Order Code RL32201
CRS Report for Congress
Received through the CRS Web
Water Infrastructure Project Earmarks
in EPA Appropriations:
Trends and Policy Implications
Updated December 15, 2004
Claudia Copeland
Specialist in Resources and Environmental Policy
Resources, Science, and Industry Division
Congressional Research Service ˜ The Library of Congress

Water Infrastructure Project Earmarks
in EPA Appropriations:
Trends and Policy Implications
Summary
The use of earmarks in appropriations legislation, defined here as funds set aside
within an account for specified projects or locations, has been increasing in recent
years as a way to help designated communities meet needs to build and upgrade
water infrastructure systems, whose estimated future funding needs exceed $300
billion. This report discusses appropriations for water infrastructure programs of the
Environmental Protection Agency (EPA), focusing on congressional earmarks in the
account that funds these programs. Information on the programmatic history of EPA
involvement in assisting wastewater treatment and drinking water projects is
provided in two appendixes.
Congressional appropriators began the practice of supplementing appropriations
for the primary Clean Water Act (CWA) and Safe Drinking Water Act (SDWA)
assistance programs with earmarks for individually designated projects in FY1989.
Since then, of the $40.8 billion appropriated to EPA for water infrastructure
assistance, 16% ($6.5 billion) has gone to earmarked project grants. Notably since
FY2000, appropriators have awarded earmarks to a larger total number of projects,
resulting in more communities receiving such assistance, but at the same time
receiving smaller amounts of funds, on average.
Members of Congress may intervene to provide funding for a specific
community for a number of reasons. In some cases the community may have been
unsuccessful in getting state approval to fund the project under other programs.
Some, especially small and rural communities, seek a grant because the cost of a
project financed through a state loan which must be fully repaid is deemed
unacceptably high (loans are the primary assistance under the CWA and SDWA).
However, the practice of earmarking has been criticized by state water program
managers and administrators of infrastructure financing programs because designated
projects are receiving more favorable treatment (55% federal grants, rather than
loans) and because the practice sidesteps the standard process of states’ determining
the priority by which projects will receive funding. Earmarked projects also have
generally not been reviewed by congressional authorizing committees.
Attention is often drawn to the relatively few projects that have received large
earmarks (more than $100 million), especially over multiple years. The majority of
designated projects, however, receives comparatively small earmark amounts. More
than 75% of the projects earmarked in the EPA appropriations legislation have
received total awards (either in a single year or over multiple years) of $2 million or
less. While some Members of Congress, interest groups, and Administration
officials are critical of including earmarks in this and other appropriations acts, it is
likely that communities will continue to seek this type of assistance, and there is little
indication that the practice will change soon. This report will be updated as events
warrant.

Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Special Purpose Project Grants: Defining “Earmark” . . . . . . . . . . . . . . . . . . . . . . 2
Earmarking Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Earmarks for Specific Cities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Policy Implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Appendix I. Background: Federal Involvement in Wastewater Treatment . . . . . 9
Appendix II. Background: Federal Involvement in Drinking Water . . . . . . . . . 11
List of Tables
Table 1. Earmarked Water Infrastructure Grants in EPA Appropriations Acts . . 4

Water Infrastructure Project Earmarks
in EPA Appropriations:
Trends and Policy Implications
Introduction
The use of earmarks in appropriations legislation, defined here as funds set aside
within an account for specified projects or locations, has been increasing in recent
years as a way to provide funding for designated communities to build and upgrade
water infrastructure systems. The future needs for projects to treat municipal
wastewater or treat and deliver public drinking water supplies in the United States
are large — $181 billion for wastewater treatment and $151 billion for public water
systems, according to the most recent estimates reported by states and the
Environmental Protection Agency (EPA).1
Federal funding to assist communities in meeting the goals and requirements of
environmental laws has been provided first through programs in the Clean Water Act
and also, more recently, through a program in the Safe Drinking Water Act. Under
the core assistance programs in these acts, Congress annually appropriates block
amounts which are allocated among states according to a specified allotment formula.
States, then, make assistance awards to individual communities. From 1972 through
FY2004, Congress has provided $80.1 billion for these programs. Under both laws,
federal funds capitalize state revolving funds (SRFs), which then are used to make
loans to communities for water infrastructure capital projects. Local communities,
in turn, repay loans to the state revolving fund.
In FY1989, congressional appropriators began the practice of supplementing
appropriations for the SRF programs with project earmarks in the EPA
appropriations account that funds the Clean Water Act and Safe Drinking Water Act
assistance programs. Unlike loans under the two SRF programs, earmarked grants
generally are provided on the basis of 55%-45% federal-local cost sharing, with no
requirement to repay the federal share. Since 1989, Congress has awarded $6.5
billion in earmarks, which have increased as a portion of appropriated water
infrastructure funds in that account. Notably since FY2000, appropriators have
awarded earmarks to a larger total number of projects (e.g., 46 in FY1995, compared
with 669 in FY2005), resulting in more communities receiving such assistance, but
1U.S. Environmental Protection Agency. Clean Watersheds Needs Survey 2000, Report to
Congress.
Washington D.C., 2003. EPA-832-R-03-001. 1 vol.; Drinking Water
Infrastructure Needs Survey, Second Report to Congress.
February 2001. EPA-816-R-01-
004. 85 p.

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at the same time most of them receiving smaller amounts of funds, on average (e.g.,
$18.1 million in FY1995, compared with $600,427 in FY2005).
This report discusses appropriations for EPA water infrastructure programs,
focusing on congressional earmarks in the account that funds these programs.
Information on the programmatic history of EPA involvement in assisting wastewater
treatment and drinking water projects is provided in two appendixes.2 While some
Members of Congress, interest groups, and Administration officials are critical of
including earmarks in the EPA and other appropriations acts, there is little indication
that the practice will change soon.
Special Purpose Project Grants:
Defining “Earmark”
In appropriations legislation, funding for EPA clean water and drinking water
programs is contained in the measure providing funds for the Department of Veterans
Affairs, Department of Housing and Urban Development, and Independent Agencies
(VA/HUD). Within the portion of that bill which funds EPA, wastewater treatment
and drinking water assistance are specified in an account called State and Tribal
Assistance Grants (STAG). This appropriations account includes all water
infrastructure funds, as well as management grants that assist states in implementing
air quality, water quality, and other media-specific environmental programs.3
Today, the STAG account includes appropriations both for the primary Clean
Water Act and Safe Drinking Water Act assistance programs (see Appendixes I and
II for background) and for earmarked special purpose project grants. There is no
single definition of the term “earmark” that is accepted by all practitioners and
observers of the congressional appropriations process, nor is there a standard earmark
practice across all 13 appropriations bills. In practice, an earmark may refer to funds
set aside within an account for a specified program, project, activity, institution, or
location. In others, the application may reflect a more narrow set of directives to
fund individual projects, locations, or institutions.4 The Office of Management and
Budget (OMB) uses a different definition of earmarks as specifying funds for
projects, activities, or institutions not requested by the Executive or add-ons to
requested funds which Congress directs for specific activities. In this report,
earmarks refer to the narrower definition described above: funds set aside within the
EPA STAG account to fund individual water infrastructure projects, locations, or
organizations, detailed either in the appropriations act or the joint explanatory
statement of its accompanying conference report, and not distinguishing those
requested by the Executive from those designated by Congress
.
2For additional background, see CRS Report RL31116, Water Infrastructure Funding:
Review and Analysis of Current Issues
.
3For additional discussion, see CRS Report 96-647 ENR, Water Infrastructure Financing:
History of EPA Appropriations.

4 See, generally, CRS Report 98-518, Earmarks and Limitations in Appropriations Bills.

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Earmarking Trends
Pressure to provide earmarked grant funding has been evident in the
appropriations process where, in recent years, Congress has reserved as much as 30%
of funds in the account that provides clean water and drinking water assistance for
special purpose grants directed to specified communities. The practice of earmarking
a portion of the construction grants/SRF account for specific wastewater treatment
and other water quality projects began in the FY1989 appropriations legislation.
Since then it has increased as a portion of appropriated funds in the STAG account
(3% of the total water infrastructure appropriations in FY1990, for example,
increasing to 31% in FY1994, but somewhat less in recent years: 16% in FY2004 and
FY2005).
The number of projects receiving these earmarked funds also has increased:
from four in FY1989 to 669 in FY2005. Since FY2000, the larger total number of
earmarked projects has resulted in more communities receiving such grants, but at
the same time receiving smaller amounts of funds. Thus, while a few communities
have received individual earmarked awards of $3 million or more in recent years, the
average size of earmarked grants has shrunk: $18.1 million in FY1995, $4.9 million
in FY1999, and $600,427 in FY2005. See Table 1 for additional detail. (Conference
reports on the individual appropriations bills provide some additional description of
projects funded in this manner, but the text is typically very brief.)
The effective result of using substantial amounts for grants earmarking has been
to reduce the amount of funds provided to states to capitalize their revolving loan
programs. Of the $40.8 billion appropriated to EPA for water infrastructure
programs since 1989 (both for wastewater, under the Clean Water Act, and drinking
water projects, under the Safe Drinking Water Act), $6.5 billion, or 16%, has gone
to earmarked project grants.
From FY1989 to FY1995, the Boston Harbor project, discussed below, received
the largest single earmark each year ($25 million in FY1989, $100 million in
FY1994). Since FY1996, the largest single earmark in each year’s appropriations act
(i.e., $100 million in FY1996, $49.7 million in FY2004, and $49.6 million in
FY2005) has been designated for “architectural, engineering, planning, design,
construction and related activities in connection with the construction of high priority
water and wastewater facilities in the area of the United States-Mexico Border.” (P.L.
108-7).
From FY1989-FY1994, earmarks were used only to assist wastewater treatment
projects. The first two earmarks for drinking water projects were designated in
FY1995 appropriations legislation, two more were awarded in FY1997, and 12 (out
of 42 total) were designated in FY1998. Since then, the number of earmarks for
individual drinking water projects has increased. In FY2004 and FY2005, earmarks
were divided approximately equally between wastewater treatment projects and
projects involving drinking water or water supply. Further, in FY2005, more than
one-third of the individual earmarks are repeats, that is, grants awarded to projects
that have previously received one or more earmarks.

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Table 1. Earmarked Water Infrastructure Grants in EPA
Appropriations Acts
Fiscal
# of
Earmarks
Average
Range of
Year
Projects
Total
Earmark
Earmarks
1989
4
$68,000,000
$17,000,000
$3 million-$25 million
1990
4
$53,000,000
$13,250,000
$6.8 million-$20
million
1991
2
$35,700,000
$17,850,000
$15.7 million-$20
million
1992
8
$435,000,000
$54,375,000
$35 million-$100
million
1993
13
$556,000,000
$42,769,231
$7 million-$100
million
1994
9
$558,000,000
$62,000,000
$10 million-$150
million
1995
46
$834,100,000
$18,132,609
$200,000-$100
million
1996
20
$306,500,000
$15,325,000
$150,000-$100
million
1997
21
$301,000,000
$14,333,333
$50,000-$100 million
1998
42
$393,125,000
$9,360,119
$100,000-$75 million
1999
82
$401,750,000
$4,899,390
$100,000-$50 million
2000
143
$395,344,000
$2,764,643
$285,000-$50 million
2001
244
$466,370,000
$1,911,352
$50,000-$75 million
2002
339
$458,900,000
$1,353,687
$100,000-$75 million
2003
491
$413,407,272
$841,970
$20,000-$49.7 million
2004
520
$425,077,160
$817,456
$85,000-$49.7 million
2005
669
$401,685,600
$600,427
$50,000-$49.6 million
Source: Compilation by CRS of water infrastructure earmarks in the VA/HUD appropriations acts and
accompanying conference reports for FY1989-FY2005.
In the early years of this congressional practice, special purpose grant funding
originated in the House version of the EPA appropriations bill, while the Senate, for
the most part, resisted earmarking by rejecting or reducing amounts and projects
included in House-passed legislation. With this difference in legislative approach,
special purpose grant funding on several occasions was an issue during the House-
Senate conference on the appropriations bill. Since FY1999, however, both the
House and Senate have proposed earmarked projects in their respective versions of
the EPA appropriations bill, with the final total number of projects and dollar
amounts being determined by conferees. In addition, as it has now been more than

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17 years since the last major amendments to the Clean Water Act, the desire by some
Members to address special needs wastewater problems that might be debated during
reauthorization of that act has increased, thus leading to greater pressure on House
and Senate Members to use the appropriations process to handle such concerns.5
Since earmarking began to increase in the early 1990s, the position of the
Clinton and both Bush Administrations has been to propose a limited number of
earmarks for inclusion in the President’s annual budget submission (such as U.S.-
Mexico Border projects), but generally to oppose the congressional practice of
earmarking a large number of projects as a significant portion of funds in the STAG
account, especially in recent years. Appropriators have supported most but not all
projects requested by the President for earmarking, while modifying the funding
amounts for some of the Administration’s requests and adding many more projects
not requested by the Administration. For example, the first Administration request
for earmarks was in the FY1992 budget. The George H.W. Bush Administration
sought $400 million at that time for grants to be directed to six projects in coastal
cities. Congress agreed to funding for those six, plus two others. Likewise, in
FY1993, Congress agreed to earmarks for six projects requested by the
Administration, plus seven others. In FY2005, the Administration requested
earmarks for three special needs projects; Congress funded all three, plus 666 others.
Earmarks for Specific Cities
The four projects designated for earmarks in FY1989 were projects for which
funding had been authorized in the 1987 Water Quality Act (WQA, P.L. 100-4).
(These project authorizations were in Title V of the WQA, which did not specifically
amend the Clean Water Act.) The authorized projects were:
! Boston, to provide secondary treatment of wastewater and improve the
environmental quality of Boston Harbor,
! San Diego, to remedy discharges of untreated sewage from Tijuana, Mexico,
! Des Moines, a sewage treatment plant project, and
! Oakwood Beach, New York, for relocation of natural gas facilities related to
two treatment works.
For the next two years, appropriators continued to earmark only WQA-authorized
projects, with one exception. Two of these authorized projects (Boston Harbor and
San Diego/Tijuana) continued to receive some funding through FY1999, but most
earmarks since FY1992 have been for projects not specifically authorized in federal
law.
5In the 104th Congress, the House passed a comprehensive CWA reauthorization bill, H.R.
961, but provisions in it that addressed regulatory relief and similar issues were
controversial, and no further action occurred. In the 107th Congress, House and Senate
committees approved legislation to reauthorize water infrastructure financing programs, and
similar legislation has been approved by a House subcommittee in the 108th Congress (H.R.
1560).

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From FY1989 to FY1999, Congress appropriated a total of $740 million for the
Boston Harbor project — the largest total amount received by a single community
under appropriations act provisions. A few other communities have received large
total amounts of earmarked grants over multiple years. For example, the WQA-
authorized San Diego project received $235 million over seven years, and another
San Diego project for a wastewater reclamation facility, received a total of $135
million in the early 1990s. Los Angeles was earmarked a total of $160 million from
FY1992-1994 for unspecified projects. New York City received $210 million in
earmarks over that same time period, also for unspecified infrastructure projects.
Detroit has received earmarks totaling $349.6 million since FY1992 for a project
called the Rouge River Wet Weather Demonstration Project. Earmarks for projects
along the U.S.-Mexico border (distributed to multiple communities) have totaled
$674 million since FY1996. Projects in Alaska Native and rural villages (also
distributed to multiple locations) have totaled $325 million since FY1995.6 The large
awards for these projects tend to mask the average value of water infrastructure
earmarks. For example, in FY2005, the average of all 669 earmarked awards is
$600,427, but discounting the $94 million in earmarks for Alaska Native and rural
village and U.S.-Mexico border projects, the average for other individual earmarks
is $461,019.
Policy Implications
Groups representing state water program managers and administrators of
infrastructure financing programs have criticized this earmarking practice. They
contend that earmarking undermines the intended purpose of the state funds, which
is to promote environmental improvements nationwide. Many state officials would
prefer that funds be allocated more equitably, not based on what they view largely as
political considerations, and they would prefer that state environmental and financing
officials retain responsibility to set actual spending priorities. Further, they say,
because directed funding to special projects diminishes the level of seed funding for
loans under state revolving funds, it delays the time when states will become
financially self-sufficient — and may actually prolong the period when states seek
continued federal support.
6 Some water infrastructure projects funded in the EPA bill have also received earmarks in
other appropriations acts. For example, Alaska Native and rural village projects received
$192 million in Agriculture Appropriations acts from FY1997 to FY2005. Additionally, a
small number of those with EPA earmarks has received earmarks through Energy and Water
Development Appropriations acts, which fund water projects and programs of the U.S.
Army Corps of Engineers and Bureau of Reclamation. Examples of water infrastructure
projects funded in this dual manner include combined sewer overflow projects in Lynchburg
and Richmond, Virginia, and Nashua, New Hampshire; construction of alternative water
supply in Jackson County, Mississippi; and projects to support an environmental restoration
plan in Onondaga Lake, New York. In general, projects so designated in the Energy and
Water appropriations bill have previously been authorized in legislation such as Water
Resources Development acts (WRDA) before receiving appropriations. Since the 1992
WRDA (P.L. 102-580), Congress has authorized more than 100 Corps environmental
infrastructure projects and programs in that act and subsequent amendments to it and has
provided Energy and Water appropriations to about one-half of them.

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The practice of earmarking has been criticized because designated projects are
receiving more favorable treatment than other communities’ projects: they generally
are eligible for 55% federal grants (and will not be required to repay 100% of the
funded project cost, which they must do in the case of a loan through an SRF), and
the practice sidesteps the standard process of states’ determining the priority by
which projects will receive funding. It also means that the projects have generally
not been reviewed by the congressional authorizing committees. This is especially
true since FY1992, when special purpose grant funding has been designated by
appropriators for projects not authorized in the Clean Water Act or amendments to
it or in the Safe Drinking Water Act.
Members of Congress may intervene to provide funding for a specific
community for a number of reasons. In some cases, the community may have been
unsuccessful in getting state approval to fund the project under an SRF loan or other
program. For some, especially small and rural communities, the cost of a project
financed through a state loan, which the community must fully repay, is deemed
unacceptably high, because repaying the loan can result in such increased user fees
that ratepayers feel are unduly burdensome. The community then seeks a grant to
avoid this costly financial scenario. A number of the special purpose grants have
been made to projects characterized as “needy cities,” based on local economic
conditions. Since FY1993, report language accompanying the appropriations bills
has specified that grants awarded pursuant to these earmarks shall require that 45%
of a project’s cost be the responsibility of the local community. EPA is allowed to
be flexible in applying the local cost-share, based on the community’s financial
capability, but the agency has rarely modified the general requirement.
Technically, the CWA Title II grants program ended when authorizations for it
expired after FY1990. One result of earmarking special purpose grants in
appropriations bills has been to perpetuate grants as a method of funding wastewater
treatment construction long after FY1990. At the same time, it also results in grants
which had not previously existed for drinking water system projects.
Following enactment of an appropriations act, earmarked funds are not provided
automatically to the designated recipient communities or organizations. Since the
funds are awarded as EPA grants, recipients must first meet all applicable EPA
requirements in regulations and guidelines that apply to other grant programs,
including applying for the grant and complying with other federal laws and
requirements, and must continue to comply with program- and project-specific rules
as long as the grant remains active. Consequently, there are administrative costs
associated with special purpose grants both for the local communities and for EPA,
which administers several hundred more of these grants every year.
Conclusion
Attention is often drawn to the relatively few projects that have received large
earmarks, especially over multiple years. However, the other side of that story is the
large number of projects that receive comparatively small earmark amounts. Even
with the large awards described here for some communities, more than 75% of the

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projects earmarked in the EPA appropriations legislation have received total awards
(either in a single year or over multiple years) of $2 million or less. The trend of
appropriators to earmark smaller awards is reflected in the fact that only 62 out of
520 in FY2004 and 76 in FY2005 received amounts of $1 million or more.
Congressional earmarking has raised two significant policy issues. The first is
that it alters the process of who decides which water infrastructure projects will
receive funding, from state program officials to Members of Congress (for those
earmarks not also requested by the Executive), and how the merits of particular
projects may be evaluated. The second issue, noted above, is that earmarking reduces
the amount of funds provided to capitalize state revolving loan programs, thus
arguably delaying the time when states will become financially self-sufficient in
administering capital programs and potentially prolonging the time when states and
communities seek continued federal aid.
Some Members of Congress, interest groups, and Administration officials are
critical of including earmarks in this and other appropriations acts. Other Members
and many local officials view it as an appropriate way to assist communities that
would not be served by the legislated programs. Based on the recent trends, there is
little indication that the practice will change soon. Still, as individual award amounts
get smaller, it is not unreasonable to wonder whether some communities may
conclude that the cost of receiving an earmark — both in terms of political capital
spent to seek it and actual resources spent subsequently to secure the grant from EPA
— exceeds the benefits.

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Appendix I. Background:
Federal Involvement in Wastewater Treatment
The Water Pollution Control Act of 1948 (P.L. 80-845) was the first
comprehensive statement of federal interest in clean water programs. While it
contained no federally required goals, limits, or even guidelines, it started the trickle
of federal aid to municipal wastewater treatment authorities that grew in subsequent
years. It established a grant program to assist localities with planning and design
work and authorized loans for treatment plant construction. With each of the four
successive amending statutes in the 1950s and 1960s, federal assistance to municipal
treatment agencies increased. A construction grant program replaced the loan
program; the amount of authorized funding went up; the percentage of total costs
covered by federal funds was raised; and the types of project costs deemed grant-
eligible expanded.
In the Federal Water Pollution Control Act Amendments of 1972 (P.L. 92-500,
popularly known as the Clean Water Act (CWA)), Congress revised the existing
federal clean water law, including provisions related to wastewater systems. In the
1972 law, Congress strengthened the federal role in clean water and established the
first national standards for sewage treatment. A number of new conditions were
attached to projects constructed with grants (such as comprehensive planning
requirements). In exchange, federal funds increased dramatically, and the federal
share was raised from 55% to 75%.
The grant program was reauthorized in 1977 (P.L. 95-217) and again in 1981
(P.L. 97-117). Efforts began to focus use of federal funds on projects with
environmental benefits, out of concern that the program’s wide scope was not well
focused on key goals. Especially reflected in the 1981 amendments were budgetary
pressures and a desire to reduce federal spending. Annual authorizations were
reduced from $5 billion to $2.4 billion, the federal share was again set at 55%, and
project eligibilities were limited.
The most recent CWA amendments were enacted in 1987 (P.L. 100-4). That
legislation authorized $18 billion over nine years for wastewater treatment plant
construction, through a combination of the traditional grant program and a new State
Water Pollution Control Revolving Funds (SRF) program. Under the new program,
federal capitalization grants are provided as seed money for state-administered loans
to build sewage treatment plants and other water quality projects. Local
communities, in turn, repay loans to the state, a process intended by Congress to
enable a phaseout of federal involvement after states build up a source of capital for
future investments. Under the amendments, the SRF program was phased in
beginning in FY1989 and entirely replaced the previous grant program in FY1991.
The intention was that states would have greater flexibility to set priorities and
administer funding, while federal aid would end after FY1994. As a general matter,
states and cities supported the program changes and the shift to a loan program that
was intended to provide long-term funding for water quality and wastewater
construction activities. However, the change means that local communities now are
responsible for 100% of project costs.

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While municipalities have made substantial progress toward meeting the goals
and requirements of the act, state water quality reports continue to indicate that
discharges from wastewater treatment plants are a significant source of water quality
impairments nationwide. The original authorizations expired in FY1994, but
pressure to extend federal funding by reauthorizing the Title VI SRF program and by
providing appropriations both for SRF capitalization grants and earmarked project
grants, has continued, in part because estimated funding needs remain large. Thus,
Congress has continued to appropriate funds, and the anticipated shift to full state
responsibility has not yet occurred. Authorizations since 1972, for the previous Title
II grant program and now for the Title VI SRF program, have totaled $66 billion,
while appropriations have totaled $73.4 billion through FY2005. For the first 10
years following enactment of the 1987 amendments, appropriations for wastewater
treatment assistance (Title II and Title VI grants) averaged $1.57 billion per year.
From FY1998 to FY2004, Title VI appropriations averaged $1.35 billion per year.
FY2005 appropriations totaled $1.09 billion.

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Appendix II. Background:
Federal Involvement in Drinking Water
In contrast to the 40-plus years of federal support for financing municipal
wastewater treatment facilities, Congress only recently, in 1996, established a
program under the Safe Drinking Water Act (SDWA) to help finance projects needed
to comply with federal drinking water regulations. Funding support for drinking
water only occurred more recently for several reasons. First, until the 1980s, the
number of drinking water regulations was fairly small, and public water systems
often did not need to make large investments in treatment technologies to meet those
regulations. Second and relatedly, good quality drinking water traditionally has been
available to many communities at relatively low cost. By comparison, essentially all
communities have had to construct or upgrade sewage treatment facilities to meet the
requirements of the CWA.
Over time, drinking water circumstances have changed, as communities have
grown, and commercial, industrial, agricultural, and residential land-uses have
become more concentrated, thus resulting in more contaminants reaching drinking
water sources. Moreover, as the number of federal drinking water standards has
increased, many communities have found that their water may not be as good as once
thought and that additional treatment technologies are required to meet the new
standards and protect public health. Between 1986 and 1996, for example, the
number of regulated drinking water contaminants grew from 23 to 83, and EPA and
the states expressed concern that many of the nation’s 52,000 small community water
systems were likely to lack the financial capacity to meet the rising costs of
complying with the Safe Drinking Water Act.
Congress responded to these concerns by enacting the 1996 SDWA
Amendments (P.L. 104-182) which authorized a drinking water state revolving loan
fund (DWSRF) program to help systems finance projects needed to comply with
SDWA regulations and to protect public health. (For additional background, see CRS
Report 97-677, Safe Drinking Water Act: State Revolving Fund Program.) This
program, fashioned after the Clean Water Act SRF, authorizes EPA to make grants
to states to capitalize DWSRFs which states then use to make loans to public water
systems. Appropriations for the program were authorized at $599 million for FY1994
and $1 billion annually for FY1995 through FY2003. Actual appropriations, first
provided in FY1997, have totaled $7.8 billion and have averaged $867 million per
year.