# Drinking Water State Revolving Fund (DWSRF): Overview, Issues, and Legislation

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URL: https://www.frixlaw.com/law-library/documents/crs%3AR45304

## Record

- **Collection:** Congressional research report
- **Document type:** CRS Report
- **Published:** October 2, 2018
- **Citation:** R45304

## Text

Drinking Water State Revolving Fund
(DWSRF): Overview, Issues, and Legislation
(name redacted)
Specialist in Environmental Policy
Updated October 2, 2018

Congressional Research Service
7-....
www.crs.gov
R45304

SUMMARY

Drinking Water State Revolving Fund (DWSRF):
Overview, Issues, and Legislation

R45304
October 2, 2018
(name redated)

The state of the nation’s water infrastructure and the challenges many communities face in
Specialist in Environmental
Policy
addressing infrastructure needs continue to receive congressional attention. In 1996, Congress
-re-acte--@crs.loc.gov
authorized the Drinking Water State Revolving Fund (DWSRF) program under the Safe Drinking
Water Act (SDWA) to help public water systems finance infrastructure projects needed to
For a copy of the full report,
comply with federal drinking water regulations and to meet the act’s health protection objectives.
please call 7-.... or visit
Under this program, states receive annual capitalization grants from the U.S. Environmental
www.crs.gov.
Protection Agency (EPA) to provide financial assistance (primarily subsidized loans) to water
systems for drinking water projects and related activities. Through FY2018, Congress has
appropriated a total of $20.41 billion for the program. From FY1997 through FY2017, states provided $35.38 billion in
DWSRF assistance to water systems for 14,090 projects.
EPA’s latest survey of capital improvement needs indicates that public water systems need to invest $472.6 billion on
infrastructure improvements over 20 years to ensure the provision of safe drinking water. EPA reports that, while all of the
projects identified in the survey would promote SDWA health protection objectives, $57.6 billion (12%) of reported needs
are attributable to SDWA compliance. An American Water Works Association study estimates that restoring aging
infrastructure and expanding water systems to keep up with population growth would require a nationwide investment of at
least $1 trillion through 2035.
Program issues include (1) the gap between estimated needs and funding; (2) the growing cost of complying with SDWA
standards; (3) the ability of small or disadvantaged communities to afford DWSRF or other financing; and (4) the broader
need for cities to maintain, upgrade, and expand infrastructure unrelated to SDWA compliance. Several overarching policy
questions are under debate, including the appropriate federal role in providing financial assistance for local water
infrastructure projects and potential funding mechanisms that could supplement or replace a program reliant on annual
appropriations.
Enacted in 2014, the Water Infrastructure Finance and Innovation Act (WIFIA; P.L. 113-121,Title V) authorized a five-year
pilot loan guarantee program to promote increased development of, and private investment in, primarily large water
infrastructure projects. Congress noted that WIFIA was intended to complement, not replace, the DWSRF program and the
similar Clean Water Act State Revolving Fund (CWSRF) program for wastewater infrastructure. For FY2017, Congress
provided $30.0 million for WIFIA ($25 million for EPA to provide loan guarantees for water infrastructure projects and $5
million for administrative costs).
The Water Infrastructure Improvements for the Nation Act (WIIN Act; P.L. 114-322) made several revisions to the DWSRF
program and authorized $100 million in DWSRF appropriations to Michigan to assist the City of Flint in repairing its water
system. In P.L. 114-254, Congress appropriated the DWSRF funding authorized in the WIIN Act. The Consolidated
Appropriations Act, 2017 (P.L. 115-31), included $863.23 million in DWSRF program.
For FY2018, the President requested $863 million for the DWSRF program and $20 million for WIFIA. The Consolidated
Appropriations Act, 2018 (P.L. 115-141), included $1.16 billion for the DWSRF program and $63 million for WIFIA.
Numerous bills in the 115th Congress would expand DWSRF eligibilities, increase funding authority, and authorize new
programs to assist water systems and improve infrastructure. Two such bills have been reported: (1) the Drinking Water
System Improvement Act of 2017 (H.R. 3387), a SDWA reauthorization bill with provisions intended to improve water
systems, SDWA compliance, infrastructure resilience, consumer confidence, and source water protection, among others; and
(2) America’s Water Infrastructure Act of 2018 (S. 2800), an omnibus water resources development act (WRDA) and
infrastructure bill that includes SDWA, the Clean Water Act (CWA) and WIFIA SRF provisions. On September 13, 2018,
the House passed (amended and renamed) S. 3021, America’s Water Infrastructure Act of 2018 (AWIA), which includes
elements of S. 2800 and H.R. 8, the House-passed WRDA 2018 bill. Title II of AWAI closely parallels H.R. 3387 and
includes other drinking water-related provisions. Title IV contains WIFIA SRF, CWSRF, and other CWA amendments.

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Drinking Water State Revolving Fund (DWSRF): Overview, Issues, and Legislation

Contents
DWSRF Program Overview ............................................................................................................ 1
DWSRF Allotments and Set-Asides ......................................................................................... 2
EPA Reserves ...................................................................................................................... 2
State Set-Asides and Requirements .................................................................................... 3
DWSRF Program Appropriations.................................................................................................... 4
Drinking Water Infrastructure Needs............................................................................................... 7
Lead Service Lines .................................................................................................................. 10
Drinking Water Infrastructure Funding Issues ............................................................................... 11
Congressional Actions ................................................................................................................... 12
Water Infrastructure Finance and Innovation Act (WIFIA) .................................................... 13
WIFIA Appropriations ...................................................................................................... 13
th
114 Congress ......................................................................................................................... 14
Water Infrastructure Improvements for the Nation (WIIN) Act ....................................... 15
DWSRF and Related Infrastructure Bills in the 115th Congress ............................................. 15
America’s Water Infrastructure Act of 2018 ..................................................................... 16
Related Drinking Water Infrastructure Legislation ........................................................... 17

Figures
Figure 1. Total 20-Year (2015-2034) Need by Project Category..................................................... 8
Figure 2. Total Regulatory Need vs. Nonregulatory 20-Year Need................................................. 9
Figure 3. Overview of 20-Year Need by State .............................................................................. 10

Tables
Table 1. Drinking Water State Revolving Fund Program Funding, FY1997-FY2018 .................... 6

Contacts
Author Contact Information .......................................................................................................... 22

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Drinking Water State Revolving Fund (DWSRF): Overview, Issues, and Legislation

DWSRF Program Overview
The quality of water delivered by public water systems has been regulated at the federal level
since enactment of the 1974 Safe Drinking Water Act (SDWA). Since then, the U.S.
Environmental Protection Agency (EPA) has issued regulations for more than 90 contaminants,
and all states (except Wyoming) have assumed primary responsibility for administering the
federal drinking water program and overseeing public water system compliance. Congress last
broadly amended the law in 1996 (P.L. 104-182) in response to criticism that the statute had too
little flexibility, too many unfunded mandates, and an arduous but unfocused regulatory schedule.
Among the key provisions, the 1996 amendments authorized a Drinking Water State Revolving
Fund (DWSRF) program to help public water systems finance improvements needed to comply
with federal drinking water regulations and to address the most serious risks to human health.1
The law authorizes EPA to make grants to states each year to capitalize a state revolving loan
fund. Each state must match 20% of its annual capitalization grant. States are authorized to use
DWSRF funds to provide financial assistance (primarily subsidized loans) to eligible public water
systems for expenditures that EPA has determined, through guidance, will facilitate SDWA
compliance or significantly further the act’s health protection objectives.2 More specifically, the
law directs each state to develop an intended use plan each year indicating how the allotted funds
will be used and requires states to give funding priority to projects that




address the most serious human health risks,
are necessary to ensure compliance, and
assist systems most in need on a per-household basis according to state
affordability criteria.3

The federal grants and state match—combined with funds from loan repayments, leveraged
bonds, and other sources—are intended to generate an ongoing source of water infrastructure
funding over time. The DWSRF program is patterned after the Clean Water Act State Revolving
Fund (CWSRF) program that Congress authorized in 1987 for financing municipal wastewater
treatment projects.4
Projects eligible for DWSRF assistance include installation and replacement of treatment
facilities, distribution systems, and certain storage facilities. Projects to replace aging
infrastructure are eligible if they are needed to maintain compliance or to further health protection
goals. Projects to consolidate water supplies and enhance water system security may also be
eligible. DWSRF funds may be used for preconstruction activities. They may not be used to pay
for operation and maintenance activities or for projects needed primarily to accommodate growth.
Public water systems eligible to receive DWSRF assistance include roughly 50,000 community
water systems (whether publicly or privately owned) and 17,500 not-for-profit noncommunity
water systems.5 States generally may not provide DWSRF assistance to systems that lack the
1 SDWA §1452, state revolving loan funds; 42 U.S.C. §300j-12.
2 SDWA §1452(a)(2)(B); 42 U.S.C. §300j-12(b)(3).
3 SDWA §1452(b)(3); 42 U.S.C. §300j-12(b)(3).
4 The CWSRF program replaced a construction grants program. See CRS Report 96-647, Water Infrastructure

Financing: History of EPA Appropriations, by (name redacted) and (name redacted)
.
5 EPA, SDWIS Federal Reports Search, First Quarter, 2018. A community water system is one that serves at least 15
service connections used by year-round residents or that regularly serves at least 25 year-round residents.
Noncommunity water systems regularly provide water to people but not year-round (e.g., schools and workplaces with
their own wells).

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capacity to ensure compliance with the act or are in significant noncompliance with SDWA
requirements unless these systems meet certain conditions to return to compliance. Systems
owned by federal agencies are not eligible. Although the law authorizes assistance to privately
owned community water systems, some states have laws or policies that preclude privately owned
utilities from receiving DWSRF assistance.

DWSRF Allotments and Set-Asides
The law directs EPA to allot DWSRF funds among the states based on the results of the most
recent quadrennial needs survey (discussed under “Drinking Water Infrastructure Needs”), except
that each state (including the Commonwealth of Puerto Rico and the District of Columbia)6 must
receive at least 1% of available funds.7 SDWA authorizes EPA and the states to reserve portions
of the available funds for specified purposes.

EPA Reserves
Before distributing funds among the states, EPA reserves 2% of the appropriated amounts for
grants to Indian tribes and Alaska Native villages for water infrastructure projects.8 For FY2017,
Congress authorized EPA to set aside as much as $20.0 million for these grants. The law also
directs EPA to allot grants to the Virgin Islands, the Commonwealth of the Northern Mariana
Islands, American Samoa, and Guam, using not more than 0.33% of the funds available for grants
to the states. Congress has regularly increased this amount to 1.5% in appropriations acts.9
The SDWA further directs EPA to set aside from the annual DWSRF appropriation $2.0 million to
pay for monitoring of unregulated contaminants in small and medium systems.10 EPA may reserve
up to $30.0 million annually to reimburse states for operator training and certification costs if
separate funding is not provided under Section 1419 of the SDWA. EPA reserved the full amount
for several years but reserved none after FY2003, as state training programs had matured. To
provide technical assistance to small systems, EPA may reserve up to 2% with a $15.0 million

6 SDWA Section 1401(13) defines the term state to include Puerto Rico and the District of Columbia for purposes of

this act. The term also includes specified insular areas for all SDWA provisions other than the DWSRF program.
7 SDWA §1452(a)(1)(D); 42 U.S.C. §300j-12(a)(1)(D). State-by-state allotments and set-asides for FY1997 through
FY2018 are available at EPA’s DWSRF website at https://www.epa.gov/drinkingwatersrf/annual-allotment-federalfunds-states-tribes-and-territories.
8 Under SDWA Section 1452(i) [42 U.S.C. §300j-12(i)], EPA may use 1.5% of the amounts appropriated annually to
make grants to Indian tribes and Alaska Native villages. Since FY2010 (Department of the Interior, Environment, and
Related Agencies Appropriations, 2010 [P.L. 111-88]), Congress has authorized EPA to reserve up to 2.0% of the
appropriated funds for Indian tribes and Alaska Native villages. This authority was included in P.L. 112-74 and has
continued through the terms and conditions of subsequent appropriations.
9 SDWA §1452(j) [42 U.S.C. §300j-12(j)]. For FY2010, Congress authorized EPA to reserve up to 1.5% of the
appropriated funds for territories (P.L. 111-88). This authority has continued through subsequent appropriations acts.
10 SDWA Section 1445 (42 U.S.C. §300j-4) directs EPA to administer a monitoring program for unregulated
contaminants to facilitate the collection of occurrence data for contaminants that are not regulated but are suspected to
be present in public water supplies. Every five years, EPA must publish a list of no more than 30 unregulated
contaminants to be monitored by public water systems. All systems serving more than 10,000 people and a sample of
smaller systems must monitor for the contaminants. EPA is required to cover the costs associated with monitoring for
systems serving from 25 to 10,000 persons. EPA promulgated the fourth Unregulated Contaminant Monitoring Rule in
December 2016. For more information, see EPA, “Unregulated Contaminant Monitoring Program,”
http://water.epa.gov/lawsregs/rulesregs/sdwa/ucmr/.

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cap. However, Congress has appropriated funding for this activity under Section 1442(e), and
EPA has not set aside DWSRF funds for this purpose.11

State Set-Asides and Requirements
The SDWA also includes several set-asides and directives that apply to the states. These
provisions offer states flexibility in tailoring their individual DWSRF programs to address state
priorities. They also demonstrate the emphasis that the 1996 amendments placed on enhancing
compliance, especially among smaller systems. The act requires states to make available at least
15% of their annual allotment for loan assistance to systems that serve 10,000 or fewer persons to
the extent that the funds can be obligated to eligible projects.
The act also allows 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).12 Through appropriations acts, Congress
has frequently required states to provide additional subsidization.
Among other set-aside provisions, Section 1452(g) authorizes states to reserve a portion of their
annual capitalization grants to cover the costs of administering the DWSRF program. Congress
increased the amount states may use for administration purposes in the Water Infrastructure
Improvements for the Nation Act (WIIN Act; P.L. 114-322), enacted on December 16, 2016.13
States may use an additional portion to help pay the costs of other SDWA mandates. Specifically,
states may set aside as much as 10% for a combination of the following:





Public water system supervision programs (Section 1443(a)),
Technical assistance through source water protection programs,
State capacity development strategies (Section 1420(c)), and
Operator certification programs (Section 1419).

In the WIIN Act, Congress removed the requirement that, in order to use DWSRF funds for the
above four purposes, states were to match expenditures with an equal amount of state funds.
Section 1452(g) further authorizes states to use an additional 2% of funds to provide technical
assistance to systems that serve 10,000 or fewer persons.
States also have the option of using as much as 15% for a combination of the following:




Loans for the acquisition of land or conservation easements,
Loans to implement voluntary source water protection measures,
Technical and financial assistance to water systems as part of a capacity
development strategy, and

11 SDWA Section 1452(q) [42 U.S.C. §300j-12(q)] authorized EPA to reserve up to 2% of funds appropriated for the

DWSRF program for each of FY1997 through FY2003 to carry out Section 1442(e). The Administration has not
requested money for these small system technical assistance activities, nor has EPA used the SRF reserve authority to
fund them. Rather, Congress has provided funding for these purposes in recent appropriations acts. Enacted December
11, 2015, the Grassroots Rural and Small Community Water Systems Assistance Act (P.L. 114-98) amended Section
1442(e) to expand the technical assistance program and reauthorize appropriations through FY2020.
12 SDWA §1452(d); 42 U.S.C. §300j-12(d).
13 SDWA Section 1452(g) had previously authorized a state to use as much as 4% of its capitalization grant to cover
administration costs. The WIIN Act revised this provision to allow each state to use the greatest of $400,000, one-fifth
percent of the current valuation of the fund, or 4% of the capitalization grant, plus any fees collected by the state.

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

Expenditures from the fund for wellhead protection programs.14

Expenditures may not exceed 10% for any one of these activities. Other SDWA provisions
separately authorized funds to be appropriated for several of these activities (e.g., wellhead
protection provisions, Section 1428). Congress has generally not provided separate appropriations
for these activities, leaving states the option to use DWSRF resources for such activities.
To further promote public water system compliance, the 1996 amendments added capacity
development and operator certification requirements. Section 1420 required states to establish
capacity development programs that include (1) legal authority or other means to ensure that new
systems have the technical, financial, and managerial capacity to meet SDWA requirements and
(2) a strategy to assist existing systems that are experiencing difficulties in coming into
compliance.15 States were also required to adopt programs for training and certifying operators of
community and nontransient, noncommunity water systems.
Congress designed the DWSRF program to give states implementation flexibility. Additionally,
Congress provided states flexibility in setting priorities between the DWSRF and CWSRF
programs to accommodate the divergent drinking water and wastewater needs and priorities
among the states. Section 302(a) of the 1996 SDWA amendments authorized states to transfer as
much as 33% of the annual DWSRF allotment to the CWSRF or an equivalent amount from the
CWSRF to the DWSRF. The act authorized these transfers through FY2001. In 2000, EPA
recommended that Congress continue to authorize transfers between the SRF programs to give
states flexibility to address their most pressing water infrastructure needs. Several annual
appropriations acts had authorized states to continue to transfer as much as 33% of funds between
the two programs, and in P.L. 109-54, Congress made this authority permanent.16

DWSRF Program Appropriations
In the 1996 SDWA amendments, Congress directed EPA to establish the DWSRF program and
authorized program appropriations at a level of $599.0 million for FY1994 and $1.0 billion
annually for each of FY1995 through FY2003, for a total appropriations authority of $9.6 billion.
Although the authorization of appropriations expired in 2003, the program authority has no
expiration date, and Congress has continued to provide annual appropriations for the program.
Table 1 presents annual appropriations for the program since it began.
From FY2000 through FY2009, annual appropriations for the DWSRF program ranged from
$820 million to $850 million. For FY2009, Congress appropriated $829.0 million for the program
through regular appropriations. The American Recovery and Reinvestment Act of 2009 (P.L. 1115) provided another $2.0 billion for infrastructure projects through the DWSRF program, for a
total of some $2.83 billion in appropriations for this program for FY2009.17 For FY2010, in P.L.
111-88, Congress appropriated $1.39 billion for the DWSRF. For FY2011, the President
14 SDWA §1452(k); 42 U.S.C. §300j-12(k).
15 SDWA §1420; 42 U.S.C. §300g-9.
16 The Department of the Interior, Environment, and Related Agencies Appropriations Act, 2006—P.L. 109-54, Title II,

August 2, 2005, 119 Stat. 530—provided: “That for fiscal year 2006 and thereafter, State authority under section 302(a)
of P.L. 104-182 shall remain in effect.”
17 In P.L. 111-5, Congress imposed several new conditions on projects receiving DWSRF assistance, including DavisBacon prevailing wage requirements and “Buy American” requirements. The act also required states to use at least 50%
of the funds to further subsidize loans (including forgiveness of principal and grants) and to reserve at least 20% of the
funds for green infrastructure, water efficiency improvements, or other environmentally innovative projects.

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requested $1.29 billion, and P.L. 112-10 funded the program at $965.0 million ($963.1 million
after applying an across-the-board rescission of 0.2%). For FY2012, the President requested
$999.0 million, and Congress appropriated $919.4 million in P.L. 112-74 ($917.9 million after
applying an across-the-board rescission of 0.16%). In this act, Congress applied Davis-Bacon
prevailing wage requirements to DWSRF program funding for FY2012 and all future years.
For FY2013, the President requested $850.0 million for the DWSRF program. The Consolidated
and Further Continuing Appropriations Act, 2013 (P.L. 113-6), provided full-year continuing
appropriations for Interior, EPA, and related agencies through September 30, 2013. After taking
into account sequestration and a 0.2% rescission pursuant to P.L. 113-6, EPA allocated $861.3
million for the program for FY2013.18 Additional SRF funds were appropriated for FY2013 in the
Disaster Relief Appropriations Act, 2013 (P.L. 113-2): $95.0 million ($100.0 million before
sequestration) for the DWSRF program and $475.0 million ($500.0 million before sequestration)
for the CWSRF program. These funds were targeted for drinking water and wastewater
infrastructure projects in areas of New Jersey and New York affected by Hurricane Sandy.
For FY2014, the President requested $817.0 million, and EPA received $906.9 million. The
President reduced the request to $757.0 million for FY2015, but Congress again appropriated
$906.9 million in P.L. 113-235. For FY2016, the President requested $1.18 billion for the
DWSRF program, and Congress appropriated $863.2 million (P.L. 114-113).
For FY2017, the Obama Administration requested $1.02 billion for the DWSRF program. In the
Consolidated Appropriations Act, 2017 (P.L. 115-31, Division G, Title II), Congress appropriated
$863.23 million for DWSRF capitalization grants.19 P.L. 114-254 included an additional $100
million in DWSRF funding to provide assistance to Flint to address lead in the water system.
For FY2018, President Trump requested $863.0 million for the DWSRF program, while Congress
provided $1,163.2 million—$300 million above the FY2017 level (excluding $100 million
provided to assist Flint). Congress again directed each state to use 20% of its FY2018 grant to
provide additional subsidy (e.g., grants) to eligible recipients. Although funding was not
requested, Congress also appropriated funds for the three new grant programs authorized in the
WIIN Act.20 For FY2019, the Administration requested $863.23 million for the DWSRF program.

18 This amount also takes into account P.L. 113-6, Section 1406, which rescinded $10.0 million from unobligated

DWSRF balances. The law also rescinded $10.0 million from unobligated CWSRF balances.
19 P.L. 115-31, H.R. 244 provides that “states shall use 20 percent of their DWSRF capitalization grants to provide
additional subsidy to eligible recipients in the form of forgiveness of principal, negative interest loans, or grants (or any
combination of these), and shall be so used by the State only where such funds are provided as initial financing for an
eligible recipient or to buy, refinance, or restructure the debt obligations of eligible recipients where such debt was
incurred on or after the date of enactment of this Act, or where such debt was incurred prior to the date of enactment of
this Act if the State, with concurrence from the Administrator, determines that such funds could be used to help address
a threat to public health from heightened exposure to lead in drinking water or if a Federal or State emergency
declaration has been issued due to a threat to public health from heightened exposure to lead in a municipal drinking
water supply before the date of enactment of this Act: Provided further, That in a State in which such an emergency
declaration has been issued, the State may use more than 20 percent of the funds made available under this title to the
State for Drinking Water State Revolving Fund capitalization grants to provide additional subsidy to eligible
recipients.” At their discretion, states may use FY2017 DWSRF capitalization grants “for projects to address green
infrastructure, water or energy efficiency improvements, or other environmentally innovative activities.” 131 Stat. 473.
20 For further information, see CRS In Focus IF10883, Overview of U.S. Environmental Protection Agency (EPA)
Water Infrastructure Programs and FY2018 Appropriations, by (name redacted) and (name redacted)
.

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Table 1. Drinking Water State Revolving Fund Program Funding, FY1997-FY2018
(in millions of dollars, nominal and adjusted for inflation 2017 dollars)
Fiscal Year

Authorizations

Appropriations
Nominal

Adjusted
for Inflation

1997

$1,000.0

$1,275.0

$1,850.8

1998

$1,000.0

$725.0

$1,039.6

1999

$1,000.0

$775.0

$1,097.4

2000

$1,000.0

$820.0

$1,137.4

2001

$1,000.0

$823.2

$1,115.2

2002

$1,000.0

$850.0

$1,133.2

2003

$1,000.0

$844.5

$1,104.7

2004

—

$845.0

$1,078.6

2005

—

$843.2

$1,043.6

2006

—

$837.5

$1003.9

2007

—

$837.5

$977.3

2008

—

$829.0

$947.7

2009

—

$829.0

$936.8

2009/ARRA

—

$2,000.0

$2,260.2

2010

—

$1,387.0

$1,553.8

2011

—

$963.1

$1,057.4

2012

—

$917.9

$989.7

2013

—

$956.3a

$1,013.9

2014

—

$906.9

$994.4

2015

—

$906.9

$933.1

2016

—

$863.2

$878.0

2017

—

$963.2b

$963.2

2018

—

$1,163.2

$1,145.3

$22,161.6c

$26,205.6

Total

Sources: Prepared by CRS using the most current information available from House, Senate, or conference
committee reports accompanying the annual appropriations bills that fund EPA and Administration budget
documents, including the President’s annual budget requests as presented by the Office of Management and
Budget (OMB) and EPA’s accompanying annual congressional budget justifications. “ARRA” refers to the
American Recovery and Reinvestment Act of 2009 (P.L. 111-5). Inflation-adjusted values are based on OMB,
Budget of the United States Government Fiscal Year 2019, Historical Tables, Table 5.4—Discretionary Budget
Authority by Agency 1976-2023, and Table 10.1—Gross Domestic Product and Deflators Used in the Historical
Tables—1940-2023, https://www.whitehouse.gov/omb/historical-tables/.
a. FY2013 post-sequestration enacted amounts are as presented in EPA’s FY2013 Operating Plan. This amount
reflects the baseline appropriation level of $861.3 million ($908.7 million pre-sequestration and prerescission) plus $95.0 million ($100.0 million pre-sequestration) for the DWSRF program in the Disaster
Relief Appropriations Act, 2013 (P.L. 113-2), for projects in New Jersey and New York to address damage
from Hurricane Sandy.

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b.

c.

The Consolidated Appropriations Act, 2017 (P.L. 115-31), included $863.23 million for the DWSRF
program. The Continuing and Security Assistance Appropriations Act, 2017 (P.L. 114-254), included an
additional $100 million in DWSRF funding to assist Flint, MI, as authorized in the WIIN Act (P.L. 114-322).
Funds available to states are reduced by amounts that EPA sets aside from the annual appropriation. For
FY2017, EPA reserved $20.0 million for American Indian and Alaska Native water system grants (SDWA
§1452(i)) and $2.0 million to reimburse small systems for unregulated contaminants (§1452(o)).

From 1997 through June 2017, cumulative appropriations for the DWSRF program reached
$20.03 billion. Adjusted for set-asides and transfers between the clean water and drinking water
SRFs, cumulative net federal contributions totaled $19.17 billion. When combined with the 20%
state match ($3.71 billion), bond proceeds, loan principal repayments, and other funds, the total
DWSRF investment through June 2017 had reached $36.96 billion, and the program had provided
more than $35.38 billion in assistance. Over the same period, more than 14,090 projects had
received assistance, and 9,836 had been completed.21
In contrast to direct grants for construction projects—which would not create an ongoing funding
source—the revolving fund program was designed to provide seed money to states in the form of
capitalization grants to help generate a sustainable source of funding in each state over time.

Drinking Water Infrastructure Needs
To determine how to allot DWSRF funds among the states, SDWA directs EPA to assess the
capital improvement needs of eligible public water systems every four years.22 Concurrently, and
in consultation with the Indian Health Service and Indian tribes, EPA must assess needs for
drinking water treatment facilities to serve Indian tribes and Alaska Native villages.23 EPA is
required to distribute the DWSRF funds among the states based on the results of the most recent
needs survey. Eligible systems include approximately 50,000 community water systems (publicly
or privately owned) and 17,500 not-for-profit nontransient, noncommunity water systems.
In March 2018, EPA issued the 2015 Drinking Water Needs Survey and Assessment, which
presents estimated needs for DWSRF-eligible infrastructure projects for the period 2015-2034.24
This survey indicates that public water systems need to invest $472.6 billion on infrastructure
improvements over 20 years ($19.2 billion annually) to achieve compliance with SDWA drinking
water regulations and “to continue to provide safe drinking water to the public.”25 EPA reports
that this amount represents an increase of 10% in the estimated total national need compared to
the 2011 survey estimate of $384.2 billion ($428.6 billion in 2015 dollars)—with water
transmission and distribution projects comprising the largest increase in needs.
The 2015 needs survey presents the 20-year needs estimates for DWSRF-eligible projects by
category: transmission and distribution, treatment, source, storage, and other. As Figure 1
indicates, the largest needs category—installation and rehabilitation of transmission and
21 Detailed national and state program data are available at https://www.epa.gov/drinkingwatersrf. See also EPA,

Drinking Water State Revolving Fund: 2016 Annual Report, EPA 816-K-17001, September 2017.
22 SDWA §1452(h); 42 U.S.C. §300j-12(h). EPA must report each needs assessment to Congress.
23 SDWA §1452(i); 42 U.S.C. §300j-12(i).
24 EPA, Office of Water, Drinking Water Infrastructure Needs Survey and Assessment: Sixth Report to Congress, EPA
816-K-17-002, March 2018, p. 9. This is the sixth drinking water needs survey.
25 EPA, Drinking Water Infrastructure Needs Survey and Assessment, p. 10. The agency noted that it adjusted its
statistical methodology slightly and facilitated the participation process, which resulted in a more complete survey,
increasingly consistent methodologies for needs estimation among the states, and improved reporting of needs related
to infrastructure rehabilitation and replacement.

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distribution systems—accounts for $312.6 billion (66.2%) of total 20-year needs. EPA reports
that community water systems have an estimated total of 2.2 million miles of transmission lines
and distribution mains.26 Water treatment needs constituted the next-largest category, accounting
for $83.0 billion (17.6%) of total needs, while water storage accounts for $47.6 billion (10.1%),
and source—projects needed to obtain safe water supplies, including rehabilitation and
installation of wells—accounts for $21.8 billion (4.6%) of total 20-year needs. The 2015
assessment did not specifically break out needs related to water system security improvements. In
the 2011 survey, EPA estimated a 20-year need of $235.9 million for security-related projects. For
that assessment, EPA concluded that security-related needs may be far greater, because many
water systems incorporate these costs into the costs of broader construction projects rather than
report them separately.
Figure 1.Total 20-Year (2015-2034) Need by Project Category
(in billions of January 2015 dollars)

Source: CRS, adapted from EPA, Drinking Water Infrastructure Needs Survey and Assessment: Sixth Report to
Congress, EPA 816-K-17-002, March 2018.
Notes: The needs survey presents the 20-year needs estimates for DWSRF-eligible projects. EPA reported that
of the total national need of $472.6 billion (an increase from the 2011 estimated needs of $384.2 billion), $57.6
billion (12.2%) is related to compliance with SDWA regulations, while $415.0 billion (87.8%) represents
nonregulatory costs (e.g., replacing distribution lines). EPA also noted an increased need for new source water
infrastructure as more communities experience drought. “Other” includes security measures, computer systems,
and other needs not captured elsewhere.

The needs survey also breaks down the 20-year needs estimates according to system size and
ownership. The 20-year drinking water infrastructure need for states (including Puerto Rico and
the District of Columbia) totaled $463.6 billion. Within that total, the reported needs among
community water systems and not-for-profit noncommunity water systems (e.g., schools with
their own water wells) broke out as follows:


Large community water systems (serving more than 100,000 people): $174.4
billion (36% of the total 20-year need);





Medium systems (serving from 3,301 to 100,000 people): $210.6 billion (43.6%);
Small systems (serving 3,300 or fewer people): $64.5 billion (17.4%); and
Not-for-profit noncommunity systems: $5.1 billion (3%).

26 EPA, Drinking Water Infrastructure Needs Survey and Assessment, p. 23.

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In addition, the American Indian and Alaska Native village water system needs totaled $3.8
billion. The 20-year needs reported by American Samoa, Guam, the Commonwealth of the
Northern Mariana Islands, and the U.S. Virgin Islands totaled $669.7 million. EPA estimated that
an additional $4.9 million would be needed for systems to comply with proposed and recently
promulgated regulations.
EPA reports that all the infrastructure projects in the needs assessment would promote the health
objectives of the act. Within the total needs reported, $57.6 billion (12.2%) is directly attributable
to regulatory costs, while $415.0 billion (87.8%) represents nonregulatory costs (e.g., replacing
old distribution lines).27 (See Figure 2.) Most regulatory funding needs typically involve the
upgrade, replacement, or installation of treatment technologies. Most nonregulatory funding
needs typically involve installing, upgrading, or replacing transmission and distribution
infrastructure to allow a system to continue to deliver safe drinking water. Although these system
problems often do not cause a violation of a specific drinking water standard, projects to correct
infrastructure problems may be eligible for DWSRF funding if needed to address public health
risks.
Figure 2.Total Regulatory Need vs. Nonregulatory 20-Year Need
(in billions of January 2015 dollars)

Source: CRS, adapted from EPA, Drinking Water Infrastructure Needs Survey and Assessment: Sixth Report to
Congress, EPA 816-K-17-002, March 2018.
Notes: EPA reports that the chemical regulations needs estimate includes needs associated with the proposed
radon rule (EPA, “National Primary Drinking Water Regulations; Radon-222; Proposed Rule,” 64 Federal Register
59246, November 2, 1999).

EPA noted that the total needs estimate may be conservative for several reasons: (1) systems are
required to meet stringent documentation criteria when identifying needs; (2) many systems had
not fully evaluated their security needs at the time of the assessment; (3) capital improvement
plans often cover fewer than 10 years, while the survey tries to capture 20-year estimates; and (4)
the survey is limited to eligible needs, thus excluding water infrastructure projects related to
dams, raw water reservoirs, fire protection, operation and maintenance, and future growth.

27 EPA, Drinking Water Infrastructure Needs Survey and Assessment, pp. 11, 30.

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EPA also presents drinking water infrastructure needs by state, as shown in Figure 3. As noted,
the act provides that, regardless of needs survey results, each state, the Commonwealth of Puerto
Rico, and the District of Columbia is to receive at least 1% of available funds.28
Figure 3. Overview of 20-Year Need by State
(including District of Columbia, Puerto Rico, and U.S. territories)

Source: CRS, adapted from EPA, Drinking Water Infrastructure Needs Survey and Assessment: Sixth Report to
Congress, EPA 816-K-17-002, March 2018.
Notes: EPA gave states that received the minimum DWSRF allotment (1%) based on the 2011 needs survey the
option of surveying only large systems in their states to reduce their burden. Of these 19 states, 14 chose the
“partial participation” option. EPA notes, “For these states, the medium system need was estimated based on
data from fully surveyed states. Because this method does not meet the Assessment’s stringent data quality
objectives at the state level, the needs of these states contribute to the estimate of the total national need but
are not reported individually by state.” The needs for American Samoa, Guam, the Commonwealth of Northern
Mariana Islands, and the U.S. Virgin Islands were estimated to be less than $1 billion each. The map does not
include $3.8 billion in combined needs for American Indian and Alaska Native Village water systems.

Lead Service Lines
Among other assessments of drinking water infrastructure needs, a 2012 study prepared by the
American Water Works Association (AWWA) projected that restoring and expanding water
systems to keep up with population growth would require a nationwide investment of at least $1
28 For a list of each state’s reported needs, broken out by project category, see EPA, Drinking Water Infrastructure

Needs Survey and Assessment, Exhibit 2.1, p. 36.

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trillion over the next 25 years.29 Additionally, the authors of a 2012 AWWA-sponsored analysis of
lead service line occurrence estimated that there may be 6.1 million lead service lines nationwide.
The AWWA notes that, while progress has been made, removal of these lines could represent an
additional $30.0 billion in infrastructure funding needs.30
In conducting the needs assessment, some public water systems included needs estimates for
replacing lead service lines, although EPA has not specifically asked water systems to report the
number of lead service lines in their systems. Lacking project-specific data, the needs assessment
model assumes that the cost to replace a lead service line is $3,777. Using that figure, EPA
provides the following partial estimate:
Based on data from large and medium systems in the 2015 Assessment and from small
systems in the 2007 Assessment, water systems identified needs for replacement of
approximately 1.4 million lead service lines over the 20-year period of January 2015
through December 2034. The estimated total cost of replacing these lead service lines is
$4.2 billion in 2015 dollars.31

The survey notes several factors that might affect this estimate. For example, water systems that
have lead service lines but control lead in drinking water through corrosion control may not
report a need to replace lead service lines.32

Drinking Water Infrastructure Funding Issues
Overall, federal spending on drinking water infrastructure represents a small portion of total
spending across federal, state, and local governments. The Congressional Budget Office reported
that, in 2014, the federal share of total public spending on water and wastewater utilities was 4%,
while state and local government expenditures accounted for 94% of all public spending on this
infrastructure.33
In addition to infrastructure needs, other SDWA mandates are eligible for DWSRF funding, thus
increasing competition for these resources. The DWSRF program includes competing objectives,
and, thus, this competition is perhaps unavoidable. On the one hand, the fundamental purpose of
the program is to capitalize revolving funds in the states in order to generate a sustainable source
of funding for drinking water projects. On the other hand, Congress authorized multiple set-asides
to fund other drinking water program priorities and requirements, such as system compliancecapacity assurance, operator certification, wellhead protection, and small system technical
assistance. Overall, states may use as much as 31% of their grants for the set-asides and another
30% to provide additional loan subsidies to disadvantaged communities.

29 Stratus Consulting, Buried No Longer: Confronting American’s Water Infrastructure Challenge, American Water

Works Association, 2012, http://www.awwa.org/legislation-regulation/issues/infrastructure-financing.aspx.
30 See David A. Cornwell et al., “National Survey of Lead Service Line Occurrence,” Journal of the American Water
Works Association, vol. 108, no. 4, http://www.awwa.org/resources-tools/public-affairs/press-room/press-release/
articleid/4074/lead-service-line-analysis-examines-scope-of-challenge.aspx. The authors noted that the data were
limited, and the number of remaining lead service lines could range from 5.1 million to 7.7 million lines in
communities nationwide.
31 EPA, Drinking Water Infrastructure Needs Survey and Assessment, p. 26. For purposes of this assessment, EPA
assumed that the cost of replacing lead service lines is $3,777 per line.
32 EPA, Drinking Water Infrastructure Needs Survey and Assessment, p. 26.
33 Congressional Budget Office, Public Spending on Transportation and Water Infrastructure, 1956 to 2014, March
2015, p. 28.

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While these options offer states flexibility to tailor their programs to meet their particular needs,
using funds for these activities could significantly erode the corpus of state funds and slow the
rate at which they become capitalized. A concern for states is that, to the degree that Congress
relies on the DWSRF to fund other SDWA requirements—rather than providing separate
appropriations—the potential of the DWSRF program is diminished. Moreover, in recent
appropriations acts, Congress has added several policy directives not present in the SDWA that
may also affect the states’ ability to grow or maintain their SRFs. These added provisions include
specified additional subsidization requirements for disadvantaged systems, Davis-Bacon
prevailing wage requirements, and Buy American (iron and steel) provisions.34 In FY2010 and
subsequent appropriations acts, Congress has mandated that states use a certain portion (usually
20%) of their federal capitalization grants to provide additional subsidies to borrowers. EPA
notes:
This change allowed states to aid communities most in need and incentivize particular types
of projects. Because this subsidy comes from the federal dollars, continued federal support
is needed to maintain this benefit and continue growing the fund. 35

A chronic issue concerns the need for communities to address drinking water infrastructure
requirements outside the scope of the DWSRF program. Communities must typically address
several categories of infrastructure requirements that are unrelated to SDWA compliance or public
health and, thus, ineligible for DWSRF assistance.36 These categories include future growth,
ongoing rehabilitation, and operation and maintenance of systems. EPA has reported that outdated
and deteriorated drinking water infrastructure poses a fundamental long-term threat to drinking
water safety and that, in many communities, basic infrastructure costs can far exceed SDWA
compliance costs. As reported in EPA’s most recent drinking water needs assessment, roughly
12% of the 20-year estimated need is directly related to compliance with SDWA regulations.
A fundamental question has concerned the long-term federal role in water infrastructure
financing. A subset of questions concerns how deficit reduction efforts might affect federal
involvement—for example, how deficit reduction objectives might impact proposals to develop a
small system grant program or sustainable funding source, such as a water infrastructure trust
fund. Other persistent water infrastructure issues include the gap between funding and estimated
needs, the growing cost of complying with SDWA standards (particularly for small communities),
the ability of small or disadvantaged communities to afford DWSRF financing, and the broader
need for cities to maintain, upgrade, and expand infrastructure unrelated to SDWA compliance.

Congressional Actions
In the face of large needs, competition for limited federal resources, and debate over the federal
role in funding water infrastructure, EPA, states, and communities and utilities have increasingly
focused on alternative management and financing strategies to address costs and promote greater
financial self-reliance among water systems. Strategies include establishing public-private
34 As noted, P.L. 114-322 amended the SDWA to require that funds made available from a state DWSRF during

FY2017 may not be used for water system projects unless all iron and steel products to be used in the project are
produced in the United States. The 112th Congress made permanent the application of Davis-Bacon prevailing wage
requirements to the DWSRF program (P.L. 112-74, H.Rept. 112-331, p. 236).
35 EPA, Drinking Water State Revolving Fund: 2016 Annual Report, p. 10, https://www.epa.gov/drinkingwatersrf/
2016-dwsrf-annual-report.
36 Projects to replace aging infrastructure are eligible if they are needed to maintain compliance or to further public
health protection goals.

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partnerships, improving asset management, and adopting full-cost pricing for water services.
Such approaches are intended to improve the financial and managerial sustainability of water
systems. However, they may be limited in their ability to fully meet needs, particularly among
poorer communities, small water systems that may lack economies of scale, or communities with
declining populations.37 Consequently, interest in exploring new infrastructure financing options
(such as an infrastructure bank) and expanding federal assistance has persisted.

Water Infrastructure Finance and Innovation Act (WIFIA)
Deficit reduction pressures are not new to DWSRF appropriations considerations, but statutory
spending caps in the Budget Control Act of 2011, as amended by the American Taxpayer Relief
Act of 2012, placed added constraints on appropriators. The 113th Congress considered various
water infrastructure funding options. As discussed below, one such approach was enacted.
The Water Resources Reform and Development Act of 2014 (P.L. 113-121, H.R. 3080) included
in Title V, Subtitle C, the Water Infrastructure Finance and Innovation Act of 2014 (WIFIA). In
WIFIA, Congress authorized a pilot loan guarantee program to test the ability of innovative
financing tools to promote increased development of, and private investment in, water
infrastructure projects—while reducing costs to the federal government. The five-year pilot
program is intended to complement—not replace—the SRF programs.
Eligible projects include SRF-eligible projects and a wide range of water resource development
projects that generally have costs of at least $20.0 million. Such large projects face difficulty
securing significant funding through the SRF programs. Moreover, unlike the SRF programs,
WIFIA is not focused on regulatory compliance and, therefore, may be more available for other
large-scale water infrastructure projects. For projects serving areas with a population of 25,000 or
fewer individuals, eligible projects must have a total cost of at least $5.0 million. Projects
financed under this program are subject to Davis-Bacon prevailing wage requirements. Also,
WIFIA funds may be used only if all the iron and steel used in a project are produced in the
United States (unless this requirement would increase project costs by more than 25%).
WIFIA authorized to be appropriated to the Secretary of the Interior and the EPA Administrator
$20.0 million each for FY2015 and $25.0 million each for FY2016, with amounts increasing
annually to $50.0 million each for FY2019.38

WIFIA Appropriations
For each of FY2015 and FY2016, Congress appropriated $2.2 million for EPA to hire staff and
develop the WIFIA program, but no project funds were provided. In the President’s FY2016
budget request, EPA noted that it faced a complex task in standing up a new federal loan
program.39 For FY2017, the President requested $20.0 million for EPA to provide WIFIA
financing for large drinking water and wastewater infrastructure projects (including
administrative costs). The budget request stated that the program goal was to “accelerate
investment in our nation’s water and wastewater infrastructure by providing supplemental credit
37 See, for example, Government Accountability Office, Water Infrastructure: Information on Selected Midsize and

Large Cities with Declining Populations, GAO-16-785, September 2016, http://www.gao.gov/products/GAO-16-785.
38 For further information, see CRS Report R43315, Water Infrastructure Financing: The Water Infrastructure Finance
and Innovation Act (WIFIA) Program, by (name redacted) and (name r
edacted)
.
39 EPA, Office of the Chief Financial Officer, United States Environmental Protection Agency Fiscal Year 2016
Justification of Appropriation Estimates for the Committee on Appropriations, February 2015, p. 552.

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assistance to credit worthy nationally and regionally significant water projects.”40 EPA estimated,
“Of the total requested, $15 million in credit subsidy translates into a potential loan capacity of
nearly $1 billion to eligible entities for infrastructure projects with the initial loans taking place in
FY2017.”
In the Continuing and Security Assistance Appropriations Act of 2017 (P.L. 114-254), Congress
provided $20.0 million for EPA to begin providing loan guarantees for infrastructure projects
under WIFIA. Also, Congress provided for WIFIA $10 million in the Consolidated
Appropriations Act, 2017 (P.L. 115-31),41 for a total of $30.0 million for the program for FY2017.
For FY2018, the President requested $20.0 million for WIFIA, and Congress provided $63
million in the Consolidated Appropriations Act, 2018 (P.L. 115-141)—$8 million of which is for
administrative costs.42

114th Congress
The detection of elevated lead levels in drinking water in Flint, MI, and elsewhere heightened
attention to the state of the nation’s drinking water infrastructure and the challenges many
communities face in addressing their infrastructure needs. The 114th Congress focused attention
on funding levels for and implementation of the DWSRF program as well as EPA efforts to
implement WIFIA. Further, numerous bills were introduced to establish new water infrastructure
funding sources through grants, a trust fund, and other means and to revise the tax code to
promote private sector investment in water infrastructure.
An array of proposals were introduced to provide infrastructure funding assistance to Flint to
address lead contamination of drinking water associated with old pipes and corrosion problems
and, more broadly, to increase water infrastructure funding for communities nationwide.
As in previous Congresses, legislation was offered to amend the Internal Revenue Code of 1986
to provide that the volume cap for private activity bonds (PABs) would not apply to bonds for
drinking water or wastewater facilities. These tax-exempt bonds provide a financing tool to
stimulate private sector investment in public projects. However, federal law imposes state bond
caps, limiting the ability of state and local governments to use PABs to finance drinking water
and wastewater infrastructure projects.43
40 EPA, FY2017 Budget in Brief, February 2016, p. 103, https://www.epa.gov/sites/production/files/2016-02/

documents/fy17-budget-in-brief.pdf.
41 P.L. 115-31 specified that $8 million be made available for the cost of direct loans and guaranteed loans under
WIFIA and that, “in addition, for administrative expenses to carry out the direct and guaranteed loan programs,
notwithstanding section 5033 of the Water Infrastructure Finance and Innovation Act of 2014, $2,000,000, to remain
available until September 30, 2018.”
42 The Continuing Appropriations Act, 2018, and Supplemental Appropriations for Disaster Relief Requirements Act,
2017 (P.L. 115-56, §133) provided to EPA for administrative expenses to carry out the WIFIA program “at a rate for
operations of $3 million.”
43 The federal tax code allows state and local governments to use tax-exempt bonds to finance certain projects that
would be considered private activities. Congress uses an annual state volume cap to limit the amount of tax-exempt
bond financing and restricts the types of “qualified private activities” that would qualify for tax-exempt financing to
types of projects specified in the tax code. Supporters, including most segments of the water industry, assert that such
bills would expand opportunities for private investment in the water infrastructure market and generate significant
private capital at a very low cost to the government. Others have argued generally against subsidies and note the loss of
revenue that would result from such an approach. Congress has generally limited the use of tax-exempt bonds for
private activities because of concern about their overuse and related revenue losses. Moreover, Internal Revenue
Service data suggest that PAB expansion may have only a small impact on water infrastructure investment. For a
review of PABs, caps, qualified programs, and congressional action, see CRS Report RL31457, Private Activity Bonds:

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Water Infrastructure Improvements for the Nation (WIIN) Act
Senate-passed S. 2848, the Water Resources Development Act (WRDA) of 2016, included a
number of SDWA and CWA infrastructure provisions and incorporated various bills introduced in
response to the Flint water crisis. The House-passed WRDA bill, H.R. 5303, excluded such EPA
provisions and proposed to authorize the U.S. Army Corps of Engineers to provide water
infrastructure assistance to certain communities in states subject to presidential emergency
declarations as a result of lead or other contaminants in the water system. In lieu of convening a
formal conference on these bills, Congress incorporated various provisions of S. 2848 and H.R.
5303—along with other water resource provisions—into S. 612, which became the Water
Infrastructure Improvements for the Nation (WIIN) Act.44
Enacted on December 16, 2016, the WIIN Act (P.L. 114-322) included an array of water
resources, drought, and drinking water provisions. Title II of this wide-ranging water resources
law comprises the Water and Waste Act of 2016. Title II, Subtitle B, authorized $100 million in
DWSRF funding and other emergency assistance to help Flint address lead in the water system.
In P.L. 114-254, Congress appropriated the funding authorized in the WIIN Act to assist Flint.
Title II, Subtitle A, of the WIIN Act made several revisions to the DWSRF program, including
requiring that funds made available from a state DWSRF during FY2017 may not be used for
water system projects unless all iron and steel products to be used in the project are produced in
the United States. (Certain waivers of the requirement are specified.) The act further amended
SDWA to direct EPA to establish two new drinking water infrastructure grant programs: New
SDWA Section 1459A authorizes grants to provide compliance assistance to small or
disadvantaged public water systems, and new Section 1459B authorizes grants for lead reduction
projects, including lead service line replacement. For each grant program, Congress authorized to
be appropriated $60 million per year for FY2017-FY2021.45 The act did not reauthorize
appropriations for the DWSRF program.
The WIIN Act, Section 2107, rewrote SDWA Section 1464 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. States or local education agencies may apply to EPA for
grants to cover testing costs. Appropriations for this grant program are authorized at $20 million
per year for FY2017-FY2021. (Funding for the three new grant programs is discussed below.)

DWSRF and Related Infrastructure Bills in the 115th Congress
The 115th Congress continues efforts to address drinking water infrastructure management and
investment challenges. Members have introduced bills to increase federal investment in water
infrastructure and to promote improved public water system asset management and SDWA
compliance capacity. A number of bills would expand DWSRF eligibilities, increase funding
authority, and make other revisions to assist communities in making improvements to drinking
water infrastructure.

An Introduction, by (name redacted) and (name redacted) .
44 For further information, see CRS In Focus IF10536, Water Infrastructure Improvements for the Nation Act (WIIN),
by (name redacted) et al.
45 For a review of SDWA amendments and authorizations in the WIIN Act and appropriations in P.L. 114-254 to assist
Flint, see CRS In Focus IF10577, Water Infrastructure Improvements for the Nation (WIIN) Act, P.L. 114-322:
Drinking Water Provisions, by (name redacted).

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America’s Water Infrastructure Act of 2018
In the first session of the 115th Congress, the House Committee on Energy and Commerce
favorably reported H.R. 3387, the Drinking Water System Improvement Act of 2017 (H.Rept.
115-380). In addition to proposing a number of changes to the DWSRF program and authorizing
increased appropriations, this broader SDWA authorization bill includes provisions intended to
improve public water systems, SDWA compliance, consumer confidence, and drinking water
infrastructure quality and resilience. Among other purposes, it would increase funding to address
lead in school drinking water and authorize additional assistance for disadvantaged communities.
On September 13, 2018, the House passed S. 3021, amended and renamed as America’s Water
Infrastructure Act (AWIA) of 2018. Initially passed by the Senate as a courthouse naming bill, the
House-passed version of S. 3021 was received by the Senate on September 17, 2018. This
omnibus water resources and infrastructure bill includes elements of H.R. 8, the House-passed
Water Resources Development Act of 2018 (WRDA 2018), and S. 2800, America’s Water
Infrastructure Act of 2018—which, as reported, includes WRDA, SDWA, CWA, WIFIA, and
other provisions.46 Title II of S. 3021, as amended, largely parallels H.R. 3387, along with several
other drinking-water-related provisions. (H.R. 3387 and S. 2800 are outlined below under
“Reported Legislation”.)

Drinking Water Provisions
Compared to H.R. 3387, Title II of AWIA would generally authorize or reauthorize appropriations
for SDWA programs for shorter periods. For DWSRF capitalization grants, for example, Title II
would authorize to be appropriated $4.4 billion over three years (compared to a five-year
reauthorization in H.R. 3387). Grants for states and tribes to oversee water systems and enforce
SDWA regulations would be reauthorized at a level of $125 million for each of FY2020 and
FY2021 rather than $150 million annually for five years.
Among many similarities to H.R. 3387, Title II of AWIA would increase the amount of DWSRF
funding that states could use to assist disadvantaged communities and would authorize states to
extend the loan repayment period. It would specify that DWSRF funds could be used for
replacing or rehabilitating aging treatment, storage, or distribution facilities; require future needs
surveys to include an assessment of costs to replace lead service lines; extend through FY2022
the requirement that projects receiving DWSRF assistance use American iron and steel; and apply
Davis-Bacon prevailing wage requirements to projects receiving DWSRF assistance (currently
required through appropriations acts). Title II of AWIA would also allow greater use of DWSRF
funds for source water protection activities. It would authorize states to require system owners or
operators, in certain circumstances, to assess options for consolidation, transfer of ownership, or
other actions to achieve compliance and would encourage systems to develop asset management
plans. Title II would rewrite and broaden SDWA antiterrorism provisions to require community
water systems serving more than 3,300 persons to assess risks and resiliency to malevolent acts
and natural hazards and to prepare emergency response plans and authorize $25 million for
FY2020 and FY2021 for grants to support these activities. Title II would require large systems to
provide consumer confidence reports to customers biannually (rather than annually as currently
required) and direct EPA to develop a strategic plan to improve accuracy and availability of
compliance monitoring data. To reduce exposure to lead in school drinking water, Title II of
AWIA would (1) authorize increased appropriations ($25 million annually for FY2020 and
FY2021) to assist states and local educational agencies in testing for lead in drinking water at
46 For more information on S. 3021, see CRS Report R45185, Army Corps of Engineers: Water Resource Authorization

and Project Delivery Processes, by (name redacted).

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schools and child care programs and direct EPA to provide technical assistance and (2) authorize
$5 million annually for FY2019 through FY2021 for grants to replace pre-1988 school water
fountains.
For disaster recovery, AWIA Title II would authorize $100 million to be appropriated for DWSRF
capitalization grants to states to assist community water systems in areas covered by a federal
disaster declaration issued after January 1, 2017. Funds may be used to help eligible systems
restore or increase SDWA compliance in underserved areas.
AWIA also includes drinking water provisions comparable to those in S. 2800, as reported.
Among other provisions, AWIA Title II would authorize $20 million for each of FY2019 through
FY2022 for EPA to provide grants for drinking water and wastewater infrastructure projects at
Indian reservations located in the Upper Mississippi River and Upper Rio Grande basins. This
title would also require EPA, with the U.S. Department of Agriculture and the Department of
Health and Human Services, to study and report to Congress on “intractable water systems” and
barriers they face in delivering potable water.47

WIFIA Provisions
AWIA Title IV, Subtitle B, would make WIFIA permanent rather than a pilot program and would
authorize appropriations at a level of $50 million for each of FY2020 and FY2021. It would
establish special rules for WIFIA assistance to state SRF finance authorities including allowing
states to finance up to 100% of project costs using WIFIA assistance. Further, Title IV would
authorize another $5 million in appropriations for WIFIA assistance to state finance authorities in
years when EPA receives at least $50 million in WIFIA appropriations. However, this extra $5
million would not be available unless appropriations for the CWSRF and DWSRF matched or
exceeded the FY2018 level or were 105% or more of the previous year’s funding, whichever was
greater.

Clean Water Act Provisions
AWIA, Title IV, Subtitle A, includes several amendments to the CWA. Among other provisions,
Subtitle A would authorize to be appropriated $225 million for each of FY2019 and FY2020 for
municipal sewer overflow control and stormwater management grants. The subtitle would
authorize EPA to make grants to nonprofit organizations to provide technical assistance to enable
rural, small, and tribal-community-owned treatment works to achieve CWA compliance or obtain
financing. It would also authorize eligible nonprofit organizations to receive CWSRF assistance
to provide assistance to low- or moderate-income households for repair or replacement of
household decentralized wastewater treatment systems or for connection to a publicly owned
treatment works. Among other provisions, Subtitle A would authorize funds to be appropriated for
the Long Island Sound program and the Columbia River Basin Restoration program.

Related Drinking Water Infrastructure Legislation
In addition to AWIA, a broad range of DWSRF and other drinking water infrastructure bills are
pending in the 115th Congress. Outlines of such bills are provided below.

47 S. 3021 defines intractable water system as a public water system that (1) serves fewer than 1,000 individuals; (2) the

owner of which is unable or unwilling to provide safe and adequate service, has abandoned or effectively abandoned
the system, has defaulted on pertinent financial obligations, or fails to maintain facilities to prevent health hazards; and
(3) is in significant noncompliance or has a history of significant noncompliance with SDWA requirements.

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Reported Legislation
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H.R. 3387 (H.Rept. 115-380), the Drinking Water System Improvement Act of
2017, would amend the DWSRF program and SDWA more broadly. It would
authorize $8 billion to be appropriated for DWSRF capitalization grants over five
years. It would specify that DWSRF funds could be used for replacing or
rehabilitating aging treatment, storage, or distribution facilities; increase the
portion of the capitalization grant that a state may use to provide additional
subsidization to disadvantaged communities from 30% to 35% and conditionally
require at least 6% to be used for this purpose; extend through FY2022 the
requirement that projects receiving DWSRF assistance use American iron and
steel; and apply Davis-Bacon prevailing wage requirements to projects receiving
DWSRF assistance (currently required through appropriations acts). H.R. 3387
would require needs surveys to include assessments of costs to replace lead
service lines, renew states’ authority to use DWSRF funds to assess source water
protection areas, and require large systems to consider cost and effectiveness of
relevant processes and materials to receive DWSRF assistance through FY2022.
(S. 3021 does not include this requirement.) The bill would direct EPA to develop
and provide to states best practices for administering their DWSRFs. Among
other provisions, H.R. 3387 would (1) expand water system reporting to
consumers, (2) promote partnerships and authorize assessment of consolidation
options for struggling systems, (3) authorize $750 million over five years for
states and tribes to oversee water systems and enforce SDWA regulations, (4)
expand unregulated contaminant monitoring and increase related funding, (5)
encourage systems to develop asset management plans, (6) require systems
serving more than 3,300 persons to assess risks and resiliency to malevolent acts
and natural hazards and authorize $175 million over five years for a drinking
water infrastructure risk and resiliency grant program, (7) direct EPA to develop a
strategic plan to improve accuracy and availability of compliance monitoring
data, and (8) authorize $25 million for grants for local educational agencies to
replace school drinking water fountains and monitor for lead. The bill would also
amend the Emergency Planning and Community Right-To-Know Act to require
prompt notification of hazardous substances releases to the state agency and any
community water systems with affected source waters. On July 27, 2017, the
Committee on Energy and Commerce held a markup session and ordered H.R.
3387, as amended, to be reported favorably. The committee filed a written report
on November 1, 2017.

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S. 2800 (S.Rept. 115-294), America’s Water Infrastructure Act of 2018, a broad
water infrastructure and water resources bill, includes various EPA- and SRFrelated provisions, primarily in Title V. The bill would make permanent the
requirement to use U.S.-produced iron and steel in all projects receiving DWSRF
assistance and authorize states to use a portion of their DWSRF funds to
implement source water protection plans. S. 2800 would amend WIFIA to
authorize special terms for loan assistance provided to state DWSRF and
CWSRF finance authorities (see related bills, H.R. 4902/S. 2364, SRF WIN,
described below). On May 22, 2018, the Senate Environment and Public Works
Committee ordered S. 2800, as amended in the nature of a substitute, to be
reported favorably. On July 10, 2018, the committee filed a written report on S.
2800. S. 3021, as passed by the House, incorporates many water resource and
water infrastructure measures from S. 2800.

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Introduced Legislation
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H.R. 904, the Buy American Improvement Act of 2017, would standardize and
expand Buy American requirements across federal agencies and programs and
make permanent requirements to use U.S.-manufactured iron and steel for
projects receiving DWSRF assistance.
H.R. 939, the Buy America for Drinking Water Extension Act of 2017, would
expand and make permanent the SDWA provision that required, for FY2017, the
use of U.S.-manufactured iron and steel in projects receiving DWSRF assistance.
H.R. 1068, the Safe Drinking Water Act Amendments of 2017, is a broad SDWA
reauthorization bill, and Title IV includes numerous amendments to the DWSRF
program. Among other revisions, the bill would (1) add Davis-Bacon prevailing
wage requirements, (2) make permanent the Buy American iron and steel
requirement for projects receiving DWSRF assistance (which SDWA applied to
FY2017 funding), (3) direct states to give funding priority to projects that
improve the ability of water systems to protect health and comply with SDWA
affordably and to give greater weight to applications that describe measures to
improve the management and financial stability of the water system, (4)
conditionally require states to use at least 6% of their capitalization grants to
provide additional subsidization to disadvantaged communities, (5) incorporate
in the statute a governor’s authority to transfer as much as 33% of the annual
DWSRF or CWSRF capitalization grant to the other fund,48 (6) increase the
amount reserved for insular areas from 0.33% to 1.5%, (7) authorize DWSRF
program appropriations at a level of $21.17 billion over five years, (8) authorize
EPA to use unobligated funds to make grants to states with water systems
disproportionately affected by new regulations to assist those systems, and (9)
require EPA to use information from states to develop best practices for DWSRF
program administration. Further, the bill would expand eligible uses of funds to
include replacement or rehabilitation of aging water systems or for producing or
capturing sustainable energy. H.R. 1068 would increase the authorized funding
level under SDWA Section 1459B for lead reduction projects (including lead
service line replacement) from $60 million annually to $100 million annually for
FY2018-FY2022. (H.R. 6818, the Clean Water Infrastructure Act, parallels many
of the above provisions.) H.R. 1068 would create grant programs for replacing
school lead service lines and water fountains that contain lead. (Bills with related
lead provisions include H.R. 3387; H.R. 2479, Title II; H.R. 4908; H.R. 4907;
and S. 1401.) H.R. 1068 would also authorize grant programs for increasing the
resiliency or adaptability of water systems and for developing real-time
contaminant monitoring technologies. It would also establish deadlines for EPA
to issue a revised Lead and Copper Rule49 and new regulations for perchlorate,
perfluorinated compounds, and microcystin toxin.
H.R. 1071—the Assistance, Quality, and Affordability Act of 2017—would
amend and reauthorize the DWSRF program, paralleling DWSRF provisions in
H.R. 1068, Title IV (above), among other purposes. H.R. 1071 would authorize

48 This transfer of funds authority was authorized through FY2001 under Section 302(a) of P.L. 104-182, the Safe

Drinking Water Act Amendments of 1996. The Department of the Interior, Environment, and Related Agencies
Appropriations Act, 2006 (P.L. 109-54, Title II, August 2, 2005, 119 Stat. 530), provided: “That for fiscal year 2006
and thereafter, State authority under section 302(a) of P.L. 104-182 shall remain in effect.”
49 See CRS In Focus IF10446, Regulating Lead in Drinking Water: Issues and Developments, by (name redacted)
.

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to be appropriated for the DWSRF program a total of $21.17 billion over five
years. It would also place greater program emphasis on assisting disadvantaged
communities, revise the list of eligible activities, and require states to give
funding priority to projects needed to make compliance affordable. The bill
would also increase the level of funding authorized to be appropriated under
Section 1459B(d) for lead reduction projects. (See also H.R. 2479, Title II.)
H.R. 1647, the Water Infrastructure Trust Fund Act of 2017, would direct the
Secretary of the Treasury to establish a voluntary product labeling system
informing consumers that the manufacturer, producer, or other stakeholder is
participating in the Water Infrastructure Investment Trust Fund and contributing
to clean water. The Secretary would provide a label for a fee of 3 cents per unit.
Funds would be made available only when the CWSRF appropriation is not less
than the average of the preceding five fiscal years. Funds made available for a
fiscal year would be split equally between the DWSRF and CWSRF programs.
(This parallels H.R. 4468 from the 114th Congress.)
H.R. 1653, the Drinking Water Affordability Act, would (1) extend DWSRF loan
amortization periods to 30 years after project completion for public water
systems generally and to 40 years for disadvantaged communities, (2) increase
the portion of DWSRF funds states may use to provide additional subsidization
to disadvantaged communities from 30% to 35%, (3) reauthorize state authority
to use DWSRF funds for source water assessment and protection activities, (4)
direct EPA to exempt water systems from a federal cross-cutting requirement50 if
the Administrator determined that the state had an equivalent requirement, (5)
require EPA to review best practices for streamlining the DWSRF loan process
and fund administration and to report to Congress, and (6) direct the Government
Accountability Office (GAO) to study and report on the cost-effective and
economically feasible rehabilitation or replacement of drinking water
infrastructure to meet SDWA goals and an assessment of barriers that preclude
use of materials and technologies identified in the study.
H.R. 3009/S. 3358, the Sustainable Water Infrastructure Investment Act of
2017/2018, would amend the Internal Revenue Code of 1986 to provide that the
volume cap for private activity bonds shall not apply to bonds for drinking water
and sewage facilities. (See also identical bills, H.R. 3912 and S. 1229.)
H.R. 4902/S. 2364, the Securing Required Funding for Water Infrastructure Now
Act (SRF WIN), would add a new section to WIFIA authorizing EPA to provide
financial assistance (e.g., secured loans) to SRF programs to support eligible
wastewater and drinking water projects. Although state SRF financing authorities
are currently eligible to receive WIFIA assistance, the SRF WIN bills would
authorize EPA to provide secured loans at subsidized interest rates for eligible
states. These states would include those that received less than 2% of the SRF
funds in the most recent year or states in which the President declared a major
disaster between 2017 and the enactment date. (These loans would be limited to
wastewater or drinking water infrastructure damaged by the major disaster.)
Funding for the subsidized loans would be capped. Unlike other WIFIA

50 40 C.F.R. §35.35575. A number of federal laws, executive orders, and government-wide policies apply by their own

terms to projects and activities receiving federal financial assistance, regardless of whether the statute authorizing the
assistance makes them applicable. A few cross-cutters apply by their own terms only to the state as the grant recipient,
because the authorities explicitly limit their application to grant recipients.

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assistance, the federal assistance under this section would be able to support
100% of project costs, and application fees would be waived. The bills would
authorize appropriations of $200 million for each fiscal year between FY2019
and FY2023. However, no funding would be available if the SRF program or the
WIFIA appropriation (excluding this new section) were less than the amount
provided in FY2018.
H.R. 5609, the Water Affordability, Transparency, Equity, and Reliability Act of
2018, would (1) establish a trust fund with funds going to EPA to support CWA
and SDWA SRFs and activities and to the U.S. Department of Agriculture for
household water well systems; (2) direct EPA to report on water affordability
nationwide, discriminatory practices of water and sewer service providers, and
water system regionalization; (3) authorize use of DWSRF funds to purchase
privately owned community water systems from willing or unwilling sellers; (4)
require states to use at least 50% of their capitalization grants to provide
additional subsidization to disadvantaged communities; (5) authorize a grant
program for repairing or replacing school drinking water coolers to ensure they
are lead free; (6) require states to permit recipients of SRF assistance to enter into
project labor agreements under the National Labor Relations Act; and (7) make
permanent the SDWA requirement to use American iron and steel for projects
receiving DWSRF assistance. (See also H.R. 1673.)
H.R. 6653, the Innovative Materials for America’s Growth and Infrastructure
Newly Expanded Act of 2018, is a broad infrastructure bill to encourage research
and use of innovative materials in transportation and water infrastructure
systems. Section 8 would direct EPA to establish a water infrastructure
innovation grant program for the design and installation of drinking water and
wastewater systems that use innovative materials to reduce total costs and extend
the service life of installed structures. It would authorize to be appropriated for
this program $65 million for each of FY2019 through FY2023.
H.R. 6727/S. 3012, the Water Technology Acceleration Act, would authorize EPA
to carry out a grant program to accelerate the development of innovative water
technologies that address various pressing water issues. It would authorize states
to provide additional subsidization under the DWSRF and CWSRF programs for
projects using innovative technologies.
S. 181 would require GAO to (1) publish a report identifying all federal public
works and infrastructure programs and whether a domestic content preference
requirement (e.g., iron, steel, and manufactured products) applied and (2) include
a list of programs for which a listed preference requirement does not apply.
Generally, once GAO issued the report, no federal funds or credit assistance
could be made available under a program that lacks a domestic content
preference for infrastructure projects unless all iron, steel, manufactured goods,
and commodity construction materials used were produced in the United States.
S. 880, the Made in America Water Infrastructure Act, would expand and make
permanent the SDWA provision requiring use of U.S.-manufactured iron and
steel in projects receiving DWSRF assistance. The bill would apply American
iron and steel requirements to maintenance projects (in addition to construction,
alteration, and repair projects).
S. 1137, the Clean Safe Reliable Water Infrastructure Act, includes a sense of
Congress that appropriations for the DWSRF and CWSRF should be robust. The

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bill would increase DWSRF set-aside authority for state implementation of
source water protection plans and would apply 40 U.S.C. Chapter 11 (the Brooks
Act) to negotiation of DWSRF-assisted contracts for communities serving more
than 10,000 individuals. The bill would also authorize EPA’s WaterSense
Program51 and authorize to be appropriated a total of $18 billion over five years
for combined sewer overflow projects grants under CWA Section 221. (See also
S. 2800.)
S. 2727 would direct EPA to establish a discretionary grant program for drinking
water and wastewater infrastructure projects, including projects eligible under the
CWSRF and DWSRF programs.
S. 3121 would amend DWSRF and CWSRF provisions to require states to
ensure, to the maximum extent practicable, that each procurement transaction for
a project receiving SRF assistance is conducted in a manner that provides
maximum open and free competition and that water systems consider use of all
suitable materials for each solicitation of a procurement offer for a project. The
bill would make similar revisions to WIFIA.

Author Contact Information
(name redacted)
Specialist in Environmental Policy
[redacted]@crs.loc.gov, 7-....

51 For information on this program, see CRS In Focus IF10787, WaterSense®: Water-Efficiency Label and Partnership

Program, by Keara B. Moore.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/crs%3AR45304. Public record. Not legal advice.