08 Jun WRDA on the Move in Infrastructure
By Michele Nellenbach
Both the House and Senate may soon consider the Water Resources Development Act (WRDA) of 2018. While not the comprehensive infrastructure package for which many stakeholders had hoped, passing a WRDA bill this Congress would demonstrate a seriousness about infrastructure and Congress’ ability to work together to meet the country’s growing needs.
The nation faces a $2 trillion gap between what it currently invests in infrastructure and what it needs to invest. BPC’s Executive Council on Infrastructure has called on Congress to enact a comprehensive infrastructure bill that covers not just Army Corps projects—which are authorized by WRDA—but also the nation’s transportation, water, broadband, and energy systems. The council recommended a legislative package include long-term, sustained federal funds and support for innovative finance programs, like the Transportation Infrastructure Finance and Innovation Act (TIFIA) program. TIFIA provides federal credit assistance, up to a maximum 49 percent of project costs, in the form of secured loans, loan guarantees, and lines of credit.
In WRDA 2014, Congress authorized but did not fund the Water Infrastructure Finance and Innovation Act (WIFIA) program, a TIFIA-like water program intended to be housed at both the Environmental Protection Agency and the Army Corps of Engineers. In 2017, EPA’s WIFIA loans financed roughly $2 billion in infrastructure projects while its latest funding proposal could provide as much as $5.5 billion in loans, leveraging $11 billion in water investments. However, Congress has not provided funding to the Corps to implement its WIFIA program.
The Senate bill (S. 2800), America’s Water Infrastructure Act of 2018, calls on the Assistant Secretary of the Army (Civil Works) to study the impediments to implementing its WIFIA program and identify projects that could benefit from WIFIA. Corps projects require the local sponsor to pay a certain percentage of the project’s cost. As has been seen with the EPA program, WIFIA holds great potential to help local communities to meet their cost-share obligations. However, it is possible that given that the lack of a revenue stream associated with Corps projects, WIFIA may not be the right financial tool for Corps projects. In either case, the Corps needs to conduct the assessment proposed in the Senate to determine if WIFIA can work for Corps projects and, if not, whether there is another mechanism better suited for large water resources projects.
The Senate proposal contains several other positive provisions, including the reauthorization of the EPA’s WIFIA program. Additionally, consistent with the council’s recommendation that all projects that receive federal funding identify life-cycle costs, the bill directs the Secretary to better define and describe operations and maintenance (O&M), repair, replacement and rehabilitation of a project enabling the non-Federal sponsor to better understand its obligations.
While the intent of any WRDA is to authorize only Corps of Engineers programs, the Senate bill has several provisions that deal with EPA programs and municipal water and wastewater systems. As BPC noted in its paper on America’s aging water infrastructure, over the next 20 years the U.S. must invest $271 billion for wastewater/stormwater upgrades and $472.6 billion for drinking water upgrades. Yet these likely underestimate the true need. For example, the American Water Works Association estimates that it will require $1 trillion over ten years to replace the nation’s drinking water pipes.
While much of this need will be met by increasing water and sewer rates at the local level, there are communities with low-income consumers who simply cannot afford to pay more. BPC’s council documented the challenges of funding water infrastructure particularly in communities with significant low-income populations and outlined a series of recommendations on how to assist disadvantage ratepayers. However, to determine what interventions are most effective, a more accurate picture of what is affordable is needed and, in this regard, the Senate bill takes an important step forward. It would require the EPA Administrator to develop a new definition of affordability and use that new standard in subsequent administrative actions. This provision should, however, be viewed as the beginning, not the end, of an important national discussion about how to pay for water infrastructure, address rate structures that undervalue the true of cost of services and help those struggling to pay today’s rates.
Unfortunately, progress towards a comprehensive infrastructure plan that addresses water and all other sectors will wait until after the 2019 elections. However, progress this year on a WRDA bill would send a signal that Congress is serious about tackling the nation’s infrastructure crisis and lay the groundwork for prompt action early next year.