House passes EPA spending bill that would reduce SRFs

U.S. Capitol building

The U.S. House of Representatives recently approved an appropriations bill that would reduce total funding for the U.S. Environmental Protection Agency (EPA) and some of the agency’s key funding programs, although the measure is unlikely to get very far.

The measure would reduce EPA’s funding down to $6.173 billion (a 39 percent cut) in 2024. The Clean Water State Revolving Fund (CWSRF) would be reduced from $1.64 billion in FY23 to $535 million in FY24 (67 percent reduction), and the Drinking Water State Revolving Fund (DWSRF) reduced from $1.13 billion in FY23 to $460.61 million in FY24 (59 percent reduction). The programs would still receive more than $4.8 billion separately through the Bipartisan Infrastructure Law in FY24.

The measure is consistent with recent Republican-backed proposals to reduce federal funding going to the SRF programs — a move the water sector says is a mistake.

In August, water sector organizations including those representing U.S. utility systems, wrote to Congress to reiterate support for funding the Clean Water and Drinking Water State Revolving Funds (SRFs) to the maximum authorization in federal law, $3 billion each, for fiscal year 2024.

The letter noted that maintaining annual federal funding for the SRFs will allow water utilities to keep water infrastructure projects on track, on time and on budget. The sector also argued that economic and regulatory factors like historic inflation, supply chain disruptions, a shortage of skilled workers, increased competition for professional services such as engineering, rising interest rates on municipal bonds, and the increased cost of compliance are all driving up the cost of infrastructure.

The Association of Metropolitan Water Agencies, one of the organizations writing in support of full SRF funding, said the GOP-led measure approved last week is sure to be rejected by the Democratic-led Senate, but said House Republicans plan to use the the slashed EPA figures as a starting point for negotiations on a final spending bill in the coming months.

This summer, a Senate committee passed its own version of an EPA spending bill that would largely hold spending on the SRFs and other agency initiatives flat next year. AMWA said the two chambers will soon begin work on negotiating the final appropriations bills for EPA and other parts of the federal government. AMWA added the House and Senate will also need to pass another continuing resolution to extend current funding levels and avoid a government shutdown on Nov. 17.

Despite the likelihood of the appropriations bill being rejected in the Senate, other industry associations in addition to AMWA have been vocal against the prospect of slashing SRF funding.

In September, Todd Swingle, executive director of Toho Water Authority in Kissimmee, Florida, testified in Congress on behalf of the National Association of Clean Water Agencies (NACWA), about the benefits of SRF investments to local water authorities in Florida. Swingle highlighted the increasing financial and operational challenges experienced by wastewater systems including emerging chemical clean-up and remediation expenses that are expected to inflate costs and delay infrastructure development.

Doug Carlson, chief executive officer of the National Utility Contractors Association (NUCA) said in part in a statement:

“Cutting infrastructure spending is bad policy. Funding our nation’s water infrastructure solely through earmarks is even worse policy.

“Taking away water infrastructure funding from the two EPA state revolving funds does not only hurt citizens in 2024 — it shrinks the funding pool for years to come. Directed water infrastructure spending reduces the funds available over the long-term because earmarks are grants, rather than loans issued by the state revolving funds. States repay these loans, which are then recycled back as repaid capital. Earmarks do not repay these funding resources, and ultimately cost states an additional $458 million.”

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