page_title: Drinking water supply and sanitation in the United States
section_title: Federal assistance
hierarchical_section_title: Drinking water supply and sanitation in the United States / Responses to address issues / Federal assistance
caption_attribution_description: English: w:United States Capitol in daylight Español: Capitolio de los Estados Unidos en un día soleado. Bân-lâm-gú: Bí-kok kok-huē Tāi-hā. 美國國會大廈
context_page_description: Issues that affect drinking water supply and sanitation in the United States include water scarcity, pollution, a backlog of investment, concerns about the affordability of water for the poorest, and a rapidly retiring workforce. Increased variability and intensity of rainfall as a result of climate change is expected to produce both more severe droughts and flooding, with potentially serious consequences for water supply and for pollution from combined sewer overflows. Droughts are likely to particularly affect the 66 percent of Americans whose communities depend on surface water. As for drinking water quality, there are concerns about disinfection by-products, lead, perchlorates, PFAS and pharmaceutical substances, but generally drinking water quality in the U.S. is good.
  Cities, utilities, state governments and the federal government have addressed the above issues in various ways. To keep pace with demand from an increasing population, utilities traditionally have augmented supplies. However, faced with increasing costs and droughts, water conservation is beginning to receive more attention and is being supported through the federal WaterSense program.
context_section_description: One way to address the funding needs of utilities to respond to the various challenges they face without increasing the burden of water bills on users is federal financial assistance.
  Centralized water and sanitation infrastructure is typically financed through utilities' own revenue or debt. Debt can be in the form of soft loans from state revolving funds (SRF), credits from commercial Banks or – in the case of large utilities – from bonds issued directly in the capital market. In the case of water supply (i.e. excluding sanitation), 42% of investments were financed by private sector borrowing, 39% by current revenues, 13% by government loans including the Drinking Water SRF, 5% by government grants and 1% from other sources. There are two SRFs: The larger Clean Water State Revolving Fund, created in 1987, and the smaller Drinking Water State Revolving Fund, created in 1997. They receive federal and state contributions and issue bonds. In turn, they provide soft loans to utilities in their respective states, with average interest rates at 2% for up to 20 years in the case of the Clean Water State Revolving Fund. In addition to the SRFs, the United States Department of Agriculture provides grants, loans and loan guarantees for water supply and sanitation in small communities (those with less than 10,000 inhabitants), together with technical assistance and training.
  The American Recovery and Reinvestment Act of February 17, 2009, provided $4 billion for the Clean Water SRF, $2 billion for the Drinking Water SRF and, among others, $126 million for water recycling projects through the United States Bureau of Reclamation. This program exceeded previous levels of financing, since Congress approved only US$1.5 billion of federal funding for State Revolving Funds in 2008. This was much below the historical average of US$3 billion/year for the Clean Water State Revolving Fund (1987–2006) and US$1.2 billion/year for the Drinking Water State Revolving Fund (1997–2005). The share of federal funding for sanitation has declined from almost 50% in the early 1980s to about 20% in the early 1990s. A May 2016 article asserted that there has been "a huge federal retreat from helping cities fund water projects," stating that overall federal spending on water utilities "has dropped 75 percent since 1977," and that experts expect more situations like the Flint water crisis to emerge.
  Congress passed the Water Infrastructure Finance and Innovation Act of 2014 (WIFIA) to provide an expanded credit program for water and wastewater infrastructure projects, with broader eligibility criteria than the previously authorized revolving funds. Pursuant to the act, EPA established its Water Infrastructure and Resiliency Finance Center in 2015 to help local governments and municipal utilities design innovative financing mechanisms, including public-private partnerships. It is part of the federal government's Build American Investment Initiative. Congress amended the WIFIA program in 2015 and 2016. One of the envisaged instruments to boost financing in water infrastructure are Qualified Public Infrastructure Bonds (QPIBs), tax-exempt municipal bonds that can be used by private companies.
caption: The United States Congress approves federal funding for water and sanitation, including through state revolving funds.
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