Water Reuse and the Title XVI Program: Legislative Issues
Released: 2010-11-09T00:00:00

Reclamation's Water Reuse (Title XVI) Program

To address growing challenges in western water management, in 1992, Congress directed the Secretary of the Interior to establish a federal water reclamation, recycling, and reuse program to share project costs in the West (Title XVI of P.L. 102-575 , as amended (43 U.S.C. §390h)). Commonly referred to as Title XVI, the program is administered by the Department of the Interior's (DOI's) Bureau of Reclamation and provides funding for projects in several western states and Hawaii. As reuse and desalination have become more cost-competitive and technically viable, interest in the program has increased. Program implementation has at times been contentious, with various stakeholders having widely different views of the program and its performance. DOI has taken action in recent years to improve program implementation.

At issue for Congress is the degree to which DOI actions are consistent with congressional priorities, whether legislative attention is needed to improve the program, and if so, how it should be changed. One question is whether to authorize additional Title XVI projects; several bills pending before the 111 th Congress (e.g., H.R. 2442 , H.R. 2522 ) would authorize additional Title XVI projects or amend existing project authorities. Another question is how to tackle the set of authorized activities: whether a funding priority system proposed by Reclamation should be used to allocate funding among authorized projects, whether there needs to be a statutorily based priority system, or whether the status quo of decision making during the annual appropriations process should be continued. The 111 th Congress has not legislatively responded to Reclamation's funding criteria proposal, nor has legislation to change the overall program been introduced. No programmatic legislation has been enacted since amendments in 1996, although legislation in recent Congresses contemplated programmatic changes. Recent Congresses have also held several oversight hearings on the program, its projects, and their funding.

The rate of Title XVI project authorizations has outpaced annual appropriations. The program has a $630 million "backlog" of authorized projects awaiting appropriations. The Obama Administration has opposed the authorization of additional Title XVI projects, including projects with agency-approved feasibility studies, citing the outstanding authorized funding and oversubscription of the program. At the same time, the Obama Administration has demonstrated support for the program. It broke with policies of the G. W. Bush Administration by declaring water reuse as an appropriate part of Reclamation's mission, and was supportive of Title XVI implementation under the American Recovery and Reinvestment Act of 2009 ( P.L. 111-5 ).

The DOI has issued three documents to guide the program's implementation: (1) agency guidelines for preparing, reviewing, and processing Title XVI project proposals, (2) internal "Directives and Standards" to increase the consistency and effectiveness of the program by establishing feasibility study requirements for prospective Title XVI projects, and (3) funding criteria to prioritize project funding. The latter document was developed following legislative consideration of programmatic changes to the program, including streamlining the feasibility process and establishing project evaluation criteria.

This report presents a brief description of the Title XVI program, the current status of the program, and information on program funding and implementation. It also discusses Title XVI legislative and administrative issues. Table A-1 in the Appendix provides details on the status of individual Title XVI projects, as well as additional program information.

Title XVI Status: Accomplishments and Challenges

The Bureau of Reclamation's water reuse program was first authorized in 1992 in Title XVI of P.L. 102-575 , the Reclamation Wastewater and Groundwater Studies and Facilities Act. The act directs the Secretary to "investigate and identify" opportunities for water reclamation and reuse in the West and authorizes financial and technical support for the design and construction of demonstration and permanent facilities to reclaim and reuse wastewater or other impaired waters (including saline groundwater and seawater). It also authorizes research on technologies for treating these impaired waters. Title XVI assistance, to date, has been limited to projects in the 17 western states and Hawaii. Each permanent Title XVI project requires congressional authorization for construction. However, demonstration projects may be constructed under general authority provided in § 1605 of P.L. 102-575 . The initial legislation authorized five individual projects, including one specifically identified demonstration project. Congress has authorized more than 50 permanent projects as of November 2010.

Geographic Distribution of Projects

Figure 1 shows authorized Title XVI projects in the 17 traditional reclamation states. These projects are overlain on a "hot-spots" illustration, created by DOI to depict where water conflicts are especially prevalent in the western United States. To date, Title XVI projects have been authorized in eight traditional reclamation states: Arizona, California, Nevada, New Mexico, Oregon, Texas, Utah, and Washington. Three projects have also been authorized in Hawaii. As seen from the overlay, many of the authorized Title XVI projects are located in areas prone to water conflict. However, not all such areas have Title XVI projects. Figure 2 lists projects depicted in Figure 1 .

As shown in Figure 1 , more than two-thirds of the 53 authorized projects are located in California. This concentration reflects the early focus of the program on the Southern California and Colorado River hydrologic region in the original authorization as well as interest in the program in the California. The states with Title XVI projects represent many of the states especially active in applying reuse technologies and practices, but not all; two active reuse states, Florida and Colorado, do not have Title XVI projects.

A Growing Program Backlog

A total of 53 projects have been authorized as of November 5, 2010. Total authorized federal funding for these projects is estimated to be nearly $1.2 billion. The backlog of authorized projects in 2006 was $354 million; today it is approximately $630 million. Even with stimulus spending discussed below, the Title XVI backlog has grown with the authorization of several new projects in the 111 th Congress. (See Table A-1 in the Appendix for a listing of projects and funding status.)

Congress to date has funded 42 of the 53 authorized Title XVI projects. That is double the number that had been funded as of FY2006, and leaves 11 completely unfunded. Reclamation has completed its funding obligations for 16 projects—up from three completed projects at the end of FY2005. Title XVI federal funding obligations are nearly complete (80% or more) for three more projects, for a total of 19 projects for which federal funding is complete or nearly compete—up from six projects in FY2006. As shown in Figure 1 , nearly 80% of the 53 Title XVI projects have received some Title XVI funding. These projects are depicted in Figure 1 by the darkest blue circles (completed projects) and the grayish blue circles (other projects receiving some Title XVI funding). The light blue circles represent authorized projects that had not received Title XVI funding by the end of FY2010. Title XVI funding via the annual Energy and Water Development Appropriations bill for FY2010 is $13.6 million. This appropriation is lower than in recent years, presumably due to the large amount of ARRA funding that was to be obligated in FY2010.

Reclamation estimates the amount of water actually produced by operating Title XVI projects in FY2009 was 245,111 acre-feet. Reclamation estimated a total maximum design capacity of 747,558 acre-feet of water annually for all Title XVI authorized projects as of 2006. Since that time several more projects have been added; however, a revised total capacity estimate was not available for this report.

Because authorizations of projects have consistently outpaced project funding, the Title XVI backlog continues to grow. For example, as of May 25, 2010, total Title XVI funding had reached an estimated $531 million, including $135 million in ARRA funding. ARRA funds significantly reduced the number of unfunded projects and contributed to the completion of the federal share of multiple projects; however, outstanding authorizations grew to $630 million.

Title XVI Issues for Congress

Congress continues to authorize Title XVI projects and has done so more frequently in recent years. Some Members of Congress continue to voice concern over the program's goals and implementation, including costs. A frequent concern is how much the program costs and its impact on available funding for more traditional Bureau of Reclamation activities and aging infrastructure. Some have also questioned the cost of water produced and whether the program is cost-effective. In general, Title XVI issues fall into two categories: (1) issues specific to the program's implementation and structure (legislatively and administratively), and (2) broad policy issues.

Reclamation has developed more detailed evaluation criteria over the years, such as Reclamation guidelines for project evaluation, Directives and Standards (D&S) for the Title XVI program, and most recently, funding criteria. However, none of these documents have been promulgated as official rules or regulations; nor do they appear to be binding. For example, the evaluation procedures do not include criteria for competitively ranking projects or selecting projects. Both the D&S and guidelines provide more explicit evaluation and feasibility criteria than are provided in statute; however, the criteria are referred to as factors to be "considered" and are not ranking or decision-making criteria. With the Administration's FY2011 budget request for a lump sum of $20 million to be allocated using proposed funding criteria, the Administration seems to be trying to accomplish administratively what some programs (e.g., EPA water quality programs) have in statute.

Other overarching issues include the scope of the program and the degree to which project assistance should be targeted to certain types of projects or broadened to include more projects in more areas. Different stakeholder views on these overarching issues will ultimately affect specific decisions to address broad policy issues, as well as program criteria, project evaluation, and funding issues discussed below.

Managing Title XVI as a Program

While between $1 million and $3 million is devoted to Title XVI program administration annually, there are no programmatic funds to be allocated to each project. Instead, the bulk of Title XVI funding is allocated annually to each project by Congress via a separate line item in Reclamation's Water and Related Resources budget account. This process is consistent with most water resource project funding (e.g., Corps of Engineers and traditional Reclamation project funding); however as discussed below, it is markedly different from other federally supported water treatment programs. In recent years such line item funding has come under fire and become part of the "earmark" debate before Congress. Under the present system, Title XVI projects are listed as "earmarks," which adds an element of controversy to them.

In response to interest in changing the current budgeting practices and to concerns over managing the demand on limited Title XVI funding, Reclamation published criteria for prioritizing projects for funding (see text box below for more details on the proposal). The Administration's FY2011 budget request included a lump sum of $20 million that would be used to restructure Title XVI funding to be more similar to other federal programs. The Administration is proposing that Congress provide it the lump sum for new Title XVI construction activities and that Reclamation would use the criteria to prioritize project funding.

Funding for Title XVI has been somewhat controversial over the years, largely because of differences in congressional and administrative priorities. For example, Reclamation has consistently limited its budget requests to projects that have received prior federal funding, while Congress has typically provided funding for a broader set of projects. At the same time, some Members of Congress have repeatedly questioned program costs.

Administration Proposal to Prioritize Title XVI Funding

For FY2011, the Title XVI budget request is $29.0 million. Roughly $9.0 million is requested for six specific projects, while $20 million is requested for Reclamation's allocation to specific projects "using criteria focused on reducing existing diversions or addressing specific water supply issues in a cost-effective manner" and meeting other priorities spelled out in Reclamation's proposed funding criteria.

Congress typically includes funding for more projects than requested by the Administration. However, it is unclear whether appropriators will grant the lump sum program funding to be allocated by Reclamation or whether the authorizing committees will sanction the proposal.

Issues Raised by the Proposal

These criteria would push Title XVI toward being managed as a program, instead of a set of individually authorized and funded projects. Other federal water assistance programs, such as state revolving loan funds for wastewater and drinking water administered by the U.S. Environmental Protection Agency (EPA) and rural water and wastewater disposal programs administered by the U.S. Department of Agriculture (USDA), have criteria, regulations, and competitive processes for selecting projects and allocating funding. For many of these programs, the formulae and criteria are set out in statute. Congress appropriates money annually for these programs; however, except for some congressionally designated projects, project funding is not regularly appropriated for each project, as it is for Reclamation and Corps projects. Instead, depending on the program, states or federal agencies select projects based on eligibility and/or selection criteria, and then allocate program funding based on these criteria. (For more information on other federal water programs, see CRS Report RL30478, Federally Supported Water Supply and Wastewater Treatment Programs , coordinated by [author name scrubbed].)

The proposed criteria may assist in managing nonfederal project sponsors' expectations for funding, improve transparency of how projects are selected for funding, and bring the Title XVI program more in line with other federal programs. Criteria would potentially reduce the active role of Congress in annually deciding the level of appropriations for each authorized project and potentially minimize concerns over "earmarks." While the approach may be a priority for OMB and the Administration, Congress may not accept leaving prioritization of project funding to the Administration, especially without statutorily directed project evaluation, funding, or ranking criteria.

The Administration's proposal raises several questions:

Input and Process : Is new or revised program guidance needed, via a formal rule-making process, congressional action, or both? Or, will the Administration's new funding criteria, combined with D&S and Reclamation guidelines suffice for project evaluation and funding prioritization? Equity : How should different phases of projects be funded? Should funding of a new phase of an existing project have priority over funding of a new project? For cost-share purposes, when does one phase end and another begin? Is it fair or desirable that some projects get multiple allocations of federal funding by staging construction in phases? Should projects that have successfully completed projects without Title XVI assistance still be eligible for the authorized federal cost-share (as indicated in the proposal)?

Basis for Title XVI Authorization

Another issue is the basis for congressional authorizations of a Title XVI project. Several authorization bills introduced in the 111 th Congress are for projects that do not have completed feasibility studies or completed environmental reviews. The Obama Administration, like its predecessor, has consistently testified in opposition to authorization of new projects that have not met these basic tests. For example, in April 2010 the Administration testified against S. 1138 , the Bay Area Regional Water Recycling Program (BARWRP) Expansion Act, stating that the projects would compete for funding with other Reclamation program needs, including existing Title XVI projects and noted that several of the BARWRP projects lacked approved feasibility studies and environmental reviews.

A question for Congress, as a policy matter, is whether to move forward project authorizations that do not have completed feasibility studies and environmental reviews. In the past, project sponsors argued that such prior authorization was necessary because the Administration was not acting on pending feasibility studies. It is not clear if that continues to be an issue. For example, the ARRA funding was only available for projects that could be implemented quickly—presumably projects that had feasibility and environmental reviews. Regardless, historically, the House Natural Resources Committee and Senate Energy and Natural Resources Committee rarely authorized traditional water resource projects prior to completed feasibility studies.

These issues also raise several questions:

Effect of Administration efforts : Has Reclamation's implementation of D&S reduced the delay in approval of project feasibility studies? Do the guidelines and D&S provide decision makers with adequate knowledge about the project? Are these measures too cumbersome for project sponsors? What is the appropriate balance between sponsor's desire for a streamlined process and protection of taxpayer interests in ensuring viable and cost-effective projects? A uthorization process : Is authorization prior to feasibility study completion a problem (e.g., has it resulted in authorized projects that are infeasible, not cost-effective, or unproductive)? If so, would new or revised guidance forestall the issue of projects being authorized by Congress prior to undergoing the Title XVI project evaluation process? What is the appropriate balance between easing burdens on congressional committees for project evaluation and delegating project selection solely to the executive branch?

Federal Role in Reuse

A broad policy issue related to Title XVI, but not frequently discussed in recent years, is the question of the appropriate federal role in water supply development, particularly for municipal and industrial (M&I) purposes, and particularly the role of Reclamation in this regard. Because Title XVI projects are largely municipal water development projects and the most recent articulated congressional policy on these types of projects is half a century old (under the Water Supply Act of 1958), debate remains in some circles over whether, and if so how, the federal government should fund these activities.

Congress has repeatedly continued to authorize and fund these projects, seemingly making the issue moot. Yet, historically, federal water resource agencies' involvement in water supply was limited to developing irrigation projects and multiple use projects. Unlike other areas of water resources management in which the federal role is more prominent (e.g., irrigation water supply, flood damage reduction, and navigation; or supporting wastewater and drinking water treatment investments through revolving loan programs), the federal role in water supply development for M&I largely has been secondary to the primary role of state and local governments. Water supply development for M&I generally has been incidental to the primary project purposes of large, multi-purpose irrigation, flood reduction, hydro power, and navigation projects, pursuant to congressional policy established in the Water Supply Act of 1958.

While as a general matter, local, regional, or state agencies have been responsible for water supply development and wary of federal involvement in allocating water, Congress occasionally has deviated from this policy. Examples of federal funding via grants and loans for M&I infrastructure often are tied to meeting federal water quality standards or broad social purposes, such as assisting rural or economically distressed areas or protecting public health and safety. In the case of Title XVI, an original rationale for the program was to help Southern California reduce its reliance on Colorado River water.

Moreover, over the last two decades, Congress has increasingly, and incrementally, authorized DOI participation in water supply projects for small and rural communities. Although Congress has increasingly passed bills for site-specific projects and established the Title XVI program, it has not re-articulated long-standing congressional policy regarding the federal role in M&I water supply development since the 1958 Water Supply Act. Related to this policy issue is the question of what is a Title XVI project? For example, should the program be used to fund projects for which the primary purpose is to meet local obligations to reduce point- or non-point source pollution under the federal Clean Water Act, for which federal funding already exists?

Increasing demand for already scarce water supplies, including water to support new energy development, in many areas of the West is contributing to water management conflicts. For example, several of the country's fastest-growing states are among the 17 western "reclamation" states ─ states where the Bureau of Reclamation typically operates, as defined in the 1902 Reclamation Act.

Pressures to reconsider federal support for water supply projects is mounting. The nation is experiencing increased local pressure on and conflicts over existing water supplies. Although the specifics vary by location, most challenges to existing water management practices are shaped by: (1) demand factors, such as growing population, instream species and ecosystem needs, agricultural water demand, energy needs, water pricing, and changed public interest (such as increased interest in water-based recreation and scenic amenities); and (2) supply factors, such as water source contamination, environmental regulation, aging infrastructure, and long-term natural variations or other changes in the hydrologic cycle. These factors, coupled with drought conditions and climate change concerns in many areas and the current fiscal climates in many states, have fostered interest in new water supply development, supply augmentation, and diversification and security of water supplies.

Growing pressure on water supplies in the West make it likely that the demand for Title XVI projects and requests for federal assistance, and hence pressure on Congress to approve more projects, will increase. At the same time, the potential for future requests to escalate and create an entirely new class of water supply assistance appears to have increased congressional, Administration, and traditional Reclamation stakeholder concerns over water reuse as a draw on limited federal water resources funds.

Next Steps and Remaining Issues

Under the status quo, the prospect for the Title XVI program is a growing list of authorized projects competing for limited appropriations and Administration support. The 111 th Congress thus far has not addressed Title XVI program management via legislation. Instead, legislative activity has been limited to individual project authorizations and oversight.

If Congress were to consider programmatic changes, it would face several broad questions in addition to those already raised, including:

How urgent is the problem of water scarcity in West? If urgent, what is the federal interest in the problem? Is funding Title XVI projects an efficient or appropriate response? How important is the problem and what is the right approach ? While the problem may be acute in some areas, it may be less so in others—should an adjustment to the program acknowledge such differences and focus federal resources in certain areas? Or is that already happening as a function of which local governments and sponsors are seeking legislation? What are other options to address the problem and are they more cost-effective? Should it be a federal responsibility to promote water reuse in the West? If so, why, or why not nationwide? How does reuse contribute to national well-being? How does promoting or facilitating reuse in the West facilitate other federal goals, objectives, and legal obligations (e.g., tribal trust obligations or protection of threatened and endangered species)? Why are some states already embracing the reuse program, but not others? For example, are there important differences in state water laws that make reclamation and reuse feasible in some areas but not others? Is it access to capital, or other reasons?

Congress also would face numerous questions related to the specifics of the programmatic changes:

Should Congress continue to subsidize water reuse in the West through this de facto grant process, or are there other priorities for limited federal funding? Is there a more efficient way to encourage reuse? Should Title XVI funding be subject to Reclamation reimbursement policies for the federal cost-share, as is generally the case for more traditional Reclamation projects? How does, or could, the Title XVI program mesh with other federal activities (e.g., Interior's Water Smart grant initiative or water reuse and storage activities under CALFED or the California water plan)? Should the program be tied to alleviating demand or reducing existing diversions where endangered species or other fish and wildlife or water quality concerns are at issue? Should reuse be used to help communities "drought-proof" their supplies, or to slow pressure on agricultural water supplies, by possibly slowing conversion of "agriculture-to-urban" water transfers? Will promoting water reclamation and reuse simply encourage more growth in already water scarce areas? Will growth or development come at the expense of federal investment in other economically depressed areas with plentiful water resources, or in other projects that might produce more water?

These questions are just a few that arise when discussing the future of Title XVI. Reclamation's new funding criteria and other programmatic actions attempt to answer some of these questions; whether Congress agrees with Reclamation's approach and appropriates the lump sum funding for the Administration to allocate has yet to be decided.

Growing demands on water resources in the West and elsewhere make it likely that interest in federal assistance for water reuse projects will continue. Depending on perceptions of problems with the Title XVI program, different solutions to resolving program issues will be sought. Different stakeholders will have different opinions on the magnitude, importance, and scope of the broad policy, program criteria, project evaluation, and funding issues identified in this report. Resolution of Title XVI issues will depend on many factors, including to what degree congressional and Administration priorities for the program can be articulated and balanced.

Appendix. Title XVI Projects

Title XVI has been amended multiple times since 1992, resulting in a total of 53 authorized projects. (See Table A-1 . )

Active Projects

As noted earlier, Title XVI funding obligations for 16 projects are complete, and nearly complete for 3 additional projects. Title XVI projects were yielding an estimated 245,111 acre-feet of water annually as of FY2009 – double the production of 121,678 acre-feet annually as of September 20, 2005. Because water yield figures are based on total design capacity, actual water yield at full build out will likely be slightly less than depicted in the last column of Table A-1 .

Unfunded Projects

Eleven projects have not received funding to date and appear to be inactive; however, to clarify this situation, Reclamation is surveying sponsors of authorized projects to determine the status of each project. Results from the survey and an analysis of new data are expected in early 2011. Projects unfunded by Reclamation are shown in bold in Table A-1 . The other Title XVI projects are considered active.

The eleven projects that have not received funding from Reclamation include at least one project that has received other federal funding, including funding from EPA and the Bureau of Indian Affairs. It is not clear how many projects may ultimately seek multiple sources of federal funding or already have done so.

Title XVI Federal Contribution

Title XVI projects authorized prior to 1996 ranged in total costs from $152 million ($38 million for Reclamation's share), to $690 million ($172 million for Reclamation's share), with 25% of the total project costs eligible for Title XVI funding. In 1996, the program's authorization was amended to limit the federal share to no more than $20 million per project. The three costliest Title XVI projects were authorized in 1992, before federal contributions were capped at $20 million. Post-1996 projects have been smaller in scale, ranging from $700,000 for Reclamation's share to the authorized federal cost-share cap of $20 million.