Before the Subcommittee on Water Resources, Committee on Transportation and Infrastructure
Rep. Eddie Bernice Johnson, Chair
2167 Rayburn

July 15, 2010

Statement of Caswell Holloway, Commissioner,
New York City Department of Environmental Protection

Good afternoon Madame Chair and Members, I am Caswell Holloway, Commissioner of the New York City Department of Environmental Protection, or as we’re known in New York City, "DEP."  On behalf of Mayor Michael R. Bloomberg, thank you for the opportunity to testify about the critical water and wastewater infrastructure challenges that we face serving nine million New Yorkers – eight million in the City and another one million in upstate New York.

DEP employs 6,000 men and women who provide water and sewer services to the residents of New York City as well as commuters and out-of-town visitors.  We manage the City's water supply, providing more than 1 billion gallons of water each day from a watershed that extends more than 125 miles from the City, and comprises 19 reservoirs and three controlled lakes. Approximately 7,000 miles of aqueducts, tunnels, and water mains bring water to homes and businesses throughout the five boroughs, and 7,400 miles of sewer lines take 1.3 billion gallons of wastewater to one of our 14 in-City treatment plants.

DEP also has one of the largest construction budgets in the region, with $11 billion of work currently under construction and $3 billion more in the planning or design stage. Our capital budget for the next four fiscal years is $5.7 billion, and will generate approximately 9,200 construction jobs.

A majority of DEP’s capital spending over the past eight years has been dedicated to meeting unfunded federal and state regulatory mandates that require the completion of massive capital investments on tight construction schedules.  Some of our largest contracts had to go to bid at the height of the construction market in 2006 and 2007, not because of a pressing public health need, but because of a one-size-fits-all approach that did not account for New York City’s specific public health and other needs.  Many of DEP’s unfunded water mandates could have been stretched out or modified without any appreciable impact on public health or the environment, which would have enabled us to build less, and focus more resources on maintaining our current infrastructure in a state of good repair.  It is time for the national clean water strategy to evolve from a "one size fits all" mandate and enforcement approach, to a strategy that recognizes and funds the individual needs of water and wastewater utilities based on demonstrated public health needs and water quality benefits.

Using our own history as an example, of the $19 billion in capital investments that DEP has made over the last seven years, 69% has funded construction necessary to meet federal and state mandates.  The bottom line for New York City ratepayers is that their bills are rising by double digits for the fourth consecutive year, creating an increased financial burden on homeowners, particularly seniors and others who live on a fixed income.  Unfunded mandates have played a significant role in that increase.  Over the last seven years, the cost of mandates has led to a 24% increase in water and sewer rates for the average single-family home – from $639 to $816 a year.

Because these projects are legally mandated and have to be done within a specified time period, many of our construction dollars are not dedicated to the projects that are most needed by New Yorkers, or are the most cost-effective in terms of public health and environmental protection.   For example, there are still thousands of New Yorkers who lack sanitary sewers and tens of thousands in New York City that lack storm sewers.  Completing the full build-out of the storm and sanitary sewer system is an important priority for the City of New York, but we have had to defer many projects until unfunded, but legally mandated work is complete.  For example, as a result of a mandate, DEP constructed a $422 million combined sewer overflow tank that will have valuable but very limited benefits to one tributary in New York Harbor. Going forward, DEP is proposing the use of less costly green infrastructure to achieve the same water quality benefits – and greater overall public benefit–on a citywide scale. But success will depend on the willingness of our regulators to embrace these new methods, and a collaborative, flexible approach, rather than a "one size fits all" standard.  We are encouraged by indications of support for green infrastructure that we have heard from both EPA and our state regulators, and there is much to be said for more cooperative partnerships with localities like New York City – who are in the best position to adopt locally suited, cost-effective approaches to achieving water quality standards. 

The grant provisions of the American Recovery and Reinvestment Act (ARRA) were an extremely welcome return to the pattern of federal environmental funding that largely ended in the mid-1980s.  Thanks to the $219 million grant provided by ARRA, DEP moved forward with nine separate projects that will reduce emissions and energy costs and provide needed upgrades to eight of our wastewater treatment facilities and our sludge vessel fleet.  Another ARRA-funded project involves the use of green infrastructure to help restore 38 acres of degraded marshes and wetlands, and still another ARRA-funded project will create green corridors and streetscapes designed to capture stormwater.  All of those projects are underway.

Overall, ARRA allowed DEP to move on projects that otherwise would have been shelved or delayed.  However, using the State Revolving Fund (SRF) loan program created certain restrictions and administrative burdens.  For example, projects like sewers and water mains were not able to qualify for ARRA funding nor were any of the City’s drinking water projects ranked high enough for funding.  The $219 million reimbursement we expect to receive for wastewater projects is proof that, in spite of any restrictions, we were able to work through the problems associated with adapting the SRF to an economic stimulus purpose.  If Congress considers a second ARRA program, we recommend making it a 100% grant program–perhaps with direct grants to localities like New York City with the demonstrated capacity to put dollars to work quickly – that would give us much greater local flexibility.  We also recommend the extension of the Build America Bond program, which is providing our water and sewer system with more cost effective financing for its capital program.

Before closing, I’d like to say a few words about H.R. 1262, the Water Quality Investment Act of 2009, which embodies a comprehensive approach to clean-water initiatives and infrastructure financing. The reauthorization at $13.8 billion over five years recognizes the range of needs of both large and small water and wastewater systems. For all the reasons I have just mentioned DEP supports the provisions allowing up to 30% of SRF funds to be used for forgiveness of principal or negative interest loans.  We also support the provisions authorizing $2.5 billion over five years for grants for combined sewer overflow facilities  as well as the provisions expanding the  range of projects eligible to receive assistance, such as water conservation, reduction in energy consumption, and watershed pilot projects, all of which are elements of Mayor Bloomberg’s  PlaNYC for a greener, sustainable New York City.

We are pleased to see that the legislation seeks more research about pharmaceuticals.  While the potential presence of pharmaceuticals and personal care products in drinking water supplies has generated much attention lately, it is critically important that any new regulation in this area be based on a demonstrated public health need, and not simply the availability of monitoring or treatment technology.  Just because something is detectable does not mean it poses a water quality risk.  DEP recently completed a pharmaceutical sampling program of our source waters that concluded that trace amounts of pharmaceuticals and personal care products do not pose a public health risk. In fact, you would have to drink 846,000 glasses of New York City tap water in a single day to get the equivalent of just one ibuprofen.

In conclusion, I believe that ARRA has been a success when it comes to the projects undertaken by DEP.  Those funds allowed us to create jobs and productive assets that will serve the public for generations to come.  However, much remains to be done to ensure that federal standards – if they are to be imposed – actually achieve water quality and public health benefits, and come with the funding necessary to carry them out.  Otherwise, unfunded mandates will continue to substitute federal and state judgment about system needs for the judgment of the localities – like New York City – with the expertise and experience to make smart investments that have a large public-health return at the lowest cost.

Thank you for the opportunity to testify.