U.S. Environmental Protection Agency (EPA) Water Infrastructure Programs and FY2021 Appropriations

January 11, 2021

U.S. Environmental Protection Agency (EPA) Water

Infrastructure Programs and FY2021 Appropriations

The condition of the nation’s drinking water and

wastewater infrastructure, the federal role in supporting

infrastructure improvements, and the financial challenges

many communities encounter regarding water infrastructure

are perennial subjects of debate and attention in Congress.

Such challenges include the ability of communities—

especially low-income communities—to finance projects

needed to (1) repair or replace water infrastructure, much of

which was constructed more than 50 years ago; (2) comply

with new or revised federal regulatory requirements; and

(3) address damage from or improve resilience to extreme

weather events and other natural hazards.

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 CWA Section 603(c) (33 U.S.C.

1383(c)). 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.

EPA Water Infrastructure Programs

FY2021 Appropriations

Table 1. EPA Water Infrastructure: Enacted

Appropriations for FY2020 and FY2021

(dollars in millions, not adjusted for inflation)

The Consolidated Appropriations Act, 2021 (P.L. 116-260),

Division G, Title II, contains appropriations for multiple

water infrastructure programs administered by the U.S.

Environmental Protection Agency (EPA), including the

Clean Water State Revolving Fund (CWSRF) and the

Drinking Water State Revolving Fund (DWSRF). The act

also includes 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 grant programs are provided

within the State and Tribal Assistance Grants (STAG)

account. A separate account funds WIFIA.

As presented in Table 1, the act appropriates a total of

$3.01 billion for FY2021 for these water infrastructure

programs, $33 million (1%) more than the total FY2020

enacted level prior to rescissions (P.L. 116-94). Also 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 complementary financial assistance

programs to help publicly owned treatment works and

public water systems finance improvements needed for

compliance and other statutory purposes. The Clean Water

State Revolving Fund (SRF) provides financial assistance

for infrastructure projects to publicly owned treatment

works and other eligible recipients (33 U.S.C. §§13811387). The Drinking Water SRF 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

Program

FY2020

FY2021

State and Tribal Assistance Grants (STAG) Account

CWSRF

$1,638.8 $1,638.8

DWSRF

$1,126.1 $1,126.1

Grants for U.S.-Mexico Border Projects

$25.0

$30.0

Grants for Rural and Alaska Native

$29.2

$36.2

Villages

Grants for Small and Disadvantaged

$25.4

$26.4

Communities

Grants for Testing School Water for

$26.0

$26.5

Lead

Grants for Reducing Lead in Drinking

$19.5

$21.5

Water

Grants for Drinking Water System

$3.0

$4.0

Resilience and Sustainability

Grants for Sewer Overflow and

$28.0

$40.0

Stormwater

Water Infrastructure Finance and Innovation Act (WIFIA) Account

WIFIA

$60.0

$64.5

Total

$2,981.0 $3,014.0

Source: CRS, using data from P.L. 116-94 (Division D, Title II) and

P.L. 116-260 (Division G, Title II). This table does not include the

supplemental appropriation provided in P.L. 116-113, as it only

provided additional funding for specific locations and narrower types

of projects; or 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

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

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U.S. Environmental Protection Agency (EPA) Water Infrastructure Programs and FY2021 Appropriations

for specified projects, such as those that implement wateror energy-efficiency goals or mitigate stormwater runoff.

to EPA for grants. P.L. 116-260 provides $26.5 million for

these grants for FY2021.

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 capital investment

needs surveys, EPA estimated that the capital cost of

wastewater and drinking water infrastructure needed to

meet CWA and SDWA objectives exceeded $744 billion

over 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 or to related

health and environmental goals. FY2021 SRF

appropriations maintain the funding levels (not accounting

for inflation) provided for FY2020: $1.6 billion for the

CWSRF and $1.1 billion for the DWSRF.

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. 116-260 provides $21.5

million for FY2021.

Water Infrastructure Finance and Innovation Act

To promote development of water infrastructure projects

and encourage nonfederal and private sector investment,

Congress established the WIFIA program in the Water

Resources Reform and Development Act of 2014 (P.L. 113121, Title V; 33 U.S.C. §§3901-3914). 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 USACE WIFIA

program first received a $14.2 million appropriation in P.L.

116-260.) In contrast to SRF programs, under WIFIA, EPA

provides credit assistance directly to an eligible recipient,

not through a program administered by the states. To be

eligible for WIFIA assistance, projects generally must 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., $59.5 million in FY2021 to cover

subsidy costs), WIFIA appropriations may provide a large

amount of credit assistance. For FY2021, Congress capped

the WIFIA credit assistance authority at $12.5 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

systems, or states on behalf of an underserved community.

P.L. 116-260 provides $26.4 million for FY2021.

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

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 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. FY2020 was the

first fiscal year that this program received funding ($3

million). P.L. 116-260 provides $4.0 million for FY2021.

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. FY2020 was the first fiscal year

Congress appropriated funding ($28 million) for this

program. P.L. 116-260 provides $40.0 million for FY2021.

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 to achieve

compliance and to apply for SRF assistance. P.L. 116-260

provides $18.0 million for the CWA technical assistance

program in the STAG account and $19.0 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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IF11724

U.S. Environmental Protection Agency (EPA) Water Infrastructure Programs and FY2021 Appropriations

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