The IIJA Factor

The seemingly arcane formula issue is of great importance because it determines how much SRF funding each state will get each year. The formula will become even more significant in coming years because of the funding increases contained in the Infrastructure Investment and Jobs Act (IIJA).

The landmark law, enacted last Nov. 15, provides states, territories and tribes a total of about $12.7 billion over five years for the Clean Water SRFs, according to a Congressional Research Service report.

In December, EPA announced its estimated $1.8-billion fiscal year 2022 apportionments for Clean Water SRFs—the law's initial year—up from about $1.6 billion in 2021.

The SRF issue was the subject of a March 16 Senate Environment and Public Works Committee hearing. Chairman Tom Carper (D-Del.) said the aim was “to better understand what changes, if any, should be made to improve the distribution of funds under this program.”

[View a webcast of the hearing and witness statements here.]

Carper seemed to acknowledge the need for a change, saying, “More could certainly be done to adapt the formula for changes in climate, changes in population and…infrastructure age.”

The committee's top Republican, Shelley Moore Capito (W.Va.), said, "I acknowledge that formula allocations set back in 1987 may not adequately address today's needs and demographic shifts."

But Capito added that significant Clean Water SRF changes "should not be rushed" but instead be "the product of deliberative process" in Congress.

State, Local Water Officials Weigh In

One witness at the hearing, Tom Sigmund, executive director of NEW Water, the Green Bay Metropolitan Sewerage District in Wisconsin, said that in reviewing the formula, “Population is an important consideration but should not be the sole factor." 

Sigmund, who was testifying on behalf of the National Association of Clean Water Agencies, also said, “The allocation process should also consider the historic per capita investment each state has made in funding wastewater projects, as these assets must eventually be replaced.”

He also said Congress should ensure that in the end, no state will have its SRF funding cut.

Laura Watson, director of the Washington State Dept. of Ecology—testifying for the Environmental Council of the States—said the council isn't making specific recommendations for how to revise the SRF formula. But she said that "the definition of 'need' should account for the actual need and the unique needs of states."

Watson also said that "the allotment formula should be based on recent and robust data."

She noted that the most recent EPA clean water needs report was issued in 2016 and was based on 2012 data.

Congress in the infrastructure law directed the agency to develop a new clean water needs study within two years and provided funding for it.

A Failed Amendment

The genesis of the hearing was an amendment that Sens. Marco Rubio and Rick Scott—Republicans from Florida—proposed to attach last April to a Senate water infrastructure bill that later was folded into the IIJA. Both sought to rewrite the SRF formula.

Capito, who with Carper opposed the measure, said that it would have had population as the primary factor in the formula and ignored "the crucial issue of need, which was baked into the original formula."

The amendment was defeated, 81-14. But Carper and Capito said they would work with the Floridians on the SRF formula issue.

No Quick Answer

Sen. Ben Cardin (D-Md.) said it is important that the SRF formula be updated.

“But as a practical matter, the only way you are going to be able to bring in a new formula is when we put money into the program—because we don’t want to adversely impact any jurisdiction," he said.

Carper indicated that the final resolution of the SRF formula issue won’t come quickly, saying that the hearing “is the end of the beginning” of the debate.

 “And we will not see a rush to judgment.” he said.