LegiStorm

Summary:

The principal federal program to aid municipal wastewater treatment plant construction is authorized in the Clean Water Act (CWA). Established as a grant program in 1972, it now capitalizes state loan programs through the clean water state revolving loan fund (CWSRF) program. Since FY1972, appropriations have totaled $97 billion. In 1996, Congress amended the Safe Drinking Water Act (SDWA, P.L. 104-182) to authorize a drinking water SRF program to help systems finance projects needed to comply with drinking water regulations and to protect public health. Since FY1997, appropriations for the drinking water state revolving loan fund (DWSRF) program have totaled $21 billion. The U.S. Environmental Protection Agency (EPA) administers both SRF programs, which annually distribute funds to the states for implementation. Funding amounts are specified in the State and Tribal Assistance Grants (STAG) account of EPA annual appropriations acts. The combined appropriations for wastewater and drinking water infrastructure assistance have represented 25%-32% of total funds appropriated to EPA in recent years. Prior to CWA amendments in 1987 (P.L. 100-4), Congress provided wastewater grant funding directly to municipalities. The federal share of project costs was generally 55%; state and local governments were responsible for the remaining 45%. The 1987 amendments replaced the traditional grant program with the SRF program. Local communities are now often responsible for 100% of project costs, rather than 45%, because they are required to repay loans to states. The greater financial burden of the act’s loan program on some cities has caused some to seek continued grant funding. This concern has been particularly evident in the appropriations process where, for a number of years, Congress reserved as much as 30% of funds in the STAG account for special purpose grants directed to specified communities. Most of the funded projects were not authorized in the CWA or SDWA. Many state water quality officials and state infrastructure financing officials objected to this practice, as did EPA, since it reduced the amount of funding for state SRF programs. Due to general opposition to congressional earmarking, this practice has not occurred since FY2011. Although the CWSRF and DWSRF have largely functioned as loan programs, both allow the implementing state agency to provide “additional subsidization” under certain conditions. Since its amendments in 1996, the SDWA has authorized states to use up to 30% of their DWSRF capitalization grants to provide additional assistance, such as forgiveness of loan principal or negative interest rate loans, to help disadvantaged communities (as determined by the state). Congress amended the CWA in 2014, adding similar provisions to the CWSRF program. In addition, appropriations acts in recent years have required states to use minimum percentages of their allotted SRF grants to provide additional subsidization. The final full-year appropriations for FY2018 were enacted as part of the Consolidated Appropriations Act, 2018, signed by President Trump on March 23, 2018 (P.L. 115-141). Compared to FY2017, funding for EPA water infrastructure programs increased by 24% in FY2018. The act provided $1.694 billion for the CWSRF and $1,163 million for the DWSRF program, increases of $300 million to both programs compared to FY2017. The act also provided $63 million for the WIFIA program, more than doubling the FY2017 appropriation. The Trump Administration’s FY2019 budget request proposes the same amounts for the CWSRF and DWSRF programs as the FY2017 appropriation. However, the request proposes a 45% reduction in the state categorical grants compared to FY2018 levels.