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Infrastructure

Congress has been busy (when it comes to the water infrastructure sector)

May 01, 2013
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U.S. Capitol, Washington, D.C.In November last year, the Senate Committee on Environment and Public Works drafted a bill to reauthorize the Water Resources Development Act (WRDA), which serves to authorize select projects and programs of the U.S. Army Corps of Engineers.

This latest bill to continue the WRDA program came on the heels of Hurricane Sandy, which had resulted in more than 120 deaths, destroyed entire neighborhoods and cost billions of dollars in damage to property and businesses on the east coast.

The new WRDA reauthorization bill recognizes the value of the nation’s water resources infrastructure by green-lighting 18 projects that have been extensively reviewed, evaluated and recommended to Congress for approval. These projects involve the U.S. Army Corps of Engineers’ primary mission areas, including flood risk and storm damage reduction, navigation and ecosystem restoration.

Notable about the new WRDA bill is its recognition of the need for expanded sources of funding available for water and wastewater projects.

Traditional funding options for infrastructure projects (grants and municipal bonds issues) are no longer sufficient to meet evolving needs for investment. In fact, there is talk that roughly $1 trillion infrastructure investment is now needed within the U.S. water and wastewater sector over the next 10-20 years.

Actions being taken

As a result, the new WRDA reauthorization bill crafted by the Senate Committee on Environment and Public Works includes a recommendation for the establishment of a pilot program to explore the viability of an innovative financing mechanism known as the Water Infrastructure Finance and Innovation Act (WIFIA).

This WIFIA five-year pilot program, based on the successful Transportation Infrastructure Finance and Innovation Act (TIFIA) program, would support local efforts to leverage funds for water resources projects and help expand the construction of local projects. It will essentially enable the U.S. Army Corps of Engineers and the

U.S. Environmental Protection Agency (EPA) to provide an added collection of loans and loan guarantees for flood control, water supply and wastewater infrastructure projects across the United States.

In the new WRDA reauthorization bill, the WIFIA pilot project is being allocated $50 million per year, for five years, which is anticipated to be leveraged to $500 million per year.

On Feb. 14, Senator Jeff Merkley of Oregon, a member of the Senate Committee on Environment and Public Works, introduced a full-fledged national Water Infrastructure Finance and Innovation Act of 2013. The newly proposed WIFIA legislation would create a financial mechanism within the U.S. EPA in order to provide access to lower-cost capital for investments in water and wastewater infrastructure.

The proposed legislation (S.335) is being positioned as a proven, effective way to help increase investment in local municipal infrastructure while reducing cost to local governments and ratepayers. The low-cost financing provided by WIFIA would save homeowners and businesses money while putting construction workers back on the job as municipal water-system repairs and new projects are accelerated.

“Investing in water-supply and treatment systems is common sense, enabling communities to fix aging systems, expand capacity or meet clean water standards,” says Merkley. “These investments will put folks to work now and pave the path for economic development.”

Resilient and sustainable

In addition to the WRDA reauthorization and WIFIA, other active Congressional initiatives that address water infrastructure include the following:

Representative Lois Capps of California introduced the Water Infrastructure Resiliency and Sustainability Act of 2013. HR 765 requires the EPA to establish a Water Infrastructure Resiliency and Sustainability Program that would provide grants to owners or operators of water systems for specific programs or projects geared to increasing systems’ resiliency or adaptability to any changes to the hydrologic conditions of a U.S. region. It gives priority to water-system owners or operators at the greatest and most immediate risk of facing significant negative impacts due to changing hydrologic conditions.

The Act emphasizes that the list of grant applications funded must include programs and projects demonstrating innovative approaches for promoting more efficient water use, water conservation, water reuse, or water recycling; or geared to reducing stormwater runoff; or focused on modifying, upgrading or replacing existing water infrastructure in response to changing hydrologic conditions; or focused on improving water quality or quantity for both agricultural and municipal uses via salinity reduction.

The Water Infrastructure Now Public-Private Partnership Act has been introduced by Representative Cheri Bustos (D-IL) as HR 1153 and by Senator Richard Durbin (D-IL) as S 566. Additional sponsors include Representative Rodney Davis (R-IL) and Senator Mark Kirk (R-IL). The proposed legislation seeks to improve infrastructure via public-private partnerships that expedite much-needed projects and ultimately save taxpayers’ money.

The proposed Bill would create a pilot program to explore agreements between the Army Corps of Engineers and private entities as alternatives to traditional financing, planning and design & construction models. The five-year pilot program would identify up to 15 previously authorized navigation, flood damage reduction and hurricane and storm damage reduction projects that have not been realized due to a $60-billion backlog in the Corps’ to-do list — including locks and dams along the Mississippi and Illinois Rivers. The Corps would then enter into agreements with private entities to move forward with these projects. Without outside investment resources, the U.S. Army Corps of Engineers believe that it would take decades to get these projects implemented.

Finally, there is also a general infrastructure-related bill recently introduced in the Senate by Senate Majority Leader Harry Reid (D-NV). Known as the Rebuild America Act (S 4), the bill emphasizes that Congress should make an effort to create jobs and support businesses while improving the nation’s global competitiveness by modernizing and strengthening our national infrastructure. Specifically, the bill calls for Congress to develop innovative financing mechanisms for infrastructure in order to leverage federal funds with private sector partners; update and enhance the U.S. network of rail, dams and ports; invest in the nation’s crumbling water infrastructure to protect public health and reduce pollution; upgrade and repair the nation’s system of flood protection infrastructure to protect public safety; and invest in U.S. infrastructure to address vulnerabilities to natural disasters and the impacts of extreme weather.

WRDA/WIFIA Update

On March 20, the Senate Committee on Environment and Public Works passed the WRDA re-authorization legislation (S 601) that would create a defined five-year WIFIA pilot program. If enacted into law, the WIFIA pilot program would provide low-interest federal loans and loan guarantees for critical water projects in communities across the United States, including for flood control, water supply and wastewater management.

According to Title X of the WRDA legislation, the aim of the WIFIA pilot program is strictly focused on increasing the “development of critical water resources infrastructure by establishing additional opportunities for financing water resources projects that complement but do not replace or reduce existing Federal infrastructure financing tools such as the State water pollution control revolving loan funds established under title VI of the Federal Water Pollution Control Act and the State drinking water treatment revolving loan funds.” 

An additional critical mission of the WIFIA pilot program is to “attract new investment capital to infrastructure projects that are capable of generating revenue streams through user fees or other dedicated funding sources.”

The American Water Works Association (AWWA), a chief proponent for the creation of WIFIA for several years, is urging water utilities and businesses across the water sector to actively support the bill as it heads to the full Senate. “[This] represents a pivotal moment in assuring America’s water infrastructure challenge is no longer buried,” said AWWA Executive Director David LaFrance. “WIFIA would help communities repair more critical water infrastructure at a lower cost. Ultimately, WIFIA would benefit everyone who pays a water bill.”

The Water Resources Development Act is expected to reach the Senate floor by May of 2013.

And now the Subcommittee on Water Resources and Environment within the U.S. House Committee on Transportation and Infrastructure has begun to draft its own version of the WRDA reauthorization legislation. It is also expected to include a WIFIA pilot program. And it is still unclear whether a member of the House will also pull together a companion bill to Senator Merkley’s Water Infrastructure Finance and Innovation Act of 2013.

Stay tuned.

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