.

Federally Supported Water Supply and
Wastewater Treatment Programs

Claudia Copeland
Specialist in Resources and Environmental Policy
Nicole T. Carter
Specialist in Natural Resources Policy
Betsy A. Cody
Specialist in Natural Resources Policy
Megan Stubbs
Specialist in Agricultural Conservation and Natural Resources Policy
Mary Tiemann
Specialist in Environmental Policy
March 18, 2015
Congressional Research Service
7-5700
www.crs.gov
RL30478

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Federally Supported Water Supply and Wastewater Treatment Programs

Summary
Although the federal government has played a significant role in developing water quality
regulations and standards for municipal and industrial (M&I) water use, it historically has
provided a relatively small percentage of the funding for construction of water supply and
treatment facilities for M&I uses. Yet, several programs exist to assist communities with
development of water supply and treatment projects, and it appears that Congress is more
frequently being asked to authorize direct financial and technical assistance for developing or
treating water supplies for M&I use.
This report provides background information on the types of water supply and wastewater
treatment projects traditionally funded by the federal government and the several existing
programs to assist communities with water supply and wastewater recycling and treatment. These
projects and programs are found primarily within the Department of Agriculture (USDA),
Department of Commerce, Department of Defense (DOD), Department of Housing and Urban
Development (HUD), Department of the Interior (DOI), and the Environmental Protection
Agency (EPA).
The focus of some programs has been enlarged over the years. The Department of the Interior’s
Bureau of Reclamation (Reclamation) was established to implement the Reclamation Act of
1902, which authorized the construction of water works to provide water for irrigation in arid
western states. Congress subsequently authorized other uses of project water, including M&I use.
Even so, the emphasis of Reclamation’s operations was to provide water for irrigation. Similarly,
the U.S. Army Corps of Engineers (DOD) constructed large reservoirs primarily for flood control,
but was authorized in 1958 to allocate water for M&I purposes. Over the past 40-plus years,
Congress has authorized and refined several programs to assist local communities in addressing
other water supply and wastewater problems. These programs serve generally different purposes
and have different financing mechanisms; however, there is some overlap.
Federal funding for the programs and projects discussed in this report varies greatly. For example,
in FY2015 Congress provided $907 million in appropriations for grants to states under EPA’s
State Revolving Fund (SRF) loan program for drinking water facilities and $1.45 billion for
EPA’s SRF program for wastewater facilities; funds appropriated for the USDA’s rural water and
waste disposal grant and loan programs are $451 million for FY2015; HUD Community
Development Block Grant (CDBG) funds (used partly but not exclusively for water and
wastewater projects) are $3.07 billion for FY2015. In contrast, Reclamation’s Title XVI
reclamation/recycling projects received $21.5 million in appropriations for FY2015.
For each of the projects and programs discussed, this report describes project or program
purposes, financing mechanisms, eligibility requirements, recent funding, and the
Administration’s FY2016 budget request.


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Contents
Introduction ...................................................................................................................................... 1
Background ...................................................................................................................................... 1
Department of the Interior ............................................................................................................... 6
Bureau of Reclamation .............................................................................................................. 6
“Traditional” Multi-purpose Reclamation Projects ............................................................. 7
Rural Water Supply Projects ............................................................................................... 8
Title XVI Projects ............................................................................................................... 9
Department of Defense .................................................................................................................. 12
Army Corps of Engineers (Civil Works Program) .................................................................. 12
Environmental Infrastructure ............................................................................................ 14
Department of Agriculture ............................................................................................................. 15
Rural Utilities Service (Water and Waste Disposal Programs) ................................................ 15
Natural Resources Conservation Service ................................................................................ 18
Watershed and Flood Prevention Operations .................................................................... 19
Small Watershed Loans ..................................................................................................... 21
Small Watershed Rehabilitation ........................................................................................ 21
Environmental Protection Agency ................................................................................................. 23
Clean Water State Revolving Fund Loan Program .................................................................. 23
Drinking Water State Revolving Fund Loan Program ............................................................. 25
Department of Housing and Urban Development ......................................................................... 28
Community Development Block Grants ................................................................................. 28
Department of Commerce .............................................................................................................. 29
Economic Development Administration (Public Works and Economic Development
Program) ............................................................................................................................... 29

Tables
Table 1. Federal Water Supply Program/Project Financing ............................................................. 3

Contacts
Author Contact Information........................................................................................................... 32

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Introduction
Although the federal government has played a significant role in developing water quality
regulations and standards for municipal and industrial (M&I) water use, it historically has
provided a small percentage of the funding for construction of water supply and treatment
facilities for M&I uses. Yet, several programs established by Congress exist to assist communities
with development of water supply and treatment projects. Congress also has frequently been
asked to authorize direct financial and technical assistance for developing or treating water
supplies for M&I use. Proposals have included individual “rural water supply projects” to be built
and funded by the Bureau of Reclamation in the Department of the Interior (Reclamation),
specific water recycling projects built and partially funded by Reclamation, and programs for
water supply and wastewater treatment projects to be largely funded by the U.S. Army Corps of
Engineers (Corps). Interest also has grown in expanding the size and scope of the State Revolving
Fund loan programs under the Clean Water Act and the Safe Drinking Water Act, as well as
support for individual wastewater and drinking water projects through congressionally earmarked
grants in appropriations legislation. However, in recent years, Congress has adopted prohibitions
on congressionally directed funding, thus largely banning the practice in authorization and
appropriations legislation.
This report provides background information on the types of water supply and wastewater
treatment projects traditionally funded by the federal government and the several existing
programs to assist communities with water supply and wastewater treatment. Projects developed
by Reclamation and the Corps typically require direct, individual project authorizations from
Congress. In contrast, projects funded by other agencies are funded through standing program
authorizations. These programs are found primarily within the Department of Agriculture
(USDA), Department of Commerce, Department of Housing and Urban Development (HUD),
and the Environmental Protection Agency (EPA). The key practical difference is that with the
individual project authorizations there is no predictable assistance, or even guarantee of funding
after a project is authorized, because funding must be secured each year in the congressional
appropriations process. The programs, on the other hand, have set program criteria, are generally
funded from year to year, and provide a process under which project sponsors compete for
funding.
For each of the projects and programs discussed, this report describes purposes, financing
mechanisms, eligibility requirements, and recent funding. The report does not address special
projects and programs aimed specifically at assisting Indian Tribes, Alaskan Native Villages, and
Colonias,1 or other regional programs such as those associated with the Appalachian Region or
U.S. Territories.
Background
The federal government has built hundreds of water projects over the years, primarily dams and
reservoirs for irrigation development and flood control, with M&I use as an incidental project

1 Colonias typically are rural, unincorporated communities or housing developments near the U.S.-Mexico border that
lack some or all basic infrastructure, including plumbing and public water and sewer.
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purpose. Most of the nation’s public municipal water systems have been built by local
communities under prevailing state water laws.
The Bureau of Reclamation (Reclamation) was established to implement the Reclamation Act of
1902, which authorized the construction of water works to provide water for irrigation in arid
western states. Congress subsequently authorized other uses of project water, including M&I use.
Even so, the emphasis of Reclamation’s operations has been to provide water for irrigation. This
emphasis is evidenced in part in the different payment mechanisms that evolved to finance
projects (described below). Similarly, the U.S. Army Corps of Engineers (Corps) constructed
large reservoirs primarily for flood control, but was authorized in 1958 (Water Supply Act of
1958, 72 Stat. 320; 43 U.S.C. §390b) to allocate water for M&I purposes. In this act, Congress
emphasized the primacy of nonfederal interests:
It is declared to be the policy of the Congress to recognize the primary responsibilities of the
States and local interests in developing water supplies for domestic, municipal, industrial,
and other purposes and that the Federal Government should participate and cooperate with
States and local interests in developing such water supplies in connection with the
construction, maintenance, and operation of Federal navigation, flood control, irrigation, or
multiple purpose projects. (43 U.S.C. § 390(b))
Over the past 40-plus years, Congress has authorized and refined several programs to assist local
communities in addressing other water supply and wastewater problems. The agencies that
administer these programs differ in scope and mission. For example, the primary responsibilities
of the Corps of Engineers are to maintain inland navigation, provide for flood and storm damage
reduction and restore aquatic ecosystems, while EPA’s mission relates to protecting public health
and safeguarding the nation’s environment. Others, such as HUD and the Department of
Commerce, focus on community and economic development. Likewise, the specific programs
discussed in this report—while all address water supply and wastewater treatment—differ in
important respects. Some are national in scope (those of USDA, EPA, and the Department of
Commerce, for example), while others are regionally focused (Reclamation’s programs and
projects). Some focus primarily on urban areas (HUD), some on rural areas (USDA), and others
do not distinguish based on community size (e.g., EPA, the Corps). In addition, these programs
serve generally different purposes and have different financing mechanisms (some provide grants,
others authorize loans); however, there is some overlap. For example, the rural water and waste
disposal program of the USDA typically authorizes “water delivery” assistance to improve
community water systems and water quality, while EPA’s drinking water infrastructure program is
driven primarily by “end of the pipe” water quality requirements of the Safe Drinking Water Act
(SDWA). Similarly, while the Clean Water Act sets performance standards for discharges of
municipally treated sewage, it also provides financial assistance to municipalities for constructing
and improving treatment facilities in order to comply with the law.
Federal funding for the programs and projects discussed in this report varies greatly. For example,
for FY2015, Congress provided $907.0 million in appropriations for grants to states under EPA’s
State Revolving Fund (SRF) loan program for drinking water facilities and $1.45 billion for
EPA’s SRF loan program for wastewater treatment facilities; funds appropriated for the USDA’s
rural utilities water and waste disposal programs total $451 million for FY2015; HUD
Community Development Block Grant funds (used partly but not exclusively for water and
wastewater projects) are $3.07 billion for FY2015. In contrast, Reclamation’s Title XVI
reclamation/recycling projects received $21.5 million for FY2015—funding for all of
Reclamation was $1.13 billion for FY2015. Collectively, congressional funding for these
programs in recent years has been somewhat eroded by overall competition among the many
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programs that are supported by discretionary spending and attention to deficit reduction, despite
the continuing pressure from stakeholders and others for increased funding. While federal support
for traditional financing tools—project grants, formula grants, capitalization grants, direct and
guaranteed loans—has declined, policy makers have begun to consider alternative financing
approaches, such as trust funds, new types of federal loans, and options to encourage private
sector investments in water infrastructure through public-private partnerships. Supporters of some
of these newer ideas see them as options to supplement or complement, but not replace,
traditional financing tools. In 2014, Congress enacted a five-year pilot program for one such
alternative financing approach—a federal loan program to be implemented by EPA and the
Corps—as part of the Water Resources Reform and Development Act (P.L. 113-121).2
It is also important to note that state and local contributions are a significant source of total funds
available to communities for drinking water and wastewater improvements. For example, from
FY1991 through FY2000, states contributed about $10.1 billion to match $18.0 billion in EPA
capitalization grants for drinking water and wastewater SRFs and made about $13.5 billion
available for these activities under state-sponsored grant and loan programs and by selling general
obligation and revenue bonds.3
The following table summarizes financial and other key elements of the projects and program
activities discussed in this report. Other federal authorities of the U.S. Department of
Agriculture’s Rural Utilities Service, Reclamation, and the Corps may be available to assist with
the provision of emergency water and wastewater needs, such as improving access to water
supplies during a drought. These authorities are not discussed in this report, but are summarized
in CRS Report R43408, Emergency Water Assistance During Drought: Federal Non-Agricultural
Programs
, by Nicole T. Carter, Tadlock Cowan, and Joanna Barrett.
Table 1. Federal Water Supply Program/Project Financing
Agency and
Project/
Type of
Federal/
Average
FY2016
Projects or
Program
Financial
Nonfederal
Amount of
FY2015
Funding
Program
Purposes
Assistance
Cost Share
Assistance
Funding
Request
USDOI Bureau Multi-purpose
De facto 40-
0%/100%,
Not
Not readily
(Total
of Reclamation projects, which 50 year loan with interest
applicable
available
agency
may include
for M&I usesb
approps.
M&Ia
(Total agency
request is
approps. are
nearly
$1.13 billion in
$1.1
current gross
billion)
discretionary
authority)
USDOI Bureau Wastewater
De facto
Up to
Not readily
$21.5 million
$20.0
of Reclamation reclamation
grant
25%/75%;
available
million
(Title XVI of
and reusea
dollar limits
P.L. 102-575)
may apply

2 For information, see CRS Report R43315, Water Infrastructure Financing: The Water Infrastructure Finance and
Innovation Act (WIFIA) Program.
For discussion of WIFIA and other alternative financing approaches that have been
discussed recently, see CRS Report R42467, Legislative Options for Financing Water Infrastructure.
3 U.S. General Accounting Office (now Government Accountability Office), Water Infrastructure: Information on
Federal and State Financial Assistance
, November 2001, GAO-02-134, p. 18. Hereinafter, GAO Water Infrastructure.
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Agency and
Project/
Type of
Federal/
Average
FY2016
Projects or
Program
Financial
Nonfederal
Amount of
FY2015
Funding
Program
Purposes
Assistance
Cost Share
Assistance
Funding
Request
USDOI Bureau Indian and
De facto
Non-Indian
Not
$65.1 million
$36.6
of Reclamation non-Indian
grant, plus
projects:
applicable
($34.1 million
million
rural water
loan
average of
(see report
requested and
supplya
64%/26%;
text for
initially
Indian
detail)
appropriated
projects:
and an
average of
additional $31
100%/0%
million al ocated
by Reclamation
in its work plan
per continuing
appropriations
for FY2015)
U.S. Army
Multi-purpose
Loans, which
0%/100%,
Not
$44.0 million
$7.0
Corps of
water projects, are repaid
with interestb
applicable
million
Engineers
which may
through
(general)
include
contract fees
permanent
col ected
M&I water
from M&I
storage or
water users
temporary
surplus water
contractsa
U.S. Army
“Environ-
Technical/
75%/25%
Not
$50.0 million
None
Corps of
mental
planning and
generally
applicable
Engineers
infrastruc-
design
(see report
(multiple
ture”a
services or
text for
sections of
grants;
detail)
WRDAs and
design and
select Energy
construction
and Water
services or
Development
grants
Approps. acts)
USDA Rural
Municipal
Loans and
0%/100% for
Grants
Grants: $336.2
Grants:
Utilities
water supply
grants
loans
(FY2013):
million
$358.9
Service, Water and waste
$292.3
million
and Waste
disposal
Up to
million total
Guaranteed
Disposal
75%/25% for
loans: $295,000
Direct
Program
grants
Direct loans:
loans:
$879.3
$31.3
million total
million
Guaranteed
loans: $56.6
million total
(averages not
available)
USDA
Multiple
Project
0%/100%
Average:
$0
$200
Watershed
activities, but
grants and
$650,000
million
and Flood
generally must
technical
Varies
Prevention
include flood
advisory
according to
Operations
control
services
purpose of
Program
measures
improvement
activity
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Agency and
Project/
Type of
Federal/
Average
FY2016
Projects or
Program
Financial
Nonfederal
Amount of
FY2015
Funding
Program
Purposes
Assistance
Cost Share
Assistance
Funding
Request
USDA Small
Dam
Project
0%/100%
Not
$85 million ($12 $0
Watershed
rehabilitation
grants and
applicable
million
Rehabilitation
technical
Varies
discretionary
Program
advisory
according to
and $73 million
services
purpose of
mandatory)
improvement
activity
EPA, Clean
Municipal
Grants to
80%/20% for
Average
Capitalization
$1.116
Water State
wastewater
states to
grants to
capitalization
grants: $1.449
billion
Revolving
treatment and
capitalize
states to
grant to
billion
Fund (SRF)
other eligible
loan funds
capitalize
state: $25.9
Loan Program
projects and
SRFs
million
activities
SRF loans
(FY2014)
made by
0%/100%
states to
(Project loans Average
local project
are repaid
assistance
sponsors
100% to
from SRF:
states)
$2.99 million
(FY2012)
EPA, Drinking
Public water
Grants to
80%/20% for
Average
Capitalization
$1.186
Water State
supply:
states to
grants to
capitalization
grants: $907.0
billion
Revolving
projects
capitalize
states to
grant to
million
Fund (SRF)
needed to
loan funds
capitalize
state: $16.3
Loan Program
meet federal
SRFs
million
drinking water
SRF loans
(FY2014)
standards and
made by
0%/100%
to address
states to
(Project loans Average
serious health
local project
are repaid
assistance
risks
sponsors
100% to
from SRF:
states)
$2.66 million
(cumulative
through
FY2012)
HUD,
Multi-purpose
Formula
100%/0% Entitlement
$3.07 billion
$2.88
Community
community
grants, 70%
formula
billion
Development
development
of which are
grants: $2.15
Block Grant
projects, which reserved for
million; state
Program
may include
urban areas,
grants: $920
water and
30% for state
million
waste disposal
grants
EDA, Public
Multi-purpose
Project
Generally
Average
$99.0 million
$85
Works and
economic
grants
50%/50%
grant $1.7
million
Economic
development
million
Development
projects, which
(FY2011)
Program
can include
nonrural,

nonresidential
water and
sewer
a. These projects general y must be authorized by Congress prior to construction.
b. Although the ultimate federal cost-share may be 0%, unless otherwise stated, the federal government may
provide 100% of initial construction costs allocated to M&I use, to be repaid over the life of the loan via
repayment contracts (typically 40-50 years).
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Department of the Interior
Bureau of Reclamation
The Bureau of Reclamation (Reclamation) was established to implement the Reclamation Act of
1902, which authorized the construction of water works to provide water for irrigation in arid
western states.4 Reclamation owns and manages 475 dams and 337 reservoirs, which are capable
of storing 245 million acre-feet of water.5 The agency’s inventory of 4,000 “constructed real
property assets” has a current of nearly $100 billion.6 Overall, these facilities serve approximately
31 million people, delivering a total of approximately 28.5 million acre-feet of water (an acre-foot
is enough to cover one acre of land one foot deep, or 325,851 gallons) annually in non-drought
years. Reclamation-funded municipal and industrial (M&I) water deliveries total approximately
2.8 million acre-feet and have more than doubled since 1970.
Reclamation primarily manages M&I water supply facilities as part of larger, multi-purpose
reclamation projects serving irrigation, flood control, power supply, and recreation purposes.
However, since 1980, Congress has individually authorized construction of “rural water supply”
projects as well as more than 50 reclamation wastewater and reuse/recycling projects.7 This title
also authorized Reclamation to undertake specific and general feasibility studies for reclamation
wastewater and reuse projects and to research, construct, and operate demonstration projects.
Even so, these projects remain a small part of the overall Reclamation portfolio.
Historically, Reclamation constructed projects with federal funds, then established a repayment
schedule based on the amount of total construction costs allocated to specific project purposes.
Reclamation project authorizations typically require 100% repayment, with interest, for the M&I
portion of water supply facilities, which makes Reclamation assistance a de facto long-term loan.8
However, for M&I projects under rural water and Title XVI authorities, Congress has authorized
terms providing some or all federal funding for projects on a nonreimbursable basis (i.e. a de
facto
grant). For example, the federal government fully funds rural water projects serving Indian
populations. For non-Indian rural water supply projects, Congress has authorized
nonreimbursable federal funding of as much as 75%-85% of project costs. The federal share of
costs for Title XVI projects is generally much lower than for rural water projects; it is limited to a
maximum of 25% of total project costs or, for projects authorized since 1996, a maximum of $20
million per project authorization.

4 Reclamation is generally authorized to construct projects only in the 17 western states (Arizona, California, Colorado,
Idaho, Kansas, Montana, Nebraska, Nevada, New Mexico, North Dakota, Oklahoma, Oregon, South Dakota, Texas,
Utah, Washington, and Wyoming), unless otherwise directed by Congress. For example, in 1986 Congress authorized
Reclamation to also work in U.S. territories (P.L. 99-396) and in 2005 to construct three water reuse facilities in Hawaii
(P.L. 109-70).
5 Department of the Interior, Budget Justifications and Performance Information, Fiscal Year 2016, Bureau of
Reclamation, Washington, DC, February 2015, p. 2, http://www.usbr.gov/budget/2016/
FY16_Budget_Justifications.pdf.
6 Ibid.
7 These projects, discussed below, are known as Title XVI projects because they were first authorized in 1992 under
Title XVI of P.L. 102-575.
8 Repayment obligations are typically spread over a 40- or 50-year repayment term. In contrast to M&I repayment,
Reclamation-built irrigation facilities are generally repaid without interest over similar time periods.
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“Traditional” Multi-purpose Reclamation Projects
Unlike many other programs described in this report, Reclamation undertakes projects largely at
the explicit direction of Congress. Local project sponsors may approach Reclamation or Congress
with proposals for project construction and funding; however, except where blanket feasibility
study authorizations exist—for example, for certain program areas described below—specific
project feasibility studies must be first authorized by Congress.9 Once a feasibility study is
completed, congressional authorization is typically sought prior to construction.10 Because there
is no “program” per se, there are no clear and concise eligibility or program criteria for selecting
large, multipurpose projects. Rather, Congress relies on information provided in feasibility
studies, including cost-benefit, engineering, and environmental analyses, and political
considerations.
Project Purposes
Individual authorization statutes establish project purposes. Generally, M&I projects are part of
larger, multi-purpose projects such as those built for irrigation water supply, flood control, and
hydro power purposes, or are authorized under the rural water supply or Title XVI water reuse
programs described below.
Financing Mechanism
Projects are financed and constructed up front by the federal government, and costs for M&I
portions of such projects are generally scheduled to be repaid 100%, with interest, via
“repayment” or “water service” contracts.
Eligibility Requirements
Generally, local governments and organizations such as irrigation, water, or conservation districts
may approach Reclamation and/or Congress for project support. All construction project funding
must be appropriated by Congress. As noted earlier, Reclamation only works on projects located
in the 17 western states (32 Stat. 388; 43 U.S.C. §391 et seq.), unless otherwise specifically
authorized.
Funding
Funding information for the M&I portions of multi-purpose projects is not readily available. Total
regular Reclamation appropriations (gross current authority; not including permanent funding) for

9 See Section 8 of the Federal Water Project Recreation Act of 1965 (P.L. 89-72, 16 U.S.C. 460l-19).
10 Although it appears that the Secretary of the Interior has the authority to move forward with project construction if
allocable benefits of the project equal or outweigh anticipated costs (Section 9(a) of the Reclamation Project Act of
1939 (53 Stat. 1193; 43 U.S.C. 485h(a)), the Secretary of the Interior has first sought congressional approval for large
construction projects in recent decades. In any case, Congress would need to provide appropriations for any new
project construction. Further, the Flood Control Act of 1944 (58 Stat. 887; 16 U.S.C. 460d) amended the 1939 Act,
stating that the proposed construction must be approved by Congress if any state or the Secretary of War (now Army)
objects to the proposed project construction (Section 1(c) of the 1944 Flood Control Act).
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FY2015 were $1.13 billion. The total FY2016 regular appropriations request for Reclamation was
$1.1 billion.11
Statutory and Regulatory Authority
Reclamation generally carries out its water supply activities in 17 western states as authorized by
the Reclamation Act of 1902, as amended (32 Stat. 388; 43 U.S.C. §391 et seq.), as well as
through hundreds of individual project authorization statutes.
Rural Water Supply Projects
Similar to its traditional multipurpose projects, Reclamation has undertaken individual rural water
projects largely at the explicit direction of Congress. However, in 2006 Congress provided
statutory authority for creation of a rural water supply program (P.L. 109-451). Under the
program, Reclamation is authorized to work with rural communities and Indian tribes to identify
municipal and industrial water needs and options to address such needs through appraisal
investigations, and in some cases feasibility studies. In 2008, Reclamation published an interim
final rule establishing future program criteria.12 Although the rule has not yet been finalized, the
criteria have been applied to FY2016 project requests. Congress must authorize construction of
rural water projects before it is to begin. Instead of funding new projects, Congress has typically
appropriated funding for already authorized projects.
Project Purposes
Individual authorization statutes establish project purposes. However, nearly half of the rural
water supply projects authorized to date are somehow connected to previously authorized
irrigation facilities under the Pick-Sloan Missouri Basin Program (PSMBP), or otherwise related
to water service anticipated but not received under earlier PSMBP authorizations. Many rural
water projects authorizations are also linked to Indian water settlements or otherwise provide
benefits to Indian tribes.
Financing Mechanism
Projects are generally cost-shared between the federal government and local sponsors. In the past,
the federal cost-share for these projects has averaged 64%, and ranged from 15% to 80% for non-
Indian rural water supply projects. As previously noted, the federal government pays up to 100%
of the cost of Indian rural water supply projects. It is expected that going forward, assistance will
be provided on a competitive basis under the new financial criteria. In accordance with the
programmatic criteria provided in the rule, a nonfederal cost-share would be required, consistent
with P.L. 109-451 and any existing or future construction authorization.

11 These amounts include funding for Rural Water and Title XVI programs, discussed below.
12 43 C.F.R. §404.
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Eligibility Requirements13
Local governments and organizations such as water and conservation districts or associations,
including Indian tribes, may approach Reclamation and/or Congress for project support. All
construction project funding must be appropriated by Congress. As noted earlier, Reclamation
only works on projects located in the 17 western states (32 Stat. 388; 43 U.S.C. §391 et seq.),
unless specifically authorized by Congress. Reclamation published an interim final rule (43
C.F.R. 404), which establishes criteria for developing new rural supply projects.14 The rule does
not apply to previously authorized projects. Under the new rule, priority is given to domestic,
residential, and municipal uses. Communities or groups of communities with populations under
50,000 are also eligible. However, the use of water for commercial irrigation purposes is not
allowed.
Funding
Funding enacted for rural water supply projects in FY2015 was $65.1 million; the Administration
requested $36.6 million for “on-going authorized” rural water projects for FY2016. An additional
$31 million was allocated to five rural water supply projects in the FY2015 Reclamation work
plan.15 The FY2016 request for rural water supply projects was prioritized using criteria
established in the interim final rule. Funding proposed for FY2016 for individual rural water
supply projects ranges from $47,000 to $12.34 million.
Statutory and Regulatory Authority
The Rural Water Supply Program is authorized by the Rural Water Supply Act of 2006 (P.L. 109-
451, Title I; 120 Stat. 3345; 43 U.S.C. 2401 note); however, construction for many projects was
previously authorized under individual acts.
Title XVI Projects
Title XVI of P.L. 102-575 directs the Secretary of the Interior to develop a program to
“investigate and identify” opportunities to reclaim and reuse wastewater and naturally impaired
ground and surface water. The original act authorized construction of five reclamation wastewater
projects and six wastewater and groundwater recycling/reclamation studies. The act was amended
in 1996 (P.L. 104-266) to authorize another 18 construction projects and an additional study, and
has been amended several times since, resulting in a total of more than 50 projects authorized for
construction. Water reclaimed via Title XVI projects may be used for M&I water supply
(nonpotable and indirect potable purposes only), irrigation supply, groundwater recharge, fish and
wildlife enhancement, or outdoor recreation.

13 For more information, see Reclamation’s “Frequently Asked Questions” website: http://www.usbr.gov/ruralwater/
general/faq.html.
14 See http://edocket.access.gpo.gov/2008/pdf/E8-26584.pdf. For more information on Reclamation’s rural water
program generally, see http://www.usbr.gov/ruralwater/.
15 See http://www.usbr.gov/budget/2016/FY2015_summary_and_detail_Project-Lists_%2002-02-15.pdf.
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Project Purposes
The general purpose of Title XVI projects is to provide supplemental water supplies by
recycling/reusing agricultural drainage water, wastewater, brackish surface and groundwater, and
other sources of contaminated water. Projects may be permanent or for demonstration purposes.
Financing Mechanism
Title XVI projects are funded through partial de facto grants. The funding is part of the larger
Reclamation WaterSMART program, which also provides grants for water conservation and river
basin studies under separate authority granted in the Secure Water Act (P.L. 111-11, subtitle B).
Title XVI project construction costs are shared by the federal government and a local project
sponsor or sponsors. The federal share is generally limited to a maximum of 25% of total project
costs and is nonreimbursable, resulting in a de facto grant to the local project sponsor(s). In 1996,
Congress limited the federal share of individual projects to $20 million in 1996 dollars (P.L. 104-
266). The federal share of feasibility studies is limited to 50% of the total, except in cases of
“financial hardship;” however, the federal share must be reimbursed. The Secretary may also
accept in-kind services that are determined to positively contribute to the study.
Eligibility Requirements
Similar to other Reclamation activities, the water reclamation and wastewater recycling program
is limited to projects and studies in the 17 western states unless otherwise specified.16 Authorized
recipients of program assistance include “legally organized non-federal entities,” such as
irrigation districts, water districts, and municipalities. In the past, Administration requests for
construction funding has generally been limited to projects where (1) an appraisal investigation
and feasibility study have been completed and approved by the Secretary; (2) the Secretary has
determined the project sponsor is capable of funding the nonfederal share of project costs; and (3)
the local sponsor has entered into a cost-share agreement with Reclamation. Reclamation
published final funding criteria for the Title XVI Program in 2010,17 which now appear to be the
primary mechanism upon which projects are evaluated for funding.
Unlike other water supply or wastewater treatment programs administered by the EPA, USDA, or
HUD (discussed below), Reclamation’s Title XVI projects are statutorily authorized construction
projects. While Reclamation has the authority to undertake general appraisal investigations and
feasibility studies, it generally has interpreted the Title XVI language as requiring specific
congressional authorization for the construction of new projects.
During the 108th and 109th Congresses, several oversight hearings were held on the Title XVI
program; however, no legislation updating the overall program authorization has been enacted
since the 1996 amendments. Reclamation issued an internal “Directives and Standards” document
(October 2007) to increase the consistency and effectiveness of the program. The Directives and
Standards did not establish a mechanism for prioritizing authorized projects; however, as noted

16 For example, Congress has authorized three projects for construction in Hawaii (P.L. 109-70).
17 http://www.usbr.gov/WaterSMART/title/docs/Title_XVI_Final_Criteria_Oct_2010.pdf.
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above, the agency issued new criteria in 2010 for use in allocating Title XVI funding in the
future.18
Funding
The total regular appropriation for the Title XVI program in FY2015 was $21.5 million. The
Administration’s FY2016 request was $20.5 million.19 Prior year program funding (i.e.,
appropriations) ranged from a high of $47.2 million in FY1998 to a low of $12.6 million in
FY2007. Projects authorized prior to the 1996 amendments ranged in size from $152 million ($38
million for Reclamation’s share), to $690 million ($172 million for Reclamation’s share). Post-
1996 project authorizations have been much smaller in size, ranging from $10 million ($2 million
for Reclamation’s share) to $280 million ($20 million for Reclamation’s share).
Statutory and Regulatory Authority
The original statutory authority for the reclamation wastewater and reuse program is the
Reclamation Wastewater and Groundwater Study and Facilities Act, Title XVI of P.L. 102-575, as
amended (43 U.S.C. 390h et. seq.). Other statutes that authorized Title XVI projects include: the
Reclamation Recycling and Water Conservation Act of 1996 (P.L. 104-266); the Oregon Public
Land Transfer and Protection Act of 1998 (P.L. 105-321); the 1999 Water Resources
Development Act (P.L. 106-53, Section 595); the Consolidated Appropriations Act for FY2001
(P.L. 106-554, Division B, Section 106); a bill amending the Reclamation Wastewater and
Groundwater Study and Facilities Act (P.L. 107-344); the Consolidated Appropriations Act for
FY2003 (P.L. 108-7, Division D, Section 211); the Emergency Wartime Supplementals Act of
2003 (P.L. 108-11); the Irvine Basin Surface and Groundwater Improvement Act of 2003 (P.L.
108-233); a bill amending the Reclamation Wastewater and Groundwater Study and Facilities Act
(P.L. 108-316); the Hawaii Water Resources Act of 2005 (P.L. 109-70); the Consolidated Natural
Resources Act of 2009 (P.L. 110-229); the Consolidated Appropriations Act, 2008 (P.L. 110-161);
and the Omnibus Public Land Management Act of 2009 (P.L. 111-11; Title IX, Subtitle B).
Reclamation published program guidelines in December 1998, internal Directives and Standards
for the program’s feasibility study review process in October 2007, and new criteria for
prioritizing project funding in October of 2010; formal regulations have not been promulgated.20
[This section prepared by Betsy A. Cody, Specialist in Natural Resources Policy, Resources,
Science, and Industry Division (707-7229).]


18 http://www.usbr.gov/WaterSMART/docs/Title_XVI_Final_Criteria_Oct_2010.pdf.
19 Since 2011, Reclamation has gradually increased funding for the criteria-based Commissioner’s Funding
Opportunity under the WaterSMART Title XVI program. For FY2011, Reclamation announced it was awarding $11.34
million to eight projects under this funding opportunity. For FY2013, Reclamation requested that $16.3 million go to
the criteria-based Commissioner’s Funding Opportunity. For FY2014, Reclamation asked that all the Title XVI request
be allocated to the Commissioner’s office for distribution. For FY2015, Reclamation noted that funding will be
requested for authorized projects identified “through programmatic criteria.... ”
20 For information, see http://www.usbr.gov/pmts/writing/guidelines/ and http://www.usbr.gov/recman/DandS.html.
Final funding criteria can be found at http://www.usbr.gov/WaterSMART/docs/
Title_XVI_Final_Criteria_Oct_2010.pdf.
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Department of Defense
Army Corps of Engineers (Civil Works Program)
Under its civil works program, the U.S. Army Corps of Engineers (Corps, Department of
Defense) operates water resources projects throughout the country. Corps civil works activities
are concentrated on three principal missions—navigation, flood damage reduction, and aquatic
ecosystem restoration. Many Corps activities also support municipal and industrial (M&I) water
supply, hydroelectric generation, fish and wildlife, and recreation. M&I water supply, however,
generally is not a Corps reservoir’s or a Corps project’s primary purpose. A total of 134 Corps
reservoirs have roughly 11 million acre-feet (AF) of storage designated for M&I water. Most of
this water was allocated to M&I purposes when the projects were constructed; around 0.7
million-acre feet have been allocated to M&I use from existing projects using the Corps’ general
water supply authorities. 21 The provision of M&I water from Corps reservoirs is subject to
availability, and the associated costs are 100% a local, nonfederal responsibility.
Additionally Congress has chosen to authorize a small number of Corps projects primarily for
water supply. The Corps also has authorities related to water supply provision as part of
emergency and disaster relief, including during droughts.
Congress has given the Corps limited general authority for M&I water supply. A 1958 authority is
for permanent allocation of water storage for M&I applications, and a 1944 authority provides for
temporary contracts for surplus water from Corps reservoirs. The Water Supply Act of 1958
authorized the Corps (and the Bureau of Reclamation) to recommend economically justified M&I
water supply storage space in new or existing reservoirs. The Corps also has authority for the
short-term provision of surplus water as specified in the Flood Control Act of 1944; surplus water
contracts generally are limited to five-year terms, with options to extend.
The Water Resources Reform and Development Act of 2014 (WRRDA 2014, P.L. 113-121)
directed the corps to assess the effects of management practices, priorities, and authorized
purposes of Corps reservoirs in arid areas on water supply during drought. The legislation also
included provisions associated with the administration of Corps water supply activities, including
its management of future water storage rights and a 10-year waiver for surplus water storage fees
in the Upper Missouri Mainstem Reservoirs.
Project Purposes
As previously noted, Congress authorized the Corps to allocate a portion of its multi-purpose
reservoirs for permanent M&I storage, or to provide M&I water from Corps reservoirs under
temporary contacts for surplus water. Neither authority allows the Corps to significantly modify
its projects in order to provide for M&I water supply, nor allows the Corps to sell or allocate
quantities of water. Instead, Corps M&I contracts are for space in a reservoir and provide no
guarantee of a fixed quantity of water to be delivered in a given year. Under these authorities, the

21 For issues related to reallocations of water storage to M&I use under the 1958 authority, see CRS Report R42805,
Reallocation of Water Storage at Federal Water Projects for Municipal and Industrial Water Supply, by Cynthia
Brown and Nicole T. Carter.
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Corps delivers water if it is available in the storage space and if delivery does not seriously affect
other authorized purposes.
Financing Mechanism
No federal money is provided to nonfederal entities through the Corps for this work; instead, it is
nonfederal entities that pay the Corps for M&I water storage. Corps construction projects are
financed up front by the federal government, and costs for M&I project purposes are repaid
100%, with interest, via long-term (typically 30-50 years) repayment contracts, unless specified
otherwise in law. Through annual contract payments, nonfederal entities pay for the M&I water
supply storage services provided. Most new Corps M&I water supply is from existing reservoirs
and is managed though contracts requiring annual payments. The pricing policy for contracts
under the 1944 authority is currently under Administration review. The Administration has
indicated its intent to undertake a rulemaking to change the current pricing policies. It is uncertain
whether the rulemaking also would apply to contracts under the 1958 authority.
Eligibility Requirements
For new Corps projects with M&I water supply, existing law and agency policy require that (1)
water supply benefits and costs be equitably allocated among multiple purposes; (2) repayment
by state or local interests be agreed to before construction; (3) the water supply allocation for
anticipated demand at any project not exceed 30% of the total estimated cost; (4) repayment shall
be either during construction (without interest), or over 30 years (with adjustable interest rates);
and (5) users reimburse the Corps annually for all operation and maintenance or replacement
costs. Occasional exceptions to the Corps’ general authority have been enacted by Congress.
Allocation of water supply at existing projects is limited to actions that do not seriously affect
project purposes.
Funding
There are no Corps water supply loans or grants available to nonfederal entities under these
authorities. The Corps’ water supply expenses are funded with annual appropriations; in recent
years water supply received between $40 million and $45 million often with most of the funding
going toward operation and maintenance (O&M) activities. The Corps FY2015 work plan for
enacted appropriations indicated that $44 million was applied to water supply activities. The
Administration’s FY2016 budget request was for $7 million, down from its FY2015 request of
$26 million.
Statutory Authority
Water Supply Act of 1958 (Title III, 72 Stat. 320, as amended; 43 U.S.C. §390b);22 Flood Control
Act of 1944 (Section 6, 58 Stat. 890, as amended, 33 U.S.C. §708); and project specific
authorities in Water Resources Development Acts or similar legislation.

22 For information on the Corps’ civil works program, see http://www.usace.army.mil/Services/Pages/Services.aspx.
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Environmental Infrastructure
Project Purpose
Federal policy generally is that community water supply is largely a local and state responsibility.
However, communities, particularly rural and small communities, increasingly have sought
federal water supply assistance. Since 1992, Congress has enacted more than 400 authorizations
allowing the Corps to provide designated communities, counties, and states with design and
construction assistance for drinking water and wastewater infrastructure (including treatment, and
distribution/collection facilities) and source water protection and development; these activities are
known as environmental infrastructure projects. The authorizations of federal appropriations for
these activities vary widely from $0.5 million to $25 million for planning and design assistance,
to $0.2 million to $435 million for construction assistance. As with Reclamation’s rural water
supply and Title XVI projects, congressional funding of these authorizations has enlarged the
scope of the agency’s activities. Like many Corps activities, congressional support for specific
environmental infrastructure project authorizations and appropriations is complicated by their
geographic specificity, which is problematic under congressional earmark bans and moratoria.
Financing Mechanism
Under most Corps environmental infrastructure authorizations, financing is typically 75% federal
and 25% nonfederal. The federal portion typically is provided by Congress to the Corps in annual
Energy and Water Development Act appropriations legislation. How the Corps and nonfederal
financing is managed varies according to the specifics of the authorization. Sometimes the Corps
is responsible for performing the work or for contracting out the work; under other authorizations,
the Corps uses appropriated funds to reimburse nonfederal sponsors for their work.
Eligibility Requirements
Because environmental infrastructure activities are not part of a national Corps program per se,
there are no clear and/or consistent general eligibility criteria. Most of Corps environmental
infrastructure authorities specify a specific geographic location (e.g., a city, county, or state) and
types of projects (e.g., municipal drinking water) as the principal eligibility requirements.
Consequently, an activity’s eligibility is evaluated by identifying whether there is an authorization
for the geographic area of the activity, and whether the type of activity is eligible under that
authorization. Because the activities are not traditional Corps water resources projects, they are
not subject to Corps planning requirements (e.g., a benefit-cost analysis is not performed).
Funding
Congressional appropriations have not kept pace with congressional authorization of Corps
environmental infrastructure. Only a subset of authorized Corps environmental infrastructure
activities has received appropriations annually. The Clinton, George W. Bush, and Obama
Administrations left environmental infrastructure projects out of their budget requests for the
Corps. However since 1992, Congress has provided the Corps roughly $2 billion in funds for
environmental infrastructure projects. Congress provided the Corps with $50 million for
environmental infrastructure work in FY2015. The Administration again requested no funding for
these activities as part of its FY2016 request.
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Statutory Authority
Prior to 1992, the Corps generally was not widely involved with municipal drinking water
treatment and distribution and wastewater collection and treatment; the agency is now authorized
to contribute to more than 400 environmental infrastructure projects and programs. A Water
Resources Development Act or similar legislation is the typical legislative vehicle for Corps
authorizations. Beginning with Sections 219 and 313 of WRDA 1992 (P.L. 102-580), Congress
has authorized the Corps to assist local interests with planning, design, and construction
assistance for environmental infrastructure projects. Subsequent Corps authorization bills
included new environmental infrastructure activities, and raised the funding ceilings for
previously authorized projects. Congress also has authorized or modified authorizations of
appropriations for Corps environmental infrastructure activities in appropriations legislation.
[This section prepared by Nicole T. Carter, Specialist in Natural Resources Policy, Resources,
Science and Industry Division (707-0854).]
Department of Agriculture
Rural Utilities Service (Water and Waste Disposal Programs)
The USDA administers grant and loan programs for water and wastewater projects in low-income
rural communities whose residents face significant health risks because they do not have access to
water supply systems or waste disposal facilities. Eligibility is limited to communities of 10,000
or less. These programs are administered at the national level by the Rural Utilities Service (RUS)
at USDA. RUS allocates program funds to the Rural Economic and Community Development
(RECD) state offices through an allocation formula based on rural population, poverty, and
unemployment. District RECD offices actually administer the programs locally. In recent years,
approximately 65% of loan funds and 57% of grant funds have been obligated to water projects;
the remainder have been obligated to waste disposal projects.
Prior to enactment of the 1996 farm bill (P.L. 104-127), these grants and loans, as well as other
USDA rural development assistance, were authorized as separate programs. In P.L. 104-127,
Congress consolidated 14 existing rural development grant and loan programs into three
categories for better coordination and greater local involvement. This program is called the Rural
Community Advancement Program (RCAP). The three components are the Rural Utilities Service
(RUS, which includes water and waste disposal activities), Rural Community Facilities, and
Rural Business and Cooperative Development programs.23
There is heavy demand for water and waste disposal funds for rural and small communities. At
the end of FY2007, USDA reported a $2.4 billion backlog of requests for 928 water and
wastewater projects. The 2008 EPA wastewater needs survey reported that small communities
(those with a population under 10,000) need to spend $23 billion for their wastewater facilities to
meet water quality objectives of the Clean Water Act. Of this amount, communities with

23 RCAP is designed to give RECD state offices flexibility in targeting financial assistance to community and regional
needs. Thus, within the three components of RCAP, up to 25% of funds can be transferred between programs in any
state, as long as transfers do not result in changes in the national funding stream of more than 10%.
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population under 3,500 identified wastewater needs totaling $14.7 billion. In addition to this,
EPA’s 2011 drinking water infrastructure survey showed $65 billion needed by small water
systems serving 3,300 or fewer people over the next 20 years to install, upgrade, or replace
infrastructure to ensure safe drinking water.
Program Purpose
The purpose of these programs is to provide basic human amenities, alleviate health hazards, and
promote the orderly growth of the nation’s rural areas by meeting the need for new and improved
rural water and waste disposal facilities. Eligible projects can include drinking water facilities,
sanitary sewers, and stormwater drainage and disposal facilities. Funds may be used for
installation, repair, improvement, or expansion of rural water facilities, including costs of
distribution lines and well-pumping facilities. USDA also makes grants (totaling $15-20 million
annually) to qualified non-profits to provide technical assistance and training to help communities
in preparing applications for grants and loans and to help problem solving operation and
maintenance of existing water and waste disposal facilities in rural areas.
Financing Mechanism
USDA provides grants and loans for water and waste disposal projects. USDA prefers making
loans; grants are made only when necessary to reduce average annual user charges to a reasonable
level. The split between loans and grants is about 70-30; the ratio of drinking water to sewer
projects has been about 60-40 in recent years. There is no statutory distribution formula. Funds
are allocated to states based upon rural population, number of households in poverty, and
unemployment. There are no matching requirements for states.
Water and Waste Disposal Loans. The Rural Development Act of 1972 authorized establishment
of the Rural Development Insurance Fund under the Consolidated Farm and Rural Development
Act. Among other activities, this fund is used for loans (direct and guaranteed) to develop storage,
treatment, purification, or distribution of water or collection, treatment, or disposal of waste in
low-income rural areas. Loans are repayable in not more than 40 years or the useful life of the
facilities, whichever is less. USDA makes either direct loans to applicants or guarantees up to
90% of loans made by third-party lenders such as banks and savings and loan associations.
Loan interest rates are based on the community’s economic and health environment and are
designated poverty, market, or intermediate. Poverty interest rate loans are made in areas where
the median household income (MHI) falls below the higher of 80% of the statewide nonurban
MHI, or the poverty level, and the project is needed to meet health or sanitary standards; by law,
this rate is set at 60% of the market rate. The market rate is adjusted quarterly and is set using the
average of a specified 11-bond index. It applies to loans to applicants where the MHI of the
service area exceeds the statewide nonurban MHI. The intermediate rate applies to loans that do
not meet the criteria for the poverty rate and which do not have to pay the market rate; by law,
this rate is set at 80% of the market rate.24 Interest rates on guaranteed loans are negotiated
between the borrower and the lender. The 2014 farm bill (P.L. 113-79) amended the water and
waste disposal direct and guaranteed loan programs to encourage financing by private or
cooperative lenders to the maximum extent possible, use of loan guarantees where the population

24 For current interest rates, see http://www.rurdev.usda.gov/UWP-int-rate.htm.
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exceeds 5,500, and use of direct loans where the impact of a guaranteed loan on rate payers
would be significant.
Water and Waste Disposal Grants. Grants for the development costs of water supply and waste
disposal projects in rural areas also are authorized under the Consolidated Farm and Rural
Development Act. Only communities with poverty and intermediate rate incomes qualify for
USDA grants. An eligible project must serve a rural area that is not likely to decline in population
below the level for which the project was designed and constructed so that adequate capacity will
or can be made available to serve the reasonably foreseeable growth needs of the area. The 2014
farm bill (P.L. 113-79) authorized authorization of appropriations at $30 million annually through
FY2018 for these grants.
Grant funds may be available for up to 75% of the development cost of a project and should only
be used to reduce user costs to a reasonable level. Grants are only made after a determination of
the maximum amount of loan that a community can afford and still have reasonable user rates.
Grants, which typically provide 35%-45% of project costs, may be used to supplement other
funds borrowed or furnished by applicants for project costs, and may be combined with USDA
loans when the applicant is able to repay part, but not all, of the project costs. Priority is given to
projects serving populations of less than 5,500.
Emergency and Imminent Community Water Assistance Grants. RUS also is authorized to help
rural residents where a significant decline in quantity or quality of drinking water exists or is
imminent and funds are needed to obtain adequate quantities of water that meet standards of the
Safe Drinking Water Act or the Clean Water Act. Grants, ranging from $10,000 to a maximum of
$500,000, are provided for projects to serve a rural area with a population of 10,000 or less that
has a median household income not in excess of the statewide nonmetropolitan median household
income. Grants for repairs, partial replacement, or significant maintenance of an established
system cannot exceed $150,000. Communities use the funds for new systems, waterline
extensions, construction of water source and treatment facilities, and repairs or renovation of
existing systems and may be awarded for 100% of project cost. Applicants compete on a national
basis for available funding. Funding for this program is mandatory through reservation of 3% to
5% of appropriated water and waste disposal grant funds. The 2014 farm bill (P.L. 113-79)
authorized $35 million per year through FY2018 for this program. Funding for it is mandatory
through reservation of 3% to 5% of appropriated water and waste disposal grant funds. Amounts
provided through this program have been quite variable over time, depending on need. In
FY2013, $5.8 million was distributed in 11 states; in FY2014, $14.7 million was distributed for
50 projects in 13 states.
Eligibility Requirements
Eligible entities are municipalities, counties, and other political subdivisions of a state;
associations, cooperatives,25 and organizations operated on a not-for-profit basis; Indian tribes on
federal and state reservations; and other federally recognized tribes. USDA’s loan and grant
programs are limited to community service areas (including areas in cities or towns) with

25 Rural electric cooperatives are private entities that build and manage rural utility systems. The 1990 farm bill (P.L.
101-624) authorized rural coops to expand from their traditional electricity and telephone services. An estimated 80 to
90 rural electric coops (less than 10% of the total number of coops nationwide) currently are involved in some aspect of
drinking water or wastewater management, with the majority dealing with drinking water management.
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population of 10,000 or less. To be eligible for assistance, communities must have been denied
credit through normal commercial channels. Also, communities must be below certain income
levels. Loans and grants are made for projects needed to meet health or sanitary standards,
including Clean Water Act and Safe Drinking Water Act standards and requirements. The 2014
farm bill (P.L. 113-79) authorized $5 million per year through FY2018 for USDA to make grants
to private nonprofit organizations for the purpose of providing loans to eligible individuals for
construction, refurbishing, and servicing of individually owned household water well systems.
Loans are limited to $11,000 per water well system.
Funding
Beginning with USDA’s FY1996 appropriation (P.L. 104-37), Congress consolidated the water
and waste disposal grant and loan appropriations in a single Rural Community Assistance
Program. Funds available through appropriations for USDA’s water and waste disposal programs
provide $450.9 million in total for FY2015, including $336.4 million in grants and subsidy to
support guaranteed loans. Out of the total FY2015 funds, USDA has available $993,000 for
grants to provide loans for individually owned water well systems and $1.0 million for grants to
capitalize revolving loans for water and waste disposal systems. For FY2016, the President’s
budget requested $479.4 million in appropriations for these programs, including $358.9 million
for the core water and waste disposal grants and $31.3 million for direct loans. According to the
budget justification, the FY2016 proposal will support $1.65 billion in program activity, counting
both appropriations and activities resulting from loans. This level of program activity is projected
to provide 1,066 loans and grants assisting 2.2 million rural residents.
Statutory and Regulatory Authority
Statutory authority for the water and waste disposal loan and grant programs is the Consolidated
Farm and Rural Development Act, as amended, Section 306, 7 U.S.C. 1926. Regulations for these
programs are codified at 7 C.F.R. Parts 1778-1780.26
[This section prepared by Claudia Copeland, Specialist in Resources and Environmental Policy,
Resources, Science and Industry Division (707-7227).]
Natural Resources Conservation Service
The USDA provides assistance to watershed activities under four closely related authorities that
are administered by the Natural Resources Conservation Service (NRCS). The Watershed and
Flood Prevention Operations Program (WFPO) consists of two authorities––referred to P.L. 566
and P.L. 534 projects. These authorize NRCS to provide technical and financial assistance to state
and local organizations to plan and install measures to prevent erosion, sedimentation, and flood
damage and to conserve, develop, and utilize land and water resources. Dams constructed under
the WFPO program are eligible to receive assistance under the Small Watershed Rehabilitation

26 For additional information on RUS water and environmental programs, see http://www.rd.usda.gov/programs-
services/water-waste-disposal-loan-grant-program.
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Program, authorized by Congress in 2000. The fourth watershed authority is an emergency
program that is not discussed in this report. 27
Currently all four programs are authorized and include a significant backlog of authorized
projects. Only the rehabilitation and emergency programs, however, continue to receive
appropriations from Congress. The WFPO program has not received an appropriation since
FY2010.
Watershed and Flood Prevention Operations
The WFPO program consists of projects built under two authorities––the Watershed Prevention
and Flood Protection Act of 1954 (P.L. 83-566) and the Flood Control Act of 1944 (P.L. 78-534).
The vast majority of the projects have been built pursuant to the authority of P.L. 83-566 (referred
to as P.L. 566 projects), under which smaller projects authorized by the Chief of the NRCS are
constructed. Larger projects must be approved by Congress. Eleven projects were specifically
authorized under P.L. 78-534 (referred to as P.L. 534 projects); they are much larger and more
expensive than P.L. 566 projects.
Under P.L. 566, 1,777 projects have been authorized through FY2014. Of that total, 1,075 have
been completed, while 302 others remain active. Also, 158 were subsequently deauthorized, 197
are inactive, and 45 have reached the end of their project life. Carryover funding was used to
complete construction and to continue construction and design work on existing projects in
FY2014. The backlog of authorized projects waiting funding is estimated to be $921 million.
The 11 projects that were specifically authorized under P.L. 534 encompass a total of almost 37.9
million acres and are divided into component projects in sub-watersheds. As of FY2014, NRCS
reports that 99% of the total planning job, with 439 work plans for sub-watersheds encompassing
almost 30 million acres, have been completed. With the exception of the two smallest projects,
the estimated federal costs for each of these projects range from more than $40 million to more
than $330 million. Three of the projects have been completed, and work on the remainder
continues in one or more sub-watersheds.
Program Purpose
The purpose of the program is to provide technical and financial assistance to states and local
organizations to plan and install watershed projects. Both P.L. 566 and P.L. 534 have similar
objectives and are implemented following similar procedures. Both 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 the like. Local sponsors agree to operate and maintain
completed projects.

27 The Emergency Watershed Protection (EWP) program is used to restore the natural functions of a watershed after a
natural disaster has occurred, and to minimize the risks to property and life posed by floods by purchasing easements
on flood plains. For more information on the EWP program, see CRS Report R42854, Emergency Assistance for
Agricultural Land Rehabilitation
, by Megan Stubbs.
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Financing Mechanism
Partial project grants, plus provision of technical advisory services are provided. Financing for
water projects under the WFPO program varies depending on project purposes. The federal
government pays all costs related to construction for flood control purposes only. Costs for
nonagricultural water supply must be repaid by local organizations; however, up to 50% of costs
for land, easements, and rights-of-way allocated to public fish and wildlife and recreational
developments may be paid with program funds. Additionally, sponsors may apply for USDA
Rural Utilities Service (RUS) Water and Waste Program loans to finance the local share of project
costs. Participating state and local organizations pay all operation and maintenance costs.
Eligibility Requirements
P.L. 566 has been called the small watershed program because no project may exceed 250,000
acres, and no structure may exceed more than 12,500 acre-feet of floodwater detention capacity,
or 25,000 acre-feet of total capacity. The Senate and House Agriculture Committees must approve
projects that need an estimated federal contribution of more than $5 million for construction or
include a storage structure with a capacity in excess of 2,500 acre feet. If the storage structure
will have a capacity in excess of 4,000 acre feet, approval is also required from the Senate
Environment and Public Works Committee and the House Transportation and Infrastructure
Committee. There are no population or community income-level limits on applications for P.L.
566 projects.
Funding
Congress has not appropriated funding for the WFPO program since FY2010. Beginning in
FY2006, the Administration requested no funding for WFPO, citing program inflexibility and a
backlog of congressionally designated projects there were frequently of limited merit. The
FY2016 request marks the first time in a decade that an Administration has requested funding for
the program––$200 million. Citing the need for climate resilience, the FY2016 request describes
the necessity for additional funds to assist communities in preparing for and mitigating extreme
weather events, specifically coastal areas. It remains unclear whether the requested funding would
be applied to previously authorized projects or to authorize new projects.
Congress had traditionally appropriated funds for the program in amounts similar to the preceding
year. It was not until FY2011, when for the first time in the program’s 60-year history, no funding
was appropriated. In FY2014, carryover funding was used to complete construction on existing
projects and to continue planning and design work. The Administration reported that
congressionally designated project funding accounted for a significant portion of the continuing
work. In FY2015, no funding was appropriated; however, Congress directed $5.6 million of
another conservation account––Conservation Operations, which funds general conservation
technical assistance offered by NRCS––to fund projects authorized under the WFPO authority.
Statutory and Regulatory Authorities
The Flood Control Act of 1944, P.L. 78-534, as amended, 58 Stat. 905 (33 U.S.C. 701b-1);
Watershed Protection and Flood Prevention Act of 1954, P.L. 83-566, as amended, 68 Stat. 666
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(16 U.S.C. 1001-1008). Regulations are codified at 7 C.F.R. Part 622 (Watershed and Flood
Prevention Operations).28
Small Watershed Loans
As part of its lending responsibilities, the Rural Utilities Service (RUS) at USDA (see discussion
above) makes loans to local organizations to finance the local share of the cost of installing,
repairing, or improving facilities, purchasing sites and easements, and related costs for P.L. 566
and P.L. 534 projects. Loans are limited to $10 million; they must be repaid within 50 years; and
the cost-share assistance may not exceed the rate of assistance for similar projects under other
USDA conservation programs. NRCS and the local organization must also agree on a plan of
work before a loan is obligated. In 2014, an estimated 29 borrowers had loans with a total
outstanding value of $6.0 million. Congress did not appropriate funds for new loans in FY2015.
Over the life of the program, 495 RUS loans have been made at a value of almost $176 million.
Small Watershed Rehabilitation
Some of the oldest P.L. 566 projects that have exceeded their design life (dams were constructed
starting in 1948) need rehabilitation work to continue to protect public health and safety by
reducing any possibility of dam failure, and to meet changing resource needs. In 2014, 3,724
dams reached the conclusion of their 50-year design life. That number will continue to grow each
year, and by 2016 will total 4,749. In response to that concern, Congress created a rehabilitation
program, known as the Small Watershed Rehabilitation Program, in Section 313 of the Grain
Standards and Warehouse Improvement Act of 2000 (P.L. 106-472) as an amendment to the P.L.
566 law. From 2000 to 2014, the program authorized the rehabilitation of 268 dams in 30 states.
Of this total, 127 projects are complete, and the remaining 141 projects are waiting for funding.
Program Purpose
The purpose of rehabilitation is to extend the service life of the dams and bring them into
compliance with applicable safety and performance standards or to decommission the dams so
they no longer pose a threat to life and property.
Financing Mechanism
Partial project grants, plus provision of technical advisory services are provided. NRCS may
provide 65% of the total rehabilitation costs but no more than 100% of the actual construction
cost, and is prohibited from funding operation and maintenance expense. Rehabilitation projects
also provide an opportunity to modify projects to provide additional benefits, including municipal
water supplies. Local watershed project sponsors provide 35% of the cost of a rehabilitation
project and obtain needed land rights and permits. The source of these funds varies from state to
state and may include bonds, local taxing authority, state appropriations, or in-kind technical
services.

28 For information, see http://www.nrcs.usda.gov/wps/portal/nrcs/main/national/programs/landscape/.
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Eligibility Requirements
Only dams constructed under the P.L. 566 authority, the Resource Conservation and Development
(RC&D) program, and pilot watershed projects authorized in the Agriculture Appropriations Act
of 1953 are eligible for assistance under the Small Watershed Rehabilitation Program.
Funding
Since FY2000, Congress has appropriated more than $700 million for rehabilitation projects. The
Administration sought no funding for the Small Watershed Rehabilitation program for FY2016
(as was the case for FY2014 and FY2015), citing the Administration’s position that the
maintenance, repair, and operation of these dams are the responsibility of local project sponsors.
The Small Watershed Rehabilitation Program has discretionary funding authority of up to $85
million annually. The program has received an average of $14.2 million in appropriations over the
last five years, including $12.0 million in FY2015.
The program is also authorized through omnibus farm bills to receive mandatory funding to
remain available until expended. Since FY2002, annual appropriations have restricted this no-
year funding to generate annual savings. In FY2014, the restriction in the Consolidated
Appropriations Act, 2014 (P.L. 113-76) resulted in a savings of $153 million. The Agricultural
Act of 2014 (2014 farm bill, P.L. 113-79), which was enacted after P.L. 113-76, authorized an
additional $250 million in mandatory funding for FY2014; thereby superseding the
appropriations restrictions for FY2014 in P.L. 113-76 and making the full $250 million available
for obligation.29 This large influx of funding increased the amount project sponsors requested in
FY2014. Project sponsors requested a total of $868.6 million to restore 790 dams in 35 states in
FY2014, compared to requests of $42.8 million to repair 92 dams in FY2013. In FY2015, the
original carryover from the FY2014 restriction ($153 million) was further reduced by
sequestration ($11 million), leaving $142 million available. The Consolidated and Further
Continuing Appropriations Act, 2015 (P.L. 113-235) further reduced the amount to $73 million,
leaving $69 million (minus sequestration) available in FY2016. The total amount (mandatory and
discretionary ) available in FY2015 is $85 million.
Statutory and Regulatory Authorities
The Watershed Protection and Flood Prevention Act of 1954, P.L. 83-566, as amended by §313 of
the Grain Standards and Warehouse Improvement Act of 2000, P.L. 106-472, 114 Stat. 2077 (16
U.S.C. 1012). Regulations are codified at 7 C.F.R. Part 622 (Watershed and Flood Prevention
Operations).30
[This section prepared by Megan Stubbs, Specialist in Agricultural Conservation and Natural
Resources Policy, Resources, Science and Industry Division (707-8707).]


29 For additional information, see CRS Report IF10041, Reductions to Mandatory Agricultural Conservation Programs
in Appropriations Law
, by Megan Stubbs.
30 For information, see http://www.nrcs.usda.gov/wps/portal/nrcs/main/national/programs/landscape/wr/.
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Environmental Protection Agency
Clean Water State Revolving Fund Loan Program
The Clean Water Act prescribes performance levels to be attained by municipal sewage treatment
plants in order to prevent the discharge of harmful wastes into surface waters. The act also
provides financial assistance, so that communities can construct treatment facilities in compliance
with the law, which has the overall objective of restoring and maintaining the chemical, physical,
and biological integrity of the nation’s waters.
In historic terms, funding under the Clean Water Act has been the largest federal program for
wastewater treatment assistance. Since 1973, Congress has appropriated $93 billion in program
grants. Funds are distributed to states under a statutory allocation formula and are used to assist
qualified projects on priority lists that are determined by individual states. These funds are used to
assist localities in meeting wastewater infrastructure needs most recently estimated by EPA and
states at $298 billion nationally for all categories of projects eligible for federal assistance under
the law.
In 1987 Congress amended the Clean Water Act (P.L. 100-4) and initiated a new program of
federal capitalization grants to support State Water Pollution Control Revolving Funds (SRFs).
Prior to 1989 (when the SRF program became effective), states used their allotments to make
grants to cities and other eligible recipients. Since 1989, federal funds (grants of appropriated
funds) have been used to capitalize state loan programs, or SRFs, with states providing matching
funds equal to 20% of the federal funds to capitalize the SRF. All 50 states, plus Puerto Rico,
participate in the clean water SRF program. Over the long term, the loan programs are intended to
be sustained through repayment of loans to states, thus creating a continuing source of assistance
for other communities. Rural and non-rural communities compete for funding; rural areas and
other small communities have no special priority, nor are states required to reserve any specific
percentage for projects in rural areas. Nevertheless, rural areas are not shut out of the program.
EPA data indicate that since 1989, nationally, 67% of all loans and other assistance (comprising
23% of all assistance amounts) have gone to assist communities with 10,000 people or fewer.
Program Purpose
The clean water SRF program provides assistance in constructing publicly owned municipal
wastewater treatment plants, implementing nonpoint pollution management programs, and
developing and implementing management plans under the National Estuary Program.
Financing Mechanism
Clean water SRFs may provide seven general types of financial assistance: making loans; buying
or refinancing existing local debt obligations; guaranteeing or purchasing insurance for local debt
obligations; guaranteeing SRF debt obligations (i.e., to be used as security for leveraging the
assets in the SRF); providing loan guarantees for sub-state revolving funds; earning interest on
fund accounts; and supporting reasonable costs of administering the SRF. States may not provide
grants from an SRF. Loans are made at or below market interest rates, including zero interest
loans, as determined by the state in negotiation with the applicant. States may provide additional
subsidization, such as principal forgiveness, negative interest loans, grants, or a combination, to
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municipalities that meet the state’s affordability criteria. Additional subsidization also can be
provided for projects to implement water or energy efficiency goals or to mitigate stormwater
runoff. All principal and interest payments on loans must be credited directly to the SRF, and
loans are to be repaid within 30 years of a project’s completion, not to exceed the project’s useful
life. States are required to ensure that SRF-funded projects use American iron and steel products
and apply the prevailing wage requirements of the Davis-Bacon Act.31
Eligibility Requirements
Eligible loan recipients for SRF assistance are any municipality, intermunicipal, interstate, or
state agency. Private utilities are not eligible to receive funds for construction of wastewater
treatment works and most other eligible activities, but privately owned projects are eligible for
certain types of activities (e.g., decentralized wastewater treatment projects; projects to manage,
reduce or treat stormwater; or development of watershed management projects).
Projects or activities eligible for funding are, initially, those needed for constructing or upgrading
publicly owned municipal wastewater treatment plans. As defined in Clean Water Act Section
212, devices and systems used in the storage, treatment, recycling, and reclamation of municipal
sewage are eligible. These include construction or upgrading of secondary or advanced treatment
plants; construction of new collector sewers, interceptor sewers or storm sewers; and projects to
correct existing problems of sewer system rehabilitation, infiltration/inflow of sewer lines, and
combined sewer overflows. Operation and maintenance is not an eligible activity. All funds in the
clean water SRF resulting from federal capitalization grants are first to be used to assure
maintenance of progress toward compliance with enforceable deadlines, goals, and requirements
of the act, including municipal compliance. Following compliance with the “first use”
requirement, funds may be used to implement nonpoint source management programs and estuary
activities in approved State Nonpoint Management Programs and estuarine Comprehensive
Conservation and Management Plans, respectively. Since the clean water SRF program was
established in 1989, $4.0 billion has been used to assist 14,543 nonpoint management projects;
$5.8 million has gone to 12 estuary management plan activities.
“Wet Weather” Projects
In 2000, Congress authorized separate Clean Water Act grant funding for projects to address
overflows from municipal combined sewer systems and from municipal separate sanitary sewers.
Overflows from these portions of municipal sewerage systems can occur especially during
rainfall or other wet weather events and can result in discharges of untreated sewage into local
waterways. This program, contained in the FY2001 Consolidated Appropriations Act (P.L. 106-
554, Division B, Section 112), authorized $750 million per year in FY2002 and FY2003. The
funds would only be available for appropriation if Congress also appropriated at least $1.35
billion in each of the years for the clean water SRF program. Under the program, grants to a
municipality or municipal entity could be used for planning, design, and construction of treatment
works to intercept, transport, control, or treat municipal combined and separate sewer overflows.
However, no funds were appropriated for this program either in FY2002 or FY2003; thus, wet

31 See CRS Report RL31491, Davis-Bacon Act Coverage and the State Revolving Fund Program Under the Clean
Water Act.

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weather projects continue to compete with other water infrastructure projects for available Clean
Water Act funds.
Funding
Since the first appropriations for the clean water SRF program in FY1989, Congress has provided
$41 billion in grants to states and Indian Tribes to capitalize SRFs. Through June 2012, federal
funds, together with state matching contributions, repaid loans, and other funds, have been used
for $95.4 billion in SRF assistance to support nearly 32,000 SRF loans and debt refinance
agreements. For FY2015, Congress appropriated $1.449 billion, the same level of funding as
provided in FY2014 for clean water SRF capitalization grants. For FY2016, the President’s
budget requested $1.116 billion for these grants.
Statutory and Regulatory Authority
Statutory authority for the clean water SRF program is the Clean Water Act, as amended, Sections
601-607, 33 U.S.C. §§1381-1387. Regulations are codified at 40 C.F.R. §35.3100.32
[This section prepared by Claudia Copeland, Specialist in Resources and Environmental Policy,
Resources, Science and Industry Division (707-7227).]
Drinking Water State Revolving Fund Loan Program
The Safe Drinking Water Act (SDWA) requires public water systems to comply with federal
drinking water regulations promulgated by EPA. Through these regulations, EPA has set
standards to control the levels of approximately 90 contaminants in drinking water, and more
regulations are under development. To help communities meet these federal mandates and to meet
the act’s public health objectives, Congress amended the SDWA in 1996 to establish a drinking
water state revolving fund (DWSRF) loan program. The program is patterned closely after the
clean water SRF, and authorizes EPA to make grants to states to capitalize drinking water state
revolving loan funds. States use their DWSRFs to provide assistance to public water systems for
infrastructure and other drinking water projects.33 States must match 20% of the federal
capitalization grant.
Each year, states must develop an ‘intended use plan’ that includes a list of projects the state
intends to fund through the DWSRF (the project priority list). The law generally directs states to
give funding priority to projects that (1) address the most serious health risks; (2) are needed to
ensure compliance with SDWA regulations; and (3) assist systems most in need on a per
household basis, according to state affordability criteria. The law also directs states to make
available at least 15% of their annual allotment to public water systems that serve 10,000 or fewer
persons (to the extent the funds can be obligated to eligible projects). Over the life of the
program, roughly 71% of DWSRF assistance agreements and 38% of funds have gone to these
smaller systems. Capitalization grants are allotted among the states according to the results of the
most recent quadrennial survey of the capital improvements needs of eligible water systems.

32 For additional information, see https://www.cfda.gov/index?s=program&mode=form&tab=step1&id=
312e4abeea3cc908bc55deb5e07ec37f.
33 Private, residential wells are not regulated under the SDWA and are not eligible for assistance through this program.
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Needs surveys are prepared by EPA and the states, and the most recent survey indicates that
public water systems need to invest at least $384.2 billion on infrastructure improvements over 20
years ($19.21 billion annually) to ensure the provision of safe drinking water and compliance
with federal standards.34
Program Purpose
This state-administered program provides assistance for infrastructure projects and other
expenditures that facilitate compliance with federal drinking water regulations or that promote
public health protection. The SDWA directs states to give funding priority to infrastructure
projects that are needed to achieve or maintain compliance with SDWA requirements, protect
public health, and assist systems with economic need. States may use a portion of the
capitalization grant for specified purposes, including programs for protecting sources of drinking
water and improving the managerial and technical capacity of water systems.
Financing Mechanism
States may use the DWSRF to make low- or zero-interest loans to public water systems, and loan
recipients generally must repay the entire loan plus any interest to the state. DWSRFs may also be
used to buy or refinance local debt obligations, to guarantee or purchase insurance for a local
obligation, as a source of revenue or security for payment of principal and interest on state
revenue or general obligation bonds if the proceeds of the sale of the bonds are deposited into the
DWSRF, and to earn interest on DWSRF accounts. The statute authorizes states to use up to 30%
of their annual DWSRF grant to provide additional subsidies (e.g., principal forgiveness and
negative interest rate loans) to help economically disadvantaged communities of any size. (A
disadvantaged community is one in which the service area of a public water system meets state-
established affordability criteria.) In recent appropriations acts, Congress has required states to
make available at least 20%, and no more than 30%, of their capitalization grant to eligible
communities for additional subsidization in the form of forgiveness of principal, negative interest
loans, and/or grants. In recent appropriations acts, including EPA appropriations for FY2015 (P.L.
113-235), Congress has required states to make available at least 20%, and no more than 30%, of
their capitalization grant to eligible communities for additional subsidization in the form of
forgiveness of principal, negative interest loans, and/or grants.
Eligibility Requirements
Drinking water systems that are eligible to receive DWSRF assistance include community water
systems, whether publicly or privately owned, and not-for-profit noncommunity water systems.
Federally owned systems are not eligible to receive assistance from this program.
Projects eligible for DWSRF assistance include (1) capital investments to upgrade or replace
infrastructure in order to continue providing the public with safe drinking water; (2) projects
needed to address violations of SDWA regulations; and (3) projects to replace aging infrastructure
(e.g., source water improvement projects and treatment facilities, storage facilities, transmission

34 U.S. Environmental Protection Agency, Drinking Water Infrastructure Needs Survey and Assessment: Fifth Report
to Congress
, Office of Water, EPA 816-R-13-006, April 2013, http://water.epa.gov/grants_funding/dwsrf/upload/
epa816r13006.pdf.
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and distribution pipes, and consolidation with other systems). Assistance may also be available
for new wells to replace contaminated wells, land acquisition, project design and planning, and
various security measures, including infrastructure improvements. Also eligible for assistance are
projects to consolidate water supplies (for example, in cases where individual homes or other
public water supplies have a water supply that is contaminated, or a system is unable to maintain
compliance for financial or managerial reasons).
Projects and activities not eligible for funding include projects primarily intended to serve future
growth or to provide fire protection, construction of dams or reservoirs (except reservoirs for
finished (treated) water), monitoring, and operation and maintenance. Ineligible systems include
those that lack the financial, technical or managerial capacity to maintain SDWA compliance and
systems in significant noncompliance with any SDWA regulation (unless the project is likely to
ensure compliance).
Funding
Through FY2015, cumulative appropriations for the DWSRF program totaled approximately
$18.23 billion.35 For FY2015, the President requested $757 million, and Congress provided $907
million in P.L. 113-235. For FY2016, the President requested $1.186 billion for the program.
From 1997 through June 2014, $17.33 billion in federal contributions—combined with the 20%
state match, bond proceeds, loan principal repayments, and other funds—generated $30.18 billion
in DWSRF program resources. Through this same period, $27.9 billion was made available for
loans and other assistance (e.g., debt refinance), and 11,689 projects received assistance. In
FY2014, states provided assistance to 837 drinking water infrastructure improvement projects.
Statutory and Regulatory Authority
The statutory authority for the DWSRF program is the Safe Drinking Water Act Amendments of
1996 (P.L. 104-182, Section 1452, 42 U.S.C. 300j-12). EPA promulgated an interim final rule for
the program on August 7, 2000 (65 FR 48285), and adopted it as final on January 12, 2001 (66
FR 2823). Regulations are codified at 40 C.F.R. §35.3500.36
[This section prepared by Mary Tiemann, Specialist in Environmental Policy, Resources, Science
and Industry Division (707-5937).]

35 Portions of the appropriated amounts are reserved each year for authorized purposes, including providing direct
grants for American Indian and Alaskan Native Village water systems, and reimbursing small water system for
monitoring for unregulated contaminants. Adjusted for these set-asides, total contributions to states, territories, and the
District of Columbia totaled $17.68 billion.
36 DWSRF program information, regulations, facts and statistics are available at http://www.epa.gov/safewater/
dwsrf.html. For further information and contacts, see the Catalog of Federal Domestic Assistance, DWSRF entry,
https://www.cfda.gov/?s=program&mode=form&tab=step1&id=2da3dbe10180847e587b5f688e90bc0d.
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Department of Housing and Urban Development
Community Development Block Grants
The Department of Housing and Urban Development (HUD) administers assistance primarily
under the Community Development Block Grant (CDBG) program. The program’s primary
objective is to develop viable urban communities by providing decent housing and a suitable
living environment, and by expanding economic opportunities, principally for persons of low and
moderate income. CDBG funds are used by localities for a broad range of activities intended to
result in decent housing in a suitable living environment. Water and waste disposal needs compete
with many other public activities for this assistance, including historic preservation, energy
conservation, housing construction, lead-based paint abatement, urban renewal projects,
recreation facilities, home ownership assistance, and others. Program policy requires that at least
70% of funds must benefit low- and moderate-income persons. The use of CDBG funds is
intended to reflect a balance between local flexibility and national targeting to low- and
moderate-income persons.
After subtracting amounts specified in appropriations acts for special-purpose activities, 70% of
CDBG funds are allocated by formula to approximately 1,000 entitlement cities nationwide,
defined as central cities of metropolitan areas, metropolitan cities with populations of 50,000 or
more, and 183 statutorily defined urban counties (the entitlement program). These funds are not
available for projects in rural communities. The remaining 30% of CDBG funds is allocated by
formula to the states for distribution to non-entitlement, smaller communities (the state program)
for use in areas that are not part of a metropolitan city or urban county, and these funds may be
available for rural community water projects. The 70/30 split and allocation formulas are
provided for in law. According to data from HUD, in recent years, water and sewer improvement
projects accounted for slightly more than 10% of all CDBG funds disbursed nationally, the largest
major category of funded public improvements. Since FY2008, investments by CDBG recipients
for water and sewer improvements have averaged $404 million per year.37
Program Purpose
The primary goal of this program is the development of viable communities by providing decent
housing, a suitable living environment, and expanding economic opportunities, principally for
low- and moderate-income persons.
Financing Mechanism
The entitlement communities and states receive a basic grant allocation each year and know in
advance the approximate amount of federal funds that they will receive annually. Grantees access
their CDBG funding through a consolidated plan process in which states and localities establish
their local priorities and specify how they will measure their performance. In the CDBG program
for smaller communities, grants are distributed out of state allocations to units of general local
government which implement approved activities. States may retain a percentage of funds to

37 U.S. Department of Housing and Urban Development, “CDBG Expenditure Reports, All CDBG Disbursements,”
https://www.hudexchange.info/manage-a-program/cdbg-expenditure-reports/.
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cover the costs of administering the program and providing technical assistance to local
governments and nonprofit organizations.
Eligibility Requirements
Eligible CDBG grant recipients include states, local governments, the District of Columbia,
Puerto Rico, Guam, the Virgin Islands, American Samoa, and the Commonwealth of the Northern
Marianas. Eligible activities include a wide range of projects such as public facilities and
improvements, housing, public services, economic development, and brownfields redevelopment.
State grantees must ensure that each activity meets one of the program’s three national objectives:
benefitting low- and moderate-income persons (the primary objective), aiding in the prevention or
elimination of slums or blight, or assisting other community development needs that present a
serious and immediate threat to the health or welfare of the community. Under the state program
that assists smaller communities, states develop their own program and funding priorities and
have considerable latitude to define community eligibility and criteria, within general criteria in
law and regulations.
Funding
For FY2015, Congress provided $3.07 billion for CDBG entitlement/non-entitlement formula
funds, of which approximately $2.15 billion is available for entitlement communities and $920
million is available for smaller communities under the state non-entitlement program. For
FY2016, the President’s budget requested $2.88 billion for this program.
Statutory and Regulatory Authority
Statutory authority for the CDBG program is Title I of the Housing and Community Development
Act of 1974, as amended (42 U.S.C. 5301 et seq.). Regulations are codified at 24 C.F.R. Part 570.
Regulations covering the CDBG state program for non-entitlement communities are codified at
24 C.F.R. Part 570, Subpart I (§570.480).38
[This section prepared by Claudia Copeland, Specialist in Resources and Environmental Policy,
Resources, Science and Industry Division. For additional CDBG program information, contact
Eugene Boyd, Government and Finance Division (707-8689).]
Department of Commerce
Economic Development Administration (Public Works and
Economic Development Program)

The Economic Development Administration (EDA), Department of Commerce, is authorized to
provide development assistance to areas experiencing substantial economic distress. Economic

38 For more program information on CDBG entitlements grants, see https://www.cfda.gov/index?s=program&mode=
form&tab=step1&id=75c19bc34eb650c446c2c4a078500ba5. For information on the CDBG state program, see
https://www.cfda.gov/index?s=program&mode=form&tab=step1&id=8ebaec7fffe34667744cf0b8b70b4251.
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development grants for community water and sewer projects are available through the Public
Works and Economic Development Program.
Under this federally administered program, public works grants are made to eligible applicants to
revitalize, expand, and upgrade their physical infrastructure. These investments are intended to
enable communities to attract new industry, encourage business expansion, diversify local
economies, and generate or retain long-term jobs in the private sector through improvements
needed for establishing or expanding industrial or commercial enterprises in distressed regions.
Grants may be used for a wide range of purposes, but frequently have a sewer or water supply
element. EDA’s FY2010 budget justification noted the linkage between water and sewer systems
and economic development and redevelopment:
Basic infrastructure in the downtown regions, particularly water and sewer systems, is often
over a century old. This infrastructure is not adequate to support the needs of growing
businesses. In rural regions, water management and coordinated planning and
implementation of water/wastewater infrastructure is key to unlocking economic
sustainability. The inadequacy of basic public water and sewer infrastructure has proven to
be a significant impediment to the growth of new businesses.39
Types of projects funded include industrial parks, expansion of port and harbor facilities,
redevelopment of brownfields, and water and wastewater facilities primarily serving industry and
commerce. According to GAO, from FY1991 through FY2000, EDA provided $1.1 billion in
grants to local communities for drinking water and wastewater projects.40 Federal law requires
that units of government retain ownership of EDA-funded projects. Because EDA grants must
directly encourage employment generation, these grants generally are not available for rural
residential sewer and water supply development.
Program Purpose
The purpose of the program is to promote long-term economic development and assist in the
construction of public works and development facilities needed to initiate and support the
creation or retention of permanent jobs in the private sector in areas experiencing substantial
economic distress. EDA’s public works program provides investments that help to facilitate the
transition of distressed communities to become more competitive through development of key
infrastructure by investing in infrastructure that is directly tied to job creation.
Financing Mechanism
EDA provides grants directly to approved applicants. Generally, EDA investment assistance may
not exceed 50% of the project cost. Projects may receive an additional amount, not to exceed
30%, based on the relative needs of the region in which the project will be located, as determined
by EDA. In the case of certain Indian Tribes, nonprofit organizations that have exhausted their
effective borrowing capacity, or a state or political subdivision of a state that has exhausted its
effective taxing and borrowing capacity, grants totaling 100% may be awarded. On average, EDA
grants fund 50% of project costs. Credit may be given toward the nonfederal share for in-kind

39 U.S. Department of Commerce, Economic Development Administration, Fiscal Year 2010 Congressional Budget
Request
, p. EDA-41.
40 GAO Water Infrastructure, pp. 13-14.
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contributions, including contributions of space, equipment, and services. No minimum or
maximum project amount is specified in law.
Eligibility Requirements
Public works grants may be made to states, cities, counties and other political subdivisions of
states, an institution of higher education or a consortium of such institutions, and private or public
not-for-profit organizations acting in cooperation with officials of a political subdivision of a
state. Under this program, the term “state” includes the Commonwealth of Puerto Rico, the U.S.
Virgin Islands, Guam, American Samoa, the Commonwealth of the Northern Mariana Islands, the
Republic of the Marshall Islands, the Federated States of Micronesia, and the Republic of Palau.
For-profit, private sector entities do not qualify.
Qualified projects must fill a pressing need of the area and: must (1) be intended to improve the
opportunities for the successful establishment of businesses, (2) assist in the creation of additional
long-term employment, and (3) benefit long-term unemployed or underemployed persons and
low-income families. Projects must also fulfill a pressing need and be consistent with the
comprehensive economic development plan for the area, and have an adequate share of local
funds. In addition, eligible projects must be located in areas that meet at least one of the following
criteria: low per-capita income, unemployment above the national average, or an actual or
anticipated abrupt rise in unemployment.
Funding
For FY2016, Congress provided appropriations totaling $99 million for EDA’s Public Works and
Economic Development (public works) grant program. For FY2016, the President’s budget
requested $85 million for the public works program.
Statutory and Regulatory Authority
The statutory authority for the Public Works and Economic Development Program is the Public
Works and Economic Development Act of 1965, as amended, P.L. 89-136 (42 U.S.C. 3131, 3132,
3135, 3171), and Title II, P.L. 105-393 (42 U.S.C. 3211). Regulations are codified at 13 C.F.R.
Chapter III, Part 302, 305, 316, and 317.
[This section prepared by Claudia Copeland, Specialist in Resources and Environmental Policy,
Resources, Science and Industry Division. For additional EDA program information, contact
Eugene Boyd, Government and Finance Division (707-8689).]

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Author Contact Information

Claudia Copeland
Megan Stubbs
Specialist in Resources and Environmental Policy
Specialist in Agricultural Conservation and Natural
ccopeland@crs.loc.gov, 7-7227
Resources Policy
mstubbs@crs.loc.gov, 7-8707
Nicole T. Carter
Mary Tiemann
Specialist in Natural Resources Policy
Specialist in Environmental Policy
ncarter@crs.loc.gov, 7-0854
mtiemann@crs.loc.gov, 7-5937
Betsy A. Cody

Specialist in Natural Resources Policy
bcody@crs.loc.gov, 7-7229



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