In response to a deteriorating national economy and recession, in February 2009 the Congress passed and President Obama signed into law the American Recovery and Reinvestment Act ( P.L. 111-5 ). Among the purposes identified in the legislation are preservation and creation of jobs and promotion of U.S. economic recovery, and investment in transportation, environmental, and other infrastructure that will provide long-term economic benefits. This report identifies funding for water infrastructure programs and projects included in the bill. The legislation directed additional appropriations to a number of existing federal programs that either directly invest in water infrastructure projects or provide assistance to states and localities for such activities. Water infrastructure funding, which was available for obligation through September 30, 2010, is summarized in Table 1 . The infrastructure activities discussed here comprise one of many broad categories of infrastructure that received additional funding under the legislation, for construction, repair, and modernization of a range of infrastructure categories both traditional (e.g., highways, airports, passenger rail, and schools) and less traditional (e.g., broadband and the electric power transmission grid). These provisions of the legislation reflected a concept that had drawn much attention by policymakers as one option for addressing the nation's faltering economic conditions: the concept of countering the effect of the current recession with increased government spending on public works in order to create jobs while also promoting long-term economic growth. Proponents argued that states and localities had hundreds of infrastructure projects that were "ready to go" to construction in 90 or 120 days, except for funding, and thus could contribute quickly to job creation and economic stimulus, especially in the construction sector that has been particularly hard hit by the recession. During House and Senate debate on the legislation, both supporters and critics favored more infrastructure spending, with some critics urging changes to increase short-term, stimulative provisions of the bill, including more targeted infrastructure spending, and less spending on activities with less certain quick stimulative effect. Nevertheless, in the floor debates concerning the overall size and composition of the legislation, only one specific proposal to increase infrastructure funds in the bill was adopted. The enacted legislation included some additional funds for high-speed rail projects that were not included in the House or Senate versions. As enacted, the legislation contained several general provisions that apply to all water infrastructure projects and programs funded by the legislation. Two of these general provisions reflect policies to deliver the federal funds quickly, in order to create jobs. First, under section 1602, preference was to be given to activities that could start and finish quickly, with a goal that at least 50% of the funds go to activities that could be initiated within 120 days of enactment. Second, section 603 required that all funds be obligated by September 30, 2010 (specific deadline provisions applicable to EPA funds are discussed below). Two additional general provisions concerned other restrictions on using federal funds. First, section 1605 required that local entities that receive ARRA financial assistance use American-made iron, steel, and manufactured goods in the construction of their projects. Section 1605(b) allowed federal agencies, with limited exceptions and applied consistently with U.S. international obligations, to waive this " Buy American" procurement requirement if doing so is in the public interest because there are insufficient American supplies, or if the use of American supplies will increase the cost of the project by more than 25%. Finally, section 1606 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. This act requires, among other things, that not less than the locally prevailing wage be paid to workers employed, under contract, on federal construction work "to which the United States or the District of Columbia is a party." Critics of Davis-Bacon say that it unnecessarily increases public construction costs and hampers competition (with respect to small and minority-owned businesses). Supporters say that the law helps stabilize the local construction industry by preventing competition from firms that could undercut local wages, and perhaps working conditions, and thus compete unfairly with local contractors. The federal Clean Water Act (CWA) and Safe Drinking Water Act (SDWA) impose regulatory requirements regarding wastewater treatment and drinking water quality in the United States. For wastewater treatment, the CWA prescribes performance levels to be attained by municipal sewage treatment plants in order to prevent the discharge of harmful wastes into the nation's lakes, rivers, and other surface waters. For drinking water quality, public water systems are subject to federal regulations under the SDWA which limit levels of contaminants in treated water and require, for example, system monitoring, treatment to remove certain contaminants, and reporting. Both of these laws authorize financial assistance so that communities can construct treatment facilities in compliance with these requirements. Under both laws, Congress appropriates federal capitalization grants as seed money to support State Revolving Funds (SRFs), and states provide matching funds equal to 20% of the federal capitalization grant. States, in turn, provide loans from the SRFs to communities for water infrastructure projects. Over the long term, the loan programs are intended to be sustained through repayment of loans to states, thus creating a continuing source of state assistance for other communities. The SRF capitalization grants are appropriated through the Environmental Protection Agency's (EPA's) State and Tribal Assistance Grants account (in the Interior and Environment Appropriations bill) and are allocated among the states according to formulas. Historically, the federal government has had a large financial role in assisting communities to meet their wastewater funding needs (having appropriated more than $85 billion since 1973) and also more recently in meeting drinking water treatment needs (more than $14 billion since 1997). However, estimates of funding needs remain very high ($203 billion for wastewater and $277 billion for drinking water), while appropriations for EPA assistance have declined in recent years. The economic recovery legislation provided additional FY2009 funding for the two SRF capitalization grant programs. The Recovery Act provided an additional $4.0 billion for clean water SRFs and $2.0 billion for drinking water SRFs. Total stimulus funding for the two SRF programs was four times larger than the funding levels for these programs in regular FY2009 appropriations. As requested by many states, the legislation waived the current law requirement that states must provide a 20% match to the federal capitalization grant. The CWA and SDWA allow states to make low-interest or no-interest loans from the SRF. The Recovery Act allowed states to also provide additional subsidization in the form of negative interest loans, principal forgiveness, grants, or a combination, but the legislation sets no project-specific limits on such assistance. States were to use 50% of the capitalization grant to provide additional subsidization. In addition, states were to use not less than 20% of capitalization grants to support "green infrastructure," such as water efficiency, or other environmentally innovative projects (unless there were insufficient applications for such projects). Under the Recovery Act, funds appropriated to states were allocated according to existing formulas, or methods of apportionment. Under current law, clean water SRF capitalization grant allocation is governed by a formulation in the CWA, while drinking water SRF capitalization grants are allocated according to a formula developed by EPA that reflects the proportional share of each state's funding needs. Based on those formulas, Table A-1 in the Appendix to this report shows amounts that states were eligible to receive under the funding levels in the bill. The table reflects that, before funds were distributed to states, 1.5% was reserved for EPA to provide assistance to Indian Tribes and, under the drinking water SRF, to Alaska Native Village water systems, consistent with current law. Also, the table reflects that an additional 1.0% of the funds was reserved for program oversight by EPA and remains available for the agency's use through September 30, 2011. States awarded ARRA SRF assistance to projects on their Intended Use Plans, lists that states develop to identify which projects in which communities will receive funding. EPA was directed to submit a report to the House and Senate Appropriations Committees within 30 days of enactment containing a general plan for expenditure of funds provided by the legislation, another report within 90 days providing detailed project level information associated with the general plan, and bi-annual reports on implementation, but there were no deadlines for actually awarding the funds in the bill. However, these reports to Congress did not identify wastewater and drinking water projects that would be funded, because states made those decisions, not EPA. Recipients of ARRA funds are required to report quarterly on expenditure of funds, including providing job creation estimates. As described above, the legislation generally required that ARRA funds be obligated by September 30, 2010. However, it also included special deadline provisions that applied to the SRF monies. The legislation directed states to give priority to wastewater and drinking water projects that could proceed to construction within 12 months of enactment (i.e., by February 17, 2010) and required that all SRF funds must be under contract or construction within that time. Further, the funds were provided as "use it or lose it," because EPA was directed to redistribute any SRF capitalization grant funds that were not under contract or construction by February 17, 2010. Under the EPA SRF programs, rural and non-rural communities compete for funding; rural areas and other small communities have no special priority. For rural areas, the U.S. Department of Agriculture (USDA) administers grant and loan programs for water and wastewater projects, with eligibility limited to communities of 10,000 or less. These programs are administered at the national level by the Rural Utilities Service (RUS) at USDA. Funding needs in rural areas are high (at least $50 billion, according to EPA surveys), and there is heavy demand for funds. At the end of FY2007, USDA reported a $2.4 billion backlog of requests for 928 water and wastewater projects.