Drinking Water State Revolving Fund (DWSRF): Overview, Issues, and Legislation

Summary

The Safe Drinking Water Act (SDWA) is the federal authority for regulating contaminants in public water supplies. The act includes the Drinking Water State Revolving Fund (DWSRF) program, established in 1996 to help public water systems finance infrastructure projects needed to comply with federal drinking water regulations and to meet the act’s health protection objectives. Under this program, states receive annual capitalization grants from the U.S. Environmental Protection Agency (EPA) to provide financial assistance (primarily subsidized loans) to public water systems for drinking water projects and other specified activities. Through FY2018, Congress has appropriated a total of $20.41 billion for the program. From FY1997 through FY2017, states provided $35.38 billion in DWSRF assistance to water systems for 14,090 projects.

The latest EPA survey of capital improvement needs indicates that public water systems need to invest $472.6 billion on infrastructure improvements over 20 years to ensure the provision of safe drinking water. EPA reports that, while all of the projects identified in the survey would promote the health protection objectives of the SDWA, $57.6 billion (12%) of reported needs are attributable to SDWA compliance. A study by the American Water Works Association estimates that restoring aging infrastructure and expanding water systems to keep up with population growth would require a nationwide investment of at least $1 trillion through 2035.

Program issues include (1) the gap between estimated needs and funding; (2) the growing cost of complying with SDWA standards (particularly for small communities); (3) the ability of small or disadvantaged communities to afford DWSRF financing; and (4) the broader need for cities to maintain, upgrade, and expand infrastructure unrelated to SDWA compliance. Several overarching policy questions are under debate, including the appropriate federal role in providing financial assistance for local water infrastructure projects and potential funding mechanisms that could supplement or replace a program reliant on annual appropriations.

Enacted in 2014, the Water Infrastructure Finance and Innovation Act (WIFIA; P.L. 113-121,Title V, Subtitle C) authorized a five-year pilot loan guarantee program to promote increased development of, and private investment in, primarily large water infrastructure projects. Congress noted that the pilot program is intended to complement, not replace, the DWSRF program and the similar Clean Water Act State Revolving Fund (CWSRF) program for wastewater infrastructure. For FY2017, Congress provided $30.0 million for the program ($25 million for EPA to provide loan guarantees for water infrastructure projects under WIFIA and $5 million for administrative costs).

The Water Infrastructure Improvements for the Nation Act (WIIN Act; P.L. 114-322) made several revisions to the DWSRF program and authorized $100 million in DWSRF appropriations to Michigan to assist the City of Flint in repairing its drinking water system. In P.L. 114-254, Congress appropriated the DWSRF funding authorized in the WIIN Act. The Consolidated Appropriations Act, 2017 (P.L. 115-31), included $863.23 million for the DWSRF program.

For FY2018, the President requested $863 million for the DWSRF program and $20 million for the WIFIA program. The Consolidated Appropriations Act, 2018 (P.L. 115-141), included $1.16 billion for the DWSRF program and $63 million for WIFIA.

The state of the nation’s water infrastructure and the challenges many communities face in addressing infrastructure needs continue to receive congressional attention. Numerous bills have been introduced in the 115th Congress to expand DWSRF eligibilities, increase funding authority, and make other revisions to the DWSRF program and to authorize new funding programs. Two such bills have been reported: the Drinking Water System Improvement Act of 2017 (H.R. 3387) and a broader water resources infrastructure bill, America’s Water Infrastructure Act of 2018 (S. 2800), which would add new DWSRF and CWSRF provisions to WIFIA.