Allocation of Wastewater Treatment Assistance: Formula and Other Changes

Congressional Research Service
http://opencrs.com/document/RL31073

[From summary] Congress established the statutory formula governing distribution of financial aid for municipal wastewater treatment in the Clean Water Act (CWA) in 1972. Federal funds are provided to states through annual appropriations according to the statutory formula to assist local governments in constructing wastewater treatment projects in compliance with federal standards. The most recent formula change, enacted in 1987, continues to apply to distribution of federal grants to capitalize state revolving loan funds (SRFs) for similar activities The current state-by-state allotment is a complex formulation consisting basically of two elements, state population and “need.” The latter refers to states’ estimates of capital costs for wastewater projects necessary for compliance with the act. Funding needs surveys have been done since the 1960s and became an element of distributing CWA funds in 1972. First, there are differences over the use of “need” and population factors in the allocation formula itself. Over time, the weighting and preference given to certain factors in the allocation formula have become increasingly complex and difficult to discern. Second, there is a gradual increase in restrictions on types of wastewater treatment projects eligible for federal assistance. Crafting an allotment formula has been one of the most controversial issues debated during past reauthorizations of the Clean Water Act. The dollars involved are significant, and considerations of “winner” and “loser” states bear heavily on discussions of policy choices reflected in alternative formulations. This is likely to be the case again, when Congress moves to reauthorize the act. In the 109th Congress, legislation to extend CWA infrastructure financing was approved by the Senate Environment and Public Works Committee (S. 1400, S.Rept. 109-186). It included changes to the allotment process. However, the bill did not receive further action, partly because of controversies over the proposed allocation formulas. Because the current allocation formula is now more than 20 years old, and because needs and population have changed, the issue of how to allocate state-by-state distribution of federal funds is likely to be an important topic in debate over water infrastructure legislation.