Water Infrastructure Funding in the American
Recovery and Reinvestment Act of 2009
Claudia Copeland
Specialist in Resources and Environmental Policy
Nicole T. Carter
Specialist in Natural Resources Policy
Megan Stubbs
Analyst in Agricultural Conservation and Natural Resources Policy
August 19, 2009
Congressional Research Service
7-5700
www.crs.gov
R40216
CRS Report for Congress
P
repared for Members and Committees of Congress

---

Water Infrastructure Funding in the American Recovery and Reinvestment Act of 2009

Summary
On February 17, 2009, President Obama signed into law the American Recovery and
Reinvestment Act of 2009 (P.L. 111-5, the ARRA, or Recovery Act). This report identifies
funding for water infrastructure programs and projects contained in the legislation, including
amounts in the House- and Senate-passed versions that preceded the conference agreement.
Among the purposes identified in the legislation are preservation and creation of jobs and
promotion of U.S. economic recovery, and investment in transportation, environmental
protection, and other infrastructure that will provide long-term economic benefits.
Under the legislation, additional appropriations are directed to a number of existing federal
programs that either directly invest in water infrastructure projects or provide assistance to states
and localities for such activities. Water infrastructure funding in the bill, available for obligation
for the remainder of FY2009 and through September 30, 2010, is provided to five federal
agencies and one commission. This funding totals $13.5 billion.
The bill provides funding for locally built wastewater and drinking water treatment projects
through assistance programs administered by the Environmental Protection Agency (EPA) and the
U.S. Department of Agriculture (USDA). For the EPA wastewater program, the enacted bill
provides $4.0 billion. For the EPA drinking water program, P.L. 111-5 provides $2.0 billion in
additional funds. These funds will be allocated to states according to established formulas, and
states will award actual assistance to projects and communities. As of late April, EPA has awarded
Recovery Act funds to about a dozen states. For the USDA programs that benefit rural
communities, the enacted legislation provides $1.38 billion in grants and loans; none has yet been
disbursed to USDA state offices, which will make individual project decisions. Additional
funding in the bill for these programs is three to four times more than the level of regular
appropriations.
The enacted legislation provides funding for water resources development and management
projects administered by four agencies. It provides $4.6 billion for the U.S. Army Corps of
Engineers (Corps) and $1.0 billion for the Bureau of Reclamation (Reclamation). The legislation
also provides $340 million for USDA’s Natural Resources Conservation Service (NRCS)
agricultural watershed program, and $220 million for the Department of State’s International
Boundary and Water Commission (IBWC) levee and dam upgrades. Congress directed that the
funds be used consistent with the eligibility and prioritization constraints and direction provided
in P.L. 111-5 and the accompanying conference report, H.Rept. 111-16. Discretion regarding
which specific projects received funds was largely left up to the Administration. Congressional
Committees have held hearings on use of ARRA water resources funds.
Even after enactment, implementation of the additional water infrastructure funding in the
American Recovery and Reinvestment Act is raising a number of issues, including how the
additional funds included in this legislation will influence decisions on regular appropriations
bills beyond FY2009. Another issue concerns matching fund requirements. Unless project
assistance is provided entirely as grants, communities and project sponsors will need to come up
with matching funds, which could be very challenging in the current fiscal environment.

Congressional Research Service

---

Water Infrastructure Funding in the American Recovery and Reinvestment Act of 2009

Contents
Introduction ................................................................................................................................ 1
Wastewater and Drinking Water .................................................................................................. 2
EPA State Revolving Fund (SRF) Programs .......................................................................... 2
Other Federal Programs ........................................................................................................ 4
Discussion ............................................................................................................................ 5
Implementation and Oversight .............................................................................................. 6
Water Resources ......................................................................................................................... 8
Corps of Engineers Projects .................................................................................................. 9
Bureau of Reclamation Projects and Programs ...................................................................... 9
Agricultural Watershed Programs ........................................................................................ 10
International Boundary and Water Commission Projects...................................................... 10
Discussion .......................................................................................................................... 10
Implementation and Oversight ............................................................................................ 11
Army Corps of Engineers.............................................................................................. 11
Bureau of Reclamation.................................................................................................. 12
Agricultural Watershed Programs .................................................................................. 12
International Boundary and Water Commission Projects................................................ 13
Concluding Thoughts ................................................................................................................ 13

Tables
Table 1. Water Infrastructure Funding in the American Recovery and Reinvestment Act
of 2009 (P.L. 111-5) ................................................................................................................. 1
Table A-1. State Allocation of EPA Wastewater and Drinking Water Funds in the
American Recovery and Reinvestment Act of 2009 (P.L. 111-5) ............................................. 15

Appendixes
Appendix. ................................................................................................................................. 15

Contacts
Author Contact Information ...................................................................................................... 17
Acknowledgments .................................................................................................................... 17

Congressional Research Service

---

Water Infrastructure Funding in the American Recovery and Reinvestment Act of 2009

Introduction
On January 28, 2009, the House passed H.R. 1, the American Recovery and Reinvestment Act of
2009. On February 10, the Senate passed an amended version of H.R. 1 (S.Amdt. 570). On
February 13, the House and Senate adopted a conference report (H.Rept. 111-16) that President
Obama signed on February 17 (P.L. 111-5). This report identifies funding for water infrastructure
programs and projects included in the bill. Among the purposes identified in the legislation are
preservation and creation of jobs and promotion of U.S. economic recovery, and investment in
transportation, environmental, and other infrastructure that will provide long-term economic
benefits. Under the legislation, additional appropriations are directed to a number of existing
federal programs that either directly invest in water infrastructure projects or provide assistance to
states and localities for such activities. Water infrastructure funding, available for obligation for
the remainder of FY2009 and through September 30, 2010, is summarized in Table 1.
Table 1. Water Infrastructure Funding in the American Recovery
and Reinvestment Act of 2009 (P.L. 111-5)
H.R. 1 as
Senate
Enacted
Passed by the
Amdt. to
Version of
Agency Program House
H.R. 1
H.R. 1
EPA Clean
Water
State
$6.0 billion
$4.0 billion
$4.0 billion
Revolving Fund
capitalization grants
EPA Drinking
Water
State
$2.0 billion
$2.0 billion
$2.0 billion
Revolving Fund
capitalization grants
RUS/USDA
Rural water and waste
$1.5 billion
$1.375 billion
$1.38 billion
disposal grants and loans
District of
D.C. Water and Sewer
—- $125
million
—-
Columbia
Authority
Reclamation/DOI Water and Related
$500 million
$1.4 billion
1.0 billion
Resources
Corps/DODa
Army Corps of Engineers
$4.5 billion
$4.6 billion
$4.6 billion
Civil Works Program
NRCS/USDA Agricultural
Watershed $400 million
$340 million
$340 million
Programs
IBWC/State
International Boundary and $224 million
$224 million
$220 million
Dept.
Water Commission
Total
$15.1 billion
$14.1 billion
$13.5 billion
Source: Compiled by CRS.
Note: Table does not include funds for the Economic Development Administration’s Public Works and
Economic Development program or the Department of Housing and Urban Development’s Community
Development Block Grant program, both of which could be used for water infrastructure and other projects,
See discussion on page 5.
a. Amounts include the $25 million for the Corps regulatory program that appeared in the House, Senate, and
final versions of the legislation, and $100 million in the S.Amdt. 570 to H.R. 1 and the final bill for the
Formerly Utilized Sites Remedial Action Program (FUSRAP).
Congressional Research Service
1

---

Water Infrastructure Funding in the American Recovery and Reinvestment Act of 2009

The infrastructure activities discussed here comprise one of many broad categories of
infrastructure that are receiving additional funding under the legislation, for construction, repair,
and modernization of a range of infrastructure categories both traditional (e.g., highways,
airports, passenger rail, and schools) and less traditional (e.g., broadband and the electric power
transmission grid). These provisions of the legislation reflect a concept that has drawn much
attention by policymakers as one option for addressing the nation’s faltering economic conditions:
the concept of countering the effect of the current recession with increased government spending
on public works in order to create jobs while also promoting long-term economic growth.1
Proponents have argued that states and localities have hundreds of infrastructure projects that are
“ready to go” to construction in 90 or 120 days, except for funding, and thus could contribute
quickly to job creation and economic stimulus,2 especially in the construction sector that has been
particularly hard hit by the recession. During House and Senate debate, both supporters and
critics of the legislation favored more infrastructure spending, with critics urging changes to
increase short-term, stimulative provisions of the bill, including more targeted infrastructure
spending, and less spending on activities with less certain quick stimulative effect. Nevertheless,
in the floor debates concerning the overall size and composition of the legislation, only one
specific proposal to increase infrastructure funds in the bill was adopted.3 The enacted legislation
includes some additional funds for high-speed rail projects that were not included in the House or
Senate versions of H.R. 1.4
Wastewater and Drinking Water
EPA State Revolving Fund (SRF) Programs
The federal Clean Water Act (CWA) and Safe Drinking Water Act (SDWA) impose regulatory
requirements regarding wastewater treatment and drinking water quality in the United States. For
wastewater treatment, the CWA prescribes performance levels to be attained by municipal sewage
treatment plants in order to prevent the discharge of harmful wastes into the Nation’s lakes,
rivers, and other surface waters. For drinking water quality, public water systems are subject to
federal regulations under the SDWA which limit levels of contaminants in treated water and
require, for example, system monitoring, treatment to remove certain contaminants, and
reporting. Both of these laws authorize financial assistance so that communities can construct
treatment facilities in compliance with these requirements.5 Under both laws, Congress

1 For background, see CRS Report R40107, The Role of Public Works Infrastructure in Economic Stimulus,
coordinated by Claudia Copeland.
2 State and local water agencies have reportedly identified from $9 to $20 billion in wastewater treatment projects and
$10 billion in drinking water projects that are “ready to go.” Inside EPA, “States Seek over $9 Billion for Clean Water
Projects in Stimulus Bill,” September 12, 2008; “AWWA members Asked to Contact Congress on Drinking Water
Infrastructure and Stimulus Bill,” http://www.awwa.org/Government/Content.cfm?ItemNumber=3821&
navItemNumber=1618.
3 While the House adopted an amendment to increase transit capital grant funding by $3 billion, the Senate rejected an
amendment offered by Senators Murray and Feinstein that would have provided $25 billion more for highway, transit,
and drinking water and wastewater projects.
4 For information, see CRS Report R40214, Transportation and Transportation Security Related Provisions of House
and Senate Stimulus Legislation (H.R. 1), by John W. Fischer et al.
5 For additional information, see CRS Report RL30478, Federally Supported Water Supply and Wastewater Treatment
Programs, coordinated by Claudia Copeland.
Congressional Research Service
2

---

Water Infrastructure Funding in the American Recovery and Reinvestment Act of 2009

appropriates federal capitalization grants as seed money to support State Revolving Funds
(SRFs), and states provide matching funds equal to 20% of the federal capitalization grant. States,
in turn, provide loans from the SRFs to communities for water infrastructure projects. Over the
long term, the loan programs are intended to be sustained through repayment of loans to states,
thus creating a continuing source of state assistance for other communities.
The SRF capitalization grants are appropriated through the Environmental Protection Agency’s
(EPA’s) State and Tribal Assistance Grants account (in the Interior and Environment
Appropriations bill) and are allocated among the states according to formulas. Historically, the
federal government has had a large financial role in assisting communities to meet their
wastewater funding needs (having appropriated more than $75 billion since 1973) and also more
recently in meeting drinking water treatment needs (more than $10 billion since 1997). However,
estimates of funding needs remain very high ($203 billion for wastewater and $277 billion for
drinking water), while appropriations for EPA assistance have declined in recent years. The
economic recovery legislation provides additional FY2009 funding for the two SRF capitalization
grant programs.
The enacted version of H.R. 1 provides an additional $4.0 billion for clean water SRFs and $2.0
billion for drinking water SRFs, as proposed by the Senate. House-passed H.R. 1 would have
appropriated $6.0 billion for clean water SRFs and the same $2.0 billion for drinking water SRFs.
Total stimulus funding for the two SRF programs would be four times larger than the funding
levels for these programs in regular FY2009 appropriations. As requested by many states, the
legislation waives the current law requirement that states must provide a 20% match to the federal
capitalization grant. Under the enacted bill, states are to use not less than 20% of capitalization
grants to support green infrastructure, water efficiency, or other environmentally innovative
projects (unless there are insufficient applications for such projects).
Under the Recovery Act, funds appropriated to states were allocated according to existing
formulas, or methods of apportionment. Under current law, clean water SRF capitalization grant
allocation is governed by a formulation in the CWA,6 while drinking water SRF capitalization
grants are allocated according to a formula developed by EPA that reflects the proportional share
of each state’s funding needs.7 Based on those formulas, Table A-1 in the Appendix to this report
shows amounts that states are eligible to receive under the funding levels in the bill. The table
reflects that, before funds are distributed to states, 1.5% is reserved for EPA to provide assistance
to Indian Tribes and, under the drinking water SRF, to Alaska Native Village water systems,
consistent with current law. Also, the table reflects that an additional 1.0% of the funds is
reserved for program oversight by EPA and remains available for the agency’s use through
September 30, 2011. States are to award SRF assistance to projects already included on their
Intended Use Plans, lists that states develop to identify which projects in which communities will
receive funding.
Under a general provision in section 1602 of P.L. 111-5, preference is to be given to activities that
can start and finish quickly, with a goal that at least 50% of the funds go to activities that can be
initiated within 120 days of enactment. EPA is directed to submit a report to the House and Senate
Appropriations Committees within 30 days of enactment containing a general plan for

6 For information, see CRS Report RL31073, Allocation of Wastewater Treatment Assistance: Formula and Other
Changes, by Claudia Copeland.
7 See http://www.epa.gov/safewater/dwsrf/allotments/funding_dwsrf_allotments_2008.html.
Congressional Research Service
3

---

Water Infrastructure Funding in the American Recovery and Reinvestment Act of 2009

expenditure of funds provided by the legislation, another report within 90 days providing detailed
project level information associated with the general plan, and bi-annual reports on
implementation, but there are no deadlines for actually awarding the funds in the bill. However,
these reports to Congress will not necessarily identify wastewater and drinking water projects that
will be funded, because states will be making those decisions, not EPA. States are to give priority
to wastewater and drinking water projects that can proceed to construction within 12 months of
enactment, i.e. by February 17, 2010. Further, the funds are provided as “use it or lose it,”
because EPA is directed to redistribute any SRF capitalization grant funds that are not under
contract or construction within that time.
Another general provision, section 1605(c), requires that local entities that receive ARRA
financial assistance use American-made iron, steel, and manufactured goods in the construction of
their projects. Section 1605(b) of the legislation allows federal agencies, with limited exceptions
and applied consistently with U.S. international obligations, to waive this “Buy American”
procurement requirement if doing so is in the public interest because there are insufficient
American supplies, or if the use of American supplies will increase the cost of the project by more
than 25%.
The enacted bill omits other general provisions in House-passed H.R. 1 concerning timing. The
House bill would have required federal agencies to award formula grants within 30 days of
enactment and competitive grants within 90 days of enactment. It also would have required that
binding commitments for 50% of the funds be made within one year of enactment, and the
remainder within two years.
Current law allows states to make low-interest or no-interest loans from the SRF. The House-
passed, Senate-passed, and enacted versions allow states to also provide additional subsidization
in the form of negative interest loans, principal forgiveness, grants, or a combination, but the
legislation sets no project-specific limits on such assistance.8 Under the final version of the
American Recovery and Reinvestment Act, states are to use 50% of the capitalization grant to
provide additional subsidization. The final bill omits provisions from the House-passed bill that
would have required that 80% of such funds go to municipalities that meet state affordability
criteria (presumably meaning economically disadvantaged), and 20% to projects involving water-
or energy-efficiency, stormwater mitigation, or other environmentally sensitive projects. The
Senate amendment to H.R. 1 did not specify a percentage of funds that must be used for
additional subsidization.
Other Federal Programs
Under the EPA SRF programs, rural and non-rural communities compete for funding; rural areas
and other small communities have no special priority. For rural areas, the U.S. Department of
Agriculture (USDA) administers grant and loan programs for water and wastewater projects, with
eligibility limited to communities of 10,000 or less. These programs are administered at the
national level by the Rural Utilities Service (RUS) at USDA.9 Funding needs in rural areas are
high (at least $50 billion, according to EPA surveys), and there is heavy demand for funds. At the

8 The SDWA already allows principal forgiveness for assistance provided to economically disadvantaged communities.
9 For information, see CRS Report 98-64, Rural Water Supply and Sewer Systems: Background Information, by
Claudia Copeland.
Congressional Research Service
4

---

Water Infrastructure Funding in the American Recovery and Reinvestment Act of 2009

end of FY2007, USDA reported a $2.4 billion backlog of requests for 928 water and wastewater
projects. The economic recovery legislation also provides additional appropriations for these
programs. The enacted version of H.R. 1 provides $1.38 billion ($968 million in grants and $412
million in direct loans). House-passed H.R. 1 would have provided $1.5 billion ($400 million in
direct loans, $1.1 billion in grants), and the Senate amendment would have provided $1.375
billion total for the RUS water and waste disposal program. Funding under the enacted bill is
more than 2.5 times larger than the funding level in FY2009. The general provisions of P.L. 111-5
concerning preference for projects that can start quickly and Buy American requirements,
described on pages 3 and 4, would also apply to these USDA funds.
Funding for a specific wastewater infrastructure project was included in the Senate amendment to
H.R. 1, but was omitted from the final bill. The Senate amendment included $125 million for the
District of Columbia Water and Sewer Authority to continue its program to remediate sewerage
overflow problems. The District is implementing a long-term sewerage overflow remediation
program that is estimated to cost more than $2 billion. Under the bill, the District of Columbia
would have been required to provide a 100% match for the federal payment.
The economic recovery legislation also includes funding for other federal programs that are not
targeted to water infrastructure (or even to infrastructure exclusively), but could potentially be
used for such purposes. One is the Public Works and Economic Development program of the
Economic Development Administration (EDA, Department of Commerce). EDA is authorized to
provide economic development grants to areas experiencing substantial economic distress in
order to directly encourage business expansion, diversify local economies, and general or retain
long-term jobs in the private sector. Economic development grants may be used for a wide range
of purposes. The enacted version of H.R. 1 provides $150 million for EDA grants(as proposed by
the Senate; the House bill would have appropriated $250 million). Regular FY2009 funding,
enacted in March after enactment of the ARRA, is $133 million.
The enacted bill also includes $1.0 billion for the Community Development Block Grant (CDBG)
program administered by the Department of Housing and Urban Development (HUD), as
proposed by the House (the Senate bill included no CDBG funding). CDBG funds are used by
about 1,200 state and local governments for a broad range of activities to invest in their own
economic development priorities that are intended to result in decent housing in a suitable living
environment. Program policy requires that at least 70% of funds must benefit low- and moderate-
income persons. Regular FY2009 funding for the CDBG is $3.6 billion.
Discussion
For wastewater and drinking water programs, the House-passed and Senate-passed bills were
quite similar, the main differences relating to funding levels (e.g., $6.0 billion in House-passed
H.R. 1, compared with $4.0 billion in the Senate amendment, for clean water SRF capitalization
grants) to provide additional funding for existing infrastructure programs. The bills also contained
some differences concerning specified timing or procedures for awarding or obligating funds (see
page 3). The Senate amendment included funds for a specific wastewater project in the District of
Columbia that was not addressed in the House-passed bill and was omitted from P.L. 111-5.
As noted, in the EPA SRF provisions, the legislation allows states to provide subsidization in the
form of principal forgiveness, negative interest loans, grants, or a combination. Traditionally, SRF
assistance to communities is provided as loans that eventually are repaid to states. The concept of
allowing principal forgiveness or negative interest loans means that communities will have less of
Congressional Research Service
5

---

Water Infrastructure Funding in the American Recovery and Reinvestment Act of 2009

a repayment burden. There is, however, a tension in how states will use this authority. As much as
state budgets are under pressure from the current recession, so, too, are cities’ budgets, and
recipients of SRF assistance would rather receive a grant or partial grant than a loan that must be
fully repaid. If states are generous in the amounts of subsidization that they provide (for example,
requiring only small amounts of assistance or even none to be repaid), a few communities will
benefit greatly. But if states are more restrictive (for example, providing only a small amount of
additional subsidization), it may be possible to assist more communities in the state, yet those
communities will have a larger repayment responsibility.
More broadly, the infrastructure funding provisions of the legislation raise some general issues.
Funding infrastructure is a long-term investment, not quick-fix spending, that should lead to
something durable, useful, and financially productive. The long-term nature of such investments
can be at odds with the stimulus goal of quickly injecting money into the economy. Thus, one
question in debating infrastructure spending as part of economic recovery is, what is truly
stimulative? Critics contend that the haste to fund “ready to go” projects is likely to result in
spending on many projects with marginal value, such as projects with plans that have been
backlogged for some time because they lack sufficient merit, but for which now there is an
opportunity to get funding. One issue of interest is, will states and communities be able to
effectively manage the large increase in project spending provided by the legislation. The
legislation includes oversight measures.10 These appear to be focused on the important issues of
identifying waste, fraud, and abuse, and ensuring compliance with applicable standards and
competition requirements in contracts and grants, but not necessarily on evaluating or ensuring
the quality of funded projects. That type of accountability will reside with state and local officials
who will be responsible for determining priorities and making the majority of actual funding
decisions for wastewater and drinking water investments.
Implementation and Oversight
Recovery Act funds for wastewater and drinking water projects are being disbursed by the federal
government to states and localities where most of the actual project decisions will be made and
spending will occur in the coming months. EPA moved quickly after enactment of the legislation
to issue guidance to states on how the agency will award and administer grants to wastewater and
drinking water state revolving funds.11 The guidance addressed a number of issues unique to the
ARRA SRF funds, such as how states are to meet the law’s requirement that at least 20% of the
funds shall be used for green infrastructure projects, additional reporting requirements to comply
with the act’s mandates for accountability and transparency, and details that states must provide
on their plans for using the federal funds, including principal forgiveness. Most states reportedly
are planning to fund projects from existing priority lists (in order to meet the law’s requirements
to select projects that can proceed quickly to construction), while some have developed
supplemental project priority lists (especially where projects to meet the law’s green
infrastructure project reserve had not previously been identified).

10 The legislation provides oversight funds for agency Inspectors General and for the Government Accountability
Office. It also establishes a Recovery Accountability and Transparency Board to coordinate and conduct oversight and
to report quarterly to the President and Congress.
11 James A. Hanlon and Cynthia O. Dougherty, “Award of Capitalization Grants with Funds Appropriated by P.L. 111-
5, the ‘American Recovery and Reinvestment Act of 2009,’” memorandum, March 2, 2009. http://www.epa.gov/water/
eparecovery/docs/604bARRA_guidance_memo_FINAL.pdf
Congressional Research Service
6

---

Water Infrastructure Funding in the American Recovery and Reinvestment Act of 2009

As of July 31, states have submitted applications with their Intended Use Plans for clean water
and drinking water SRF capitalization grants, and EPA has obligated nearly $5.1 billion (out of
the $6.0 billion appropriated) to all 50 states, the District of Columbia, Puerto Rico, and one
Territory. States, in turn, are beginning to award funds to specific projects; actual outlays as of
July 31 total about $33 million. Officials say that when recipient reporting begins in October,
more information on spending details and jobs created will be available.
Both OMB and EPA have issued guidance on implementing the law’s Buy American provision
(see page 4), which is another new consideration in using the ARRA funds. EPA’s guidance issued
in April details how an SRF assistance recipient (i.e., local government) may apply for a waiver
from the Buy American requirement and how the agency will evaluate such requests.12 As of
August, EPA has issued four nationwide “Buy American” waivers based on the ARRA’s public
interest provision, as well as 10 project-specific waivers because U.S.-made products meeting
specifications justified by local conditions and requirements were not available. In April EPA
issued a nationwide waiver to allow some already-funded SRF projects to refinance loans to
access the more attractive financing options that the Recovery Act provides, but this waiver only
applies to eligible projects for which debt was incurred on or after October 1, 2008, and before
February 17, 2009. Two waivers issued in May apply to projects that solicited bids on or after
October 1, 2008, and before February 17, and for “de minimis” use of non-domestic iron, steel,
and manufactured goods in a project where such components comprise in total no more than 5%
of materials in the project. A fourth nationwide waiver, issued July 24, clarifies the previous “de
minimis” waiver.
The Buy American requirement has become among the most contentious provisions of the ARRA
for water infrastructure projects. For example, some state and local officials criticized the
relatively high threshold in the law for waiving the provision based on increased costs (25%).
Further, the provision has prompted special concern in the water infrastructure sector because
only a limited amount of equipment and materials is manufactured in the United States, according
to reports. Some critics say this could result in monopolies for certain companies and could
increase the cost of ARRA projects because domestic content may be more expensive than
foreign-supplied materials. A Canadian trade official characterized the provision as
discriminatory and as a threat to traditional trading openness between the two countries.13 Others
generally support the Buy American provision, saying that it will help create domestic jobs.
Other federal agencies that received ARRA funds for wastewater and drinking water projects also
are proceeding with implementation. For example, as of early August, USDA has awarded $1.29
billion of the $1.38 billion in grant and loan funds that it received for rural water and waste
disposal projects. The Economic Development Administration’s six regional offices are
responsible for selecting and administering the $150 million in ARRA funds that EDA received,
and EDA’s goal is to fully obligate the funding by September 30, 2009. EDA expects to fund at
least $135 million in public works grants. As of July, EDA had announced 15 grants totaling $23
million. Finally, HUD, which received $1.0 billion in ARRA CDBG funds, announced allocation

12 James A. Hanlon and Cynthia O. Dougherty, “Implementation of the Buy American provisions of P.L. 111-5, the
‘American Recovery and Reinvestment Act of 2009,’” memorandum, April 28, 2009. http://www.epa.gov/water/
eparecovery/docs/04-29-2009_BA_waiver_process_final.pdf
13 Guy Saint-Jacques, Deputy Head of Mission, Embassy of Canada to the United States, Address to the 2009 National
Clean Water Policy Forum, May 4, 2009.
Congressional Research Service
7

---

Water Infrastructure Funding in the American Recovery and Reinvestment Act of 2009

of the funds in March; in July, the department announced that $360 million of the total had been
awarded to nearly 700 grantees.
Congressional committees also have begun hearings on the Administration’s implementation of
the Recovery Act. At the time of the legislation’s enactment, the chairman of the House
Transportation and Infrastructure Committee sent letters to governors in March requesting that
they provide specific certifications and accountability information regarding ARRA-funded
projects. On April 29 and July 31, the committee held the first two of a planned series of hearings
on implementation, receiving testimony at the hearings from EPA, EDA, the Army Corps of
Engineers and others within that committee’s jurisdiction on steps to disburse funds to states and
award assistance to specific projects. At the April 29 hearing, the EPA Inspector General (IG)
testified that EPA and its grantees will be challenged to spend the Recovery Act funding in a
timely manner, as required by the legislation. The IG noted that, because Recovery Act-funded
grants do not require a match by the recipient and there are provisions for loan forgiveness, there
is risk of fraud, waste, and abuse that EPA will need to monitor closely. Other committees that
have begun oversight activities include the House Natural Resources Committee (see discussion
below) and the House Science and Technology Committee which, among other topics, is
investigating how government agencies are ensuring transparency and accountability for
Recovery Act spending.
Water Resources
The federal government has a long history of involvement in water resource development
projects, such as dams, levees, coastal protection, and navigation works, to facilitate navigation,
expand irrigated agriculture, reduce flood losses, and, more recently, restore aquatic ecosystems.
At the federal level, these activities are principally the responsibility of two agencies. Under its
civil works program, the U.S. Army Corps of Engineers (Corps, Department of Defense)
constructs and operates primarily navigation, flood, coastal protection, and aquatic restoration
throughout the country. The Bureau of Reclamation (Reclamation, Department of the Interior) is
authorized to construct and manage multi-purpose projects serving irrigation, municipal and
industrial water supply, flood control, power production, and recreation purposes in the 17
western states.14 Congress provides appropriations to support these activities through annual
Energy and Water Development appropriations bills.
The economic recovery legislation provides supplemental funding above regular appropriations
for the Corps, Reclamation, and other water resources activities at the Department of
Agriculture’s Natural Resources Conservation Service (NRCS) and the Department of State’s
International Boundary and Water Commission (IBWC). A general provision in section 1602 of
the enacted bill, which applies to all these water resources activities, states that preference should
be given to activities that can start and finish quickly, with a goal that at least 50% of the funds go
to activities initiated within 120 days of enactment.

14 For more information, see CRS Report R40180, Water Resources Issues in the 111th Congress, coordinated by Betsy
A. Cody.
Congressional Research Service
8

---

Water Infrastructure Funding in the American Recovery and Reinvestment Act of 2009

Corps of Engineers Projects
P.L. 111-5 provides a total of $4.6 billion for the Corps. All of the funds go toward Corps civil
works activities, however, some of the funds are directed toward activities other than federal
water resources projects ─ $25 million for the Corps regulatory program and $25 million for the
Formerly Utilized Sites Remedial Action Program (FUSRAP), a program to investigate and clean
up or control sites that were part of the early atomic energy and weapons program. The legislation
also reserves $200 million for water-related environmental infrastructure projects, which are
projects more similar to the municipal water and wastewater systems previously discussed, than
the Corps’ primary flood, navigation, and aquatic restoration missions.15
P.L. 111-5 directs that the ARRA funds be used for either entire projects, programs, or activities,
or elements of those. It states that funds are directed to activities that can be completed with the
stimulus funds, and that do not create future budgetary obligations. It also states that funds shall
only be used for programs, projects, or activities that “heretofore or hereafter” receive funds
provided in Energy and Water Development appropriations acts.16 P.L. 111-5 authorizes unlimited
reprogramming authority for Corps funds provided under the legislation, as proposed by the
Senate. It requires quarterly reports to the House and Senate Appropriations Committees on the
allocation, obligation, and expenditure of the funds, as proposed by the House.
Bureau of Reclamation Projects and Programs
ARRA funding for Reclamation in P.L. 111-5 totals $1.0 billion. P.L. 111-5 directs that the funds
be used for projects, programs, or activities that can be completed with these funding amounts,
and that do not create future budgetary obligations. It also authorizes unlimited reprogramming
authority for Reclamation funds provided under the legislation.
Of the total ARRA funds for Reclamation, P.L. 111-5 provides $126 million for water reclamation
and reuse projects (Title XVI projects, which typically treat municipal wastewater for reuse rather
than discharge or desalinate brackish groundwater or seawater), as proposed by the House. The
law also provides $50 million for projects under the Central Utah Project Completion Act, $50
million for projects under the California Bay-Delta, $60 million for rural water projects, and $10
million for inspection of canals in urbanized areas, amounts that were proposed by the Senate.
The Recovery Act also authorizes Reclamation to extend up to 50 years, with interest, the
timeframe for water supply customers to repay the U.S. government for maintenance and
rehabilitation. Short repayment times for major maintenance and rehabilitation projects have been
of great concern to Reclamation water users in recent years, and are a growing concern as
existing infrastructure ages. In the earlier House and Senate versions of the bill, Reclamation
would have been authorized to extend repayment up to 25 years without interest.

15 For information on Corps environmental infrastructure projects, see CRS Report RL30478, Federally Supported
Water Supply and Wastewater Treatment Programs, coordinated by Claudia Copeland.
16 This statutory language may indicate that not only may projects previously funded be eligible for stimulus funds, but
also activities funded in subsequent legislation, such as regular FY2009 appropriations legislation, which Congress
enacted in March 2009 (P.L. 111-8), after enactment of the ARRA.
Congressional Research Service
9

---

Water Infrastructure Funding in the American Recovery and Reinvestment Act of 2009

Agricultural Watershed Programs
Under several small watershed programs, NRCS provides technical advisory services and
financial assistance (partial grants) to state and local organizations to plan and install measures to
prevent erosion, sedimentation, and flood damage to conserve, develop, and utilize land and
water resources. The programs fund land treatment, and nonstructural and structural facilities for
flood prevention, erosion reduction, agricultural water management, public recreation
development, fish and wildlife habitat development, and municipal or industrial water supplies.
Structural measures can include dams, levees, canals, pumping plants, and other facilities.17
Agricultural watershed programs have existing formulas for allocating program funding. Factors
considered include risk to life, flood damage reduction, water conservation, water quality, and
erosion control, to name a few.18
P.L. 111-5 provides ARRA funding for three agricultural watershed programs. One is Watershed
and Flood Prevention Operations, used to design and build flood prevention, water quality
improvement, and similar projects. The enacted legislation provides $290 million divided in half,
with $145 million for Watershed and Flood Prevention Operations and $145 million to purchase
and restore floodplain easements though the Emergency Watershed Protection program. Under a
floodplain easement, a landowner voluntarily offers to sell NRCS a permanent conservation
easement that provides NRCS with full authority to restore and enhance the floodplain’s functions
and values. The third program is Watershed Rehabilitation, which rehabilitates dam projects
previously constructed with NRCS assistance that have reached the end of their engineering
design life. P.L. 111-5 provides $50 million for these activities. This amount is equal to 4.5 times
the appropriations for these NRCS activities in FY2009. The enacted legislation requires that
ARRA spending be used to fully fund projects that can be completed and allocated to projects that
can be commenced promptly. The conference report, H.Rept. 111-16, provides further direction
on how USDA is to prioritize use of the funds.
International Boundary and Water Commission Projects
The Recovery Act includes $220 million for the International Boundary and Water Commission
for its water quantity program, rather than $224 million as proposed by the House and Senate.
The bill directs that IBWC use the funds for immediate repair and rehabilitation requirements.
The four projects along the U.S.-Mexico border specified to receive the funds (Rio Grande Flood
Control System, Safety of Dams, Colorado Boundary; and Capacity Preservation) are for flood
damage reduction infrastructure upgrades (i.e., levee improvements and dam safety measures).
Discussion
Unlike some of the other water infrastructure activities funded in the legislation (including the
EPA wastewater and drinking water programs discussed previously), little was publicly known
about how most of the water resources funds would be distributed when P.L. 111-5 was enacted.

17 For information, see CRS Report RL30478, Federally Supported Water Supply and Wastewater Treatment
Programs, coordinated by Claudia Copeland.
18 These formulas are established by NRCS and are made publicly available through its website. For the NRCS FY2009
fund allocation formulas and methodologies, see http://www.nrcs.usda.gov/programs/pdf_files/
2009_Allocation_Formulas.pdf.
Congressional Research Service
10

---

Water Infrastructure Funding in the American Recovery and Reinvestment Act of 2009

Generally, formulas are not used to distribute funds to the Bureau of Reclamation and Corps of
Engineers. Instead, Congress typically, in either the text or report language of appropriations bills,
distributes most of the appropriated funds across individual Corps and Bureau projects or
programs, or the distribution is delegated to the agency. In contrast, P.L. 111-5 and the conference
report (H.Rept. 111-16) list broad prioritization criteria and identified several broad categories in
which it expects the agencies to allocate funds. Until the Administration notified Congress on
how it chooses to distribute the funds (discussed below), it was largely unknown for much of the
ARRA water resources funds which projects would be funded and how much assistance each
state would receive.
Implementation and Oversight
Water resources projects are often complicated planning and construction efforts that span
multiple years; whether federal water resources agencies, and their contracting officers in
particular, will be able to obligate and expend stimulus funds in a timely, yet transparent and
efficient, manner depends on many factors. The amounts in P.L. 111-5 represent roughly 80% of
the typical annual Corps appropriations,19 80% of the typical Reclamation appropriations, and 4.5
times current annual agricultural watershed funding.
Army Corps of Engineers
The Corps released its list of projects to receive ARRA funds on April 28, 2009.20 Of the $4.6
billion directed to the Corps, the Administration distributed $4.4 billion across 1,182 water
projects and nine FUSRAP sites; it also reserved $200 million in order to cover cost
contingencies for these projects.
On April 29 and on July 31, the House Transportation and Infrastructure Committee held
oversight hearings that included testimony on Corps ARRA implementation. At the second
hearing, concerns were raised about Corps projects not moving as quickly as hoped. The
Committee indicated there was potential for additional oversight hearings in the fall. At a June 18,
2009, hearing on the FY2010 budget request by the Senate Appropriations Subcommittee on
Energy and Water Development, concern was expressed regarding the selection of the Corps
projects by the Administration for the FY2010 budget request and ARRA funds.
According to the Corps, the Administration arrived at its list of projects using the criteria in P.L.
111-5 and its conference report; it also limited the set of eligible projects to those that were
consistent with long-standing executive branch policy. This meant that only those projects that
had been reviewed by the Assistant Secretary of the Army (Civil Works) and approved by the
Office of Management and Budget were considered. For example, beach nourishment projects,
which place sand on beaches to reduce property damage from coastal storms, were not included
in the Administration’s list. Budget requests under the Bush Administration had indicated

19 For the Corps, contracting for the civil works stimulus would be occurring concurrently with significant contracting
for its domestic and international military operations, including contracts related to defense base closures.
20 For a list of how the ARRA funds are distributed across the projects, see http://www.usace.army.mil/recovery/Pages/
Projects.aspx. For a map of where the ARRA projects are located, see http://www.usace.army.mil/recovery/Pages/
ProjectLocations.aspx. Corps projects receiving ARRA funds are located in 49 states; according to the Corps,
Wyoming had no eligible projects (see Frequently Asked Questions and Answers, ARRA of 2009 at
http://www.usace.army.mil/recovery/Pages/FAQ.aspx).
Congressional Research Service
11

---

Water Infrastructure Funding in the American Recovery and Reinvestment Act of 2009

opposition to beach nourishment. Congress, however, stated in section 2018 of WRDA that it is
the policy of the United States to promote beach nourishment. There has been criticism by some
Members of Congress and other stakeholders regarding the exclusion of beach nourishment
projects and that the project list excluded all “new starts,” including those authorized by Congress
in the Water Resources Development Act of 2007 (WRDA, P.L. 110-114).
Bureau of Reclamation
Reclamation announced its first outline of projects to be funded under ARRA on April 15, 2009.21
The agency announced that a total of $945 million in funding would be awarded to projects in six
program areas ─ meeting future water supply needs ($450.9 million); infrastructure reliability and
safety ($164.6 million); environmental/ecosystem restoration ($236.3 million); green buildings
($13.5 million); water conservation challenge grants ($40.0 million); and emergency drought
relief $40.0 million. An additional $50 million will be transferred to the Department of the
Interior’s Central Utah Project Completion Act effort, and $5 million will be set aside for
management and oversight.
Of the $450.9 million for water supply needs, the Department of the Interior announced on July 1
that $134.3 was designated for 27 projects authorized under Reclamation’s water reuse authority,
commonly known as the Title XVI program. Twenty-six of those listed are in California; the one
New Mexico project identified received $2.5 million in ARRA funds.
The House Natural Resources Water and Power Subcommittee held an oversight hearing on
Reclamation ARRA funding on April 28, 2009. Several Members of Congress and witnesses
questioned why there was not more emergency drought funding, while others questioned a
perceived high level of spending on environmental and ecosystem restoration projects. In
response, the Reclamation witness noted that much of the environmental/ecosystem spending
could be directly or indirectly tied to water supply reliability and that drought projects had not
been fully identified.22 Other witnesses were pleased with the funding levels, particularly
supporters of Title XVI projects. Remaining questions at the hearing explored which reuse,
drought, and conservation projects may receive future funding and how the FY2010 budget
request will complement ARRA funding.
Agricultural Watershed Programs
On April 6, 2009, NRCS allocated $45 million of the $50 million provided for the Watershed
Rehabilitation Program to rehabilitate 27 aging flood control structures in 11 states. NRCS
announced the allocation of $84.8 million on April 16 and $42.3 million on June 2 of the original
$145 million for Watershed and Flood Prevention. This funded a total of 81 previously
authorized, but unfunded, projects in 47 states and the District of Columbia, and reduced a
backlog of over 300 projects worth approximately $1 billion.23 NRCS reports allocating over
$121 million of the original $145 million to 36 states to fund floodplain easements under the

21 See http://recovery.doi.gov/bor/summary_projects.php#meeting.
22 Of particular note among the environmental projects was $109 million for a Red Bluff (CA) fish passage facility
within Reclamation’s Central Valley Project, which received widespread and bipartisan support. The project represents
nearly one-third of the environmental and ecosystem ARRA funding outlined by Reclamation; according to
Reclamation, the project will help facilitate the delivery of water supplies elsewhere in the CVP service area.
23 For exact project agricultural watershed project locations, see http://www.usda.gov/recovery/map/.
Congressional Research Service
12

---

Water Infrastructure Funding in the American Recovery and Reinvestment Act of 2009

Emergency Watershed Program. The number and size of floodplain easements enrolled has not
been reported following the April 10, 2009 application deadline.24
International Boundary and Water Commission Projects
On March 9, 2009, the Department of State released a list of IBWC projects (without funding
levels for each project) to receive the ARRA funds.25 Roughly $22.6 million of the funds were
committed by August 7, 2009.26 With prior-year appropriations and with the ARRA funding,
IBWC has completed the majority of pre-construction work for levee rehabilitation in the Rio
Grande Valley. With ARRA and other funds, construction for the highest priority IBWC levees
are anticipated to be completed by September 2011.27
Concluding Thoughts
The American Recovery and Reinvestment Act of 2009 provides emergency supplemental
appropriations for FY2009 and FY2010 for a number of existing federal programs.28 The
legislation is unusual in many respects, including the fact that the FY2009 supplemental funds in
this legislation were enacted before resolution of the regular FY2009 appropriations for most
agencies. As the start of the fiscal year was approaching (October 1, 2008), regular full-year
appropriations bills had not been enacted for any of the 12 regular appropriations bills. On
September 28, the President signed the Consolidated Security, Disaster Assistance, and
Continuing Appropriations Act, 2009 (FY2009 CR, P.L. 110-329), generally providing full-year
funding for three regular appropriations bills and partial-year funding for nine regular
appropriations bills at amounts provided in the FY2008 appropriations laws. Among other
programs, the nine part-year bills covered the water infrastructure activities described in this
report. P.L. 110-329 provided appropriations from October 1, 2008, through March 6, 2009, and a
second short-term CR was enacted on March 6 (P.L. 111-6) while Congress was finishing
consideration of a full-year omnibus appropriations bill that the President signed on March 11
(P.L. 111-8). The regular FY2009 appropriations provided in that legislation for water
infrastructure programs are about the same as in FY2008.
How the additional funds included in the American Recovery and Reinvestment Act will
influence appropriations for FY2010 is yet to be determined, because congressional action on
FY2010 appropriations legislation is incomplete, as of August. President Obama presented a
budget outline for FY2010 on February 26, followed by details in May. 29 Regarding water
infrastructure programs, the Administration requested appropriations for the EPA State Revolving
Fund programs at a $3.9 billion total, or 2.5 times higher than the combined FY2009 regular

24 Funding announcements for floodplain easements are available at http://www.nrcs.usda.gov/.
25 For the project list, see http://www.state.gov/recovery/communications/120222.htm.
26 For weekly Department of State reports on ARRA financial activity, see http://www.state.gov/recovery/.
27 Testimony by Bill Ruth, IBWC Commissioner, before the House Transportation and Infrastructure Subcommittee on
Water Resources and Environment Hearing on Agency Budget and Priorities for FY2010, Part 2, on June 16, 2009.
28 By designating the appropriations as emergency spending, the discretionary spending in the bill is not subject to the
constraints of the congressional budget resolution (S.Con.Res. 21, 110th Congress) under provisions of the
Congressional Budget Act of 1974. For information, see CRS Report RL34711, Consolidated Appropriations Act for
FY2009 (P.L. 110-329): An Overview, by Robert Keith.
29 See http://www.whitehouse.gov/omb/budget/.
Congressional Research Service
13

---

Water Infrastructure Funding in the American Recovery and Reinvestment Act of 2009

appropriations for those programs. The Administration’s FY2010 request for the Army Corps
was, as is typical, below the enacted amount from the previous year; however, the gap between
the previous year’s enacted amount and the budget request was smaller than in recent years. The
request for FY2010 for Reclamation was close to level with FY2009 enacted appropriations.
As described in this report, some of the water infrastructure funds included in the Recovery Act
represent a significant increase above recent program funding levels—for some, from three to
four times higher than the FY2009 amount. Many infrastructure stakeholder groups have urged
Congress to sustain similar high levels in regular appropriations in FY2010 and beyond, because
infrastructure projects typically involve outlays over multiple years. They argue that individual
project planning and implementation will be disrupted if federal assistance is uneven or
unpredictable, very large one year and much lower the next year. But because the infrastructure
funds in P.L. 111-5 are to be available for obligation through FY2010 and will be spent out over
several years,30 some policymakers argue that it will not be necessary to appropriate increased
levels for these programs in FY2010. While most analysts believe that it will be difficult for
Congress to continue the high spending levels for all programs included in P.L. 111-5 beyond
enactment of that legislation, there continue to be calls for Congress to do that very thing.

30 For example, the Congressional Budget Office estimated that 55% of the EPA SRF capitalization grant funds in the
legislation will be spent in Fiscal Years 2010 and 2011. Only 3% will be spent in FY2009. A total of 79% will be spent
between FY2009 and FY2012. Letter from Douglas W. Elmendorf, Director, Congressional Budget Office, to
Honorable Nancy Pelosi, Speaker, U.S. House of Representatives, February 13, 2009, http://www.cbo.gov/ftpdocs/
99xx/doc9989/hr1conference.pdf.
Congressional Research Service
14

---

Water Infrastructure Funding in the American Recovery and Reinvestment Act of 2009

Appendix.
Table A-1. State Allocation of EPA Wastewater and Drinking Water Funds in the
American Recovery and Reinvestment Act of 2009 (P.L. 111-5)
(Millions of Dollars)
CLEAN WATER
DRINKING WATER
SRF FUNDS
SRF FUNDS
STATES
($4 BILLION)
($2 BILLION)
Alabama
$44.3
$19.5
Alaska
$23.7
$19.5
Arizona
$26.7
$55.3
Arkansas
$25.9
$24.5
California
$283.1
$159.0
Colorado
$31.7
$34.4
Connecticut
$48.5 $19.5
Delaware
$19.4
$19.5
District of Columbia

$19.4
$19.5
Florida
$133.6
$88.1
Georgia
$66.9
$54.8
Hawai
$30.7
$19.5
Idaho
$19.4
$19.5
Illinois
$179.0 $79.5
Indiana
95.4
$27.2
Iowa
$53.6
$24.3
Kansas
$35.7
$19.5
Kentucky
$50.4
$20.5
Louisiana
$43.5
$27.6
Maine
$30.6
$19.5
Maryland
$95.7
$26.8
Massachusetts
$134.4 $52.2
Michigan
$170.2
$67.5
Minnesota
$72.8 $35.1
Mississippi
$35/7
$19.5
Missouri
$109.7
$37.9
Montana
$19.4
$19.5
Nebraska
$20.2
$19.5
Nevada
$19.4
$19.5
New Hampshire

$39.6
$39.5
New Jersey

$161.8
$43.2
Congressional Research Service
15

---

Water Infrastructure Funding in the American Recovery and Reinvestment Act of 2009

CLEAN WATER
DRINKING WATER
SRF FUNDS
SRF FUNDS
STATES
($4 BILLION)
($2 BILLION)
New Mexico

$19.4
$19.5
New York

$436.9
$86.8
North Carolina

$71.4
$65.6
North Dakota

$19.4
$19.5
Ohio
$222.9
$58.5
Oklahoma
$32.0 $31.5
Oregon
$44.7
$28.5
Pennsylvania
$156.8 $65.7
Rhode Island

$26.6
$19.5
South Carolina

$40.6
$19.5
South Dakota

$19.4
$19.5
Tennessee
$57.5 $20.2
Texas
$180.9
$160.7
Utah
$20.9
$19.5
Vermont
$19.4
$19.5
Virginia
$81.0
$20.8
Washington
$68.8 $41.8
West Virginia

$61.7
$19.5
Wisconsin
$107.0 $37.8
Wyoming
$19.4
$19.5
American Samoa

$3.6
$0.5
Guam
$2.6
$2.1
Northern Mariana Islands

$1.7
$1.8
Puerto Rico

$51.6
$19.5
Virgin Islands

$2.1
$2.0
TOTAL
$3,909.0
$1,950.0
Source: EPA (http://www.epa.gov/recovery/docs/Final_SRF_eco_recovery_allotments.pdf )
Note: Individual state al ocations and totals reflect the fact that under the legislation, before funds are al ocated
to states, 1.5% was reserved for EPA to provide assistance to Indian Tribes, consistent with current law. Also, an
additional 1.0% was reserved from the combined funds for program oversight by EPA, for a total of 2.5% in
reserved funds.

Congressional Research Service
16

---

Water Infrastructure Funding in the American Recovery and Reinvestment Act of 2009

Author Contact Information

Claudia Copeland
Megan Stubbs
Specialist in Resources and Environmental Policy
Analyst in Agricultural Conservation and Natural
ccopeland@crs.loc.gov, 7-7227
Resources Policy
mstubbs@crs.loc.gov, 7-8707
Nicole T. Carter

Specialist in Natural Resources Policy
ncarter@crs.loc.gov, 7-0854

Acknowledgments
The authors thank Betsy A. Cody for assistance with this report.



Congressional Research Service
17

---