EPA Water Infrastructure Funding in the
July 24, 2020
American Recovery and Reinvestment Act of
Jonathan L. Ramseur
2009
Specialist in Environmental
Policy
As part of the federal response to the “Great Recession,” Congress passed the American

Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5) to stimulate the economy and
Elena H. Humphreys
address a range of other policy objectives. ARRA included tax relief and incentives and provided
Analyst in Environmental
hundreds of billions of dollars in mandatory and discretionary spending, including funding for
Policy
wastewater and drinking water infrastructure projects. As Congress considers options to mitigate

the economic impacts of Coronavirus Disease 2019 (COVID-19), infrastructure funding is
receiving increased attention. ARRA implementation experience may be relevant as

policymakers consider options to stimulate the economy through increased infrastructure
spending.
ARRA delivered wastewater and drinking water infrastructure funding primarily through two U.S. Environmental Protection
Agency (EPA) programs—the Clean Water State Revolving Fund (CWSRF) program under the Clean Water Act (CWA) and
the Drinking Water State Revolving Fund (DWSRF) program under the Safe Drinking Water Act (SDWA). These programs
help publicly owned treatment works and public water systems finance infrastructure improvements needed to comply with
water quality or public health requirements and for other statutory purposes. Using annual appropriations, EPA makes grants
to states to capitalize state revolving loan funds. States in turn primarily provide subsidized loans to eligible recipients.
ARRA provided $4.0 billion for the CWSRF and $2.0 billion for the DWSRF in supplemental funding in FY2009. The
ARRA SRF funding was more than double the appropriations for FY2008.
Congress applied several conditions to the ARRA funding for the CWSRF and DWSRF programs that differed from the
existing statutory requirements. ARRA required states to give priority to projects that were “ready to proceed to construction
within 12 months” of enactment, and it required that all ARRA SRF funds must be under contract or used for construction by
February 17, 2010. ARRA required states to use at least 50% of ARRA grants to “provide additional subsidization to eligible
recipients” and use not less than 20% of ARRA grants “for projects to address green infrastructure, water or energy
efficiency improvements or other environmentally innovative activities.” In addition, recipients of ARRA funding were
subject to Davis-Bacon Act wage requirements and “Buy American” provisions. Congress has applied versions of some
ARRA requirements to the SRFs in subsequent EPA appropriations acts and through amendments to the CWA and SDWA.
Pursuant to ARRA reporting requirements, the U.S. Government Accountability Office (GAO) reported that all 50 states met
the 12-month deadline to have ARRA-funded projects under contract by February 17, 2010. GAO also reported that states
met the act’s requirement to use at least 20% of the funds for green infrastructure, water and/or energy efficiency, and other
innovative environmental projects and that states used 76% of CWSRF funds and 70% of DWSRF funds to provide
additional subsidies (e.g., forgiveness of loan principal or grants).
The ARRA SRF funding results and implementation experience may be relevant in the 116th Congress as policymakers
consider legislative options to stimulate the economy and/or meet other policy objectives through increases in water
infrastructure spending. Key considerations involve the broad policy objectives of stimulus legislation and how to efficiently
achieve such objectives. Some policy objectives may involve trade-offs among competing priorities and may require
differing tools for evaluation. In the case of funding wastewater and drinking water infrastructure as a means of achieving
these or other policy goals, the practicalities of wastewater and drinking water infrastructure projects may be informative. In
general, water infrastructure projects often involve complicated planning and construction efforts that span multiple years.
Other policy considerations include whether to provide funding through existing programs, such as the SRF programs, or
through new programs. Policymakers may also consider whether to apply certain requirements to the funding, as occurred
with ARRA, and the trade-offs that may result from certain funding conditions. Although states met ARRA’s deadline and
funding conditions, the one-year funding deadline combined with the added funding conditions presented implementation
challenges for EPA, states, and local governments. In some cases, the ARRA funding deadline and conditions changed states’
SRF funding priorities for their previously ranked projects.
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EPA Water Infrastructure Funding in ARRA

Introduction
The condition of the nation’s wastewater and drinking water infrastructure and related financing
challenges, as well as the federal role in helping communities meet those challenges, have been
perennial subjects of debate and attention in Congress. The U.S. Environmental Protection
Agency (EPA) estimates that the capital cost of wastewater and drinking water infrastructure
needed to meet statutory water quality and public health requirements and objectives exceeds
$744 billion over a 20-year period.1 A broader water infrastructure survey conducted by the
American Water Works Association estimated that, for drinking water alone, the cost to repair
aging infrastructure and expand water service to meet growing demand would be $1 trillion over
20 years.2
In the 116th Congress, Members have introduced numerous bills that would support existing and
create new water infrastructure assistance programs. In addition, as efforts to contain the
Coronavirus Disease 2019 (COVID-19) have contributed to economic decline and significant job
losses, some Members from both the House and Senate have linked these and other infrastructure
bills to future economic recovery efforts. For example, the Department of the Interior,
Environment, and Related Agencies Appropriations Act, 2021 (H.R. 7612), would provide more
than $10 billion in emergency supplemental appropriations for wastewater and drinking water
infrastructure. Further, the House-passed Moving Forward Act (H.R. 2) contains provisions that
would authorize billions of dollars in wastewater and drinking water infrastructure spending. The
chairman of the House Committee on Energy and Commerce, Frank Pallone, linked this bill to
economic recovery efforts, saying, “There is no better way to stimulate our economy and create
millions of good paying jobs than to modernize our badly aging infrastructure.”3 In the Senate,
the Committee on Environment and Public Works reported the America’s Water Infrastructure
Act of 2020 (S. 3591) and the Drinking Water Infrastructure Act of 2020 (S. 3590) on May 11,
2020. The committee chairman, John Barrasso, stated that these bills “will be critical to our
economic recovery after the immediate pandemic response is behind us.”4

1 This estimate includes $271 billion for wastewater infrastructure and $473 billion for drinking water infrastructure.
See EPA, Clean Watersheds Needs Survey (CWNS) Report to Congress—2012, 2016, https://www.epa.gov/cwns; and
EPA, Drinking Water Infrastructure Needs Survey and Assessment: Sixth Report to Congress, 2018,
https://www.epa.gov/dwsrf/what-infrastructure-needs-survey-and-assessment.
2 American Water Works Association (AWWA), “Buried No Longer: Confronting America’s Water Infrastructure
Challenge,” 2012, p. 3. Unlike EPA’s drinking water needs assessment, the AWWA estimate included the cost for
additional distribution lines investments anticipated to meet projected population growth, regional population shifts,
and service area growth through 2050, as well as the costs for investments needed for statutory compliance and for
repairs to aging water infrastructure.
3 House Committee on Energy and Commerce, “Pallone Applauds Passage of the Moving Forward Act,” press release,
July 2, 2020, https://energycommerce.house.gov/newsroom/press-releases/pallone-applauds-passage-of-the-moving-
forward-act.
4 Senate Committee on Environment and Public Works, “Barrasso: Infrastructure Will Be Critical to Economic
Recovery After Pandemic Is Behind Us,” press release, May 6, 2020, https://www.epw.senate.gov/public/index.cfm/
press-releases-republican?ID=F22B94C0-71BB-42CB-8963-4A2EB2249DCE.
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As part of the federal government’s response to the “Great Recession,”5 Congress enacted the
American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5) on February 17, 2009.6
ARRA was the largest fiscal stimulus measure passed by Congress to address the economic
impacts of the Great Recession.7 Among the purposes identified in ARRA were (1) preservation
and creation of jobs and promotion of U.S. economic recovery and (2) investment in
transportation, environmental protection, and other infrastructure that would provide long-term
economic benefits.8 To support these and other policy objectives, ARRA included revenue
provisions and provided hundreds of billions of dollars in mandatory and discretionary spending,
including funding for infrastructure projects in transportation, energy, and other sectors.
This report discusses the ARRA provisions regarding wastewater and drinking water
infrastructure funding, which was delivered through the Clean Water State Revolving Fund
(CWSRF) and Drinking Water State Revolving Fund (DWSRF) programs.9 The first section
provides background information on the CWSRF and DWSRF programs. The second section
discusses the ARRA funding levels provided to these two programs in the context of historical
and recent funding levels. The third section discusses the ARRA funding requirements and how
Congress continued to apply many of these requirements in some form to SRF funds after ARRA.
The fourth section discusses the funding results and selected observations from EPA and states
regarding ARRA implementation challenges.10 The final section provides concluding
observations.
This report does not evaluate the economic impacts associated with the increased ARRA funding
for the CWSRF and DWSRF programs. Other studies have examined ARRA’s overall economic
impacts, including impacts to the U.S. gross domestic product and unemployment.11

5 The National Bureau of Economic Research (NBER) defines a recession as “a significant decline in economic activity
spread across the economy, lasting more than a few months, normally visible in production, employment, real income,
and other indicators.” According to the NBER, the Great Recession began in December 2007 and ended in June 2009.
During that time, the U.S. economy experienced its longest recession since the Great Depression of the 1930s. For
more details, see NBER, “US Business Cycle Expansions and Contractions,” https://www.nber.org/cycles.html.
6 For more information, see CRS Report R40537, American Recovery and Reinvestment Act of 2009 (P.L. 111-5):
Summary and Legislative History, by Clinton T. Brass et al.
7 Other measures included the Economic Stimulus Act of 2008 (P.L. 110-185) and the Tax Relief, Unemployment
Insurance Reauthorization, and Job Creation Act of 2010 (P.L. 111-312).
8 P.L. 111-5, §3. Other purposes were to assist those most impacted by the recession and to stabilize state and local
government budgets.
9 Various other federal programs provide financial assistance for wastewater and drinking water infrastructure. In
particular, the U.S. Department of Agriculture’s Rural Utilities Service provides loans and grants for wastewater and
drinking water projects in rural communities. For information on these and other water infrastructure programs, see
CRS Report RL30478, Federally Supported Water Supply and Wastewater Treatment Programs, coordinated by
Jonathan L. Ramseur.
10 ARRA required the U.S. Government Accountability Office (GAO) and the inspector general offices of federal
departments or agencies to report the use of funds. ARRA included reporting and evaluation requirements that applied
to federal agencies as well as others. This report relies on these reports, as sources.
11 For example, see Congressional Budget Office (CBO), “Estimated Impact of the American Recovery and
Reinvestment Act on Employment and Economic Output in 2014,” 2014. See also CRS Report R46343, Transportation
Infrastructure Investment as Economic Stimulus: Lessons from the American Recovery and Reinvestment Act of 2009,
by William J. Mallett.
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Background: State Revolving Fund Programs
The Clean Water Act (CWA)12 and the Safe Drinking Water Act (SDWA)13 respectively authorize
parallel complementary financial assistance programs—the CWSRF and DWSRF—that help
finance wastewater and drinking water infrastructure projects needed for compliance and other
statutory purposes.14 The CWSRF program provides financial assistance to a range of eligible
recipients—including municipalities, state agencies, and certain private and nonprofit entities—to
support a range of eligible projects and activities. These include construction of wastewater
treatment works and stormwater systems, management of nonpoint source pollution, and
replacement of decentralized systems (e.g., septic tanks), among others.15 The DWSRF program
provides assistance to community water systems and nonprofit noncommunity water systems for
projects needed to maintain SDWA compliance or to further the act’s health protection goals,
among other activities. Eligible projects include installation and replacement of treatment
facilities, distribution systems, and certain storage facilities construction, among others.16
Using annual appropriations, EPA makes grants to states to capitalize state revolving loan funds.17
EPA allots CWSRF funds among states based on a CWA statutory formula, which provides a
minimum share of 0.5% to each state and has effectively been in place since the beginning of the
program in 1987.18 DWSRF state allotments are based on the proportional share of each state’s
needs identified in the quadrennial drinking water infrastructure needs survey, except that no state
may receive less than 1% of available funds.19 Each year, each state must match 20% of its annual
capitalization grant and, for each SRF, develop an intended use plan (IUP) indicating how the
allotted funds will be used.20 As outlined in their plans, states provide primarily subsidized loans
to publicly owned treatment works (CWSRF) or public water systems (DWSRF), which reduce
the cost of such infrastructure projects to communities. Communities repay loans into the fund,
thus making resources available for projects in other communities. Over time, the federal grants
and state match—combined with funds from loan repayments, leveraged bonds, and other

12 The statutory name is the Federal Water Pollution Control Act, as amended, codified at Title 33, Section 1251 et seq
of the United States Code. For more information, see CRS Report RL30030, Clean Water Act: A Summary of the Law,
by Laura Gatz.
13 The SDWA is codified generally at Title 42, Sections 300f-300j of the U.S. Code. For more information, see CRS
Report RL31243, Safe Drinking Water Act (SDWA): A Summary of the Act and Its Major Requirements, by Mary
Tiemann.
14 42 U.S.C. §300j-12. For more details regarding the history of the DWSRF, see CRS Report 96-647, Water
Infrastructure Financing: History of EPA Appropriations, by Jonathan L. Ramseur and Mary Tiemann.
15 33 U.S.C. §§1381-1387. For more details regarding the history of the CWSRF and its predecessor grant program in
CWA Title II, see CRS Report 96-647, Water Infrastructure Financing: History of EPA Appropriations, by Jonathan L.
Ramseur and Mary Tiemann.
16 For more information, see CRS Report R45304, Drinking Water State Revolving Fund (DWSRF): Overview, Issues,
and Legislation, by Mary Tiemann.
17 The 50 U.S. states and Puerto Rico operate SRF programs. The CWA and SDWA require EPA to provide direct
grants to the District of Columbia, the U.S. Virgin Islands, American Samoa, Guam, the Commonwealth of Northern
Marianas, and Indian tribes for wastewater and drinking water infrastructure improvements (33 U.S.C. §1362 and
§1377; 42 U.S.C. 300j-12(i) and (j)). The funding for the District of Columbia, U.S. territories, and Indian tribes is part
of the SRF appropriations to EPA.
18 For more information, see CRS Report RL31073, Allocation of Wastewater Treatment Assistance: Formula and
Other Changes, by Jonathan L. Ramseur.
19 33 U.S.C. §1384 and §1285(c); 42 U.S.C. §300j-12(a)(1)(D)(ii).
20 33 U.S.C. §1386; 42 U.S.C. §300j-12(e).
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sources—are intended to generate an ongoing, revolving source of water infrastructure funding at
the state level.
States may also use the DWSRF and CWSRF to provide “additional subsidization”—such as
principal forgiveness and/or negative interest loans—to disadvantaged communities to make
projects affordable.21 In addition, states can use CWSRF grants to provide additional
subsidization for specific types of infrastructure projects, including those that address water or
energy efficiency.22
Both the CWA and SDWA require states to report specific information to EPA regarding the
implementation of their respective SRF programs. States are required to submit to EPA an annual
report on the CWSRF and a biennial report on the DWSRF. In addition, both statutes require EPA
to annually review states’ implementation activities and periodically audit state programs.23
As context, while the SRF programs are the two key federal financial assistance programs for
wastewater and drinking water infrastructure, the federal contribution of total public spending is
less than some other “infrastructure” sectors.24 According to analysis from the Congressional
Budget Office (CBO), state and local governments contribute the vast majority of public funding
for wastewater and drinking water infrastructure projects.25 In CBO’s analysis, federal spending
includes the EPA SRF programs as well as other federal programs (e.g., the U.S. Department of
Agriculture’s Rural Utilities Service water and waste loan and grant program).26 Infrastructure
spending analyzed by CBO includes both spending on capital (e.g., treatment plants, pipes and
equipment) and spending on operation and maintenance (O&M) activities. In 2017, CBO data
indicate that capital spending accounted for $31 billion and O&M spending accounted for $80
billion in this sector.27 State and local governments contribute the vast majority of spending on
O&M activities, as these are generally not eligible for funding by the SRF programs. Figure 1
compares the capital spending (adjusted for inflation) on wastewater and drinking water
infrastructure between state and local governments and the federal government. The figure
indicates that in 2017, the state and local share of such spending was 89%, while the federal
contribution was 11%.28

21 33 U.S.C. §1383(i); 42 U.S.C. §300j-12(d).
22 33 U.S.C. §1383(i)(1)(B).
23 42 U.S.C. §300j-12(g)(4); 33 U.S.C. §1386.
24 CBO, Public Spending on Transportation and Water Infrastructure, 1956 to 2017, 2018, p. 22, https://www.cbo.gov/
publication/54539.
25 CBO, Public Spending on Transportation and Water Infrastructure, 1956 to 2017, p. 22.
26 7 U.S.C. §1926.
27 CBO, Public Spending on Transportation and Water Infrastructure, 1956 to 2017, Supplemental Data Tables.
28 Authorized in 1987, the CWSRF replaced the construction grant program authorized by Title II of the Clean Water
Act Amendments of 1972 (P.L. 92-500). Title II of P.L. 92-500 authorized grants to states for wastewater treatment
plant construction under a program administered by EPA. Federal funds were provided through annual appropriations
under a state-by-state allocation formula contained in the act. For more information, see CRS Report 96-647, Water
Infrastructure Financing: History of EPA Appropriations, by Jonathan L. Ramseur and Mary Tiemann.
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Figure 1. Comparison of Water Infrastructure Capital Spending
by Level of Government (1957-2017)
Does not include spending for operation and maintenance activities

Source: CBO, Public Spending on Transportation and Water Infrastructure, 1956 to 2017, 2018, Supplemental Data
Tables, https://www.cbo.gov/publication/54539.
Notes: For details on CBO’s methodology, see CBO, Public Spending on Transportation and Water Infrastructure,
2010, Appendix B, https://www.cbo.gov/publication/21902.
ARRA Funding for the SRFs
ARRA provided funding for infrastructure in a range of sectors. Depending on how one defines
infrastructure, the aggregate infrastructure funding totaled between $100 billion and $150
billion.29 ARRA provided $4.0 billion for the CWSRF and $2.0 billion for the DWSRF in
FY2009. The Omnibus Appropriations Act, 2009 (P.L. 111-8), enacted on March 11, 2009,
provided an additional $689 million for the CWSRF and $829 million for the DWSRF in
FY2009. Therefore, the total FY2009 funding for the CWSRF was $4.7 billion and, for the
DWSRF, was $2.8 billion. The stimulus funding for the CWSRF and DWSRF was four times
larger and 2.5 times larger, respectively, than the FY2008 appropriations for these programs.
Unlike regular CWSRF and DWSRF grants from EPA, ARRA waived the requirement for states
to provide a 20% match to the federal capitalization grant.30
As a point of comparison, from FY2000 through FY2009, annual appropriations averaged about
$1.1 billion for the CWSRF and about $833 million for the DWSRF. Figure 2 illustrates the
annual appropriations for the CWSRF and DWSRF programs for FY2000-FY2020, including the

29 For example, programs administered by the U.S. Department of Transportation received a total of $48.1 billion.
Other public works infrastructure funding in ARRA included $4.6 billion for Army Corps of Engineers civil works
projects and $2.5 billion for four major federal land management agencies. In addition, authority for state and local
governments to issue tax credit bonds for capital spending represented an additional federal subsidy of about $36
billion. For a further discussion, see CRS Report R46343, Transportation Infrastructure Investment as Economic
Stimulus: Lessons from the American Recovery and Reinvestment Act of 2009, by William J. Mallett.
30 ARRA provided funds to U.S. territories and the District of Columbia in a similar manner to the annual SRF
appropriations. ARRA required EPA to reserve up to 1.5% of the appropriation for CWSRF capitalization grants for
grants to Indian tribes.
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ARRA funding in FY2009. In nominal dollars (i.e., not adjusted for inflation), the annual
appropriations for these programs—especially for the CWSRF—increased after ARRA. Between
FY2010 and FY2020, the annual appropriations averaged about $1.6 billion for the CWSRF and
about $1.0 billion for the DWSRF.
Figure 2. CWSRF and DWSRF Appropriations: FY2000-FY2020
Not adjusted for inflation

Source: Prepared by CRS using information from annual appropriations acts, ARRA, committee reports, and
explanatory statements presented in the Congressional Record. Amounts reflect applicable rescissions but do not
include recent supplemental appropriations for specific locations in P.L. 116-20 and P.L. 116-113 or special
purpose project grants (often referred to as “earmarks”), which ended in FY2011. For more information, see
CRS Report 96-647, Water Infrastructure Financing: History of EPA Appropriations, by Jonathan L. Ramseur and Mary
Tiemann.
ARRA Requirements for the SRF Programs
A key purpose of ARRA was to stimulate the economy quickly. To support this objective,
Congress delivered wastewater and drinking water infrastructure funding through existing
programs. In ARRA, Congress applied a range of new conditions for the funding of the CWSRF
and DWSRF programs that differed from the SRF’s statutory requirements that applied at the
time. As discussed below, in some cases these new funding conditions “created extensive
challenges for EPA, states and funding recipients.”31
In support of the act’s overarching objective to stimulate the economy, ARRA generally required
that funds be obligated by September 30, 2010. However, the act included shorter deadlines for
the SRF program funding. The act directed states to give priority to wastewater and drinking
water projects that were “ready to proceed to construction within 12 months” of enactment (i.e.,
by February 17, 2010)—often described as “shovel-ready”—and required that all SRF funds must

31 EPA, U.S. Environmental Protection Agency (EPA) and Major Partners’ Lessons Learned from Implementing EPA’s
Portion of the American Recovery and Reinvestment Act: Factors Affecting Implementation and Program Success:
Funds Management, September 2013, https://www.epa.gov/sites/production/files/2015-09/documents/lessons-learned-
arra-funds-management.pdf.
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be under contract or construction within that time frame. Further, ARRA directed EPA to
reallocate funds to other states if any SRF capitalization grant funds were not under contract or
construction by February 17, 2010. As discussed below, EPA did not need to reallocate the ARRA
funding.
Additionally, Congress applied several new programmatic requirements to ARRA funding to
support specific policy objectives. Among these conditions, states were required to use at least
50% of ARRA funds for additional subsidization (e.g., grants) and 20% for “green projects.”
Projects receiving ARRA funding were required to use American iron, steel, and manufactured
goods32 and comply with Davis-Bacon Act prevailing wage provisions.33 Table 1 discusses these
requirements and provides their location in ARRA.
Table 1. ARRA Requirements That Applied to the SRFs
ARRA Requirements
Section/Account of P.L. 111-5
One-Year Funding Time Frame: EPA was required to reallocate
Division A, Title VII, State and Tribal
ARRA SRF funding if projects were not under contract or construction
Assistance Grants Account
within 12 months of February 17, 2009. States were required to prioritize
projects on their IUPs that were ready to proceed to construction within
12 months of February 17, 2009.
Additional Subsidization: States were required to use at least 50% of
Division A, Title VII, State and Tribal
ARRA grants to “provide additional subsidization to eligible recipients in
Assistance Grants Account
the form of forgiveness of principal, negative interest loans or grants or
any combination of these.”
Green Reserve: States were required to use not less than 20% of ARRA Division A, Title VII, State and Tribal
grants “to the extent there are sufficient eligible project applications …
Assistance Grants Account
for projects to address green infrastructure, water or energy efficiency
improvements or other environmentally innovative activities.”
Buy American: ARRA funding was available only if all iron, steel, and
Division A, Title XVI, Section 1605
manufactured goods used in a project were produced in the United
States. This section allowed federal agencies, with limited exceptions and
applied consistently with U.S. international obligations, to waive this "Buy
American" requirement if doing so was in the public interest because
there were insufficient American supplies or if the use of American
supplies would have increased the cost of the project by more than 25%.
Davis-Bacon Prevailing Wages: States were required to ensure that
Division A, Title XVI, Section 1606
ARRA-funded projects complied with the prevailing wage requirements of
the Davis-Bacon Act.
Reporting: Recipients of ARRA funds were required to submit to federal Division A, Title XV, Sections 1512,
agencies quarterly reports on expenditure of funds and provide job
1514, and 1515
creation estimates. Federal agencies were required to report on a
quarterly basis on implementation. Inspector general offices of federal
departments or agencies were required to report on the use of funds.
Source: Prepared by CRS.
In addition, ARRA included reporting and evaluation requirements that applied to federal
agencies, state and local implementing agencies, and ARRA funding recipients. These
requirements were intended to provide transparency and accountability for the increased

32 P.L. 111-5, §1605.
33 P.L. 111-5, §1606. This section directed that all projects funded directly by or assisted in whole or in part by ARRA
shall comply with prevailing wage requirements of the Davis-Bacon Act.
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spending.34 EPA was directed to submit, within 30 days of enactment, a report to the House and
Senate Committees on Appropriations containing a general plan for expenditure of funds
provided by the legislation and, within 90 days, another report providing detailed project-level
information associated with the general plan. Federal agencies were required to report on a
quarterly basis on implementation.35 Recipients of ARRA funds were required to submit to EPA
quarterly reports on expenditure of funds and provide job creation estimates.36
Further, ARRA required the U.S. Government Accountability Office (GAO) and the inspector
general offices of federal departments or agencies to report on the use of funds. Inspectors general
were required to review any concerns raised by the public about specific investments using
ARRA funds and relay findings to department or agency heads and post the findings of such
reviews or audits on the internet.37 GAO was required to conduct bimonthly reviews on the use of
ARRA funds by selected states and localities.38
Funding Results and Implementation Experience
Pursuant to ARRA reporting directives, GAO issued multiple reports assessing ARRA
implementation and documenting how the funds were used. In addition, EPA issued several
“lessons learned” reports describing funding outcomes and recounting experiences and challenges
from the states concerning implementation.
An evaluation of the economic impacts associated with the increased ARRA funding for the
CWSRF and DWSRF programs is beyond the scope of this report. Other studies have examined
ARRA’s overall economic impacts, including impacts to the U.S. gross domestic product and
unemployment.39 This section discusses the funding results and selected observations from EPA
and states regarding ARRA implementation challenges.
One-Year Funding Deadline
In a 2010 report,40 GAO cited EPA as stating that all 50 states met the deadline to have ARRA-
funded projects under contract by February 17, 2010 (i.e., one year after enactment). As discussed
above, ARRA waived the 20% state match requirement for ARRA SRF funds in order to
“expedite the use of funds” by the recipients.41 The waived matching requirement likely

34 Office of Management and Budget (OMB), “Requirements for Implementing Sections 1512, 1605, and 1606 of the
American Recovery and Reinvestment Act of 2009 for Financial Assistance Awards,” 74 Federal Register 18449,
April 23, 2009.
35 P.L. 111-5, Title XV, §1512.
36 P.L. 111-5, Title XV, §1512. During ARRA implementation, the website, recovery.gov, contained recipient
information reported on a grant-by-grant basis under EPA Recipient Reporting. EPA produced quarterly reports that
can be found at https://archive.epa.gov/recovery/web/html/plans.html#quarterly.
37 P.L. 111-5, Title XV, §§1514 and 1515. EPA Office of Inspector General reports are available at
https://www.epa.gov/office-inspector-general.
38 P.L. 111-5, Title IX, §§901 and 902.
39 See, for example, CBO, “Estimated Impact of the American Recovery and Reinvestment Act on Employment and
Economic Output in 2014,” 2014. See also CRS Report R46343, Transportation Infrastructure Investment as
Economic Stimulus: Lessons from the American Recovery and Reinvestment Act of 2009, by William J. Mallett.
40 GAO, Recovery Act: States’ and Localities’ Uses of Funds and Actions Needed to Address Implementation
Challenges and Bolster Accountability, GAO-10-604, May 2010, https://www.gao.gov/assets/310/304678.pdf.
41 U.S. Congress, Conference Committee, Making Supplemental Appropriations for Job Preservation and Creation,
Infrastructure Investment, Energy Efficiency and Science, Assistance to the Unemployed, and State and Local Fiscal
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contributed to states meeting the one-year time frame. Without such a waiver, some states may
have required current-year budget increases in order to provide a match, which may have needed
state legislative approval.
ARRA funds supported more than 3,000 water infrastructure projects.42 CWSRF projects
included wastewater treatment, sanitary sewer overflow, and new sewers. DWSRF projects
included construction of transmission and distribution lines and projects to treat and store
drinking water.
In 2011, GAO reported that two years after ARRA enactment, states had drawn down from the
Treasury approximately 80% of the CWSRF funding and 83% of the DWSRF funding of the
ARRA provided funds.43 This may indicate that, in some circumstances, a project that met the
ARRA time frame for contracting may still have been months away from actual construction or
implementation. Specific ARRA-funded projects likely had varying time frames for construction.
Wastewater and drinking water projects can take multiple years to complete. Figure 3 illustrates
the rate at which ARRA-funded projects were completed under the CWSRF and DWSRF
programs. As the figure indicates, at the end of FY2013, funding recipients had completed 66% of
the CWSRF projects and 83% of the DWSRF projects funded through ARRA.44 Certain ARRA-
funded projects, such as water meter installations, may have had shorter timelines than other
ARRA-funded projects, such as water treatment plant construction or sewer line replacement.

Stabilization, for Fiscal Year Ending September 30, 2009, and for other Purposes, conference report to accompany H.R.
1, 111th Cong., 1st sess., H.Rept. 111-16 (Washington, DC: GPO, 2009), p. 443.
42 GAO, Recovery Act: Funds Supported Many Water Projects, and Federal and State Monitoring Shows Few
Compliance Problems, GAO-11-608, June 2011, https://www.gao.gov/assets/330/320224.pdf.
43 GAO, Recovery Act: Funds Supported Many Water Projects.
44 EPA’s website contained such quarterly reporting through the fourth quarter of 2013. See EPA, American Recovery
and Reinvestment Act, Quarterly Performance Report, FY2013 Quarter 4, 2013, https://archive.epa.gov/recovery/web/
html/.
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Figure 3. Cumulative Percentage of ARRA SRF Funding Based on Year of Project
Completion
As of September 30, 2013

Source: Prepared by CRS with data from EPA, American Recovery and Reinvestment Act, Quarterly Performance
Report, FY2013 Quarter 4, 2013, https://archive.epa.gov/recovery/web/html/.
Both EPA and GAO reported that the added requirements for ARRA funds and the statutory
deadline for contracting changed states’ SRF funding priorities. In some cases, the changes
resulted in previously prioritized projects being bypassed for the projects that were consistent
with ARRA funding conditions. For example, states reported postponing projects with greater
environmental or public health benefits in favor of projects that could meet the 12-month
contracting deadline. In addition, an EPA report stated that the one-year deadline “made it
difficult for water projects to take advantage of green infrastructure or innovative technology
options.”45 According to this report, these ARRA requirements were complex, EPA clarified
guidance as questions arose to address implementation issues, and the workload for states and
EPA associated with the mandates alone was significant.
In addition, EPA stated that the scale of funding provided by ARRA and the associated
requirements, including the one-year time frame for contracting, posed significant workload
challenges for states and EPA.46 Relatedly, the 2011 GAO report found that “the deadline was the
single most important factor hindering the ability of [economically disadvantaged communities]
from receiving funding … because these communities typically do not have funds to plan and
develop projects.”

45 EPA, U.S. Environmental Protection Agency (EPA) and Major Partners’ Lessons Learned from Implementing EPA’s
Portion of the American Recovery and Reinvestment Act: Factors Affecting Implementation and Program Success, A
Summary of Six Specific Reports, September 2013, p. 21, https://www.epa.gov/sites/production/files/2015-09/
documents/lessons-learned-arra-six-report-summary.pdf. The Science Applications International Corporation
conducted these assessments on behalf of EPA.
46 EPA, Lessons Learned: A Summary of Six Specific Reports, p. 2.
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Green Reserve Requirement
ARRA required states to use at least 20% of the funds be reserved for “green” projects. Although
GAO reported that states met (or exceeded) this requirement, this funding requirement presented
implementation challenges. ARRA identified general categories of green reserve projects,
including “green infrastructure, water or energy efficiency improvements or other
environmentally innovative activities.” As illustrated in Figure 4, expenditures involving energy
efficiency in the CWSRF and water efficiency in the DWSRF accounted for more than half of the
green reserve projects funded by ARRA. The wastewater sector offers a wider range of project
opportunities to improve energy efficiency (particularly at wastewater treatment plants) and more
opportunities for “green” infrastructure (e.g., stormwater runoff reduction projects). As discussed
below, most of the DWSRF water efficiency projects supported by ARRA funding were water
meter installations.
Figure 4. Breakdown of ARRA Green Reserve Project Funding
Dollars in millions

Source: Reproduced from GAO, Recovery Act: Funds Supported Many Water Projects, and Federal and State
Monitoring Shows Few Compliance Problems, GAO-11-609, June 2011, https://www.gao.gov/assets/330/320224.pdf.
As with many of the other ARRA funding conditions, the green reserve provision was a new
requirement for both EPA and state agencies, as the SRF provisions in the CWA and SDWA did
not require a portion of funds to be used for “green” projects. The green reserve provision in
ARRA included general categories of project types; it did not include definitions for the terms or
categories (e.g., green infrastructure and environmentally innovative activities). Consequently,
state agencies were uncertain as to which projects would satisfy the green reserve condition. EPA
published guidance that addressed green project reserve eligibilities on March 2, 2009, and
subsequently issued four additional documents to clarify its initial guidance on green project
reserve.47 A 2010 inspector general report found that a lack of clear EPA guidance on the “green

47 EPA, Lessons Learned: Funds Management, p. 62.
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requirement” caused confusion and disagreements as to which projects were eligible.48 In
addition, according to the 2011 GAO report, “in certain cases state officials said they had to
choose between a green water project and a project that was otherwise ranked higher to address
water quality problems.” That is, states selected “green projects” over projects that were
prioritized for SRF financial assistance based on compliance with water quality or public health
requirements.
To receive an ARRA capitalization grant, states were required to submit an IUP reflecting the
green project reserve and other ARRA funding requirements.49 In contrast to ARRA, the CWA
and SDWA criteria for SRF project prioritization emphasized compliance, water quality or public
health benefits, and economic need and did not target “green” infrastructure projects
specifically.50 Given the one-year time frame, EPA encouraged states to use their existing IUPs to
identify projects that would be eligible for the ARRA green reserve. Most states did not have a
sufficient number of conforming projects in their existing IUPs to fulfill the 20% “green
reserve.”51 In the absence of sufficient projects, EPA required states to issue solicitations for green
project applications.52 Several states reported re-issuing solicitations for green projects after EPA
clarified its initial guidance,53 which resulted in further implementation delays. Some 38 states
had to conduct additional solicitations to attract clean water “green” projects, and 35 states had to
solicit to attract drinking water green reserve projects.54 To attract participation, 15 states offered
100% subsidization for clean water green projects.55
The green reserve requirement was particularly challenging under the DWSRF program, which is
focused on public health. In general, state agencies implementing DWSRFs had fewer project
options to satisfy the green reserve conditions than did agencies implementing CWSRF
programs.56 This is, in part, due to the CWSRF project eligibilities, as some green projects more
directly support the environmental quality objectives of the CWA.57 As Figure 4 indicates, water
efficiency projects accounted for the majority of green reserve projects in the DWSRF, and “new
water meters in previously unmetered areas [accounted] for a substantial percentage of these

48 EPA, Office of Inspector General, EPA Needs Definitive Guidance for Recovery Act and Future Green Reserve
Projects, 2010, https://www.epa.gov/sites/production/files/2015-11/documents/20100201-10-r-0057.pdf.
49 EPA, Award of Capitalization Grants with Funds Appropriated by P.L. 111-5, the “American Recovery and
Reinvestment Act of 2009,” March 2, 2009.
50 EPA, U.S. Environmental Protection Agency (EPA) and Major Partners’ Lessons Learned from Implementing EPA’s
Portion of the American Recovery and Reinvestment Act: Factors Affecting Implementation and Program Success:
Green Project Reserve, September 2013, p. 2, https://www.epa.gov/sites/production/files/2015-09/documents/lessons-
learned-arra-green-project-reserve.pdf.
51 EPA, Office of Inspector General, EPA Needs Definitive Guidance for Recovery Act and Future Green Reserve
Projects.
52 EPA, Award of Capitalization Grants with Funds Appropriated by P.L. 111-5.
53 EPA, Office of Inspector General, EPA Needs Definitive Guidance for Recovery Act and Future Green Reserve
Projects.
54 EPA, Office of Inspector General, EPA Needs Definitive Guidance for Recovery Act and Future Green Reserve
Projects.
55 EPA, ARRA: Clean Water State Revolving Fund Green Project Reserve Report, June 2012, p. 8,
https://nepis.epa.gov/Exe/ZyPURL.cgi?Dockey=P100MF4Y.txt.
56 EPA, Award of Capitalization Grants with Funds Appropriated by P.L. 111-5. States could submit a business case
for projects not specifically identified in the guidance. At least one state reported that it forewent the business case
option for green projects due to the one-year time frame.
57 At the time, the CWSRF eligible uses included treatment works construction (e.g., sewer and stormwater systems),
nonpoint source management program implementation (e.g., infrastructure to address nonpoint discharges and
stormwater runoff), and national estuary plan implementation.
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water efficiency projects.”58 These water meter installation projects helped states achieve their
“green reserve” funding requirement for the DWSRF and meet the one-year time frame for
contracting. As stated by EPA, “water meter projects were quickly able to meet shovel-ready
status, as compared to projects that involve intensive planning, such as water and wastewater
treatment.”59
Additional Subsidization Requirement
ARRA required states to use at least 50% of their allotment of funds for the SRFs as additional
subsidization (e.g., forgiveness of principal, negative interest loans, or grants). According to the
ARRA conference report:
[T]his provision provides relief to communities by requiring a greater Federal share for
local clean and drinking water projects and provides flexibility for States to reach
communities that would otherwise not have the resources to repay a loan with interest.60
States exceeded the requirement that 50% of the funds be provided as additional subsidies. Of the
total ARRA funds awarded, GAO reported that states provided 76% of CWSRF funds and 70% of
DWSRF as additional subsidies (e.g., forgiveness of principal or grants).61
State approaches to the additional subsidization requirements for ARRA funds varied. Under
SDWA, states have discretion to offer additional subsidization in their DWSRF programs. While
some states had offered additional subsidization prior to ARRA, other states had to adopt
legislative changes to authorize SRF programs to provide assistance other than loans.62 Other
states emphasized loans in order to build the “revolving” capacity of their DWSRFs.
Some states opted to offer 100% of ARRA funds in principal forgiveness.63 One state reported
that additional subsidization expedited the contracting process as applicants did not have to
complete credit reviews.64 In the long term, as subsidy recipients do not repay funds to the SRF,
offering 100% of ARRA funds as subsidies limits the future availability of repayments for loans
for other infrastructure projects. On the other hand, ARRA’s additional subsidization requirement
was intended to support water infrastructure projects in communities that otherwise may not have
the resources to repay a loan with interest.65

58 EPA, Drinking Water State Revolving Fund, Green Project Reserve Funding Status, 2010.
59 EPA, Lessons Learned: Green Project Reserve.
60 U.S. Congress, Conference Committee, Making Supplemental Appropriations for Job Preservation and Creation,
Infrastructure Investment, Energy Efficiency and Science, Assistance to the Unemployed, and State and Local Fiscal
Stabilization, for Fiscal Year Ending September 30, 2009, and for other Purposes, conference report to accompany H.R.
1, 111th Cong., 1st sess., H.Rept. 111-16 (Washington, DC: GPO, 2009), p. 443.
61 GAO, Recovery Act: Funds Supported Many Water Projects, and Federal and State Monitoring Shows Few
Compliance Problems.
62 EPA, Lessons Learned: Funds Management, p. 29.
63 EPA, Lessons Learned: Funds Management, p. 34.
64 EPA, Lessons Learned: Funds Management, p. 33.
65 U.S. Congress, Conference Committee, Making Supplemental Appropriations for Job Preservation and Creation,
Infrastructure Investment, Energy Efficiency and Science, Assistance to the Unemployed, and State and Local Fiscal
Stabilization, for Fiscal Year Ending September 30, 2009, and for other Purposes, conference report to accompany H.R.
1, 111th Cong., 1st sess., H.Rept. 111-16 (Washington, DC: GPO, 2009), p. 443.
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“Buy American” Requirements
Congress required the use of American-produced iron, steel, and manufactured goods in projects
that received ARRA funding.66 As with some of the other ARRA funding requirements, EPA and
the states had little previous experience implementing these funding conditions.67 In April 2009,
the Office of Management and Budget (OMB) published government-wide guidance in the
Federal Register to assist agencies in implementing this and other ARRA requirements.68 Several
days later, EPA issued its guidance for implementing the “Buy American” requirements under the
SRF programs.69 EPA subsequently published additional clarifying guidance documents, some of
which were revised on several occasions.70
According to an EPA study, although participant support for the “concept of buying American-
made products was strong … participants noted many instances in which the Buy American
requirements were so resource intensive and time consuming that projects were delayed simply to
meet the requirement.”71
As states used their existing IUPs to identify projects, such project applications had to be
amended to include the ARRA “Buy American” requirements, which may have contributed to
delays in contracting.72 Some project funding recipients sought waivers of these requirements,
which EPA could grant on a project-by-project basis.73 EPA found that offering a waiver for a
product (e.g., wind turbine) rather than a project may have assisted with a more expeditious
obligation of funds.74
Davis-Bacon Requirements
A number of state agency officials had prior experience with the Davis-Bacon provisions, as these
labor requirements applied to CWSRF projects in the beginning years of the program (FY1989-

66 P.L. 111-5, §1605. None of the funds appropriated or made available by ARRA were to be used for construction,
alteration, maintenance, or repair projects unless all of the iron, steel, and manufactured goods used in the project were
produced in the United States, with certain exceptions.
67 GAO, Recovery Act: States’ and Localities’ Uses of Funds and Actions Needed to Address Implementation
Challenges and Bolster Accountability.
68 OMB, “Requirements for Implementing Sections 1512, 1605, and 1606 of the American Recovery and Reinvestment
Act of 2009 for Financial Assistance Awards,” 74 Federal Register 18449, April 23, 2009.
69 EPA, Memorandum to Regional Directors, “Implementation of Buy American provisions of P.L. 111-5, the
‘American Recovery and Reinvestment Act of 2009,’” April 28, 2009.
70 EPA, “Buy American Provisions of ARRA Section 1605, Questions and Answers,” Part 1, July 2, 2009 (revised
September 22, 2009 and May 27, 2010).
71 EPA, Lessons Learned: Funds Management, p. 45.
72 EPA, Lessons Learned: Funds Management.
73 See for example, EPA, “Notice of a Regional Project Waiver of Section 1605 (Buy American) of the American
Recovery and Reinvestment Act of 2009 (ARRA) to the Town of Falmouth, MA,” 75 Federal Register 22129-22131,
April 27, 2010.
74 EPA, Lessons Learned: Funds Management.
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FY1995) and in the CWA Title II Construction Grants program (the precursor to the CWSRF
program).75 In addition, some states had experience with their own fair labor wage standards.76
Some stakeholders observed that Davis-Bacon and other ARRA mandates hindered the “the push
to obligate and spend funds quickly.”77 Part of the implementation challenge may have been due
to uncertainty regarding the requirements. According to an EPA report, “all states and funding
recipients complained about the onerous and confusing Davis-Bacon process.”78 Applications for
SRF funding from states’ existing IUPs had to be amended to include the Davis-Bacon
requirements, which further challenged efforts to use existing projects from state IUPs to meet the
one-year time frame for contracting.79 In addition, some states identified eligible parties who
chose not to apply for or withdrew from the ARRA funding process due to the additional costs
related to the ARRA funding requirements, such as the Davis-Bacon requirements.80
Reporting Requirements
As discussed above, ARRA required quarterly reporting from federal agencies that were in charge
of implementing ARRA funding programs. States were required to submit weekly reports on
usage of ARRA funds, and EPA published weekly reports to a website specifically for ARRA.81
Some states noted the importance of transparency and publicly available data. Others questioned
the utility of the added reporting data, observing that the data they were providing under the SRF
program was broadly duplicative to existing SRF reporting requirements.
ARRA also required recipients of funds to provide quarterly reports on spending details and
estimates of job creation provided by the ARRA funding. In general, states conducted the
recipient reporting requirements for the SRF programs. While most of the required data elements
were relatively “straightforward and familiar,” state officials noted that the ARRA requirement to
report jobs data, coupled with quarterly deadlines, presented implementation challenges for the
states.82 In addition, the OMB guidance describing the method for calculating jobs data changed
several times during ARRA implementation.83 States noted that these changes led to confusion
and required additional time to implement, as the new guidance was discussed among EPA
regions, states, and local recipients.84

75 Prior to ARRA, the CWA contained Davis-Bacon requirements for CWSRF projects that were constructed before
FY1995 (33 U.S.C. §1382(b)(6) as in effect before the Water Resources Reform and Development Act of 2014
changes). Some policymakers and stakeholders sought to apply Davis-Bacon provisions to CWSRF projects after
FY1995. For more information on the history of these provisions and developments, see CRS Report R41469, Davis-
Bacon Prevailing Wages and State Revolving Loan Programs Under the Clean Water Act and the Safe Drinking Water
Act, by Gerald Mayer and Jon O. Shimabukuro. In addition, state officials may have encountered these requirements
while managing other government-funded construction projects.
76 EPA, Lessons Learned: Funds Management.
77 EPA, Lessons Learned: A Summary of Six Specific Reports.
78 EPA, Lessons Learned: Funds Management.
79 EPA, Lessons Learned: Funds Management.
80 GAO, Recovery Act: Funds Supported Many Water Projects, and Federal and State Monitoring Shows Few
Compliance Problems.
81 EPA, Award of Capitalization Grants with Funds Appropriated by P.L. 111-5, the “American Recovery and
Reinvestment Act of 2009.”
82 EPA, Lessons Learned: Funds Management.
83 EPA, Lessons Learned: Funds Management.
84 EPA, Lessons Learned: Funds Management.
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Subsequent Changes to the SRF Programs
In the years following ARRA, Congress has variously applied versions of ARRA requirements to
the SRF programs in specific years through appropriations acts and, in some cases, has
incorporated similar provisions into the underlying statutes. These requirements and the
subsequent changes to the CWSRF and DWSRF are identified in Table 2.
Table 2. ARRA Requirements for States and Subsequent Changes to the SRFs
ARRA Requirements
Subsequent Changes

CWSRF
DWSRF
Additional Subsidization:
Appropriations acts subsequent to ARRA
SDWA had authorized, but not
States were required to use
regularly required 10% of the CWSRF
required, states to use up to 30% of
at least 50% of ARRA grants
grants to be used for additional
their capitalization grants to
to “provide additional
subsidization.
provide additional subsidies to
subsidization to eligible
The Water Resources Reform and
disadvantaged communities.
recipients in the form of
Development Act of 2014 (WRRDA
Appropriations acts subsequent to
forgiveness of principal,
2014, P.L. 113-121) amended the CWA to ARRA regularly required states to
negative interest loans or
authorize states to provide additional
use 20% of their capitalization
grants or any combination of subsidization under certain conditions and grants for additional subsidies.b
these.”
limitations.a
America’s Water Infrastructure Act
of 2018 (AWIA 2018, P.L. 115-270)
amended the DWSRF provisions of
SDWA to increase the portion
(from 30% to 35%) of a state's
capitalization grant that states may
dedicate to additional subsidization
while conditionally requiring states
to use at least 6% of their grants for
these subsidies.
Green Reserve: States
Appropriations acts subsequent to ARRA
Starting with the FY2012
were required to use not less have included provisions requiring a
appropriations act, states, at their
than 20% of ARRA grants “to
percentage of CWSRF grants be used for
own discretion, could use DWSRF
the extent there are sufficient such projects. Since the FY2012
grants for green infrastructure
eligible project applications
appropriations act, subsequent
projects.
… for projects to address
appropriations acts have required 10% of
green infrastructure, water
the grants be used for this purpose.
or energy efficiency
WRRDA 2014 expanded CWSRF project
improvements or other
eligibility to specifically include some
environmentally innovative
“green reserve” projects (e.g., energy and
activities.”
water efficiency).
Buy American: ARRA
Appropriations acts subsequent to ARRA
Appropriations acts subsequent to
funding was available only if
have included provisions requiring
ARRA have included provisions
all iron, steel, and
CWSRF-financed projects to comply with
requiring DWSRF-financed projects
manufactured goods used in a narrower requirements to use American
to comply with narrower AIS
project were produced in the iron and steel (AIS).
requirements.
United States.
WRRDA 2014 added AIS requirements to In 2016, the Water Infrastructure
CWSRF provisions of the CWA.
Improvements for the Nation Act
(P.L. 114-322) amended SDWA
DWSRF provisions to apply AIS
requirements for FY2017.
AWIA 2018 amended the DWSRF
provisions to renew the AIS
requirements for FY2019-FY2023.
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ARRA Requirements
Subsequent Changes

CWSRF
DWSRF
Davis-Bacon Prevailing
In the Consolidated Appropriations Act,
In the Consolidated Appropriations
Wages: States were
2012 (P.L. 112-74), Congress applied
Act, 2012, Congress applied Davis-
required to ensure that
Davis-Bacon prevailing wage requirements Bacon prevailing wage requirements
ARRA-funded projects
to CWSRF program funding for FY2012
to DWSRF program funding for
complied with the prevailing
and all future years.c
FY2012 and all future years.
wage requirements of the
WRRDA 2014 added Davis-Bacon
AWIA 2018 amended the SDWA
Davis-Bacon Act.
prevailing wage to CWSRF provisions.
DWSRF provisions to add Davis-
Bacon prevailing wage
requirements.
Source: Prepared by CRS.
a. WRRDA 2014 added CWA Section 603(i) to authorize states to provide additional subsidization to
municipalities and other eligible entities that meet affordability criteria or other specified conditions. States
may provide additional subsidization “only if the total amount appropriated for making capitalization grants
to all States under this title for the fiscal year exceeds $1,000,000,000.” With limitations, states may
generally use as much as 30% of their annual capitalization grant for providing additional subsidization.
b. Since the DWSRF program was established in 1996, states were authorized, but not required, to provide up
to 30% of their capitalization grants as additional subsidization to disadvantaged communities (42 U.S.C.
§300j-12(d)).
c. At the time ARRA was enacted, the CWA contained Davis-Bacon requirements that applied to CWSRF
projects constructed before FY1995 (see the provisions in 33 U.S.C. §1382(b)(6)) before they were
amended by WRRDA 2014. Some policymakers and stakeholders sought to apply Davis-Bacon provisions to
CWSRF projects after FY1995. For more information on the history of these provisions and developments,
see CRS Report R41469, Davis-Bacon Prevailing Wages and State Revolving Loan Programs Under the Clean
Water Act and the Safe Drinking Water Act, by Gerald Mayer and Jon O. Shimabukuro.
Concluding Observations
To address the economic impacts of the Great Recession, ARRA provided hundreds of billions of
dollars in mandatory and discretionary spending delivered through both new and existing
programs. A primary objective of ARRA was economic stimulus to preserve and create jobs. To
support this objective, ARRA provided funding for infrastructure in a range of sectors, including
$6 billion in supplemental appropriations for the CWSRF and DWSRF programs. Congress may
consider the degree to which funding such projects would help achieve their specific policy goals.
Whether federal dollars could provide more of a stimulus by supporting other economic policy
tools (e.g., tax cuts) is beyond the scope of this report. Below are several points involving the
experience with ARRA specific to the EPA SRF programs that may be informative for
policymakers considering future economic stimulus measures.
In contrast to the CWSRF and DWSRF capitalization grants provided through annual
appropriations, ARRA SRF funds did not require a 20% match from the states. This waiver likely
contributed to states’ success in meeting the one-year contracting requirement. Without the
waiver, some states may have required current-year budget increases in order to provide a match,
which would have generally required state legislative approval. Without the ARRA waiver, the
20% state match may have leveraged an additional $1.2 billion for the SRF programs above the
appropriated amount in ARRA. If policymakers consider substantial funding increases for the
SRF programs in future stimulus proposals, a state-match waiver may raise issues for
consideration, including the feasibility of states to provide additional funds within a fiscal year
and the trade-off between the increased amount of available funds provided by a state
contribution and the spending time frame. During the Great Recession, states may not have had
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sufficient funds to match ARRA’s funding due to reduced revenue from state tax sources and/or
potential limitations on borrowing from state-level balanced budget requirements.
In addition to the one-year contracting deadline, ARRA funding included several new conditions
and priorities that differed from the existing statutory requirements. Subsequent to ARRA,
Congress applied versions of many of the ARRA funding requirements to the SRF programs
through appropriations acts and, subsequently, through amendments to the underlying statutes
(see Table 2). State and federal SRF program administrators now have more than a decade of
experience implementing many of the funding conditions included in ARRA, although some of
the details of the conditions have changed over time. For example, both SRFs now include a
narrower requirement to use American-made iron and steel products in SRF funded projects, with
certain exceptions. Davis-Bacon prevailing wage requirements now apply to projects receiving
assistance from either SRF. In terms of the green reserve condition, annual appropriations
provisions have directed states to use a percentage (e.g., 10% in the Further Consolidated
Appropriations Act, 2020 [P.L. 116-94]) of their CWSRF capitalization grants for “green”
projects, while under the DWSRF program, states have discretionary authority to finance such
projects.
Although states met ARRA’s deadline and funding conditions, stakeholders reported that the one-
year contracting deadline combined with the added funding conditions presented substantial
implementation challenges for EPA, states, and local governments. For example, according to one
report, “it took a tremendous amount of extra effort from all stakeholders to attain EPA’s ARRA
goals.”85 In addition to the implementation challenges, in some cases the ARRA funding deadline
and funding conditions altered states’ SRF funding priorities (at least temporarily) for their
previously ranked projects or selected projects needed for compliance with water quality or
public health requirements.
The ARRA SRF funding results and implementation experience may be relevant in the 116th
Congress as policymakers consider legislative options to stimulate the economy and/or meet other
policy objectives through increases in water infrastructure spending. Considerations involve the
broad policy objectives of stimulus legislation and how to efficiently achieve such objectives,
perhaps while supporting other policy goals, including statutory priorities such as protecting
public health and environment and infrastructure assistance. Policy options to achieve certain
objectives vary and may depend on the degree and nature of the economic impacts being
addressed (e.g., recovery from COVID-19-related economic impacts). Some policy objectives
may involve trade-offs among competing priorities and may require differing tools for evaluation.
In the case of funding wastewater and drinking water infrastructure as a means of achieving
policy goals, the practicalities of wastewater and drinking water infrastructure projects may be
relevant. In general, water infrastructure projects often involve complicated planning and
construction efforts that span multiple years. Regarding the objective of quickly stimulating the
economy, one consideration is whether to provide funding through existing programs, such as the
SRF programs, or through new programs. For existing programs, a consideration is whether or
how to apply new conditions to the funding to further certain policy objectives, as occurred with
ARRA. If funding were to be delivered through new programs, various considerations―program
structure, development time frames, rulemakings, or other related implementation
considerations―may arise.

85 EPA, Lessons Learned: A Summary of Six Specific Reports, p. 2.
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Author Information

Jonathan L. Ramseur
Elena H. Humphreys
Specialist in Environmental Policy
Analyst in Environmental Policy

Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan
shared staff to congressional committees and Members of Congress. It operates solely at the behest of and
under the direction of Congress. Information in a CRS Report should not be relied upon for purposes other
than public understanding of information that has been provided by CRS to Members of Congress in
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