U.S. Environmental Protection Agency (EPA) Water Infrastructure Programs and FY2020 Appropriations

April 2, 2020

U.S. Environmental Protection Agency (EPA) Water

Infrastructure Programs and FY2020 Appropriations

The condition of the nation’s drinking water and

wastewater infrastructure and associated financing

challenges are perennial subjects of debate and attention in

Congress. Among others, challenges include the ability of

communities—especially low-income communities—to

finance projects needed to (1) repair or replace water

infrastructure, much of which has was constructed more

than 50 years ago; (2) comply with new or revised federal

regulatory requirements; and (3) address damage from

natural hazards and improve resiliency to extreme weather

events.

EPA Water Infrastructure Programs

FY2020 Appropriations

The Further Consolidated Appropriations Act, 2020 (P.L.

116-94), Division D, Title II, included appropriations for

multiple water infrastructure programs administered by the

U.S. Environmental Protection Agency (EPA), particularly

the Clean Water State Revolving Fund (CWSRF) and

Drinking Water State Revolving Fund (DWSRF) programs.

P.L. 116-94 also included appropriations for the Water

Infrastructure Finance and Innovation Act (WIFIA) loan

program, two regional infrastructure grant programs, four

drinking water infrastructure grant programs, and one

wastewater infrastructure grant program. Appropriations for

the CWSRF, DWSRF, and other infrastructure grant

programs are provided within the State and Tribal

Assistance Grants (STAG) account. WIFIA is funded

through a separate account.

As presented in Table 1, Congress appropriated a total of

$2.81 billion for FY2020 for these water infrastructure

programs, or about 1.6% less than the total FY2019 enacted

level of $3.03 billion, prior to rescissions (P.L. 116-6, Titles

II and IV). Also for FY2019, Congress provided $349.4

million in supplemental appropriations for the state

revolving funds (SRFs) in P.L. 116-20. These funds were

provided to areas affected by specified natural disasters. For

FY2020, P.L. 116-113, Title IX, included a supplemental

appropriation of $300 million for wastewater projects at the

U.S.-Mexico border.

State Revolving Fund Programs

The Clean Water Act (CWA) and the Safe Drinking Water

Act (SDWA) authorize two complementary SRF programs

to help publicly owned treatment works and public water

systems finance improvements needed for compliance and

other statutory purposes. The CWSRF provides financial

assistance for infrastructure projects to publicly owned

treatment works and other eligible recipients (33 U.S.C.

§§1381-1387). The DWSRF provides assistance to public

water systems, which may be publicly or privately owned

(42 U.S.C. §300j-12).

In both SRF programs, EPA makes grants to states to

capitalize a state revolving loan fund. Each state must

match 20% of its annual capitalization grant. States are

authorized to use the DWSRF or the CWSRF to provide

primarily subsidized loans to eligible public water systems

or publicly owned treatment works (and other eligible

recipients), respectively. CWSRF financial assistance is

available generally for projects needed for constructing or

upgrading (and planning and designing) publicly owned

treatment works, among other purposes defined in Title 33,

Section1383(c), of the United States Code. DWSRF

financial assistance is available for statutorily specified

expenditures and those that EPA has determined, through

guidance, will facilitate SDWA compliance or significantly

further the act’s health protection objectives.

Table 1. U.S. EPA Water Infrastructure: Enacted

Appropriations for FY2019 and FY2020

(dollars in millions, not adjusted for inflation)

Program

FY2019

FY2020

State and Tribal Assistance Grants (STAG) Account

CWSRF

$1,694.0

$1,638.8

DWSRF

$1,164.0

$1,126.1

Grants for U.S.-Mexico Border Projects

$15.0

$25.0

Grants for Rural and Alaska Native Villages

$25.0

$29.2

Grants for Small and Disadvantaged

Communities

$25.0

$25.4

Grants for Testing School Water for Lead

$25.0

$26.0

Grants for Reducing Lead in Drinking Water

$15.0

$19.5

Grants for Drinking Water System

Resilience and Sustainability

None

$3.0

Grant for Sewer Overflow and Stormwater

None

$28.0

Water Infrastructure Finance and Innovation Act (WIFIA) Account

WIFIA

$68.0

$60.0

Total

$3,031.0

$2,981.0

Source: CRS using data from P.L. 116-6 (Division E, Titles II and IV)

and P.L. 116-94 (Division D, Title II). This table does not include (1)

supplemental appropriations acts described in the accompanying text,

as these only provided additional funding for specific locations or

narrower types of projects; or (2) grants for technical assistance for

small, rural water systems and treatment works, as described below.

While the SRFs generally provide subsidized loans, states

may use the DWSRF and the CWSRF (under certain

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U.S. Environmental Protection Agency (EPA) Water Infrastructure Programs and FY2020 Appropriations

conditions) to provide “additional subsidization”—such as

principal forgiveness and/or negative interest loans—to

municipalities that meet the state’s affordability criteria. For

the CWSRF, the additional subsidization is also available

for specified projects, such as those that implement water or

energy efficiency goals or mitigate stormwater runoff.

Although the SRFs have generally been popular, states,

local communities, and others have raised concerns

regarding increasing funding needs (e.g., replacement of

lead pipes) and affordability of infrastructure projects for

many communities. In its most recent compilation surveys,

EPA estimated that the capital cost of wastewater and

drinking water infrastructure needed to meet CWA and

SDWA objectives exceeds $744 billion for a 20-year

period. This amount does not include costs to extend

services to accommodate population growth or to repair

infrastructure not linked to compliance and related health

and environmental goals.

Water Infrastructure Finance and Innovation Act

To promote development of water infrastructure projects,

the 113th Congress authorized the WIFIA program in the

Water Resources Reform and Development Act of 2014

(P.L. 113-121, Title V; 33 U.S.C. §§3901-3914). Initially

established as a five-year pilot program, WIFIA authorizes

EPA and the U.S. Army Corps of Engineers (USACE) to

provide credit assistance—secured or direct loans—for a

range of water infrastructure projects. (The USACEadministered WIFIA program has not advanced into

implementation.) In contrast to SRF programs, under

WIFIA, EPA provides credit assistance directly to an

eligible recipient. To be eligible for WIFIA assistance,

projects must generally have costs of $20 million or more.

Annual WIFIA appropriations primarily cover long-term

credit subsidy costs, which are calculated to cover the risk

that the loan will not be repaid. As such, relative to its

budget authority (e.g., $55 million in FY2020 to cover

subsidy costs), WIFIA appropriations may provide a large

amount of credit assistance. For FY2020, Congress capped

the WIFIA credit assistance authority at $11.5 billion.

Grants for Small and Disadvantaged Communities

In 2016, the Water Infrastructure Improvement for the

Nation Act (WIIN Act; P.L. 114-322) amended SDWA by

adding Section 1459A (42 U.S.C. §300j-19a), which directs

EPA to establish a grant program to assist disadvantaged

communities and small communities that are unable to

finance projects needed to comply with SDWA. Eligible

projects include investments needed for SDWA

compliance, household water quality testing, and assistance

that primarily benefits a community on a per-household

basis. EPA may make grants to public water systems, tribal

water systems, or states on behalf of an underserved

community. P.L. 116-94 provided $25.4 million for 2020.

Grants for Testing School Water for Lead

In the WIIN Act, Congress amended SDWA Section

1464(d) (42 U.S.C. §300j-24) to require EPA to establish a

voluntary program for testing for lead in drinking water at

schools and child care programs under the jurisdiction of

local education agencies (LEAs). States or LEAs may apply

to EPA for grants. P.L. 116-94 provided $26.0 million for

these grants for FY2020.

Grants for Reducing Lead in Drinking Water

The WIIN Act further amended SDWA by adding Section

1459B (42 U.S.C. §300j-19b), which directs EPA to

establish a grant program for projects and activities that

reduce lead in drinking water, including replacement of

lead service lines and corrosion control. Grants may be used

to provide assistance to low-income homeowners to replace

their portions of lead service lines. Eligible recipients

include community water systems, tribal systems, schools,

states, and municipalities. P.L. 116-94 provided $19.0

million for FY2020.

Grants for Drinking Water System Resilience

America’s Water Infrastructure Act of 2018 (AWIA; P.L.

115-270) amended SDWA Section 1459A (42 U.S.C.

§300j-19a), to authorize EPA to establish the Drinking

Water System Infrastructure Resilience and Sustainability

Program, a grant program for small and disadvantaged

public water systems. EPA is authorized to provide grants

to eligible public water systems for projects that increase

resilience to natural hazards, including hydrologic changes.

Eligible projects include those that increase water use

efficiency, enhance water supply through watershed

management or desalination, and increase energy efficiency

in the conveyance or treatment of drinking water. P.L. 11694 provided $3.0 million for FY2020. FY2020 is the first

fiscal year Congress appropriated funding for this program.

Sewer Overflow and Stormwater Grant Program

In 2000, the Consolidated Appropriations Act, 2001 (P.L.

106-554), amended the CWA by adding Section 221, which

authorized EPA to establish a grant program to address

overflows from municipal combined sewer systems and

from municipal separate sanitary sewers (“wet weather”

projects). The act authorized annual appropriations of

$750.0 million for each of FY2002 and FY2003. In 2018,

AWIA made several amendments to Section 221, including

modifying the program to include stormwater infrastructure

and authorizing appropriations of $225.0 million for each of

FY2019 and FY2020. P.L. 116-94 provided $28 million for

FY2020. FY2020 is the first fiscal year Congress

appropriated funding for this program.

Technical Assistance for Water Systems

The CWA and SDWA authorize EPA to make grants to

qualified nonprofits to provide technical assistance to small

wastewater and water systems (33 U.S.C. §1254(b)(8); 42

U.S.C. §300j-1(e)). AWIA amended the CWA in 2018 to

add this grant program. While construction is not an eligible

activity, the grants may be used to help systems with

compliance and to apply to the SRFs. P.L. 116-94 provided

$12 million for the CWA technical assistance program in

the STAG account and $15 million for the SDWA program

in the Environmental Programs and Management account.

Elena H. Humphreys, Analyst in Environmental Policy

Jonathan L. Ramseur, Specialist in Environmental Policy

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U.S. Environmental Protection Agency (EPA) Water Infrastructure Programs and FY2020 Appropriations

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