ has become a buzz word of sorts on Wall Street, 

particularly in the last couple of years, and investors all over the 

world have realized that infrastructure is a critical part of economic development, and they are putting vast, vast amounts of 

money into infrastructure funds to be able to participate in the 

growth and spending that is likely to be needed. A recent survey 

that came out from Standard & Poor’s said that approximately 

$100 billion was raised in 2006 alone for infrastructure funds. 

These are global funds that are looking to put money to work in 

infrastructure investment, and Goldman Sachs, for instance, obviously a leading U.S. investment bank, closed a fund at the end of 

December that has $6.5 billion that is going to be invested in infrastructure. The fund ended up being a little more than twice what 

they had planned because of huge investor demand, and I think 

44

that creates an interesting question in terms of how we can put 

these two pieces together. 

This huge amount of money is looking for places to go to work. 

It has caused water stocks, which I follow, water investment equities, to go up dramatically as investors are looking for ways to play 

in the water infrastructure arena. They are investing in water 

stocks. They are investing in companies that make pipes and 

pumps, but they are not able to put money directly into municipal 

infrastructure. Why is that? 

I think that what we need to look at are the structural barriers 

to investing in water infrastructure in this country. Obviously, as 

most of us know, most water and wastewater infrastructure in the 

U.S. is, of course, municipally owned and operated and, as CIFA 

and others have referred to, is funded by municipal bond financing, 

which, of course, is usually sold to private investors as well. 

On the other hand, all of the new infrastructure funds are being 

put directly into assets that are owned; typically, whether it is airports or ports or utilities—electric or gas or water utilities—but 

typically, they are not able to put the money directly to work in 

municipal water and wastewater infrastructure because of the 

funding mechanisms that do not allow private capital to be put to 

work. 

So certainly what I would encourage the committee to do is look 

at ways that, number one, the awareness of this issue can continue 

to be raised. We have talked about how this is a pending crisis, but 

I believe that still, even at this point, the American public is not 

aware of the number of illnesses that are caused by waterborne 

disease, is not aware of the billions of gallons of sewage that are 

spilled into our waterways, is not really aware of the leakage of 

water from faulty pipes; and raising awareness, I think, is something that Congress can help to do and, secondly, to begin to provide some umbrella where both municipal and private operators 

and utilities could work together to look at how water infrastructure is funded, how rates are set, some more uniform approach to 

rate structures so people understand the cost of water infrastructure and, finally, to support innovative financing mechanisms. 

There is a tremendous amount of expertise in the project finance 

and energy finance arenas that know how to put structures in 

place that can bring in private capital, not private ownership of the 

asset, but private capital in a project finance vehicle and put it together with leverage that could then allow some of these huge 

amounts of money that are out there, looking for a place to go to 

work, to go into municipalities where it is so greatly needed. 

So I would like to thank you for the opportunity to speak to you 

today, and I will be happy to take questions. 

Thanks. 

Ms. JOHNSON. Thank you very much. 

We will start the first round of questioning. 

Mr. Ward, you heard the testimony of Ms. Coy, and we are very 

interested in the rising availability of private capital to meet some 

of today’s wastewater infrastructure needs, and her testimony 

seems to suggest that the private financial market is looking to expand its opportunities for investment and to obtain a good return 

for private investors. 

45

In your experience, is this the solution to address to a growing 

infrastructure gap? Are we looking for ways to find additional capital? 

Mr. WARD. Yes, Madame Chair, it is a way, but it is just, as has 

been stated by other panel members, one way amongst many that 

need to be brought to bear on this issue. 

We do believe that if these roadblocks are taken down and we 

are allowed now then to access that capital that you will see use 

of that capital, and it will begin to develop in innovative ways. It 

is not about an ownership issue when you are talking about providing a conduit to bring that capital into a water system. It is 

about a choice of what kind of shared risk the investment community is willing to take on with the municipality or even with a private utility for that matter. Lowering the cost of that capital is instrumental, so that is really what the issue is. 

When you talk about private activity bonds and what we see as 

a needed change there, it is not to state that you do not want to 

have these be subject to those constraints that are applied to all 

private activity bonds. It is simply a matter of expanding the ability to use private activity bonds in that arena. So you are not talking about making suddenly these private activities and for-profit 

entities be able to access tax exempt bonds. You are talking about 

the ability to have them access a capital mechanism subject to alternative minimum tax so that there is a freer flow of capital into 

these public entities. 

And it is a growing need. The population is expanding. 

We have talked about—I keep thinking of the Nessie Curve that 

was presented here several years ago where you talk about the 

growing underneath-the-ground unknown amount of infrastructure 

that needs to be replaced. 

Shared risk is really the way things are going right now. Capital 

markets are all ready. I know they keep telling us. I think the municipalities are more ready now than they have been in the past. 

We have used this mechanism in the State of Texas more than 

once now. We actually have set up a program that mirrors the 

rural development program with 40-year loan terms, with near taxexempt rates that we go to to private activity bonds every year to 

fund to the tune of about $25 million a year for projects in Texas, 

and it has supplemented the cuts that have come down the pike 

for those programs. 

That is just a step. We are seeing it for investment in desalinization projects. I do not see why it would not work with wastewater 

projects. 

Ms. JOHNSON. Thank you very much. 

Does anyone else care to comment on that source of funding? 

Thank you very much. 

Mr. Boustany first. 

Mr. BOUSTANY. Thank you very much. 

Mr. Soderberg, in your testimony, you proposed a short-term 

study to be conducted to determine appropriate combinations of 

revenue sources to pay for clean water infrastructure. 

What organization or company should do this study? 

Mr. SODERBERG. Madame Chair and Mr. Boustany, when we discussed it earlier, it was a wide range of organizations that could 

46

bring their expertise. There would obviously need to be Federal 

Government representatives, their representatives of the various 

agencies that can look at this. So we are looking at a wide-ranging 

effort with those that have expertise on it. 

Mr. BOUSTANY. Certainly, if you have any specific recommendations, the committee would be interested in hearing those. 

Mr. SODERBERG. Yes, we do, in fact, and we can provide those to 

you. 

Mr. BOUSTANY. Thank you. 

Ms. Coy, a lot of talk has occurred here on the fringes, of innovative financing. How do municipalities access these finance vehicles, 

and what barriers currently exist for municipalities to access various innovative financing mechanisms? 

Ms. COY. Well, I think it varies, certainly, from State to State 

and project to project, so it is hard to say one specific or even a 

handful of barriers, but typically, the structures are focused on taxexempt financing, and then there are limitations on private sector 

participation where tax-exempt financing is involved. So beginning 

to break down those barriers so that you can put combinations of 

financing together I think would be helpful. 

Obviously, raising the cap on private activity bonds gets you over 

that to a certain extent, but I also think that given how water and 

wastewater infrastructure is structured—you know, it is an entire 

system, and what the energy arena has done has begun to break 

off generation assets versus distribution assets, similar to looking 

at desalinization plans versus transmission systems. 

Much of what we are talking about here today is the fact that 

our sewer pipes are deteriorating, and typically, you cannot bring 

project finance approaches to an ongoing, you know, what is considered to be maintenance cap X. So, if you could begin to look at 

breaking that out from the system and putting a project finance vehicle together for a maintenance project like that, then I think you 

could start to access these alternative sources of debt and equity 

to put it to work. 

Mr. BOUSTANY. Thank you. 

I would suggest that perhaps we might make that the subject of 

a future hearing to look at some of these areas, because, to my 

knowledge, we have not really done that, and it might be very beneficial. 

Ms. COY. And there is a lot of expertise out there. 

Mr. BOUSTANY. Ms. Stoner, I appreciate the information you gave 

on green infrastructure. My younger brother actually does research 

in that area, but what strikes me is that it is useful in looking at 

new development. 

How do you apply that to aging facilities—inner city and so 

forth—and is that cost effective? 

Ms. STONER. Yes. I appreciate that question. That is a great 

question. 

A lot of the photographs that I showed actually involve retrofits—parking lot retrofits, putting on green roofs and so forth—and 

those are great techniques to use, particularly in some of the older 

cities where we have combined storm water and sewage systems; 

and what that does is, instead of having to store the sewage and 

storm water after heavy rain events to prevent sewer overflows, 

47

the storm water never goes into the system in the first place. So 

the costs get to be very, very high as the increasing amounts of 

that storm water have to be stored. The pipe diameter has to be 

larger, and it is often very cost effective, instead, to use a variety 

of approaches that can be integrated into the urban landscape to 

offload the storm water in the first place. 

Mr. BOUSTANY. Thank you. I see my time has expired. 

Ms. JOHNSON. Thank you very much. 

I want to say that we have had lots of discussion on the various 

ways of financing water infrastructure. However lifting the cap on 

private acting bonds is not in our jurisdiction. It is the jurisdiction 

of the Ways and Means Committee. 

Mr. Oberstar. 

Mr. OBERSTAR. Thank you, Madame Chair. 

The hearing has covered a wide range of issues and elicited a 

wide variety of views on the subject matter before us. 

In response to Mr. Boustany’s question about future financing, 

we have to review these matters consistently and persistently, and 

we will do that even though, as Ms. Johnson said, ultimately tax 

initiatives are in the jurisdiction of the Ways and Means Committee. But we most certainly can hold the hearings, make recommendations and do what is in our jurisdiction and recommend 

to the Ways and Means that they undertake what is in their jurisdiction. We have done that over the years, and we will continue to 

do that. 

Mr. BOUSTANY. Thank you, Mr. Chairman. 

Mr. OBERSTAR. Mr. Grumbles talked about public-private partnerships, about a range of private financing mechanisms, and Ms. 

Coy, your testimony was very interesting, but the question I have 

is ′′Privatizing what?′′

In the aviation arena, we held hearings several years ago, and 

I was Chair on the privatization of airports. Well, that does not 

mean selling the airport to private interests. It means allowing airports, with the authority which they have, to contract out certain 

activities within the airports; and as you have seen in the post 9/

11 era, airports have become shopping malls—and they have become huge shopping malls, in fact, generating great revenues—and 

the airlines are pushing airports to generate ever more revenue 

from selling shoes and socks and jackets and shirts and then using 

that revenue to defray the costs of operating the airport, therefore, 

reducing the airlines’ charges and costs. 

There may be a parallel in the sewage treatment plant operation 

arena and the drinking water arena. Europe has, for years—European governments, I should say, have allowed initiatives for many 

years in the drinking water arena to privatize their systems, that 

is, to be totally owned and operated by private entities. 

So I come to the question here of privatizing what: the ownership 

of the sewage treatment facility? Privatizing its operation, that is, 

contracting out to an entity to operate it? Then, in that context, 

what are the responsibilities of the private entities, and how do 

they differ from the public entity? 

Ms. COY. Well, there are a lot of ways to look at privatization or 

private sector involvement all the way from ownership, as you say, 

48

and I do not think we will probably have shopping malls at sewage 

treatment plants any time soon———

Mr. OBERSTAR. I doubt it. 

Ms. COY. —having been to a few. 

I was not even referring in my testimony to ′′privatization′′ as it 

is classically portrayed in terms of private sector ownership or operation. I was more referring to making available access to private 

sector capital to a system that continues to be municipally owned 

and operated in another form other than through tax-exempt finance, which is, in fact, accessing private sector capital, but 

through limitations. 

Mr. OBERSTAR. Has your organization managed or placed private 

activity bond financing for jurisdictions? 

Ms. COY. We do at Janney Montgomery more muni bond debt. 

The private activity bond market is pretty small, and that is one 

of the issues that we are discussing here today, that there is limited access because of the caps. 

Mr. OBERSTAR. And the 1986 legislation put a cap on private activity bonds, and that has not been touched since then. 

Ms. COY. Right. Exactly. 

Mr. OBERSTAR. What would you recommend be done with that, 

by the way? 

Ms. COY. I would certainly advocate a rise in the cap because, 

as we said earlier, there is this limitation on private participation 

in municipally financed projects. So, if you raise the cap on private 

activity bonds, that would make it easier in most jurisdictions for 

private money to also participate on the equity side as well as on 

the debt side. 

Mr. OBERSTAR. So private activity bonds are used by municipalities for a wide range of public endeavors of funding———

Ms. COY. That is correct. 

Mr. OBERSTAR. —a host of public activities. 

Could we segregate out some of it or designate some of that for 

the water infrastructure needs, both drinking water and sewage 

treatment facilities? 

Ms. COY. I would think that would be certainly helpful as well. 

Absolutely. 

Mr. OBERSTAR. What is the difference in interest rate—this is 

your area of specialty, specialization. 

What is the difference in interest rate between municipal bonds 

and private activity bonds? 

Ms. COY. It is actually, unfortunately, not my area of specialization. 

Mr. OBERSTAR. Oh. 

Ms. COY. I am an equity analyst, and so I focus more on the equity side than on the debt side. So I would not be a good one to 

answer that. 

Mr. OBERSTAR. Well, there is an difference. 

Ms. COY. Yes, there is. 

Mr. OBERSTAR. Yes. 

Other members of the panel? Kurt. Thank you by the way, Kurt, 

for your coming here and participating in the hearings. 

Mr. Soderberg and I go back a long way. He has been a superb 

manager of the Western Lake Superior Sanitary District, which is 

49

saving Lake Superior; and through the efforts and the vigilance of 

the Western Lake Superior Sanitary District, we are now catching 

walleyes. Fisherman are catching walleyes in the St. Louis River, 

which was dead for a very long time, and they are good-sized walleyes, by the way, and very edible. There is no buildup of toxics in 

them. 

Mr. SODERBERG. Thank you very much, Mr. Chair. 

Madame Chair, if I may just talk about the privatization issue, 

NACWA has clearly looked at the options. Some of our member 

agencies do have operating contracts. I think there have been 

maybe a couple of outright transactions to sell a utility around the 

country, but it really has not gone that far. But one of the initiatives———

Mr. OBERSTAR. Hold the mike up closer to you so we can hear 

you better. 

Mr. SODERBERG. One of the initiatives of our organization was to 

see whether we are pricing our services competitively. We did that 

over a series of years, and we believe that we are providing competitive pricing of our services run by the municipal organizations. 

In the places where they believe they can get a better deal, they 

have gone down the road to the privatizers. 

When the EPA, though, talks about the various sorts of publicprivate partnerships, it is difficult to understand what they are 

talking about because it is rather vague. I have read the gap report. I bet some of the folks in this room have read that report. We 

have looked at the sorts of things that they are talking about that 

we need to do; and the bottom line is, we are doing all of those 

things, and we are still seeing these terrific increases in prices. 

So we are really hopeful that EPA will have some more specific 

guidance of what they mean by public-private partnerships, the 

four pillars of management, because at least right now it seems as 

if the big need is for additional funding. We are operating far better than we were in the past, but when you look at permit compliance, when you look at struggling local economies, operating costs, 

capital costs, there really is a need for more and better information 

from EPA. 

Mr. OBERSTAR. Well, given EPA’s own estimate of over the next 20 years $300 billion to $400 billion of construction needs in expanding or upgrading existing wastewater treatment facilities, 

waterlines, sewer lines, interceptor sewers, separated and combined operations, there is plenty of room for a whole range of financing, it seems to me, and we ought to start with something we 

know that is in place and proven, and that is the State Revolving 

Loan Fund. 

And we have a bill that has been pending now for 6 years. We 

ought to get that—that is the bird in hand. We have it. We have 

a bipartisan consensus on it. If we move that without ruling out 

or prejudicing any other forms of financing. Then we can then come 

back to and review and include those as well in future legislation. 

Mr. Ward and Mr. Stutler, do you have comments? 

Ms. Stoner? 

Yes. 

Ms. JOHNSON. We do have one more. 

Mr. OBERSTAR. One more member, yes. 

50

Mr. WARD. Chairman Oberstar, one issue maybe this committee 

could take up within its own purview is the fact that when you look 

at the financing in the SRFs, the Clean Water Act when it was admitted in 1987 and Title VI was added to it, it limited the funding 

to be for publicly owned treatment works, 212, the definition, taken 

out of old Title II. 

In the State of Texas, nonprofit water supply corporations, which 

are quasi-governmental and at least under the constitution of 

Texas considered to be a governmental entity for the purposes of 

financing, are not eligible under the Clean Water SRF. Meanwhile, 

down the hall on the other side of EPA’s building, in the Office of 

Water, we can do nonprofit water supply corporations. We can even 

do private entities to fund projects for water, for drinking water 

purposes. 

It seems like it is at odds because you could not argue administratively that the Agency could not handle it, because they are 

doing it on the other side of the building. So that is an issue. We 

have it in one of our priorities that we have listed that I can provide to the committee in detail. That might open the door a little 

wider than even just looking at the private activity bond cap. We 

have looked at not just lifting the cap, but exempting water 

projects like you have other exemptions under that. 

Mr. OBERSTAR. Do you mean exempting them from the cap? 

Mr. WARD. Yes, particularly if it is for the Clean Water State Revolving Fund. I mean, to that extent, it makes a lot of sense because Congress then is maximizing the effect of the program on 

both sides of its ability to make changes. 

Mr. OBERSTAR. I think I will desist at this point from further 

questions, but you have given us the basis. No. This is fine. Thank 

you very much. I appreciate your comments. 

Ms. JOHNSON. Thank you. 

Dr. Kagen. Congressman Kagen. 

Mr. KAGEN. Thank you, Madame Chairperson. 

Sometimes, Mr. Oberstar, resistance is futile. 

I would like the comments of Nancy Stoner about the effects of 

global warming on our water resources and also the implications 

for SRF funding, which I am learning is woefully behind what we 

really require. 

Ms. STONER. Thank you for that question. 

NRDC is actually doing a study on the effects of global warming 

on water resources now, that I expect to come out shortly, but some 

of the initial findings are already out, and they indicate that we 

can expect to see a range of problems, including less snow pack, so 

less water available, increased flooding due to more and larger 

storm events, increased temperature in cold water fisheries so that 

we will have fewer streams that support trout and so forth. 

What all of this suggests to me is an increased need, not only to 

address global warming directly, which of course is important, but 

in the water area, to do integrated water resource management to 

look not only at what our current needs are, but what they are 20 

years and 50 years and even 100 years out and to ensure that we 

are taking the steps now to ensure that there will be safe, usable, 

clean water for our children and grandchildren. 

51

Mr. KAGEN. On a related issue, in what way do you feel the SRF 

can have an impact, or how will it affect how we maintain the 

quality of the Great Lakes water? 

As you know or may be aware, in Wisconsin, we have a great 

deal of E. coli contamination on our beaches that may not be pointsourced anywhere close to where the bacteria are showing up. 

Ms. STONER. Yes. NRDC does a report every summer on beach 

water pollution called Testing the Waters, and it covers Great 

Lakes beaches; and what we see on Great Lakes beaches is an increasing trend in beach closings and advisories. Great Lakes beaches were closed 13 percent as opposed to 7 percent for other coastal 

beaches in our last report, and that mostly comes from storm water 

and sewage, which are two of the principal areas of focus for the 

Clean Water State Revolving Fund. So, again, more money better 

spent on those problems will help make sure that Great Lakes 

beaches are open and safe for people to use. 

Mr. KAGEN. Thank you. 

Ms. JOHNSON. Thank you very much. 

The one thing that we are all aware of is that the warmer the 

water becomes, the more problems we have and the more disease 

we have and the more we experience health being at risk in this 

country. 

Mr. Boustany has some questions. 

Mr. BOUSTANY. Thank you, Madame Chair. 

Mr. Ward, a couple times you made specific reference to some 

recommendations, specific recommendations, regarding how we can 

improve wastewater treatment. 

Can you provide the committee with those specific recommendations? Do you have that? 

Mr. WARD. Yes, sir. We have them in print, and I can leave them 

with the committee before we leave. 

Mr. BOUSTANY. OK, and one final question for you as well. 

In looking at the State Revolving Funds, are they structured, in 

your opinion, to help small, rural and disadvantaged communities; 

and what can the States do to help reach small and rural communities? 

I have got rural communities throughout my district, and they do 

not seem to get the benefit of the funding needed to fix aged water 

infrastructure. 

Mr. WARD. My answer would be, no, they are not because it does 

not reach quite deep enough. 

The other program that was created almost 10 years later, drinking water, Congress, you know, recognized that and specifically put 

provisions in so that we could reach deeper down to the communities that have the most hardship. Right now, we do not have a 

corresponding mechanism on the wastewater side through the 

Clean Water SRF. 

The limitations of 20-year financing, one can say perhaps you 

can find a legal way to get there underneath the structure, but it 

is going through a complete maze of requirements right now with 

EPA. It is no fault of theirs. It is just the way the statute is written, and so you need to look at the 30-year terms at the very least. 

I think rural communities would argue 40 in some cases. 

52

Lower interest-rate terms, perhaps even the loan forgiveness 

that you afforded in the drinking water program, all of those mechanisms as an option to a State would then allow the State administrations to work with EPA and reach deeper into the small and 

rural communities to help those ones that are more disadvantaged. 

We just cannot get that far down into the population right now. 

We just cannot. 

Mr. BOUSTANY. It gets back to the question I asked the first 

panel about oversight and making sure that the money, once it 

leaves Federal hands and gets to the State and then subsequently 

down to the local level, that it is actually being spent in a very 

cost-effective way. 

We have very good data about the disbursement of funds and so 

forth, but are we really spending that money in a very cost-effective way on infrastructure, and I think we need to probably have 

an improvement in the oversight mechanism by which we review 

that. 

Mr. WARD. I would believe that, yes, we are doing it in a very 

cost-effective way because we have limited resources that we have 

to apply across a wide array of projects of very different natures. 

I mean, you are seeing States do nonpoint source. We are cleaning 

up septic areas. We are doing source water protection, and virtually every aspect of water pollution control is now being taken 

care of through these Clean Water SRFs, even given the constraints. So my answer would be, yes, it has been cost effective. 

If you are concerned about whether more of it is going towards 

expansion of systems for future growth, if you do not look at what 

the trend is for growth in a community when you are building capacity in a treatment plant, then you are going to have the same 

cycle repeat itself. So those statistics are somewhat misleading. 

You know, our group would say that the restrictions that are in 

there now are on a horizon that is reasonable. I think, in the old 

grants program, it was close to a 10-year horizon. I think it may 

have gone up as much as to 20 for the SRFs for some projects, but 

on a wholesale basis, it is to solve pollution control problems because the priority system is handed down for you, the Congress, 

just like it is in drinking water, and those priorities then have to 

be effected through EPA to the States. 

We are given flexibility, but we still have to have a priority system. We still have to have an intended use plan. We still have to 

look at funding in a priority order. 

The oversight from EPA is very deliberate with regard to those 

matters, and so for our organization, we are going to say, yes, it 

is cost effective. 

Mr. BOUSTANY. Thank you. 

Ms. JOHNSON. Let me say thank you to all of the panelists who 

have come today. 

We recognize the seriousness and the importance of the issue, 

and we will be in touch. We hope that this time, after our seventh 

try of getting the bill passed, we will succeed. 

Let me thank all of the Members of Congress who have come, 

and the committee is adjourned. 

[Whereupon, at 12:52 p.m., the subcommittee was adjourned.]

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Æ


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