» Legislative Alerts Archive

On Jan. 21, the House Appropriations Committee, chaired by Congressman David Obey (D-Wis.), approved the $358 billion federal spending portion of the American Recovery and Reinvestment Act of 2009. The infrastructure sections of the bill contain $63.5 billion in overall infrastructure spending with nearly 20%, or approximately $11.8 billion, targeted for community water and wastewater infrastructure projects.

The Senate Appropriations Committee released a summary of its $365 billion spending proposal on Friday, Jan. 23. The draft spending package includes $6 billion for wastewater and drinking water systems through the Environmental Protection Agency's Clean Water and Drinking Water State Revolving Funds, but does not provide any additional detail. President Obama also released details of his economic recovery plan this week, which includes funding for 1,300 wastewater projects, 380 drinking water projects, and 1,000 rural water and sewer projects. Congress hopes to finish its bill by the February President’s Week recess, in line with Obama’s request for the legislation to be on his desk no later than Feb. 16. It remains to be seen if that deadline will be met as differences between the two bills may necessitate a House-Senate conference negotiation. Once a Senate bill with more detail is introduced, NACWA will send a similar Alert to this one to the membership.

Below is an analysis of the proposed legislation’s requirements for utilization of the recovery package funds. It is followed by a summary of major infrastructure funding provisions of interest to NACWA members.

General Requirements for the House Recovery Funding Package

Use It or Lose It: The proposal is structured to ensure both a quick infusion of resources and that funds are available to sustain these activities over the next two years. The measure would require Clean Water State Revolving Fund (CWSRF) dollars to be apportioned to the states no later than 30 days after enactment. States must then have contracts or other binding commitments awarded to communities for half of the funds not later than 1 year after enactment, or not later than 9 months after states actually receive the money if later. States are required to enter into binding commitments for the remainder of the money within two years of enactment, or not later than 21 months after they actually receive the money. Funds not committed in accordance with these requirements are returned to the federal government for redistribution to other states that are able to achieve binding commitments within 120 days after the reallocation. There is an additional provision that encourages States to distribute half of the first year funding to communities that can initiate projects within 120 days of enactment.

Maintenance of Efforts: For the infrastructure sections of the recovery package, governors would be required to certify within 30 days of enactment that a state will maintain its effort regarding state funding for specified activities. The states would be required to submit a statement identifying the amount of funds the state had planned to invest on each covered activity from non-federal sources from the measure’s date of enactment through FY 2010. The state would also be required to submit reports within 30 days, 60 days, 120 days, 180 days, 1 year, and three years detailing how the new funds are spent and the results of the investment.

Accountability and Transparency: For all activities funded under the recovery package, federal, state, and local agencies are required to post details of how funds are being utilized on a new web site, www.recovery.gov. The agencies would be required to explain the project being undertaken, why it is needed, its cost, and the name of an individual to contact with questions. In the case of State or local governments, a certification from the Governor, mayor, or other chief executive that the infrastructure investment has received “the full review and vetting required by law and that the chief executive accepts responsibility that the infrastructure investment is an appropriate use of taxpayer dollars,” is required before funds are made available.

The measure will establish a new Accountability and Transparency Board made up of several federal agency inspector generals and the newly created position of chief performance office. The board and its staff will monitor, audit and report on the expenditure of recovery package funds.

Breakdown of Funding Opportunities in the Recovery Package

U.S. Environmental Protection Agency (EPA): $8 billion total
The measure would provide $8 billion for community water and wastewater infrastructure projects through EPA State and Tribal Assistance Grants. Of the total, $6 billion is dedicated for wastewater projects funded through the CWSRF and $2 billion for drinking water projects funded through the Drinking Water SRF. There is no state matching requirement.

• Clean Water State Revolving Fund: $6 billion
  The recovery package provides grants, distributed through the existing CWSRF formula, to states and territories to capitalize their revolving loan funds. Half of the funding is to be disbursed by the states as loans. States are required to use the additional 50 percent ($3 billion) to provide assistance in the form of “additional subsidization, including forgiveness of principal, negative interest loans, and grants” to municipalities for projects that are included on the State’s existing priority list. Eighty percent of the grant money ($2.4 billion) would be for projects “to benefit municipalities that meet affordability criteria as determined by the Governor of the State,” and 20 percent ($600 million) for projects “to address water-efficiency goals, address energy-efficiency goals, mitigate stormwater runoff, or encourage environmentally sensitive project planning, design, and construction, to the extent that there are sufficient project applications eligible for such assistance.”

• Drinking Water State Revolving Fund: $2 billion
  The Drinking Water SRF provides grants, also distributed by the existing formula, to states to capitalize their revolving loan funds which then finance drinking water infrastructure improvements. States are required to disburse 50 percent ($3 billion) as loans and the remaining 50 percent to provide assistance in the form of “additional subsidization, including forgiveness of principal, negative interest loans, and grants” to municipalities for projects that are included on the State’s existing priority list.

U.S. Department of Department of Agriculture (USDA): $4.236 billion total

The measure would provide $4.236 billion for natural resource conservation and rural development programs. Of the total, $3.836 billion is dedicated to rural water and waste projects through the Rural Utility Service grant and loan programs, and $400 million is provided for watershed rehabilitation and flood prevention programs through the National Resources and Conservation Service. There is no state matching requirement.

• Rural Water and Waste Disposal Program: $3.836 billion
  The measure would provide $3.836 billion for the rural water and waste grant and loan programs. This (USDA) program serves rural areas with populations of 10,000 or less and funds drinking water and wastewater treatment infrastructure, with priority given to smaller and poorer communities. Of this total, States are required to distribute $2.736 billion in the form of loans and $1.1 billion as grants. Priority is given to those projects that “can commence promptly following enactment of this Act."

• Watershed Rehabilitation and Flood Prevention Operations: $400 million
  The measure provides $400 million for the Natural Resources Conservation Service's (NRCS) watershed rehabilitation and flood prevention programs. These programs help local project sponsors to design and build flood prevention and water quality improvement projects. Significantly, infrastructure projects to clean polluted waterways are eligible.

U.S. Army Corps of Engineers: $4.5 billion total

The measure provides $4.5 billion to the Corps of Engineers for construction, operation and maintenance of the nation's flood control and navigation infrastructure, as well as the construction and maintenance of environmental restoration projects. The funding will be used to accelerate the completion of ongoing capital improvement projects and preference will be given to initiate new elements of existing projects that can be built within the next year.

U.S. Department of the Interior: $500 million total

The measure provides $500 million to “manage, develop and protect water resources in the western portion of the United States.” The funding would be disbursed in the form of loans, and would provide for capital improvement projects under the jurisdiction of Bureau of Reclamation. At least $126 million is of these funds would be used for water reuse and recycling projects, and not less than $80 million would be used on water intake projects and treatment facilities.

U.S. Department of Housing and Urban Development (HUD): $1 billion total

The measure provides $1 billion in funding for HUD’s Community Development Block Grants (CDBG) program. While much of this money would be targeted for local government housing programs to stem the number of foreclosures, it could also be used by local governments for critical services and infrastructure needs. The funding provided in this legislation will be distributed through the existing formula and is required to adhere to an accelerated timeframe. Again, these dollars could potentially provide significant infrastructure dollars for local governments.

U.S. Department of Energy (DOE): $3.5 billion total

The measure would provide $3.5 billion for energy efficiency and renewable energy block grants through DOE. Modeled after the Community Development Block Grant program, the Energy Efficiency and Conservation Block Grant program would provide grants to cities, counties and states for innovative practices to achieve greater energy efficiency and lower energy usage. These grants fund local initiatives that many wastewater utilities can, or in many cases already have, undertaken, including building and home energy conservation programs, energy audits, fuel conservation programs, building retrofits to increase energy efficiency, and alternative energy programs. Cities with a population of at least 35,000 or one of the 10 most populous cities in the state would be eligible for the block grant.

NACWA Works to Increase Grant Funding, Address Affordability Issues in the Senate

NACWA’s priorities for the recovery bill fared well in the draft House legislation. However, there is still significant work to be done in the Senate:

• NACWA believes that the economic recovery package could go much further in providing funding for infrastructure in general with a concomitant increase in funding for water and wastewater infrastructure projects. While the package’s $6 billion targeted to wastewater projects within the CWSRF program is significant, NACWA members have over $17 billion worth of wastewater projects ready-to-go that can have shovels in the ground within 120 days of receiving the go ahead from their State agencies. A minimum of $10 billion and as much as $20 billion should be included for wastewater projects in the economic recovery package.

• NACWA believes that significantly more than fifty percent of the CWSRF funds should be distributed as grants or grant equivalents. The Association is asking for 100% of the funds to be available as grants, and believes that this type of financing will generate the greatest stimulative effect. Communities are hesitant right now to incur debt obligations because they cannot pass on the cost of repayment to their ratepayers. If communities do not accept a loan, it would reduce the overall effectiveness and impact of the recovery package.

• NACWA believes that all communities should have access to grant financing and that these dollars not be targeted to any particular communities based on affordability. Alternatively, NACWA is asking Congress to include language providing guidance to States on how affordability should be determined for distributing grant financing received through this stimulus package that does not use a single indicator tied to median household income. This formula is too simple and focuses on the individual ratepayer rather than on the overall financial capability of a community.

• NACWA also is addressing new concerns raised by the Congressional Budget Office (CBO) and senior senators from both parties about the length of time it will take for federal dollars dedicated to infrastructure to create new jobs. NACWA is working to refute these claims and would like to see more stringent use it or lose it language with shorter timeframes included in the legislation to provide states with an additional incentive to enter into binding commitments in a timely fashion.

Public Agency Members Urged to Make the Case for Grants

The release of the House draft bill is only the beginning of the vital process of getting stimulus legislation passed. NACWA will continue to advocate for ensuring that funding for wastewater infrastructure projects remain a significant part of the overall stimulus package as it progresses through the House and Senate, and member agencies are strongly encouraged to talk to their members of Congress about their funding needs and the importance of ensuring the stimulus bill contains grants that can be quickly accessed to enable critical infrastructure projects to move forward.