Water Infrastructure Financing: History of EPA Appropriations


 

Publication Date: August 2008

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Environment

Type:

Abstract:

The principal federal program to aid municipal wastewater treatment plant construction is authorized in the Clean Water Act (CWA). Established as a grant program in 1972, it now capitalizes state loan programs. Authorizations from 1972 through FY2003 have totaled $65 billion, while appropriations have totaled $71.25 billion. It has represented 25-30% of total EPA appropriated funds in recent years.

In appropriations legislation, funding for EPA wastewater assistance grants is contained in the measure providing funds for the Veterans Administration, Department of Housing and Urban Development, and Independent Agencies, which includes EPA. Within the portion of that bill which funds EPA, wastewater treatment assistance is specified in an account now called State and Tribal Assistance Grants. Three trends in the funding of this account are most prominent: inclusion of non-infrastructure environmental grants to states, beginning in FY1993; increasing number and amount of special purpose grants since FY1989; and the addition of grant assistance for drinking water treatment projects, beginning in FY1997. This report summarizes, in chronological order, congressional activity to fund items in this account since 1987. It will be updated periodically to reflect most recent developments.

Prior to the 1987 amendments, wastewater treatment assistance was provided in the form of grants made to municipalities. The federal share of project costs was generally 55%; state and local governments were responsible for the remaining 45%. The 1987 amendments altered this arrangement by replacing the traditional grant program with one that provides federal grants to capitalize state clean water loan programs, or state revolving funds (SRFs). As a general matter, states and cities support the program changes and the shift to a loan program that was intended to provide long-term funding for water quality and wastewater construction activities. However, the change means that local communities now are responsible for 100% of projects costs, rather than 45%, because they are required to repay loans to states. The greater financial burden of the Act's loan program on some cities has caused some to seek continued grant funding.

This has been particularly evident in the appropriations process where, in recent years, Congress has reserved as much as 30% of funds in the State and Tribal Assistance Grants account for special purpose grants directed to specified communities. Most of the funded projects are not authorized in the Clean Water Act or amendments to it. State water quality officials, state infrastructure financing officials, and EPA have objected to this practice, since it reduces the amount of funding for state SRF programs. One additional aspect of this practice began in FY1994 when the Administration requested and Congress agreed to provide funds to capitalize state drinking water SRFs out of this account. In 1996 Congress passed legislation to authorize a drinking water SRF grant program, and the first funds for this program were appropriated in FY1997.