Notes on the 2021 Bipartisan Infrastructure Law, Part II*
The Infrastructure Investment and Jobs Act (IIJA, better known as the Bipartisan Infrastructure Law) that the 117th Congress and President Biden passed late last year authorizes $63.3 billion for the water sector. My last post discussed the significance of that spending.
Beyond the burgeoning billions, the IIJA contains some interesting water-related policy directives. This second of three posts about the IIJA sifts through the fine print and discusses a few interesting bits of policy that may have gone unnoticed in the glare of the top-line spending. The rules and guidelines that emerge along with the spending program are likely to shape the water sector long after the last IIJA dollar is gone.
The United States continues lurching toward a national water/sewer bill assistance program, and the IIJA reveals some important things about the direction of the lurching. Congress created a new national water/sewer bill assistance program in the waning days of the Trump administration as part of a massive COVID relief package. Initial funding was set at $638 million, with another $500 million added in March 2021. The new Low Income Household Water Assistance Program (LIHWAP) answered repeated calls for a water/sewer bill assistance program modeled on the Low Income Home Energy Assistance Program (LIHEAP). Touted as “LIHEAP for water,” implementation was assigned to the U.S. Department of Health & Human Services (HHS), which runs the decades-old energy assistance program.
LIHWAP implementation has been… slow. More than a year after LIHWAP’s creation HHS has sent tens of millions of dollars to state agencies to support LIHWAP administration, and some states have finally begun accepting applications for the new program. But as far as I know, no low-income households have actually received any assistance to date. [Update: over the 48 hours after posting, I received a several messages telling me that LIHWAP is now up and running and even distributing funds in a handful of states. Hooray!]
None of this is surprising, nor is it a knock on HHS—the agency was charged with setting up a brand new, national assistance program from scratch, in cooperation with 50 states and dozens of tribes and territories and thousands of utilities, in the midst of a pandemic. Assistance programs are hard to run and most fail to reach the majority of folks who need it. HHS also has zero experience working with an American water sector that is vastly more complex and fragmented than its energy sector.
The IIJA suggests that federal water/sewer billing assistance may be heading in a different direction. Section 50108 orders the Environmental Protection Agency (EPA), to conduct a national needs assessment for water/sewer bill assistance, and Section 50109 calls for up to 40 customer assistance pilot programs to be funded as grants to water utilities. There are two notable things about this development:
- IIJA assigns selection, oversight, and evaluation of these pilot programs to EPA not HHS.
- The pilots are structured as block grants to individual utilities, not states.
Congress seems to be sending a similar signal in the pending Build Back Better bill, which would give EPA $225 million in grants to support state/tribal assistance programs. Just as importantly, Build Back Better includes no permanent, ongoing funding for LIHWAP—suggesting that Congress may quietly let the program die out with the COVID-19 pandemic.
Together, these provisions may presage a shift in the structure of federal efforts at water/sewer bill assistance from a LIHEAP-style benefit program run by HHS to a grant program administered through EPA. EPA has no experience running welfare programs, but it plenty of experience working with utilities and state regulatory agencies. Whether the bureaucratic shuffle and shift in policy framework will lead to better outcomes is an empirical question.
Several of the IIJA’s water spending provisions direct EPA to prioritize “small and disadvantaged communities” in awarding infrastructure funding. This laudable goal aligns with the Biden Administration’s Justice40 initiative, which seeks to channel at least 40 percent of the overall benefits of new federal spending toward disadvantaged communities. The Drinking Water State Revolving Loan Fund (DWSRF) is one of 21 federal programs designated as a pilot to demonstrate Justice40 implementation.
Transforming this political poetry into public policy prose requires defining three key terms:
- “Overall benefits”
The IIJA does not define these terms, and so it will fall to EPA and state DWSRF administrators to figure out exactly what these words mean and how they will affect funding decisions. And they'll have to do it fast—DWSRF is supposed to disburse more money in the next five years than it has in the program's entire 25-year history. Bureaucratic
inertia path dependency means that the definitions that emerge from this process will shape agency priorities far beyond IIJA spending. This is inside baseball worth watching closely.
Studies! Studies! Studies!
Beyond the Section 50108 assistance assessment, IIJA calls for the EPA to conduct water-related studies on:
- Advanced drinking water treatment technology
- Advanced wastewater treatment technology
- Watershed needs assessment
- The prevalence & causes of boil water advisories
- Historical distribution of grant funds to disadvantaged communities
As a professor, I’m naturally predisposed to like this sort of thing. EPA’s development and management of these studies is worth watching carefully, as the knowledge gained through these studies may have impacts that last long after the final IIJA infrastructure dollars are spent.
The IIJA’s Section 50106 authorizes the EPA to spend up to $300 million in 90-10 matching grants aimed at improving the operational sustainability of small water systems, defined as systems that serve populations of less than 10,000. This is a laudable goal, given the well-documented advantages of larger utilities and small system struggles. However, the IIJA’s definition of operational sustainability is weirdly narrow:
This definition seems to reduce “sustainability” to leak prevention. To that end, section 50106 program would fund things like asset management systems, leak detection technology, advanced metering infrastructure, and so forth. Those are all useful things.
But glaring by their absence from this definition of operational sustainability are source water quality, treatment technology, financial resources, and organizational capacity—all of which seem important for a water utility to be, you know, sustainable.* ¯\_(ツ)_/¯
Devils (and angels!) in the details
The IIJA spills more than 20,000 words of ink on the water sector, and I’ve surely missed some noteworthy stuff here. The point is that, apart from the big bucks, this new law carries in its minutiae some potentially important implications for federal policy toward water and sewer systems.
My third and final post in this series will consider what all the IIJA’s funding and features mean for the future of the American water sector.
*Some asset management firm’s lobbyist earned his/her bonus last year.