The Clean Water State Revolving Fund: An Update

On March 6th, House Transportation and Infrastructure Committee Chair Peter DeFazio introduced the Water Quality Protection and Job Creation Act of 2019 (H.R. 1497), which would reauthorize the Clean Water State Revolving Fund (CWSRF) program.

The following day, the Transportation and Infrastructure Committee’s Water Subcommittee discussed CWSRF reauthorization in a hearing titled “The Clean Water State Revolving Fund: How Federal Infrastructure Investment Can Help Communities Modernize Water Infrastructure and Address Affordability Challenges.”

Recent actions and statements by members of Congress on both sides of the aisle indicate an interest in both moving an infrastructure package forward and including water infrastructure in that package. This reopening of discussion on CWSRF reauthorization prompts a review of the current state of the CWSRF and the potential opportunities and challenges presented by reauthorization.

CWSRF Background

The CWSRF dates to 1987 when Congress amended the Clean Water Act (CWA) creating a capitalization grant program to finance infrastructure for sewage treatment and water quality improvement. Prior to 1987, Congress funded public wastewater infrastructure using a direct grant program that would cover 55% and 75% of construction costs for qualifying public projects.

The CWSRF program was developed with the intention of transitioning to a system in which state and local governments would cover 100% of wastewater infrastructure financing. Congress set the target date of this transition as fiscal year (FY) 1995 – a date coinciding with the expiration of the CWA’s original authorizations in 1994 – and authorized the program for $18 billion to be distributed between fiscal years 1987 to 1995.

Unresolved funding needs and administrative challenges prevented the realization of a complete transition to state and local funding as the program reached the end of its authorization in FY 1995. While the CWSRF has not been reauthorized since then, Congress has continued appropriating funds for the program. Annual appropriations amounts through FY 2018 can be seen in the table below.

Table 1: Clean Water Appropriations FY 1987 – FY 2019

Source: CRS Funding for EPA Water Infrastructure: A Fact Sheet

How Does the CWSRF Work?

All 50 states as well as Puerto Rico currently participate in the CWSRF program. The EPA provides capitalization grants that serve as seed funding the each state’s revolving fund. States then use their funds to issue loans, buy local debt, and issue guarantees.

The primary benefit of CWSRF loans is the below-market interest rates that they provide to states. In 2017, the average interest rate of CWSRF loans was 1.4%, significantly lower than the market rate of 3.5%.

More information on the program with details on loan issuance and leveraging can be found in the EPA’s SRF Fund Management Handbook.

Repayments and interest earned from outstanding loans return to the states revolving funds and are then used to develop new loans. States are also able to increase financing capacity by leveraging their funds and issuing fund-backed bonds. The figure below shows how leveraging has increased the impact of federal dollars provided to the program.

Figure 1: Leveraging of Federal Capitalization Grants

Source: EPA CWSRF 2017 Annual Report

Proposed Reauthorization Legislation

The bill introduced on March 6th, the Water Quality Protection and Job Creation Act of 2019 (H.R. 1497), would authorize $23.5 billion in wastewater infrastructure investment over the next five years, with $20 billion dedicated to capitalization of the CWSRF. Under this authorization, Congress would be able to appropriate up to $4 billion per year for the program. This would be more than double recent CWSRF appropriations, which totaled $1.39 billion in FY 2017 and $1.64 billion in FY 2018.

CWSRF reauthorization legislation has been introduced before, but has never passed. The most recent effort was made during the 115th Congress with the Water Quality Protection and Job Creation Act of 2017 (H.R. 2510). Compared to previous years, H.R. 1497 has an increased chance of passage as both Congress and the Administration have identified infrastructure as a priority for the 116th Congress and indicated an interest in developing bipartisan legislation on the subject.

Funding Challenges for the CWSRF

Funding the CWSRF program presents a significant challenge for lawmakers. While other infrastructure domains like surface transportation benefit from user-driven revenue streams like the federal gas tax, an equivalent has not yet been identified for water infrastructure.

One recently proposed bill would increase the corporate income tax rate from 21% to 24.5%, sending $35 billion a year to a water trust fund that would be used to fund the CWSRF. Another proposal, introduced during the 115th Congress, would create a water trust fund by allowing businesses that produce bottled products to voluntarily pay a $0.03 per unit fee in exchange for the right to place a label on their products indicating their commitment to clean water resources protection.

Despite consensus that water infrastructure investment needs to be increased, all reauthorization proposals that require increased spending of general funds are likely to cause disagreement among lawmakers. Consequently, the identification of other sources of revenue would increase the chance of successful passage of a CWSRF reauthorization.

Reauthorization Potential in 2019

There are indications that CWSRF reauthorization legislation may gain traction as a part of the broad effort to develop infrastructure legislation during the 116th Congress. Recent congressional hearings and comments by House leadership and the Administration show that support exists on both sides of the aisle for moving infrastructure legislation forward and funding water projects.

Uncertainty remains, however, and this uncertainty is encapsulated well by the Administration’s recently released FY 2020 budget which cuts the CWSRF program budget by $600 million, while also providing a $200 billion placeholder for “additional infrastructure investments” that would likely include water infrastructure investment.

Official Waters of the United States Proposal Released, Comment Period Open

The Environmental Protection Agency (EPA) and Army Corps of Engineers have officially released a revised definition of “Waters of the United States” (WOTUS) which determines the scope of federal regulation under the Clean Water Act (CWA). The comment period for the revision will be open until April 15, 2019. The revised definition and comment submission information can be accessed here

What would the redefinition do?

The redefinition would create six categories of regulated waters and eleven categories of exempted waters.

The six categories that would be regulated:

  1. Traditional navigable waters, including the territorial seas;
    1. The previously separated categories of “navigable waters” and “territorial seas” would be merged, but regulation of these waters would not be altered.
  2. Tributaries that contribute perennial or intermittent flow to such waters;
    1. Tributaries would not include any surface features that only flow as the result of precipitation. Ephemeral flows like dry washes and arroyos would be excluded.
  3. Certain ditches;
    1. Only ditches that also satisfy the conditions of the tributary definition, and ditches constructed in an adjacent wetland would be included. 
  4. Certain lakes and ponds;
    1. Lakes and ponds that satisfy the conditions of traditional navigable waters would be included.
    1. Lakes and ponds that contribute a perennial or intermittent flow to other jurisdictional waters would also be included.
  5. Impoundments of otherwise jurisdictional waters; and
    1. The redefinition would not alter the regulation of impoundments.
  6. Wetlands adjacent to other jurisdictional waters.
    1. Wetlands would satisfy the requirement of adjacency if they “abut” or have a “direct hydrological surface connection” with other jurisdictional waters.

The eleven categories of waters that would be exempted:

  1. Waters or water features that are not identified in the six categories of regulated waters.
  2. Groundwater, including groundwater drained through subsurface drainage systems.
  3. Ephemeral features and diffuse stormwater run-off.
  4. Certain ditches.
  5. Prior converted cropland.
  6. Artificially irrigated areas that would revert to upland if artificial irrigation ceases.
  7. Certain artificial lakes and ponds constructed in upland.
  8. Certain water-filled depressions created incidental to mining or construction activity and pits excavated for the purpose of obtaining fill, sand, or gravel.
  9. Stormwater control features excavated or constructed in upland to convey, treat, infiltrate, or store stormwater run-off.
  10. Wastewater recycling structures constructed in upland.
  11. Waste treatment systems.

The background of WOTUS

The definitions of “Navigable Waters” and “Waters of the United States” have changed multiple times since the creation of the CWA in 1972. The most recent redefinition occurred in 2015 and expanded CWA scope, including increased jurisdiction regarding ephemeral water features and water features adjacent but lacking direct hydrological connections to jurisdictional waters.

Source: Environmental Protection Agency

Since its introduction, the 2015 definition has faced litigation regarding its validity under the Constitution and the CWA. As a result, the rule has been blocked in 28 States and is currently only recognized in 22 States, the District of Columbia, and U.S. Territories. In states where the 2015 rule is blocked, the EPA’s less-inclusive 1988 definition of “Waters of the United States” remains in effect.

On February 28, 2017, President Trump signed the Executive Order “Restoring the Rule of Law, Federalism, and Economic Growth by Reviewing the `Waters of the United States’ Rule.” This order began the process of developing the currently proposed redefinition. The intention of this redefinition as stated in the Executive Order is “to ensure that the Nation’s navigable waters are kept free from pollution, while at the same time promoting economic growth, minimizing regulatory uncertainty, and showing due regard for the roles of the Congress and the States under the Constitution.”

The official revised WOTUS definition was released on February 14, 2019 and the comment period on the rule will be open until April 15, 2019. The latest fact sheets, infographics, supporting documents, information on the revision can be accessed here on the EPA’s website.

MWCOG Celebrates 10 Years of Climate Action

On November 14th, NARC staff attended Metropolitan Washington Council of Governments’ (MWCOG) most recent Climate, Energy, and Environment Policy Committee meeting at MWCOG offices. The Committee met to celebrate ten years of climate action since MWCOG adopted their regional program on climate change in 2008. Additionally, Dr. James Kinter, Director of the Center for Ocean-Land-Atmosphere at George Mason University, gave a presentation on climate change and risks posed to the Metropolitan Washington region. Lastly, the Committee spent time discussing the next ten years of climate action, including identifying what goals and actions may be needed to address climate change in the region.

In 2007, MWCOG’s Board of Directors celebrated its 50th anniversary and at the same time came together to discuss the next fifty years. Recognizing global climate change as a defining force in the decades to come, the Board adopted Resolution R31-07, creating a regional climate change initiative. The program would include developing a greenhouse gas inventory, setting regional goals, identifying best practices for reducing emissions, advocating policies at the federal and state levels, making recommendations on regional climate change policy, and creating a steering committee to guide the initiative. In 2008, MWCOG’s Board of Directors approved the National Capital Region Climate Change Report, which includes significant greenhouse gas reduction targets for the region and 78 recommendations to help area leaders and citizens meet the targets. Since then, MWCOG has been involved in a number of national and regional partnerships, programs, and other efforts aimed at addressing climate change.

Following this portion of the meeting, Dr. Kinter provided attendees with an in-depth look at climate change and the risks it poses to the Metropolitan Washington region. He presented evidence of human-caused climate change and discussed the major sources of carbon dioxide emissions and where that carbon dioxide ends up. Furthermore, he showed some of the possible scenarios – developed by the Intergovernmental Panel on Climate Change – for future global temperature change based on the various levels of action taken by the world’s governments to address emissions. He then discussed the risk that climate change poses to Washington, D.C. and how effects such as increased nuisance flooding have already been witnessed in the region.

Finally, the Committee brainstormed goals and actions that may be needed to address climate change over the next ten years. Some actions included net-zero public buildings, solar power purchase agreements (PPAs) on government buildings, electric municipal and public school buses, getting rid of diesel buses, increased development of electric charging infrastructure, and more widespread use of Property Assessed Clean Energy (PACE) financing programs.

During closing statements, there was an emphasis on “acting quicker because the damage is coming quicker.” Many Committee members made remarks that there needs to be a realization of the economic benefits of climate action and that jobs such as those in solar installation are top in the country. Lastly, the Committee complimented MWCOG on its role over the last ten years and on its continued commitment to regional climate action over the next decade.

To view documents from the meeting, please visit MWCOG’s website.

2018 NARC Achievement Awards Winners

At every Annual Conference and Exhibition, NARC celebrates membership achievements of regional excellence and cooperation across the nation. This year’s winners exemplify many qualities that a 21st-century regional council needs to be successful, including innovation, adaptability, collaboration, and hard work. Read more about our 2018 NARC Major Metro, Medium Metro, and Rural Achievement Awards Winners below:

Major Metro Winner: Southeast Michigan Council of Governments (SEMCOG)
Headquarters: Detroit, Michigan
Project: Water Resources Plan

The Southeast Michigan Council of Governments (SEMCOG) won the 2018 Major Metro Achievement Award for their Water Resources Plan. The plan focuses on three major pillars of water planning in the region: “Blue Economy,” Natural Resources, and Infrastructure. “Blue Economy” recognizes the importance of the region’s water assets and supports water placemaking efforts to enhance water recreation opportunities and support the economic development of water-dependent industries. The Natural Resources pillar highlights threats to natural resources such as invasive species and prioritizes strategies to eliminate them, as well as protect wetlands, riparian corridors, and aquatic habitats. Finally, the Infrastructure pillar addresses the region’s drinking water, wastewater, storm water, dams, and transportation infrastructure.

The plan’s breadth and depth make it a very useful part of the region’s toolkit for addressing water infrastructure needs. It outlines specific policy recommendations and actions related to protecting water resources in Southeast Michigan, many of which will be incorporated into SEMCOG’s planning efforts, like their 2045 Regional Transportation Plan. Implementation of the innovative Water Resources Plan is already underway through several projects. Looking forward, SEMCOG will work with the state to map and inventory all existing and historical wetlands, helping inform decisions made about wetland restoration and protection. Congratulations to SEMCOG on their excellent Water Resources Plan!

Medium Metro Winner: Indian Nations Council of Governments (INCOG)
Headquarters: Tulsa, Oklahoma
Project: Regional Advocacy Program

INCOG’s 2018 Medium Metro Achievement Award-winning advocacy program exemplifies regional cooperation and proves that unifying a regional message is more effective than individual efforts to pass legislation. This INCOG program is unique in its four-pronged approach to regional advocacy:

  • Hosting the Coalition of Tulsa Area Governments (CTAC), an active group of county and municipal governments who advocate for issues that directly affect their member governments;
  • Developing an annual federal policy issue agenda that identifies issues important to the region, which then informs the development of their Congressional Delegation Information Packet and conversations with Oklahoma’s federal representatives;
  • Holding an annual reception and orientation meetings to start building relationships with newly-elected state and federal officials; and
  • Working through their OneVoice Legislative Program with the Tulsa Regional Chamber to develop an annual state and federal legislative agenda embraced by public and private partners alike.

Since 2000, more than 65 CTAC bills have been signed by the governor, with countless more bills killed that harm local governments. CTAC’s slate of issues require unanimous support from all members to initiate or oppose a legislative change, creating an expectation that disagreements will be resolved in favor of the larger group and the greater good. The OneVoice agenda is also a product of more than 400 individuals – which 70 organizations, including INCOG, routinely endorse – that governors and legislators find invaluable as an indication of regional consensus on significant legislative issues. Congratulations to INCOG on their inspiring Regional Advocacy Program!

Medium Metro Winner: Northwestern Indiana Regional Planning Commission (NIRPC)
Headquarters: Portage, Indiana
Project: Greenways + Blueways 2020 Plan

NIRPC’s Greenways + Blueways 2020 Plan, which won them the Medium Metro Achievement Award, highlights the benefits and relationships of both environmental and non-motorized transportation planning through three main topics: conservation, recreation, and transportation. The plan is the product of a significant public engagement process and cooperation among governmental, advocate, and corporate stakeholders. It merges typically distinct planning focus areas to highlight opportunities for integration. The plan identifies conservation corridors along waterways and large but fragmented patches of conservation land, and highlights over 160 miles of land-based, multi-use recreation trails across the Northwest Indiana landscape. The plan includes a chapter on merging these focus areas and a chapter on implementation that identifies performance measures and outlines eight stakeholder groups that can help put them into practice. The Greenways + Blueways Plan is an ambitious vision for tying together mutually beneficial focus areas to advance regional priorities of conservation and non-motorized transportation planning. Congratulations to NIRPC on their impressive G&B 2020 Plan!

Rural Achievement Award Winner: Heartland Regional Transportation Planning Organization (HRTPO) Headquarters: Bartow, Florida
Project: Highlands Transit Plan

HRTPO developed the Highlands Transit Plan through a collaborative planning process, engaging thousands of citizens over a 10-month study period and winning them the 2018 Rural Achievement Award. It is the first adopted transit development plan for Highlands County, Florida, which has no existing public transit system. Because of its successful campaign, HRTPO can confidently use their results to inform their strategic vision, which will guide the planning, development, and implementation of future public transportation services.

HRTPO used several approaches to gather feedback from their residents on their plan. Rather than focusing on public meetings, they placed an emphasis on education and participation where they knew people were – online, at work, civic activities, and community events. An informal “street team” of volunteers distributed surveys to their neighbors, co-workers, church members, and friends to help expand their reach, resulting in the collection of over 900 survey responses. The first public involvement phase identified the community’s public transportation and potential service options by conducting 27 stakeholder interviews, collecting 771 transportation needs survey responses, putting out a PSA on a Spanish language radio station, producing a one-hour segment on local talk radio, and hosting a booth at the Highlands County Fair for 10 days. Outreach strategies for the second phase, proposing service options for public input and prioritization, included: 100+ engagements at the Blueberry Festival, 156 service options surveys collected, two newspaper articles on plan development, and 20 attendees at a transit forum. Congratulations to HRTPO on their impressive outreach efforts that informed their Highlands Transit Plan!

State Perspectives on Regulating Background Ozone

On June 21, the Environment Subcommittee of the House Science, Space, and Technology Committee held a hearing on State Perspectives on Regulating Background Ozone. Among those called to testify was Diane Rath, executive director of the Alamo Area Council of Governments (AACOG) in San Antonio, Texas. She provided background on the great progress the San Antonio-New Braunfels Metropolitan Statistical Area (MSA) has made over the years in reducing ozone, and explained some of the complicated factors used to calculate the region’s ozone levels.

For AACOG and other regions facing variables outside of their control, federal ozone standards should be flexible enough to account for background ozone in trying to maintain healthy air quality for their citizens.

Regional Success in Reducing Ozone Levels

“The San Antonio-New Braunfels MSA has experienced significant improvement in its ozone levels in the last several years, with nearly a 20 percent decline in design value from 91 parts per billion (ppb) in 2004 to 73 ppb in 2016,” Ms. Rath noted in her testimony. “These improvements occurred despite a population increase of over 568,000 across the eight-county MSA during that period.”

When discussing what led to this drastic reduction in ozone levels, Ms. Rath stated that “the region’s success in improving ozone levels is due in large part to local voluntary public and private partnerships.” Some of the efforts noted in her written testimony included:

  • Bexar County and Cities of San Antonio, Leon Valley, and Seguin Anti-Idling Ordinances;
  • Participating in the Texas Emission Reduction Program (TERP) to facilitate turnover of older and dirtier diesel engines and engaging in community outreach to spread awareness of TERP among local industry and business leaders;
  • VIA Metropolitan Transit (VIA) began converting its diesel bus fleet to compressed natural gas (CNG) in April 2017 (VIA’s new CNG fueling facility is the largest in North America); and
  • Investments in the latest technology by both the energy industry in the Eagle Ford shale and the cement industry to reduce emissions.
Outside Influences on AACOG’s Ozone Levels

Improving the region’s ozone levels were complicated by multiple variables outside of AACOG’s control. According to Ms. Rath, tropical cyclones landfalling in the southeastern U.S. can cause spikes in local ozone levels, citing the example of Hurricane Irma as an instance where landfall in Florida triggered a high ozone event in San Antonio.

She also stated that “79.5 percent of San Antonio’s ozone is caused by emissions and transport from outside the San Antonio-New Braunfels MSA, that is, outside of local control.” The pie chart below used du

ring Ms. Rath’s opening testimony breaks down the contribution to San Antonio area ozone by geographic region.

background ozone

Questions from Congress

In response to questions from the Committee, Ms. Rath noted that San Antonio has taken aggressive actions to remain in attainment with the 2008 NAAQS. CPS Energy (a municipally-owned electric utility company) implemented cost-saving programs that resulted in savings equal to shutting down a medium-sized coal plant. CPS Energy produced 1500 megawatts of renewable energy capacity two years ahead of schedule, and are shutting down the Deely plant the region’s largest and oldest coal-powered plant.

The AACOG region faces a low estimate of over $117 million annually, and the high estimate is over $1 billion annually in economic consequences of a nonattainment designation. For every year we are in nonattainment, there is the potential for our eight-county MSA to incur over $1 billion in costs.

In addition, the impact of international ozone be taken into consideration when applying NAAQS to various regions in the U.S. How can you hold a community or region responsible for what is totally and completely outside of its control? Ms. Rath noted. If international transport was considered in measuring ozone levels, the region would be well under the limit.

Ms. Rath’s testimony and answers acknowledged the importance of the Environmental Protection Agency’s (EPA) National Ambient Air Quality Standards (NAAQS) for ozone but emphasized the adverse impacts of overly broad standards on regions, especially the San Antonio area. She urged Congress to “take advantage of the flexibility in the Clean Air Act to evaluate and actively consider during NAAQS designation the impact of background ozone levels and all foreign transport on a region.” This would be a step closer to ensuring that regional projects and economies don’t shoulder the full burden of nonattainment from factors outside their control.

EPA Seeks Nominees for Advisory Council

On Friday, the U.S. Environmental Protection Agency (EPA) published a notice in the Federal Register seeking nominations to fill vacancies on EPA’s National Drinking Water Advisory Council (NDWAC). EPA requests nominations of qualified candidates to be considered for a three-year appointment. The 15-member NDWAC was established by the Safe Drinking Water Act to provide practical and independent advice, consultation, and recommendations to the EPA’s Administrator on the activities, functions, policies, and regulations required by the bill. EPA’s notice solicits nominations to fill four vacancies from August 2018 through December 2020, and five vacancies from December 2018 through December 2021. To maintain the representation required by statute, nominees will be selected to represent state and local agencies concerned with water hygiene and public water supply (two vacancies) and the general public (two vacancies). Nominations are due by May 31, 2018.

Energy Secretary Perry Announces Funding for Advanced Vehicle Technologies Research

Energy Secretary Rick Perry recently announced $68.5 million in funding through the U.S. Department of Energy’s Office of Energy Efficiency and Renewable Energy for early-stage research of advanced vehicle technologies. Projects selected through this Vehicle Technologies Office funding opportunity will address one of five topics, including batteries and electrification, technology integration, and co-optimization of engines and fuels. The goals of this opportunity are to improve transportation efficiency and reliability by enhancing economic growth and enabling affordable mobility.

Upcoming Brownfields Tax Legislation

Representatives Elizabeth Esty and Peter King joined forces to introduce the Brownfields Redevelopment Tax Incentive Reauthorization Act of 2018, as referenced in their “Dear Colleague” letter. If passed, the legislation would save a brownfields tax incentive that expired in January 2012. According to the letter, the bill would “reauthorize a tax incentive program that would allow developers to fully deduct the costs of environmental cleanups of brownfields in the year the costs were incurred.” The reauthorization is expected to encourage private sector investment to take on brownfields cleanup and redevelopment projects. NARC, the National League of Cities (NLC), the National Association of Counties (NACo), and the U.S. Conference of Mayors recently produced a letter urging Congress to pass the bill.

FCC Ditches 2 Federal Reviews in 5G ‘Streamlining’

The Federal Communications Commission (FCC) approved a wireless infrastructure streamlining order last week to try to speed up American efforts in the race to 5G, exempting small cell deployments from federal historic preservation and environmental reviews. Now only states and localities that have their own review processes in place can mandate them. After a failed attempt to delay the vote for more input from tribal nations, environmental advocates, and local government officials, Commissioner Jessica Rosenworcel noted that streamlining the installation of 5G networks for the wireless industry will not guarantee improved access to underserved communities, such as rural areas and urban deserts. Read more in this Route Fifty article.

At Long Last, Congress and the President Fund FY 2018

After months of wrangling, five continuing resolutions, two short-term government shutdowns, and much argument over what funding levels and policy riders should make the final cut, Congress voted and the president signed an omnibus appropriations bill that will keep the federal government funded through the end of the current fiscal year on September 30, 2018.

The $1.3 billion appropriation represents a significant success for our members! Many of NARC’s 2018 legislative and funding priorities received substantially more funding than the president requested and more than was appropriated in fiscal year 2017. Areas that saw significant funding increases include:

  • Transportation and infrastructure, including TIGER Grants, AMTRAK funding, and autonomous vehicles;
  • Community Development Block Grant (CDBG);
  • Workforce Innovation and Opportunity Act (WIOA) state workforce formula grants;
  • Economic Development Administration (EDA);
  • Census Bureau;
  • Opioid crisis relief, including funding for prevention, treatment, and law enforcement;
  • Rural water and broadband programs;
  • Clean Water and Drinking Water State Revolving Funds;
  • Aging programs;
  • Low Income and Home Energy Assistance Program (LIHEAP);
  • HOME Investment Partnerships Program and other housing assistance programs; and
  • Homelessness assistance.

Several policy riders and authorizations were also adopted as part of the omnibus, including:

  • Reauthorization of the EPA Brownfields Program, including NARC supported language;
  • Reauthorization of the Federal Aviation Administration is now extended through September; and
  • Short-term reauthorization of the National Flood Insurance Program (NFIP) is extended through the end of July.

For more information, check out our new blog post on the FY 2018 omnibus appropriations bill.