R48066 — The Role of Earmarks in SRF Appropriations in the 118th Congress
Reports · published 2024-05-15 · v5 · Active · crsreports.congress.gov ↗
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- Elena H. Humphreys
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R48066
Summary
The condition of the nation’s drinking water and wastewater systems continues to garner congressional attention. The U.S. Environmental Protection Agency (EPA) periodically reports on the capital cost of wastewater and drinking water infrastructure needs. EPA’s 2024 report on wastewater estimates found that the nation’s wastewater treatment facilities will need $630.1 billion (in 2022 dollars) over 20 years to meet federal water quality objectives. EPA’s 2023 report on drinking water indicates that public water systems need to invest $625 billion (in 2021 dollars) in infrastructure improvements over 20 years to ensure the provision of safe drinking water. In response to an optional survey of selected water systems by the Department of Health and Human Services, these systems reported that an average of 20% of their customers missed water payments, and that, as a result, these systems assert they may be challenged to support operations, maintenance, and capital improvements. To assist with local water infrastructure projects, Congress has authorized several federal financial assistance programs, and it has provided regular, and, in some cases, supplemental appropriations for several of these programs. Among these are the Clean Water State Revolving Fund (CWSRF), authorized by the Clean Water Act (CWA), and the Drinking Water State Revolving Fund (DWSRF), authorized by the Safe Drinking Water Act (SDWA). Under both SRF programs, EPA receives appropriations and allots the funding as grants to the states (including Puerto Rico). Each state uses its federal grant to capitalize revolving loan funds to support local water infrastructure projects. The District of Columbia (DC), territories, and tribes do not operate revolving loan funds but receive allotments from CWSRF and DWSRF appropriations. The 117th Congress increased funding for the state revolving funds (SRFs) through the Infrastructure Investment and Jobs Act (IIJA; P.L. 117-58). The IIJA provides five fiscal years of emergency supplemental appropriations for the SRFs, representing a substantial increase over recent regular appropriations for these programs. Also, the 117th Congress reestablished the process of providing funding directly for specific water infrastructure projects through community project funding/congressionally directed spending (CPF/CDS) items, commonly known as earmarks. In the 118th Congress, the Consolidated Appropriations Act, 2024 (P.L. 118-42) provides regular appropriations for the SRFs, and continues CPF/CDS. Just as in the 117th Congress, the act reserves a portion of each SRF appropriation for CPF/CDS items rather than providing a separate appropriation for CPF/CDS. The act dedicates just over half ($1.41 billion) of the combined SRF regular appropriations ($2.76 billion) to 1,022 drinking water and wastewater project earmarks. The reservation of funds for earmarks effectively reduces SRF regular appropriations. The effect of this reduction in available SRF funding is distributed uniformly among states, as EPA uses either a statutory formula or the latest drinking water infrastructure needs survey to determine state allotments of CWSRF and DWSRF grants, respectively. In both the 117th and 118th Congresses, some states and territories did not receive any earmarked funds. For FY2024, Congress did not earmark funds for any projects in Montana, North Dakota, Wyoming, the District of Columbia, Puerto Rico, American Samoa, the U.S. Virgin Islands, or Guam. Among the states and territories that received earmarked funds, those funds were not evenly distributed. It is unclear how these selections were made. The reservation of CPF/CDS from the SRF appropriations in the Consolidated Appropriations Act, 2024 (P.L. 118-42) resulted in changes in the distribution of water infrastructure funding—as CPF/CDS and through the SRF capitalization grant—going to projects in states, territories, and tribes, relative to a hypothetical scenario in which the SRF appropriations were distributed entirely via the SRF programs. How much more or less each state, territory, and tribe received, given the presence of these earmarks, varies relative to what they would have received if the SRF appropriations were distributed entirely via the SRF programs. The effect of reserving funds for CPF/CDS items from regular appropriations on state SRF programs has been offset in part by IIJA supplemental appropriations for the SRFs. The practice of providing CPF/CDS for water infrastructure projects from SRF appropriations shifts the process of who decides which water infrastructure projects will receive this funding from state program officials to Members of Congress. Also, through the joint explanatory statement, the appropriations committees provide direction to EPA regarding the timeliness of CPF/CDS administration, and direct EPA to propose a legislative structure to allow for state administration of CPF/CDS. Whether CPF/CDS continues to be provided, as a separate appropriation or set-aside within SRF appropriations, and any changes to the administration of these items remains to be seen.
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