By Mae Stevens
After decades of declining federal investment in water infrastructure, Congress has acted to boost funding via passage of the Infrastructure Investment and Jobs Act (228-264) in the late hours of November 5, sending the bill to President Biden’s desk. This bill represents the most significant federal investment in water systems in living memory.
From Flint, Michigan to Jackson, Mississippi, water utilities and the communities they serve have been reeling from the repercussions of federal disinvestment in water infrastructure – a level of investment that used to hover around 63 percent of total investment in water infrastructure in the US, but has since dwindled down to nine percent as of 2017. While safe and reliable water and sanitation systems play a pivotal role in public health, these systems are also critical to our economy.
From healthcare, to manufacturing, to agriculture and food production and beyond, we rely on water systems for businesses and our economy, a fact often easy to forget as these systems are out of sight and out of mind until a problem arises. So, while the IIJA passage marks a significant investment in public health, it also represents a broader investment in businesses and the economy – all of which rely on these shared water systems.
What’s in the bill?
For the water sector, all eyes are on the tripled federal investment in the Clean Water and Drinking Water State Revolving Funds, the two programs that represent the primary sources of federal financing for water systems. Over the next five years, the IIJA will make the following investments:
• $11.173 billion to the Drinking Water State Revolving Fund (DWSRF)
• $11.173 billion to the Clean Water State Revolving Fund (CWSRF)
• $15 billion to the DWSRF specifically for lead service line replacement
• $4 billion to the DWSRF specifically for PFAS remediation
• $1 billion to the CWSRF specifically for PFAS remediation
How do SRFs Work?
Based on funding formulas, US EPA deposits money into drinking and clean water revolving funds managed by states. These funds then act as banks to provide low-interest loans or grants to a variety of eligible entities, including local governments and non-profits, to implement eligible clean water and drinking water
projects. The term revolving fund comes from any interest accrued on loans being reinvested into these banks to later fund other eligible projects. Because some funds are issued as grants, the banks require replenishing from the federal government, which is what the investments listed above are intended to do.
While states exercise a large degree of latitude on how SRF funds are spent (through drafting US EPA-mandated ‘Intended Use Plans’), the IIJA does require 49 percent of the SRF funds to be used as grants, with the exception of PFAS funding. PFAS funding through SRFs must be 100-percent grants. These grant mandates are critical for the many low-wealth communities that have difficulty identifying a revenue source to pay back SRF loans. This funding and the rules surrounding it are a big win for helping to provide a greater degree of equity in funding projects in our communities.
Also, nature based infrastructure is increasingly implemented as a cost effective way of helping protect source water, manage stormwater, among other functions (while also providing other environmental and social co-benefits). It is important to remember that 10 percent of the Clean Water SRFs must fund nature based infrastructure projects.
In addition to the incredible investments into the SRFs, the IIJA also created or renewed a number of programs that were not funded in this bill, but could receive funding in future packages. These provisions include: the creation of a water affordability pilot program, cybersecurity support for public water systems and a wastewater efficiency grant pilot program, among many others
While we pause momentarily to claim victory as water advocates, the fight continues…
The next battle ahead is the passage of the Build Back Better Act (BBB). While this bill is largely coined a social spending package, if passed it would represent significant additional funding in water infrastructure. At the time of writing this column, BBB would invest (in addition to the funding in IIJA):
• $9 billion for lead service line removal projects
• $1.85 billion for sewer overflow and stormwater management projects
• $225 million to create a nation-wide water affordability program
• $125 million for alternative source water projects
• $150 million to help families replace, repair, or install decentralized wastewater treatment systems (i.e., septic systems)
A closing thought…
Each year, billions of dollars are needed for maintenance and upgrades: treatment plants, pumps, pipes, valves, IT infrastructure to combat cyber threats, are just a few examples. Compounding these basic needs with present threats of climate change, unfunded federal mandates, shifting populations (and tax bases) – the water infrastructure financing gap is immense, estimated to be nearly $750 billion.
While the historic investments in the IIJA specifically its $55 billion in water investments, cannot be overstated – our tireless advocacy does not end – more work remains to close this funding gap, including communicating to our members of Congress the dire impacts on the health and prosperity of our communities if we fail to act.
1. “One Water for America Policy Framework Big Idea 3.” US Water Alliance. http://uswateralliance.org/initiatives/listening-sessions/sevenbig-ideas/big-idea-3
2. Olson, Erik D. “American Jobs Plan gives water infrastructure
a much needed boost.” GreenBiz. https://www.greenbiz.com/article/american-jobs-plan-gives-water-infrastructure-muchneeded-boost
About the author
Mae Stevens is an Executive Vice President at Signal Group and the Chair of Signal Water. She provides strategic environmental and infrastructure policy expertise to a diverse range of corporate, municipal and non-profit clients. Prior to joining Signal Group, Stevens served as Environmental Policy Advisor to Sen. Ben Cardin (D-MD), handling the Senator’s responsibilities on the Environment and Public Works Committee, including staffing the Senator during the crafting and passage of the FAST Act and the 2016 and 2018 Water Resources Development Act bills.