Reviewing the Infrastructure Investment & Jobs Act for Water & Wastewater

Bob Crossen & Cristina Tuser

The U.S. House of Representatives is expected to vote on the Infrastructure Investment & Jobs Act, a $1 trillion infrastructure bill, Sept. 27, 2021.

This bill contains many provisions outlined in President Joe Biden’s American Jobs Plan, a framework for infrastructure spending aimed at replacing, repairing and updating United States roads, rail, water, wastewater, stormwater, and transportation infrastructure, among others. 

The Infrastructure Investment and Jobs Act is a $1 trillion bill that includes $550 billion in new spending. Of that $550 billion in new spending, $55 billion is proposed for the water, wastewater and storm water sectors, which would be spent over a five-year period. According to a report from the Congressional Research Service, this spending would be greater than the sum of all spending on water infrastructure in the previous 10 years.

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What’s in the Infrastructure Investment & Jobs Act for Water & Wastewater?

The Infrastructure Investment & Jobs Act contains $55 billion in infrastructure spending spread over five years for water, wastewater and storm water funding programs. The primary emphasis has been placed on state revolving funds (SRF) for both drinking and clean water. However, an increased emphasis was also placed on lead contamination mitigation and lead pipe removal.

Below is a breakdown by water, wastewater and storm water using information from the Water & Wastewater Equipment Association as well as the Association of State Drinking Water Administrators to compile a comprehensive list.

Water

• $11.7 billion over five years - Drinking Water SRF.  This would follow the below allocations per year:
  • $2.4 billion in fiscal year 2022
  • $2.7 billion in fiscal year 2023
  • $3.0 billion in fiscal year 2022
  • $3.2 billion in fiscal year 2022
  • $3.2 billion in fiscal year 2022
• $4 billion - Drinking Water SRF for emerging contaminants, including per- and polyfluoroalkyl substances (PFAS)
• $15 billion - Drinking Water SRF for lead in drinking water
• $125 million over five years - Alternative Source Water Pilot Program

Wastewater

• $11.713 billion over five years - Clean Water SRF. This follows the same allocation formula as drinking water as seen above.
  • $2.4 billion in fiscal year 2022
  • $2.7 billion in fiscal year 2023
  • $3.0 billion in fiscal year 2022
  • $3.2 billion in fiscal year 2022
  • $3.2 billion in fiscal year 2022
• $1 billion - Clean Water SRF for emerging contaminants, including per- and polyfluoroalkyl substances (PFAS)
• $100 million over five years - Wastewater Energy Efficiency Grant Pilot Program
• $125 million over five years - Clean Water Infrastructure Resiliency and Sustainability Grant Program

Storm Water

• $1.4 billion over five years -EPA Sewer Overflow & Stormwater Reuse Municipal Grant Program of which, no less than 25% will go to rural and financially disadvantaged communities.
• Reauthorizing the Sewer Overflow and Stormwater Reuse Grants program at increased funding levels
• $25 million - Stormwater Infrastructure Technology Program to create five Stormwater Centers of Excellence
• $50 million for stormwater infrastructure planning/development and implementation grants

Programs Across Sectors

• $250 million over five years - Water Infrastructure Finance and Innovation Act (WIFIA). Additionally, facilities applying will be required to have only one ratings agency opinion letter (instead of two).
• $25 million over five years - The Water Infrastructure and Workforce Investment Grant Program
• $200 million over five years - Publicly Owned Treatment Works Grant Program, which connects homes to POTWs.
• $25 million per year to improve access to running water in Tribal nations and disadvantaged communities.
• Small Publicly Owned Treatment Works Efficiency Grant Program to be established with funding levels to be determined.
• The Rural and Low-Income Water Assistance Pilot Program will establish a new U.S. EPA program to provide 40 grants per year to utilities to assist low-income ratepayers

Industry Response to the Infrastructure Investment & Jobs Act

Water Environment Federation (WEF)

WEF Legislative Director Steve Dye said in a press release that WEF is "pleased" with the proposed increase in funding, and for the inclusion of storm water funding provisions.

“Both the U.S. Senate and U.S. House of Representatives versions of the major infrastructure package contain comprehensive – and long-overdue – funding and policy provisions for the stormwater sector,” said Dye, in a WEF press release. “WEF is pleased that increased funding and attention for stormwater infrastructure appears to be a bipartisan priority and looks forward to working with our partners to maximize the impact of this legislation.”

American Water Works Association (AWWA)

Tom Holmes, AWWA legislative director, told WWD via email on Sept. 23 that the increased funding and reauthorization of current funding mechanisms in the bill will be effective in addressing many financial challenges for the industry's future.

“H.R. 3684, the Infrastructure Investment and Jobs Act, does contain many water infrastructure provisions from the Senate’s water bill, S. 914, that we support,” Holmes said. “We were very happy to see reauthorization of the SRFs and WIFIA, and increased authorized funding for the SRFs. The $15 billion for lead service line replacement would be a good down payment on addressing this issue.”

Holmes noted that the bill is not without some pitfalls, particularly as it relates to the Buy American requirements.

“One concern in H.R. 3684, however, is the extension of Buy American requirements to manufactured products,” Holmes added. “Many products used in water infrastructure, such as electronic control boards, for example, may have components from a number of other countries. Members tell me certain valves are not made in this country. The current waiver process seems unworkable. If these new purchase requirements are to become law, we will have to get a more realistic waiver process in place.”

National Association of Clean Water Agencies (NACWA)

According to NACWA in a statement, the bill contains important authorizations for new key clean water programs which NACWA has advocated for. These authorizations include: requiring EPA to conduct a study of low-income water assistance needs; authorizing the agency to stand up a pilot program of federal assistance for low-income households; and authorizing a Clean Water Infrastructure Resiliency and Sustainability grant program.

“NACWA strongly supports this bipartisan bill and applauds the White House and the Senate leaders who worked across party lines to negotiate this deal,” said Chief Executive Officer of NACWA, Adam Krantz, in the statement. “However, there is still much work to be done and NACWA looks forward to continuing to see the process move forward and ultimately deliver strong support for the public clean water sector – a vital infrastructure sector which protects the public health and environment. Clean water’s role is fundamental and must be placed on equal footing with other infrastructure sectors such as roads, bridges and broadband.”

Association of State Drinking Water Administrators (ASDWA)

"The amount of funding potentially going to drinking water is both exciting and daunting at the same time,” said Alan Roberson, ASDWA executive director. “It's going to be challenging to ensure that Congress' expectations for spending all of this money in a short period of time are met". 

Additionally, ASDWA joined the Association of Clean Water Agencies (ACWA), the Environmental Council of States (ECOS), the Council of Infrastructure Financing Authorities (CIFA) and the Western States Water Council (WSWC) on a letter to Congressional leaders that strongly supported the increased funding for drinking water, wastewater and storm water infrastructure in the Infrastructure Investment and Jobs Act.

The details on this letter can be found at the bottom of this article, which include some of the pitfalls of the current language. The associations provided a few suggestions to tweak the bill before it becomes law to ensure quick access to federal funds for water, wastewater and storm water infrastructure.

National Association of Regulatory Utility Commissioners (NARUC)

According to NARUC, although the comprehensive package is laudable, the final bill does not include key provisions advocated for by the NARUC.

“In short, we support the bill’s revised tax treatment for contributions in aid of construction and we are pleased by the inclusion of the pilot low-income water program,” said Paul Kjellander, NARUC President, in a press release. “Unfortunately, the bill includes a transmission siting provision that NARUC strongly opposes and there are key aspects of the broadband benefit program that we do not support.”

The transmission siting in question entails a provision that preempts state siting jurisdiction and eminent domain powers as they relate to siting electric transmission projects. 

Water & Wastewater Equipment Manufacturers Association

The Water & Wastewater Equipment Manufacturer’s Association provided a fact sheet on its website about the Infrastructure Investment and Jobs Act. 

At the bottom of this article is a video interview with WWEMA Executive Director Vanessa Leiby on the Buy American requirements listed in the bill, a portion of the bill which AWWA also noted could be cause for concern in the industry.

Pitfalls of the Infrastructure Investment & Jobs Act?

Buy America

When using federal funding, projects must comply with federal policy regarding three rules governing how much of the equipment used must be domestically manufactured. These three rules are Buy America, American Iron & Steel Act, and Buy American. 

The proposed bill includes language that expands the Buy American language, which would require equipment used in projects using federal funding (such as that listed above) to be domestically made to a certain extent. The language provided expands this year over year to a maximum of 75% domestically made. 

This provides a considerable challenge for water and wastewater equipment manufacturers because the production of iron and steel in the U.S. is finite. Historically, exemptions have been made for certain products and even systems as a whole, but it is not clear if that will be the case moving forward.

For a more detailed discussion and explanation of this issue, watch the video below with Vanessa Leiby, WWEMA executive director.

State Cash Match

According to a joint letter from ASDWA, the Association of Clean Water Administrators (ACWA), the Environmental Council of the States (ECOS), the Council of Infrastructure Financing Authorities (CIFA), and Western States Water Council (WSWC), the proposed increases in funding are welcome and necessary to repair, replace and rebuild U.S. water infrastructure. But the letter also notes a large barrier to making that happen with the current iteration of the bill:

However, the requirement for state cash match on appropriations in the bill jeopardizes the ability of states to quickly and efficiently access this federal funding for water infrastructure projects. When combined with cash match requirements for annual appropriations, the Infrastructure Investment and Jobs Act significantly increases cash match requirements for states.

The Infrastructure Investment and Jobs Act requires states to provide cash match for $22.426 billion for capitalization grants over the next five years (10% of the 2022 and 2023 capitalization grants and 20% of the 2024, 2025, and 2026 capitalization grants). The cumulative cost of state cash match for these supplemental appropriations is an estimated $3.864 billion over the next five years.