What the federal infrastructure bill means for water systems nationwide

The ongoing crisis in Jackson, Mississippi, is a dramatic reminder of the fragility of Americans’ water supply systems. When recent flooding overloaded the city’s already hobbled water treatment plant, tap water became unsafe to drink for the city’s 180,000 residents, more than 80% of whom are Black. The city no longer has enough water pressure to fight fires.

The system collapse was the culmination of decades of underfunding, and in that respect, Jackson has plenty of company. The latest survey by the Environmental Protection Agency — conducted in 2015 — put the price tag for fixing America’s drinking water infrastructure at $472.6 billion over the next 20 years. That was nearly $90 billion higher than when the EPA asked four years earlier.

In cities and rural communities, the nation has been losing ground.

The 2021 Infrastructure Investment and Jobs Act was designed to help the country claw its way back. It provides more than $55 billion over five years to rebuild drinking and wastewater treatment plants. That’s in addition to billions appropriated through the 2021 American Recovery Plan Act, which so far has provided about $14 billion to water projects.

Jackson stands to benefit from the infrastructure law, said Denise Schmidt with the Environmental Policy Innovation Center, a Washington-based conservation group. But critical questions lie ahead.

"The unknowns are how Jackson’s projects would rank in the year it applies, how its projects would be prioritized for loans versus principal forgiveness, and how much its award would be," Schmidt said.

It doesn’t help that under Mississippi’s rules, the city needs special approval from the state for any water project loan over $5 million.

Before we delve into the details of the infrastructure program, one reality check is essential: Upgrading water plants is slow business. 

"These don’t happen overnight," said Nathan Gardner-Andrews, head of policy for the National Association of Clean Water Agencies. "From planning, to design, to construction, these are multiyear projects."

That said, here’s an accounting of what the infrastructure act made possible, its limits and the political tussle it has unleashed at the state level.

The bulk of the infrastructure money is distributed  through the EPA’s drinking water and clean water revolving loan programs. The drinking water program has $30.7 billion (including $15 billion for replacing lead pipes) and the clean water program — mainly wastewater treatment and managing stormwater — has $12.7 billion. 

The remaining billions are distributed through programs that target specific problems or communities. For example, $5 billion in grants is available to small and underserved communities, and the Department of Health and Human Services has $3.5 billion available for facilities overseen by the Indian Health Service.

Nearly all the money is distributed by formula. The EPA sends each state its designated share. After that, it’s entirely up to the state to decide which local projects to fund.

There’s an incentive for states to increase the number of projects in the early years. Some of the federal money requires that the state pay a certain percentage of the total project cost. The state match is 10% if states approve projects in the first two years funding is available, but the match rises to 20% in the three years that follow.

The new infrastructure law also has a twist that opens the door to intense negotiations at the state level.

The clean water and drinking water programs typically issue funding in the form of loans that local water system operators have to pay back to the state. 

But under the infrastructure law, 49% of the new money must be awarded to disadvantaged communities as grants, not loans. Ultimately, it’s up to state officials to determine which places qualify as disadvantaged, but the EPA’s guidance urges them to focus on "low-income people and communities of color."

"Of course, if you are a local utility, you would prefer a grant over a loan," Gardner-Andrews said. "There will be some challenging conversations within the states."

Every four years, the EPA surveys states about the water projects they would like to fund. The most recent snapshot in 2015 showed that for drinking water alone, the states’ wish lists had a total price tag of $472.6 billion for work needed over the next 20 years. The American Society of Civil Engineers estimated that the funding gap for both clean and drinking water would rise to $434 billion by the end of the decade.

The $55 billion that was allocated will more than double Washington’s current contribution to local water projects, but estimates of the total need show that a lot of work will remain.

Jackson alone would need $1 billion to fix its drinking water distribution system, Mayor Chokwe Antar Lumumba said Aug. 30. And additional billions, he said, would be needed to deal with the full list of water issues the city faces.

"States and localities are responsible for more than 90% of total public spending on water infrastructure each year," said researcher Joseph Kane at Brookings, a Washington-based policy group. "They are struggling to keep up, as the infrastructure ages and more repairs become inevitable."

Many local governments, but particularly those like Jackson with many low-income residents, are caught between a rising need to invest and a limited ability to pay.

The management consulting firm McKinsey reported that the average U.S. water-network pipe is 45 years old, with some cast-iron pipes more than a century old. 

Much of the nation’s water and wastewater infrastructure was built in the 1970s and 1980s and is wearing out. Repairs and maintenance have lagged as overburdened state and local governments juggle their funding priorities, the report said.

Gardner-Andrews said Washington deserves a lot of credit for this infusion of money, but he added that it’s just the beginning of what’s needed.

Federal funds have begun to flow. About $10.8 billion is headed to states, territories and tribal areas. The clock is ticking for local water system operators to make sure they submit all their paperwork, including engineering design, environmental review and financial plans, if they want a shot at securing state approval this year.

A local operator might need "to wait up to a year to apply if it misses a deadline," said Schmidt with the Environmental Policy Innovation Center.

Schmidt also warned that the infrastructure law’s emphasis on getting money to economically distressed communities could add time to the process. The EPA has pressed states to revisit their selection criteria. In some cases, there might be a gap between the EPA’s priorities and the state’s. Sorting that out is a key issue.

The center found that historically, only about 7% of eligible system operators took advantage of the EPA’s drinking water revolving loan fund.

"Small and racially diverse communities were even less likely to access this funding," Schmidt said. "Without policy reforms, the Infrastructure Investment and Jobs Act funding is not likely to yield different results."

Putting plans together also requires technical support. But a lack of staff at the local and state levels and a shortage of engineers to develop applications creates another pinch point, Schmidt said.

In a recent report, the center found that 10 states left more than 10% of their available money unused. The reasons tended to come down to a lack of time and staff to submit applications.

Gardner-Andrews of the the National Association of Clean Water Agencies said he thinks that with additional technical support that’s included in the infrastructure bill, that might not be as big a problem going forward.

"All the states are going to move," he predicted. "They won't leave the money sitting on the table." 

Staff writer Tori Gantz assisted with reporting.