Congress Trims SRF Funding in FY2016 Plan; EPA Funding Remains Steady

Last week, lawmakers on Capitol Hill wrapped up their remaining 2015 business week by passing an omnibus appropriations bill that avoids a government shutdown and funds federal operations and activities for the remainder of the 2016 fiscal year.?

The bill, a product of months of negotiations, holds overall U.S. EPA funding steady while trimming the level of dollars allocated to its largest water infrastructure funding programs.

The?final spending bill?approved by the House and Senate late last week delivers $8.14 billion for EPA in FY2016, equal to the agency?s 2015 funding amount, but it reduces funding for both the Drinking Water and Clean Water State Revolving Funds (SRFs) compared with their 2015 allotments.

The bill provides $863.2 million for the DWSRF ? well below President Obama?s request of $1.186 billion and more than $40 million below the program?s FY2015 appropriation.?While the figure represents the lowest DWSRF appropriation in several years, it is significantly above the FY16 funding levels originally proposed by the House and Senate Appropriations Committees, each of which would have cut DWSRF funding to below $780 million.

The CWSRF, meanwhile, sees its funding cut by $55 million to $1.394 billion.?This actually exceeds the $1.116 billion requested in President Obama?s budget, which proposed directing some funding toward necessary drinking water projects.

The wastewater and drinking water utility sector were closely monitoring the omnibus bill to see how congressional appropriators would fund the state revolving funds. That is because the White House, in a shift away from its past water budget-related priorities, had sought less funding for the clean water state revolving fund and more for the drinking water fund.

The final omnibus bill continues several requirements governing states? use of SRF allotments, such as reserving 10 percent of CWSRF funds for ?green infrastructure, water or energy efficiency improvements, or other environmentally innovative activities.? Additionally, 10 percent of a state?s CWSRF dollars, and 20 percent of its DWSRF funds, must be reserved for low or negative interest loans or grants to eligible communities. American-made iron and steel requirements will continue to apply to DWSRF projects, with EPA retaining the power to waive the requirement in cases where it would increase total project costs by more than 25 percent.

The budget agreement allows EPA to continue ongoing efforts to establish the Water Infrastructure Finance and Innovation Act (WIFIA) pilot program, with the?explanatory statement?accompanying bill delivering $2.2 million in administrative funds to EPA for this purpose.? Though the statement does not reference WIFIA directly, it instructs EPA to allocate its Water Quality Protection funding ?consistent with fiscal year 2015? ? thereby continuing Congress? FY15 requirement that EPA reserve $2.2 million for WIFIA implementation.

President Obama is expected to sign the bill into law, formally completing the FY2016 budget process. Attention will quickly turn to FY2017 following the New Year, as the President is expected to submit his budget request to Congress in early February.

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