For other versions of this document, see http://wikileaks.org/wiki/CRS-RL31344 ------------------------------------------------------------------------------ Order Code RL31344 Report for Congress Received through the CRS Web Water Infrastructure Financing Legislation: Comparison of S. 1961 and H.R. 3930 Updated June 10, 2002 Claudia Copeland and Mary Tiemann Specialists in Environmental Policy Resources, Science, and Industry Division Congressional Research Service ~ The Library of Congress Water Infrastructure Financing Legislation: Comparison of S. 1961 and H.R. 3930 Summary This report provides a side-by-side comparison of two major bills in the 107th Congress concerning water infrastructure project financing. It compares provisions of S. 1961, the Water Investment Act of 2002, which would amend both the Clean Water Act (CWA) and Safe Drinking Water Act (SDWA), and H.R. 3930, the Water Quality Financing Act of 2002, which would amend only the CWA. It also describes relevant provisions of current law that would be affected or modified by the bills. The CWA and SDWA provisions that these two bills would amend are principally the portions of those laws that authorize federal financial assistance to State Revolving Loan Funds (SRFs) for purposes of building and upgrading wastewater treatment and drinking water treatment facilities in compliance with the laws. Congress established the CWA SRF program in 1987 and the SDWA SRF program in 1996. Under both, federal capitalization grants are provided as seed money for state-administered loans, which communities repay to the state, providing a source of capital for future investments. Both laws contain provisions that specify requirements for states to establish SRFs and requirements that apply to the SRF's operation, such as plans and reporting. Both define categories of projects eligible for assistance, who may receive assistance, and types of assistance activities. A key intention of both bills is to extend SRF authorizations. S. 1961 authorizes $35 billion total for FY2003-2007 ($20 billion for the CWA SRF, $15 billion for the SDWA SRF), while H.R. 3930 also authorizes $20 billion for the CWA SRF for the same time period. In addition, both would conform the two laws in several respects. For example, the SDWA currently allows states to offer longer loan repayment periods and additional subsidization to disadvantaged communities, and both bills would add parallel provisions to the CWA. The bills are not identical, however. In some cases, they take different approaches to an issue, such as how to revise the formula for state-by-state allotment of SRF capitalization grants. They differ in other ways, as well. S. 1961, but not H.R. 3930, includes provisions modeled on the current SDWA that would allow private utilities to receive CWA SRF assistance. S. 1961 includes other provisions not in the House bill. One requires a study of public water system and wastewater treatment works rate structures. Another calls for a study of to identify status and trends of freshwater and groundwater resources in the United States. It also includes a new grant program to assist small community drinking water projects. H.R. 3930 includes some provisions not in the Senate bill. For example, it would extend requirements for 11 CWA reports to Congress. Congressional committees are considering this water infrastructure legislation. Following a hearing on March 13, 2002, the House Transportation and Infrastructure Committee approved H.R. 3930 on March 20. The Senate Environment and Public Works Committee held hearings on S. 1961 and several other bills on February 26 and 28 and approved S. 1961 with amendments on May 17. Contents Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Table 1. Comparison of Water Infrastructure Legislation . . . . . . . . . . . . . . . . . . 4 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Recipients Eligible for Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Projects Eligible for Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Fund Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Extension of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Additional Subsidization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Financial Assistance to Small Systems from the SRF . . . . . . . . . . . . . . 8 Technical Assistance to Small Systems from the SRF . . . . . . . . . . . . . 8 EPA Technical Assistance Grants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 State Administrative Costs Set-Aside . . . . . . . . . . . . . . . . . . . . . . . . . 10 Reservation of Funds for Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Cross-cutting Program and Federal Requirements . . . . . . . . . . . . . . . 10 Requirements for Receipt of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 No Assistance for Systems in Noncompliance . . . . . . . . . . . . . . . . . . 12 Technical, Managerial, and Financial Capability Requirements for Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Consistency with Planning Requirements . . . . . . . . . . . . . . . . . . . . . . 15 Priority System Requirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Intended Use Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Allotment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 SRF Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Cross-collateralization between CWA & SDWA SRFs . . . . . . . . . . . 18 SRF Set-Aside for Indian Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Small Drinking Water System Grant Program . . . . . . . . . . . . . . . . . . 19 Small System Technology Assistance Centers . . . . . . . . . . . . . . . . . . 21 Environmental Finance Centers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Demonstration Program for Water Quality Enhancement and Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Rate Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Streamlining the SRF Application and Review Process . . . . . . . . . . . 23 Water Resource Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Nutrient Control Technology Program . . . . . . . . . . . . . . . . . . . . . . . . 24 Wet Weather Watershed Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Preservation of Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . . 25 New York City Watershed Protection Program . . . . . . . . . . . . . . . . . . 25 Water Infrastructure Financing Legislation: Comparison of S. 1961 and H.R. 3930 Introduction This report provides a side-by-side comparison of two major bills in the 107th Congress concerning water infrastructure project financing. It compares provisions of S. 1961, the Water Investment Act of 2002, which would amend both the Clean Water Act (CWA) and Safe Drinking Water Act (SDWA), and H.R. 3930, the Water Quality Financing Act of 2002, which would amend only the CWA. It also describes relevant provisions of current law that would be affected or modified by the bills. The CWA and SDWA provisions that by these two bills would amend are principally the portions of those laws that authorize federal financial assistance to State Revolving Loan Funds (SRFs) for purposes of building and upgrading wastewater treatment and drinking water treatment facilities in compliance with those laws, respectively. Under both programs, federal capitalization grants are provided as seed money for state-administered loans. Recipients repay loans to the state, enabling the state to build up a source of capital for future investments. Congress established the CWA SRF program in 1987 (P.L. 100-4), replacing what previously had been a CWA program of grants to municipalities. Before 1996, the SDWA had not authorized federal assistance for drinking water treatment facilities, but in that year, Congress established the SDWA SRF program (P.L. 104-182), modeling it after the CWA program while also refining it to reflect early implementation of P.L. 100- 4. (For background information, see CRS Report RL31116, Water Infrastructure Funding: Review and Analysis of Current Issues.) A key intention of both bills is to extend and increase SRF authorizations. In the case of the CWA program, authorizations under the 1987 law expired at the end of FY1994, but Congress has continued to appropriate monies for capitalization grants each year since then. The SDWA SRF program is authorized through FY2003. S. 1961 authorizes $35 billion total for the two SRF programs for FY2003- 2007 ($20 billion for the CWA SRF, $15 billion for the SDWA SRF), while H.R. 3930 also authorizes $20 billion for the CWA SRF for the same time period. In addition, both S. 1961 and H.R. 3930 would conform aspects of the programs in the two laws. For example, the SDWA currently allows states to offer longer loan repayment periods and additional subsidization on loans to disadvantaged communities, and both bills would add parallel provisions to the CWA. The bills are not identical, however. In some cases, they take different approaches to an issue, such as how to revise the formula for state-by-state allotment of SRF capitalization grants. They differ in other ways, as well. S. 1961, but not H.R. 3930, includes provisions modeled on the current SDWA that would allow CRS-2 private utilities to receive CWA SRF assistance. The Senate bill would require states to work with wastewater utilities to attain technical, managerial, and financial capability. The SDWA currently has a similar provision. Both bills would permit states to make longer term SRF loans to economically disadvantaged communities; H.R. 3930 would permit such loans to be made for up to 30 years, while S. 1961 generally extends clean water and drinking water SRF loans from 20 years to up to 30 years and would permit loans to economically disadvantaged communities under both programs to be made for up to 40 years. The House bill addresses several issues not included in the Senate measure; it would, for example, extend requirements for 11 CWA reports to Congress and reauthorize the Act's state management assistance grant program in Section 106.1 House and Senate committees held oversight hearings on water infrastructure financing issues during the 1st Session of the 107th Congress. Attention to specific legislation is underway in the 2nd Session. The Senate Environment and Public Works Committee held hearings on several bills (S. 252, S. 285, S. 503, S. 1044 and S. 1961) on February 26 and 28, and the House Transportation and Infrastructure Subcommittee on Water Resources and Environment held a hearing on H.R. 3930 on March 13. H.R. 3930 was approved by the full House committee on March 20 with an amendment concerning applicability of Davis-Bacon Act prevailing wage requirements (see page 10). The Senate Environment and Public Works Committee approved S. 1961 on May 17. During markup, the committee adopted several amendments, including provisions concerning prevailing wage requirements; a revised state-by-state allocation formula for the CWA SRF (see page 16); and authorization of several new grant programs--to assist small community drinking water projects (page 19), nutrient control treatment projects at wastewater plants (page 24), and wet weather watershed projects (page 24). Several other legislative proposals, although not specifically described in this report, also have been introduced in the 107th Congress.2 These include: ! H.R. 688/S. 252, to authorize $15 billion in CWA SRF appropriations and expand the types of projects eligible for CWA SRF assistance, 1 As introduced, H.R. 3930 also included two provisions to modify portions of federal tax law that affect wastewater and drinking water infrastructure financing. One provision would modify the Internal Revenue Code to reclassify bonds for projects furnishing water and sewer projects as exempt from annual state caps on private activity bonds. The other would modify the Code to exempt earnings on bonds collateralized with assistance from a CWA SRF or a SDWA SRF from requirements to rebate to the government arbitrage profits on unspent bond proceeds. These tax provisions were included in H.R. 3930 as ordered reported by the Transportation and Infrastructure Committee on March 20. The bill was subsequently referred to the Ways and Means Committee for consideration of matters within its jurisdiction. That committee ordered the bill reported on April 17 with an amendment which removed the tax provisions. 2 Congress also has considered water infrastructure legislation that focuses specifically on security issues. For a discussion of this legislation see, for example, CRS Report RL31294, Safeguarding the Nation's Drinking Water: EPA and Congressional Actions. CRS-3 ! H.R. 1178/S. 503, to authorize $750 million per year for SDWA grants to public water systems that serve small communities, ! H.R. 1750, to reauthorize the CWA SRF program at $5.4 billion per year through FY2006, ! H.R. 1751, to reauthorize the CWA's previous construction grants (Title II) program at $5.4 billion per year through FY2006, ! H.R. 3224/S.1299, to authorize $1.9 billion for the period FY2001-FY2006 for grants to assist small public water systems in complying with SDWA standards, ! H.R. 3792, to authorize $25 billion in appropriations for CWA SRFs and expand the types of eligible projects, ! S. 285, to authorize the use of CWA SRF monies for construction of water conservation and quality improvements, and ! S. 1044, to provide CWA assistance through grants to states in the Chesapeake Bay watershed for installing nutrient removal technologies at wastewater treatment plants. CRS-4 Table 1. Comparison of Water Infrastructure Legislation Current Law S. 1961 H.R. 3930 Definitions Clean Water Act (CWA) definitions are Adds definitions of "disadvantaged community," Defines "small treatment works" as those serving a provided in §502. "disadvantaged user," and "small treatment works" population of 20,000 or less. (section 127 of H.R. to CWA §502. Defines small wastewater treatment 3930) works as those serving a population of 10,000 or less. (section 101 of S. 1961) Adds definition of "treatment works" to CWA §502. (section 151) Safe Drinking Water Act (SDWA) definitions Adds definition of "disadvantaged user" to section No new definitions. generally are provided in §1401. Disadvantaged SDWA 1452(d). Defines a disadvantaged user as community is defined in §1452(d). Small public "a person that meets affordability criteria water systems are described as systems serving a established, after public review and comment, by population of 10,000 or fewer in §1412(b)(4)(E) the state in which the person resides." and elsewhere. (section 205(a)) Recipients Eligible for Assistance CWA §603(c) provides that eligible assistance Adds private utilities that principally treat No comparable CWA language concerning private recipients include any municipality, municipal wastewater or domestic sewage as utilities. intermunicipal, interstate, or state agency. eligible recipients for CWA State Revolving Fund (SRF) assistance. (section 103(c)) If a state includes private utilities in its needs survey, the state shall ensure that private utilities are eligible to receive SRF assistance. (section 103(i)) SDWA §1452(a) and (f) provide that eligible Specifies that if a state includes the needs of private No comparable provision. assistance recipients include privately or publicly utilities in its needs survey, then the state must owned community water systems and nonprofit ensure that private utilities are eligible to receive noncommunity water systems, other than systems SRF assistance. (section 206) owned by federal agencies. Projects Eligible for Assistance CWA §603(c) describes types of projects Clarifies that costs for planning, design, associated No comparable language for costs of planning, CRS-5 Current Law S. 1961 H.R. 3930 eligible for financial assistance (construction of preconstruction, and necessary siting activities are design, and preconstruction activities. publicly owned treatment works, implementation eligible for assistance. of a §319 nonpoint pollution management program, and development and implementation of Adds water conservation improvement projects; Adds lake protection projects (CWA §314), a §320 estuary conservation and management water reuse, reclamation or recycling projects; decentralized wastewater treatment systems, plan) projects to increase facility security; and measures municipal stormwater runoff measures, water to control municipal stormwater to list of types of conservation, treatment works security measures, eligible projects. watershed development and implementation projects (CWA §121) to list of eligible projects. Eligible projects may use one or more (section 123(a)) nontraditional approaches (e.g., land conservation, decentralized wastewater treatment innovations, other nonpoint best management practices) (section 103(c)) SDWA §1452(a)(2) states that funds may be Expands §1452(a)(2) to allow water systems to use No comparable provision. used only for expenditures that the Administrator funds for planning, design, and associated has determined will facilitate compliance with preconstruction expenditures, and for projects to SDWA regulations or significantly further consolidate community water systems. Funds may SDWA's health protection objectives. also be used to provide loans for projects or activities to increase the security of public water §1452(k) authorizes states to use up to 15% of the systems. (section 203) capitalization grant (not more than 10% for any 1 activity) to provide loans to public water systems Amends §1452(k) to broaden other eligible uses of for acquiring conservation easements or land for SRF funds to include developing and implementing source water protection; to provide loans to source water protection programs (including community water systems for voluntary source wellhead protection programs). (section 204(e)) water protection measures; to provide capacity development assistance; and to establish and implement wellhead protection programs. Fund Management CWA §603(c) requires that CWA SRFs be Requires that CWA SRFs be maintained and Requires that CWA SRFs be maintained and maintained and credited with loan repayments and credited with loan repayments and be maintained in credited with loan repayments and fees on loan be maintained in perpetuity. perpetuity. (section 103(c)) recipients and be maintained in perpetuity. (section CRS-6 Current Law S. 1961 H.R. 3930 122(c)) SDWA §1452(c) requires that SDWA SRFs be No additional provisions. No additional provisions. maintained and credited with loan repayments and interest, and be maintained in perpetuity. Amounts not needed for current obligation or expenditure must be invested in interest bearing obligations. Extension of Loans CWA §603(d) provides that a water pollution Authorizes a water pollution control revolving fund Permits state to provide an extended term for a control revolving fund may make loans at terms to make loans at terms not to exceed 30 years, so CWA SRF loan (up to 30 years, so long as that not to exceed 20 years. long as that period does not exceed the project's period does not exceed the project's design life) to design life. a project that meets affordability criteria established by the state. (section 123(b)) Permits state to provide an extended term for a CWA SRF loan to a disadvantaged community (up to 40 years, so long as that period does not exceed the project's design life). (section 103(d)) SDWA §1452(f) provides that a SDWA SRF Funds may be used to make loans at terms not to No additional provisions. may make loans at terms not to exceed 20 years. exceed 30 years; the term may not exceed the project's design life. Exception: a state may extend the term of a loan to as much as 30 years for disadvantaged Permits a state to provide an extended term for a communities, provided the term does not exceed loan to a disadvantaged community (up to 40 years, the project's design life. provided that the term does not exceed the project's design life). (section 204(c)) Additional Subsidization CWA §603(d) permits states to make loans at or Authorizes states to provide additional Authorizes states to provide additional below market interest rates, including interest free subsidization from a CWA SRF, including subsidization from a CWA SRF, including loans. CWA has no existing provisions for forgiveness of principal, to treatment works for use forgiveness of principal and negative interest additional subsidization or forgiveness of loans. in developing technical, managerial, and financial loans, to projects to benefit a municipality that capacity or for projects using non-traditional meets the state's affordability criteria. Also may CRS-7 Current Law S. 1961 H.R. 3930 approaches. Authorizes states to provide additional provide subsidization to implement alternative subsidization, including forgiveness of principal, processes or techniques that may result in cost for projects in disadvantaged communities. savings or increased environmental benefits. (section 103(d)(4)) Authorizes states to provide additional Total amount of subsidization provided by a state subsidization, including forgiveness of principal, to may not exceed 30% of its capitalization grant. be directed through the user charge rate system or similar program to disadvantaged users within the State also may provide additional subsidization to community's residential user class of the municipalities that do not meet affordability community. Subsidization under this provision criteria if the municipality seeks to benefit may not exceed 15% of the state's capitalization individual ratepayers in the residential user rate grant in that year. (section 103(d)(4)) class and ensures that this subsidization will be directed through a user charge rate system to such Additional subsidization under these 3 provisions ratepayers. may not exceed 30% of the state's capitalization grant in that year. (section 103(e)(2)) Directs states to establish affordability criteria by Sept. 30, 2003. EPA may provide information to A disadvantaged user may not receive additional assist states in establishing criteria. subsidization under both the provision concerning user charge system subsidization and subsidized assistance of treatment works project costs. (section 103(d)(4)) No comparable set-aside provision. Set-aside: In any year when CWA SRF appropriations exceed $1.4 billion, a state shall set aside 25% of the difference between its capitalization grant and its proportionate share of $1.4 billion to provide additional subsidization. (section 123(e)) CRS-8 Current Law S. 1961 H.R. 3930 SDWA §1452(d) authorizes states to provide Amends §1452(d)(1) to authorize states to use 15% No comparable provision. additional loan subsidization, including of the capitalization grant to provide additional forgiveness of principal, for projects in subsidization for communities not defined as disadvantaged communities. disadvantaged if the recipient demonstrates and The total amount of loan subsidies may not documents to the state that the added subsidization exceed 30% of the state's capitalization grant for is directed through the user charge rate system to that year. Defines `disadvantaged community' as disadvantaged residential users. the service area of a system that meets EPA may provide information to assist states in affordability criteria set by the state. EPA may identifying disadvantaged users. A disadvantaged publish information to assist states in establishing user within a community that receives assistance as these criteria. a disadvantaged community is not eligible for this additional subsidization. (section 205(a)) Financial Assistance to Small Systems from the SRF CWA - no existing provision No comparable provision. Directs states, beginning in FY2004, to use at least 15% of CWA capitalization grants to assist municipalities with population less than 20,000, if there are sufficient applications for assistance. (section 122(c)) SDWA §1452(a)(2) requires that 15% of the No additional provision. No additional provision. amount credited to a state SDWA SRF in any fiscal year must be available for providing loan assistance to systems serving fewer than 10,000 persons, to the extent such funds can be obligated for eligible projects. Technical Assistance to Small Systems from the SRF CWA - no existing provision Authorizes states to provide CWA SRF assistance Authorizes states to provide CWA SRF assistance to small treatment works for technical and planning to small treatment works in financial management, assistance and for assistance in financial user fee analysis, capital improvement planning, management, user fee analysis, budgeting, repair operation and maintenance, repair schedules. scheduling and other similar activities. Amounts Amounts shall not exceed 2% of capitalization shall not exceed 2% of capitalization grant awards grant awards to the fund. (section 123(d)) CRS-9 Current Law S. 1961 H.R. 3930 to the fund. (section 103(d)(4)) EPA shall assist states in establishing simplified procedures for small treatment works to obtain CWA SRF assistance and shall publish a manual to assist such systems in obtaining assistance. (section 127) SDWA §1452(g)(2) authorizes states to use 2% No additional provision. No additional provision. of their capitalization grant to provide technical assistance to public water systems serving 10,000 or fewer persons. (See section below.) EPA Technical Assistance Grants CWA - no existing provision, but §104(b) Modifies CWA §603 to authorize EPA to make Modifies CWA §104(b) to authorize EPA to make generally authorizes EPA to support or conduct grants to qualified nonprofit providers for technical grants to nonprofit organizations concerning various types of research, investigations, and assistance to small wastewater treatment works assistance to rural and small municipalities, training. (located in rural areas and serving fewer than 3,300 publicly owned treatment works and decentralized users) in planning, developing, and obtaining wastewater treatment systems concerning financing for eligible projects. Authorizes $7 planning, design, financing, construction and million per year for FY2003-2007. (section 103(h)) operation of wastewater treatment works. Authorizes not less than $15 million per year for FY2003-2007. (section 111) SDWA §1452(q) authorizes EPA to reserve up No additional provision. No additional provision. to 2% of the SRF appropriation to provide technical assistance to small systems; the total amount provided may not exceed the amount authorized under §1442(e) (regarding small system technical assistance and training). SDWA §1442(e) authorizes EPA to provide technical assistance to small systems through circuit-rider and regional technical assistance No additional provision. No additional provision. programs. Assistance may go to nonprofit organizations. Authorizes $15 million for each of FY1997-FY2003. CRS-10 Current Law S. 1961 H.R. 3930 State Administrative Costs Set-Aside CWA §603(d) allows a state to reserve up to 4% Increases allowed CWA reservation for Increases allowed reservation for administrative of its capitalization grant to cover the reasonable administrative costs to 6% beginning in FY2003. costs to $400,000, or 1/5 percent per year of the costs of administering the SRF. (section 103(d)(5)) current valuation of the state's SRF, whichever is greater. (section 123(c)) SDWA §1452(g)(2) allows a state to use up to Increases allowed SDWA reservation for No additional provisions 4% of its capitalization grant to cover the administrative costs to 6%. reasonable costs of administering programs under (section 305(b)(1)) §1452 and to provide technical assistance to public water systems. This section further authorizes states to use up to an additional 10% of their capitalization grant to administer public water system supervision programs, to administer or provide technical assistance through source water protection programs, to develop and implement capacity development strategies, and for operator certification programs. For these purposes, states must provide a dollar for dollar match of funds. Reservation of Funds for Planning CWA §604(b) directs states to reserve 1% of Increases reservation of funds for planning to 2% of No comparable provision. sums allotted under Title VI to carry out specified allotted sums. (section 103(j)) planning activities. SDWA - no provision No provision. No provision. Cross-cutting Program and Federal Requirements CWA §602(b)(6) attaches 16 specific statutory Eliminates the applicability of some Title II Eliminates the applicability of some Title II requirements to projects funded with a provisions to projects funded with the CWA SRF provisions to projects funded with the CWA SRF capitalization grant (but not to SRF activity made but extends requirements to comply with: but extends requirements to comply with: from loan repayments or other state monies). All restrictions on funding sewer collector systems restrictions on funding sewer collector systems CRS-11 Current Law S. 1961 H.R. 3930 but two are CWA-specific carryover (CWA §211); applicability of NEPA (CWA (CWA §211); cost-effectiveness and value ("equivalency") requirements from the previous §511(c)); and applicability of Davis-Bacon engineering review (CWA §218); applicability of CWA Title II construction grant program. Other prevailing wage requirements (CWA §513). Davis- NEPA (CWA §511(c)); and applicability of Davis- cross-cutting federal requirements are: Bacon would apply to assistance made from federal Bacon prevailing wage requirements (CWA §513). applicability of the National Environmental capitalization grants and other monies in the SRF, Davis-Bacon would apply to assistance made from Policy Act and Davis-Bacon prevailing wage including loan repayments. Also modifies CWA federal capitalization grants and other monies in provisions for treatment works construction. The sec. 211 to update limits on sewer collector systems the SRF, including loan repayments. (section requirements applied to funds provided through to those in systems or communities in existence as 122(a)) FY1994. of Feb. 15, 2002. (section 103(b)) SDWA SRF provisions (§1452) do not specify Rewrites SDWA §1450(e) to expressly apply No comparable provision. federal cross-cutting requirements, but, as with Davis-Bacon to all construction projects financed in CWA assistance, a number of federal laws, whole or in part, and by any form of assistance executive orders, and government-wide policies provided under SDWA (including assistance apply by their own terms to projects and activities provided from state drinking water SRFs). (section receiving federal financial assistance, regardless 202) of whether a statute authorizing assistance makes them applicable. Several apply only to the state as a grant recipient. All projects for which the state provides SDWA SRF assistance in amounts up to the amount of the capitalization grant must comply with cross-cutters; amounts greater than this are not subject to cross-cutters. §1450(e) directs EPA to take such action as may be needed to assure compliance with the Davis-Bacon Act. Requirements for Receipt of Funds CWA §602(b) specifies a number of conditions Adds a requirement that CWA SRF assistance may Adds a requirement that, beginning in FY2004, for receipt of SRF assistance. (See discussion only be provided if the recipient demonstrates and states shall require as a condition of receiving above on cross-cutting requirements.) documents to the state that it has considered CWA SRF assistance that recipients conduct consolidated ownership or management; physical and operational analysis of any system cooperative partnerships; and use of methodologies proposed for repair, replacement, or expansion; or technologies that are more environmentally evaluate the cost and effectiveness of innovative sensitive. Recipient also must have in effect an and alternative processes and techniques and select asset management plan. Recipients of funds above projects accordingly; analyze the cost and CRS-12 Current Law S. 1961 H.R. 3930 $500,000 in any fiscal year also must have in effect effectiveness of alternative management and a rate plan to achieve actual cost of service to financing approaches (including rate structures, customers and which addresses capital replacement consolidation, public-private partnerships); and funds. These requirements do not apply to funds implement a plan for maintaining, replacing, and used solely for planning, design, preconstruction funding its wastewater infrastructure. (section activities, or security measures. (section 103(h)) 122(c)) Prohibits state from providing CWA SRF assistance to a municipality unless recipient has or No comparable provision. will adopt a system of charges or dedicated ad valorem tax sufficient to pay for operation, maintenance and replacement of the system (note: this equivalency provision, CWA §204(b)(1)(A), applied through FY1994 under §602(b)(6)). (section 122(c)) SDWA §1452, like the CWA provisions, Amends §1452(f) to further require that a recipient No comparable provision. imposes various requirements on recipients of demonstrate and document to the state that the SRF assistance. §1452(f) further requires that a recipient considered, during the planning and loan recipient establish a dedicated source of engineering phase, consolidating management or revenue (or for privately owned system, ownership; forming cooperative partnerships; and demonstrate adequate security) to repay loan. using methodologies or technologies that may be more environmentally sensitive. A recipient receiving more than $500,000 must demonstrate and document to the state that it has in effect a plan to achieve a rate structure that reflects actual cost of service to customers and that addresses capital replacement funds, and has in effect an asset management plan. These requirements do not apply to assistance used for planning, design, or security measures. (section 204(c)) No Assistance for Systems in Noncompliance CWA - no existing provision Prohibits state from providing CWA SRF assistance No comparable provision. CRS-13 Current Law S. 1961 H.R. 3930 (except for planning, design, or security purposes) to a treatment works that is in significant noncompliance with the CWA. Such treatment works may receive assistance if it has entered into an enforceable administrative or judicial order to effect compliance or if assistance would enable the treatment works to take sufficient corrective action. (section 103(h)) SDWA §1452(a)(3) provides that no assistance No additional provision. No additional provision. may be made to a system that is in significant noncompliance. However, such systems may receive assistance if the assistance will ensure compliance and the system considers restructuring, if the state determines that restructuring measures are needed to ensure the system's compliance capacity. (See following discussion.) Technical, Managerial, and Financial Capability Requirements for Assistance CWA - no existing provision, however CWA Modifies CWA to require states to implement Reinstates the equivalency provision of CWA §201(o) directed EPA to encourage and assist within 3 years a strategy to assist wastewater §204(b)(1)(B) to require that recipients of applicants for construction grants assistance to treatment works in attaining and maintaining assistance have the legal, institutional, managerial, develop capital financing plans. CWA technical, managerial, operations, maintenance, and and financial capability to ensure adequate §204(b)(1)(B) required that, to receive funding, an capital investments and in meeting and sustaining construction, operation, and maintenance of the applicant must have legal, institutional, compliance with applicable federal and state laws. treatment works. (section 122(c)) managerial, and financial capability to ensure The state shall include a description of how it will adequate construction, operation and maintenance use its resources and authorities to assist treatment of the treatment works. These "equivalency" works in attaining and maintaining technical, provisions applied to SRF assistance, under CWA managerial, and financial capacity. §602(b)(6), through FY1994. Beginning 4 years after enactment, states shall require treatment works to demonstrate and document to the state adequate technical, managerial, and financial capacity including, for CRS-14 Current Law S. 1961 H.R. 3930 systems that receive more than $500,000 in assistance in any fiscal year, implementation of an asset management plan. Does not apply to funds for planning, design, or security purposes. (section 103(h)) Requires states to report annually to EPA on progress made in improving the technical, managerial, and financial capacity of treatment works in the state. (section 103(k)) SDWA §1420 requires states to establish No additional provision. No additional provision. capacity development strategies to assist systems in developing and maintaining technical, financial, and management capacity to comply with drinking water regulations. §1452(a)(1)(G) requires EPA, starting in FY1999, to withhold 20% of a state's capitalization grant unless the state has obtained legal authority to No additional provision. ensure that new systems demonstrate technical, managerial, and financial capacity to comply with SDWA regulations. EPA must withhold 10% in FY2001, 15% in FY2002, and 20% in FY2003 unless a state is developing and implementing a strategy. SDWA §1452(a)(3) provides that no assistance may be made to a system that lacks the technical, managerial, and financial capacity to ensure SDWA compliance or is in significant noncompliance. §1452(a)(3)(B) provides that these systems may receive assistance if the assistance will ensure compliance and the system considers restructuring CRS-15 Current Law S. 1961 H.R. 3930 (operational changes including ownership, management, accounting, rates, maintenance, alternative water supply, consolidation, etc.), if Amends §1452(a)(3)(B) to include in the list of the state determines the measures are needed to restructuring measures to be considered by a ensure the system will have compliance capacity system: the formation of regional partnerships. over the long term. (section 204(a)) Consistency with Planning Requirements CWA §204(a) required that grants under Requires states to ensure that applicants for No additional provision. previous Title II construction grants program financial assistance from the CWA SRF could only be made if a proposed project was demonstrate and document to the state that they will included in and in conformity with applicable consult and coordinate with local land use planning regional and state water quality plans. This agencies, regional transportation planning agencies, "equivalency" requirement applied to SRF and agencies responsible for watershed plans. assistance, under CWA §602(b)(6), through (section 103(f)) FY1994. SDWA - no existing provision Requires applicants for financial assistance from No comparable provision. the SDWA SRF to demonstrate and document to the state that they will consult and coordinate with agencies responsible for developing local land use plans, regional transportation plans, and watershed plans. (section 204(d)) Priority System Requirement CWA §216 authorizes states to determine the Updates the CWA priority list requirement from the Updates the CWA priority list requirement. priority of specific projects to be funded. Act's Title II construction grants program. Requires states to establish or update a list of Identifies categories of eligible treatment works Requires each state to develop and periodically projects and activities for which SRF assistance is projects that states may include on priority list. update a project priority system for use in sought, using a listing methodology each state prioritizing SRF projects, taking into consideration shall establish. States shall seek to achieve the chemical, physical and biological data that are greatest degree of water quality improvement and reasonably available and are of sufficient quality consider whether improvements would be realized and providing opportunity for public input. State without SRF assistance. (section 125(a)) shall biennially publish a summary of projects eligible for assistance (i.e., treatment works and If the state does not fund projects and activities in CRS-16 Current Law S. 1961 H.R. 3930 other projects), including a project's priority and the order on the priority list, it must provide an anticipated funding schedule. (section 103(g)) explanation of the change. (section 125(b)) SDWA §1452(b)(3) requires states to develop No additional provision. No additional provision. Intended Use Plans for SRF funds, giving priority to using funds for projects that: address the most serious risks; are needed to ensure compliance, and assist systems most in need on a per household basis. (See discussion under following section). Intended Use Plan CWA §606(c) requires each state to annually Modifies CWA §606(c) to require that states No additional provision. prepare a plan identifying the intended uses of provide for significant public outreach of the amounts available in its SRF and describing how Intended Use Plan and that the Plan include a those uses support the goals of the SRF. summary of priority projects to be funded from the SRF in that year. (section 103(k)) SDWA §1452(b) requires each state, after Modifies §1452(b) to require states to provide for No additional provision. providing for public review and comment, to "significant public outreach" before preparing the annually prepare a plan identifying the intended Intended Use Plan. (section 204(b)) uses of amounts available in its SRF, including criteria and methods for distributing funds and a description of the financial status and goals of the fund. Allotment CWA §205(c)(3) provides a state-by-state Revises CWA allotment for FY2003-2007. Moves Current CWA allotment formula shall apply in formula for annual allotment of available funds. towards allotment based solely on needs (needs FY2002 and FY2003. Beginning in FY2004, This formula, in effect since 1987, combines formula means allotment in accordance with each appropriated amounts up to $1.35 billion shall be population and need factors. No state receives state's proportional share of total needs, but allotted under the current allotment formula. less than 0.4965% of available funds (except for excluding needs for nonpoint pollution control Amounts that exceed $1.35 billion shall be allotted territories, which generally receive smaller projects; no state receives less than 0.7% of total according to a needs-based formula to be shares). funds). For total funds (appropriations) up to $1.35 developed by EPA; no minimum state share billion, the following allotment applies: FY2003, specified. (section 124) CRS-17 Current Law S. 1961 H.R. 3930 50% existing §205(c)(3) formula, 50% needs formula; FY2004, 37.5%/62.5% existing formula/needs formula; FY2005, 25%/75% existing formula/needs formula; FY2006, 12.5%/87.5% existing formula/needs formula. Beginning in FY2007, all funds shall be allotted in accordance with each state's proportional share of needs. Includes a complex "hold harmless" exception formula so that no state gains or loses more than 20% compared with the preceding year's allocation. For funds greater than $1.35 billion, funds shall be allotted in accordance with each state's proportional share of total needs. Small state protection: no small state shall receive less than 1% of available funds (defined as state that would receive more than 1% under existing formula in FY2002 but with reported needs of less than 0.7%). Allocates a total of 0.25% of available funds among Guam, Virgin Islands, American Samoa, Commonwealth of Northern Mariana Islands, to be allotted by EPA. (section 103(i)) SDWA §1452(a)(D) requires that funds are No additional provision. No additional provision. allotted to the states based on a formula that reflects the proportional share of each state's needs identified in the most recent needs survey (conducted every 4 years). The minimum share for each state and District of Columbia is 1% of available funds; territories receive up to 0.33%. SRF Authorization CWA §607 authorizes $8.4 billion in Authorizes CWA SRF capitalization grants as Authorizes CWA SRF capitalization grants as capitalization grants for state revolving funds for follows: $3.2 billion in each of FY2003 and follows: $2 billion in FY2003, $3 billion in FY1989-94. (Congress has continued to FY2004, $3.6 billion in FY2005, $4 billion in FY2004, $4 billion in FY2005, $5 billion in CRS-18 Current Law S. 1961 H.R. 3930 appropriate SRF capitalization grants since FY2006; and $6 billion in FY2007 - total $20 FY2006, $6 billion in FY2007 - total $20 billion. FY1994. Appropriations for the last 5 years have billion. Reserves $1 million per year for EPA to (section 128) been $1.35 billion per year.) pay the costs of conducting needs surveys. (section 103(k)) SDWA §1452(m) authorizes SRF capitalization Authorizes SDWA SRF capitalization grants as No comparable provision. grants: $599 million for FY1994, and $1 billion follows: $1.5 billion in FY2003; $2 billion in each for each of FY1995-FY2003 - total $9.59 billion. of FY2004 and FY2005; $3.5 billion in FY2006; and $6 billion in FY2007 - total $15 billion. Reserves $1 million per year to pay the costs of the needs survey. (section 208) Cross-collateralization between CWA & SDWA SRFs CWA - no existing provision, but Modifies CWA §603 to permit a state to transfer up No comparable provision. FY1998 and FY1999 EPA appropriation laws to 33% of a CWA capitalization grant to its SDWA allow states to combine assets of CWA and SRF and vice versa. (section 305(a)) SDWA SRFs as security for bond issues to enhance the lending capacity of one or both SRFs. §302 of the SDWA Amendments of 1996 (P.L. Adds this provision as a permanent authority under No comparable provision. 104-182) authorized a state, prior to FY2002, to SDWA §1452(g). transfer up to 33% of the SDWA SRF (section 305(b)(2)) capitalization grant to the CWA SRF or an equivalent amount from the CWA SRF to the SDWA SRF. SRF Set-Aside for Indian Programs CWA §518 authorizes the EPA Administrator to Increases CWA funds reserved for Indian Tribes to Same as S. 1961. (section 152) reserve 0.5% of funds appropriated under §207 not less than 0.5% or more than 1.5% of funds for developing waste treatment management plans available under §207. (section 102) and construction of sewage treatment works to serve Indian tribes. Appropriations laws since FY2001 have reserved 1.5% of CWA SRF appropriated funds for Indian tribes. CRS-19 Current Law S. 1961 H.R. 3930 SDWA §1452(i) authorizes EPA to reserve No additional provision. No additional provision. 1.5% of the SRF appropriation for grants to Indian Tribes and Alaska Native villages. Small Drinking Water System Grant Program 1. Establishment of Small System Grant Program Amends the SDWA to add new Subpart G to No comparable provision. establish within EPA a small public water system CWA - not applicable assistance program for eligible entities within states SDWA - no provision and areas governed by Indian Tribes. For purposes of this program, defines "eligible entity" to include a small system that serves an economically disadvantaged community or a community that could become economically disadvantaged, or incurs more than $3 million in costs in complying with SDWA regulations; and systems in certain specified locations. Defines small public water systems as community and noncommunity water systems that serve populations of 15,000 or fewer persons. (section 213) 2. Program priorities Directs the EPA to provide grants to eligible No comparable provision. systems for activities that: address the most serious health risk from lack of compliance; are needed to ensure compliance; and assist communities most in need, based on median household income, under affordability criteria established by the state (or EPA for entities in Tribal areas). EPA must also consider giving priority to activities carried out by communities that form management cooperatives. For entities in Tribal areas, EPA and the Indian Health Service must develop an annual list of eligible activities based on the above priorities. (section 213) CRS-20 Current Law S. 1961 H.R. 3930 3. Technical assistance Requires EPA to use at least 1.5% of the available No comparable provision. funds to provide grants to nonprofit technical assistance organizations to be used to assist eligible entities in: assessing needs; identifying additional funding sources to meet cost-sharing requirements; planning, implementing and maintaining activities that receive funding. Entities may use no more than 5% of their grant for such technical assistance. (section 213) 4. Funding for Indian Tribes Requires EPA to use at least 3% of funds available No comparable provision. each year to provide grants to eligible entities located in areas governed by Indian Tribes. (section 213) 5. Limitations on assistance Grants may not be provided if EPA determines that No comparable provision. an entity lacks the technical, managerial, operations, maintenance, or financial capacity to ensure compliance or is in significant noncompliance with a drinking water regulation, unless EPA determines that the grant will ensure compliance and other specified conditions are met. (section 213) 6. Cost share Provides that the share of the total cost of an No comparable provision. activity funded by a grant generally may not exceed 80%; EPA may waive this requirement, partially or completely, as needed. (section 213) 7. Reports Requires EPA to report annually, for FY2003-2007, No comparable provision. to the Senate Committee on Environment and Public Works and the House Committee on Energy and Commerce. The reports must list the activities receiving funds, identify the number and amounts of grants awarded and the grant recipients. (section 213) CRS-21 Current Law S. 1961 H.R. 3930 8. Authorization of Appropriations Authorizes for this program $1 billion for each of No comparable provision. FY2003-2007. (section 213) Small System Technology Assistance Centers CWA - no existing provision No provision. No provision. SDWA §1420(f) authorizes EPA to make grants Amends §1420(f) to broaden the duties of the No comparable provision. to institutions of higher learning to establish and centers to include: technology verification, and operate small public water system technology testing of innovative technologies. Directs EPA, at assistance centers. Duties of the centers include least every 2 years, to review and evaluate this providing training and technical assistance to program. If EPA determines that a center is not small systems and systems that serve Indian carrying out its duties, EPA must notify the center Tribes. and, within 180 days of the notice, may stop Authorizes $2 million for each of FY1997- funding the center. Authorizes $6 million for each FY1999 and $5 million for each of FY2000- of FY2003-FY2007. (section 207(a)) FY2003. Environmental Finance Centers CWA - no existing provision No provision. No provision. SDWA §1420(g) requires EPA to provide initial Extends authorization of $2 million per year for No comparable provision. funding for 1 or more university-based FY2003-FY2007. environmental finance centers to provide (section 207(b)) technical assistance to state and local officials in developing the financial and managerial capacity of public water systems. Authorizes $1.5 million for each of FY1997- FY2003 to implement this program. Miscellaneous 1. States' rights Reaffirms CWA §101(g) for the purposes of this act No comparable provision. (S. 1961) and states that nothing in this act impairs CWA §101(g) states policy of Congress that the or affects any right or jurisdiction of a state with CRS-22 Current Law S. 1961 H.R. 3930 authority of states to allocate quantities of water respect to the water of the state or supersedes or within their jurisdiction shall not be superseded, abrogates state with respect to allocating quantities abrogated, or otherwise impaired by this Act. of water or any right to quantity or use of water established by a state. (section 502) SDWA §1427(l) (sole source aquifer protection) states that nothing under this section affects rights to quantities of water set by interstate compacts, Supreme Court decrees or state water laws, or requirements or rights under federal or state environmental laws. 2. State management assistance No comparable provision. Authorizes $250 million per year for FY2003-2007 for CWA §106. (section 112) CWA §106 authorizes grants to states to assist management of state water pollution control programs. SDWA §1443 authorizes $100 million for each No additional provision. No additional provision. of FY1997-FY2003 for grants to states to administer public water system supervision programs. 3. Federal review oversight No comparable provision. Authorizes EPA to allow a state to certify its compliance with CWA Title VI for purposes of CWA §606(e) requires EPA to conduct annual this review. (section 126) oversight review of a state's Intended Use Plan. SDWA §1452(r) directs EPA to assess the No additional provision. No additional provision. effectiveness of SRFs through FY2001 and report to Congress. Demonstration Program for Water Quality Enhancement and Management CWA - no existing provision Directs EPA to establish a nationwide No comparable provision. SDWA - no existing provision demonstration program of 10 projects per year to promote innovations in technology and alternative approaches to water quality management or water CRS-23 Current Law S. 1961 H.R. 3930 supply and reduce municipalities' costs to comply with the CWA and SDWA. Specifies criteria for selection of municipalities to carry out projects and types of projects relating to e.g., excessive nutrient growth, lack of alternative water supply, sewer overflows, problems with naturally-occurring constituents. Non-federal share of project costs shall be at least 20%. Authorizes $20 million per year for FY2003-2007. Also directs EPA to carry out a grant program for research and development on innovative and alternative technologies for water quality or drinking water supply; authorizes $20 million per year for FY2003-2007. (section 302) Rate Study CWA - no existing provision Directs the National Academy of Sciences to No comparable provision. SDWA - no existing provision prepare a study of the public water system and treatment works rate structures in U.S. communities. The study shall address issues including existing rate practices, extent to which rates include cost of service and infrastructure replacement, standards for affordability, rates in disadvantaged communities, successful incentive rate systems, and recommended industry practices for use in establishing rate structures. The study shall be completed within 2 years. (section 303) Streamlining the SRF Application and Review Process CWA - no existing provision Directs the EPA Administrator to identify ways to No comparable provision. SDWA - no existing provision streamline and improve the application and review process for CWA SRF and SDWA SRF assistance and to submit a report to Congress. (section 304) CRS-24 Current Law S. 1961 H.R. 3930 Water Resource Planning CWA - no existing provision Directs the U.S. Geological Survey to do a 2-year No comparable provision. SDWA - no existing provision study assessing the state of water resources in the U.S. to provide indicators of the status and trends of fresh water in rivers and reservoirs, groundwater levels and volumes, and freshwater withdrawals. The Secretary of the Interior in coordination with federal agencies shall publish a list of water resources research priorities focusing on monitoring and improving the quality of information available to water resource managers. The Secretary also shall coordinate a system to communicate water resource information to decisionmakers, the private sector, and the general public. Authorizes $3 million per year for FY2003-2007. (sections 401- 405) Nutrient Control Technology Program CWA - no existing provision Adds new §701 to the CWA. Directs EPA to No comparable provision. establish a competitive program of grants to states and municipalities to upgrade nutrient removal technologies of wastewater treatment works with permitted design capacity to treat 500,000 gallons or more of wastewater per day. Federal share of project costs shall not exceed 55%. Authorizes $100 million annually for FY2003-2007. Funds only available in years when Title VI appropriations exceed $1.35 billion. (section 501) Wet Weather Watershed Projects CWA §121, Sewer Overflow Control Grants, Authorizes appropriations of $250 million annually No comparable provision. authorized $750 million in FY2002-2003 in grants for FY2004-2007 for this program. Makes a for intercepting, transporting, controlling or technical correction to redesignate this provision as treating municipal combined or separate sewer CWA §122. (section 103(m)) CRS-25 Current Law S. 1961 H.R. 3930 overflows. Preservation of Reporting Requirements The Federal Reports Elimination and Sunset Act No comparable provision. Extends requirement for various CWA reports, of 1995 (P.L. 104-66) authorized elimination of e.g., Great Lakes research needs, National Estuary numerous agency reports to congressional Program activities, Great Lakes Water Quality committees at the end of 1999 unless Congress Agreement implementation, state water quality acted to continue specific reports. reports, requirements and costs of water pollution control. (section 201) New York City Watershed Protection Program CWA - no existing provision No provision. No provision. SDWA - Section 1443(d)(4) authorizes EPA to Reauthorizes the New York City watershed provide assistance to New York State for protection program to provide $25 million annually demonstration projects supporting the watershed for FY2003-FY2007. (section 201) program to protect the quality of source waters of New York City's water supply. Authorizes $15 million for FY1997-FY2002; federal assistance may not exceed 50% of program costs. ------------------------------------------------------------------------------ For other versions of this document, see http://wikileaks.org/wiki/CRS-RL31344