Why States Want Changes to Programs Providing Billions in Water Funds

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As the infrastructure law unleashes a wave of federal cash for water system upgrades, officials are pressing for tweaks in how governments can access and spend the money.

Billions of dollars in the bipartisan infrastructure law to improve the nation’s drinking water systems is a major step toward eliminating lead pipes and other contaminants around the country.

But officials representing state water administrators told a House subcommittee Tuesday they need more flexibility from the Environmental Protection Agency to allow them to tackle important tasks like figuring out where all the lead pipes are.

“You must know where the lead is to remove it,” Lori Mathieu, president of the ​Association of State Drinking Water Administrators, told the House Environment and Climate Change subcommittee. 

Mathieu also urged the EPA to waive the Infrastructure Investment and Jobs Act’s union and prevailing wage requirements, particularly for small water systems, some of which, she said, are run by volunteer homeowner associations.

Meanwhile, Erik Olson, the Natural Resources Defense Council’s senior strategic director for health and food, urged Congress to spend even more money to deal with problems where funding in the law fell short, like removing lead pipes from schools.

“We’ve got a historic investment but we’re going to need more,” Olson said. 

Republicans on the committee, however, seized on the hearing as another opportunity to blame the Biden administration for driving up inflation by spending trillions through packages like IIJA and the American Rescue Plan Act. GOP lawmakers also urged greater oversight over how the dollars are being spent.

Democrats, too, raised concerns about how the infrastructure law is being implemented, questioning whether the money will flow to the most disadvantaged communities and if some states like Illinois will be shortchanged from getting their share of the money.

Last year’s $1.2 trillion package increased funding for the Drinking Water State Revolving Fund by $11.7 billion over five years. IIJA also lowered a requirement for states to match federal revolving fund dollars from 20% to 10% during the first two years of the law. And the package sets aside about half of the additional revolving fund dollars to be distributed through grants or loans with 100% principal forgiveness.

The law also includes $15 billion for replacing lead service lines, with no requirement for a state match. Just shy of half of that money will also be made available through grants or with principal loan forgiveness. 

Another $9 billion in IIJA dollars will go toward addressing water contamination problems from chemicals commonly referred to as PFAS, contained in products like firefighting foams, food packaging materials, nonstick cookware and cleaning products.

Rep. Paul Tonko, a New York Democrat and the subcommittee's chairman, said the money in the law will begin making up for the federal government letting the nation’s water infrastructure slide into disrepair.

“Every federal official should bear some responsibility, and some shame, for the lack of access to safe, and yes affordable, drinking water,” he said.

NRDC’s Olson, however, noted that according to an American Water Works Association estimate, $1 trillion in water infrastructure spending is needed just to deal with the nation’s population growth over the next 25 years.

Olson also said that the House’s version of Biden’s Build Back Better social welfare bill, which derailed in the Senate, included an additional $10 billion to improve drinking water infrastructure.

However, Rep. Buddy Carter, a Georgia Republican, objected to more spending. "​​Record government spending is fueling inflation and it is out of control,” said Carter.

Carter, former mayor of Pooler, Georgia, also raised concerns about mandates on using the water money and issues around intergovernmental authority.

“Whether EPA is using this bill as an excuse to overtake drinking water program management, spending flexibility and utility operations,” as he put it. “These are all areas that traditionally fall to local governments and the states,” Carter added. “A federal takeover would be unprecedented and troubling.”

More Flexibility Wanted

State administrators are also asking for more flexibility. Jim McGoff, representing the Council of Infrastructure Financing Authorities, noted that the EPA is requiring states to create a list of projects they plan to fund with the drinking water dollars before they can begin using the money.

But many states have not yet created an inventory of lead pipes to help guide that process. And only a small portion of the IIJA dollars can be used to do the inventories, said McGoff, whose organization advocates for state clean water and drinking water revolving funds. States should be able to use more of the money to identify the lead pipes that need to be removed, he said.

“Logic suggests that lead removal funds should be used for all things related to the removal,” said McGoff, the Indiana Finance Authority’s chief operating officer and director of environmental programs.

McGoff also said fire departments should be able to use clean water dollars to dispose of firefighting foam, a source of PFAS contamination. IIJA only allows water systems to use the money.

Mathieu urged the EPA to simplify how funding recipients go about applying for the dollars. Mathieu, who is the chief of the Connecticut Department of Public Health’s drinking water section, said she recently visited a water system in Lebanon, Connecticut run by a homeowners association.

“These are people with full-time jobs or two jobs and they get together every couple of weeks to manage a water system,” she said.

“Requirements such as those found within the Buy America, Build America (BABA), and Davis-Bacon (DB) Acts create additional challenges and barriers for these communities that do not have the necessary expertise to navigate the process,” she said in written testimony submitted to the subcommittee.

Mathieu also urged that all lead service line replacements be eligible for 100% federal loan forgiveness, noting that replacing a single line can in some cases cost $12,000.

“A water system with 100,000 lead service lines could need up to $1.2 billion to remove this lead hazard from their distribution system,” she said.

Rep. Jan Schakowsky of Illinois was among the Democrats who questioned how the infrastructure law is being implemented. Schakowsky said Illinois is getting a disproportionately low sum of drinking water dollars compared to other states, but didn’t elaborate.

Rep. John Sarbanes, a Maryland Democrat, also raised concerns about the drinking water dollars reaching those most in need. He noted that Congress required about half the funds to go to disadvantaged communities but gave states the responsibility of deciding how to define that term. 

Sarbanes said some low-income urban neighborhoods might not qualify for the infrastructure dollars if they are in the same water districts as richer communities. That's not what Congress intended, he added, but his office did not respond when asked whether the congressman is planning to introduce a bill clarifying the requirement.

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