Wastewater Infrastructure: Overview, Funding, and Legislative Developments

The collection and treatment of wastewater remains among the most important public health interventions in human history and has contributed to a significant decrease in waterborne diseases during the past century. Nevertheless, waste discharges from municipal sewage treatment plants into rivers and streams, lakes, and estuaries and coastal waters remain a significant source of water quality problems throughout the country.

The Clean Water Act (CWA) establishes performance levels to be attained by municipal sewage treatment plants in order to prevent the discharge of harmful wastes into surface waters. The act also provides financial assistance so that communities can construct treatment facilities and related equipment to comply with the law. Although approximately $95 billion in CWA assistance has been provided since 1972, funding needs for wastewater infrastructure remain high. According to the most recent estimate by the Environmental Protection Agency and the states, the nation’s wastewater treatment facilities will need $271 billion over the next 20 years to meet the CWA’s water quality objectives. Meeting the nation’s wastewater infrastructure needs efficiently and effectively is likely to remain an issue of considerable interest to policymakers.

The CWA authorizes the principal federal program to support wastewater treatment plant construction and related eligible activities. Congress established the CWA Title II construction grants program in 1972, significantly enhancing what had previously been a modest grant program. Federal funds were provided through annual appropriations under a state-by-state allocation formula contained in the act. States used their allotments to make grants to cities to build or upgrade categories of wastewater treatment projects including treatment plants, related interceptor sewers, correction of infiltration/inflow of sewer lines, and sewer rehabilitation.

In 1987, Congress amended the CWA and created the State Water Pollution Control Revolving Fund (SRF) program. This program represented a major shift in how the nation finances wastewater treatment needs. In contrast to the Title II construction grants program, which provided grants directly to localities, SRFs are loan programs. States use their SRFs to provide several types of loan assistance to communities, including project construction loans made at or below market interest rates, refinancing of local debt obligations, providing loan guarantees, and purchasing insurance.

In 2014, Congress revised the SRF program by providing additional loan subsidies (including forgiveness of principal and negative interest loans) in certain instances. The law identifies a number of types of projects as eligible for SRF assistance, including wastewater treatment plant construction, stormwater treatment and management, energy-efficiency improvements at treatment works, reuse and recycling of wastewater or stormwater, and security improvements at treatment works.

In both FY2016 and FY2017, Congress provided $1.394 billion for the clean water SRF program. President Trump’s FY2018 budget proposal requests the same amount as provided for the previous two fiscal years. Although appropriation levels have remained consistent in recent years (in nominal dollars), policymakers have continued to propose changes to the funding program. Issues debated in connection with these proposals include extending SRF assistance to help states and cities meet the estimated funding needs, modifying the program to assist small and economically disadvantaged communities, and enhancing the SRF program to address a number of water quality priorities beyond traditional treatment plant construction—particularly the management of wet weather pollutant runoff from numerous sources, which is the leading cause of stream and lake impairment nationally.