Water Resources Measure Pushed Forward by Senate

The U.S. Senate was working to pass a massive water program bill that included the Water Infrastructure Finance and Innovation Act (WIFIA) for utilities.

Jun 1st, 2013

By Patrick Crow, Washington Correspondent

The U.S. Senate has passed a massive water program bill that included the Water Infrastructure Finance and Innovation Act (WIFIA) for utilities. It now goes to the House for consideration.

The measure was included in the Water Resources Development Act (WRDA), which authorizes an array of politically popular Corps of Engineers water projects. The last such bill was passed in 2007.

The WIFIA provision would establish two five-year pilot programs, run by the Army Corps and the Environmental Protection Agency (EPA), and each authorized at $50 million per year. Under WIFIA, the two agencies could offer direct, low-interest loans for major water infrastructure projects expected to cost more than $20 million. The pilot program would complement, not replace, the Clean Water and Drinking Water state revolving funds (SRFs).

The American Water Works Association, which developed the WIFIA concept, called WIFIA's passage a "huge step forward" for water consumers and urged broad support as the legislation heads to the House.

"Approval of WIFIA by the U.S. Senate represents a huge step forward in confronting America's water infrastructure challenge," said AWWA Executive Director David LaFrance. "WIFIA would repair more critical water infrastructure at a lower cost to our communities. With so many of our nation's water pipes in need of replacement, WIFIA will benefit everyone who receives a water bill."

WIFIA passage was not problem-free, however. Before the bill went to the Senate floor, the Congressional Budget Office (CBO) reported that WIFIA would cost the federal government not $250 million, but $260 million over the next five years. Also, because Title X would allow WIFIA loans to cover no more than 49 percent of a project's total cost, CBO assumed the issuance of tax-exempt bonds would cover the balance and thus reduce federal revenues by $135 million over the next decade.

To keep WIFIA budget-neutral and able to win passage, Senate staffers added language that would ban utilities from using any tax-exempt financing on WIFIA projects, but with the understanding that the "band-aid" would be replaced with an alternative solution when the bill reaches a House-Senate conference committee. Water groups warned that keeping the ban in the bill's language would make the WIFIA program unworkable for many utilities.

Another issue was the expansion of WIFIA. Although the measure specifically was designed to help large utilities, the Senate accepted an amendment to expand it to include projects costing $5 million or more for communities of less than 25,000 residents.

Sen. Jim Inhofe (R-Okla.), a member of the Senate Environment and Public Works Committee, offered the amendment.

He explained, "America's rural communities need the same access to water resources and infrastructure as larger metropolitan areas. Smaller communities are required to meet the same unfunded clean drinking and wastewater mandates from the Environmental Protection Agency but are not provided sufficient access to federal funding."

Rob Johnson, CEO of the National Rural Water Association, said, "Many western rural areas have never had adequate water supplies and have a need for a reliable water supply to attract and maintain rural economic and public health. Many rural communities in the west are still hauling water for drinking."

Dan Hartnett, a spokesman for the American Metropolitan Water Association, said his group did not object to the Inhofe amendment. Hartnett said WIFIA already included language that would have allowed small utilities to band together in projects costing $20 million or more.

Separately, the Obama Administration had more bad news for advocates of the Drinking Water and Clean Water SRF programs. In its fiscal 2014 budget, the administration requested $817 million for the drinking water and $1.095 billion for the clean water funds, down from the current $908.7 million $1.452 billion, respectively.

The administration said the lower funding still would facilitate $6 billion per year in wastewater and drinking water infrastructure projects annually. It added that EPA should "target SRF assistance to small and under-served communities."

Water groups subsequently urged Senate and House appropriations subcommittees to reject proposed cuts in the SRFs and maintain spending at current levels.

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