The Infrastructure Investment and Jobs Act: What it means for water infrastructure

With an emphasis on digital infrastructure, resiliency, and the clean energy economy, the Infrastructure Investment and Jobs Act (IIJA) has allocated funding across many programs including transportation, manufacturing, and R&D. Also included in the bill is $55 billion in funding for the nation’s water infrastructure. 

Spaced over five years, this investment looks to partially address the funding gap created by decades of underinvestment. The pool of money has been allocated into four initiatives: 

1. $15 billion in funding for lead pipe remediation: To remove lead pipes from American homes and schools, improving health outcomes and quality of life for many 

2. $24 billion in funding to upgrading drinking water, wastewater, and stormwater systems: To modernize water systems around the country through investment in clean drinking water and funding for low-income areas that are struggling to replace distribution pipes and treatment facilities 

3. $10 billion in funding to support clean water infrastructure: To monitor and improve drinking water quality through updating PFAS limits set by the Safe Drinking Water Act and accelerating water quality research 

4. $6 billion in funding to support water infrastructure in tribal communities: To improve water infrastructure and resiliency through programs provided by the Indian Health Service Sanitation Facilities Construction program and complete Indian Water Rights Settlements

Water infrastructure in America is in need of investment 

The American Society of Civil Engineers issues a report card every four years for America’s infrastructure. In 2020 America’s infrastructure scored a C-, drinking water infrastructure received a C-, stormwater infrastructure received a D, and wastewater infrastructure received a D+. 

Decades of underinvestment have created an extreme funding gap—about $750 billion over the next 20 years—leaving water utilities to make tough choices as to which areas receive repairs, maintenance, and upgrades. The staffing challenges facing the industry only compound the complexity of these decisions. Available funding mechanisms are inadequate to meet the financial needs utilities have. Oftentimes rates are kept low to maintain affordability, and available revolving funds make up only a small fraction of the nation’s total water spend, ultimately leaving a chronic funding gap when it comes to infrastructure maintenance and upgrades. The IIJA begins to alleviate this funding gap as it focuses on four initiatives to improve water infrastructure:  

• Lead pipes: Congress banned lead pipes in 1968 but allowed existing lead pipe infrastructure to remain in the ground. As many as 10 million homes across the U.S. currently receive their drinking water through lead pipes and service lines, leading to potential adverse health effects in those populations.
• Crumbling infrastructure: A water main breaks, on average, every two minutes in the United States—leading to a daily loss of about 6 billion gallons of treated water. Between 1977 and 2017, the federal government’s share of capital spend in the water sector fell from 63% to 9% of total capital spend, highlighting the critical need for renewed federal government funding support today.
• PFAS contamination: PFAS are man-made chemicals that repel water and oil and are used in a wide variety of consumer products. They do not break down in the environment, which means they can accumulate and work their way through water systems over time. PFAS has potentially adverse health effects and no federal limits have yet been set on the concentration of the chemicals in water.
• Water supply and sanitation in Tribal communities: Decades of underinvestment in critical drinking water and sanitation infrastructure, combined with ongoing water rights battles, has left many tribal communities struggling to access clean water resources.

While the IIJA will not meet the full funding need of the water industry, it will provide significant positive benefits to water utilities and customers alike. 

What does federal water infrastructure investment mean for water utilities?  

Water utilities have been burdened with aging infrastructure for decades. With the funding provided in the IIJA, utilities have the opportunity to remediate lead pipes, modernize assets to help reduce water waste and costs, and improve drinking water quality through research and improved standards on contaminants of emerging concern. 

Tackle lead pipe remediation

Many utilities have taken steps to help remediate lead services while others have yet to truly get started in an impactful way. With this significant boost in investment in place, utilities that receive funding are tasked with efficiently and responsibly removing lead services within the five-year window of the IIJA. However, two large challenges remain: 

• The first will be verifying the lead service inventory throughout a service territory. Historical records and inconsistent documentation make this difficult. Pittsburgh has recently taken on this challenge by creating an inventory log meant to be used in conjunction with a lead service line replacement program. This repository goes above and beyond regulatory requirements but will be most useful in creating an effective program. More and more, water utilities are investing in data analytics to predict the presence of lead services. 

• The second challenge will be the aggressive timeline. The city of Denver has a “Help get the Lead Out” program in place to remove all 70,000 lead services over a 15-year period. Compare that with Chicago, which has 400,000 lead service lines and has yet to begin its remediation program. Water utilities will have to quickly define their scope and efficiently work to remove all lead services. However, once completed, this initiative will reduce lead exposure in 400,000 schools and childcare facilities and could be “the single greatest step we’ve seen this century to reverse lead contamination of our drinking water,” according to John Rumpler, Environment America’s Clean Water Program Director.  

Some utilities are also making progress by pairing lead remediation with advanced metering, taking the opportunity to test for lead services during planned meter replacements.  

Adapt to increased water quality standards

With the IIJA, water quality standards are required to improve with funding focused on the monitoring and remediation of PFAS in drinking water. Additional funding will also be provided specifically to small water systems for quality improvements. It has been reported that 110 million Americans’ drinking water contains PFAS contaminants. Because of this, the EPA has been criticized in recent years for moving too slowly to implement regulation for these chemicals. In parallel, many water utilities, hamstrung by funding gaps, have not been able to invest in the infrastructure, technology, or personnel required to meet an increase in water quality standards. With the increase in funding thanks to the IIJA, water utilities must now focus on how to operationally improve to meet the increased standards. 

Areas of innovation and opportunity for utilities 

This investment provides a historic opportunity for communities and water utilities to build cleaner, safer infrastructure, including: 

• Investment in cybersecurity: Public water systems are eligible to apply for $1.8 billion to increase system resiliency and improve protection from cyber threats. 

• Reduce lead in the water system: Community water systems and municipalities are eligible to apply for up to $500 million to replace lead service lines. This funding can be used to develop a lead service inventory to support rapid replacement of lead services.

• Sewer overflow and stormwater reuse: Municipalities and public entities are eligible for $50 million in storm water control and infrastructure. This includes green infrastructure investments and water re-use technologies. 

• Water infrastructure and workforce investment: Community based organizations and public works departments can use funds to align water and wastewater utility workforce recruitment efforts, training programs, retention efforts, and community resources. 

Investment through existing, successful programs

The IIJA will “scale up existing, successful programs” to distribute the billions of dollars in water infrastructure financing. These programs include the Environmental Protection Agency’s Drinking Water State Revolving Fund and Water Infrastructure Finance and Innovation Act (WIFIA) loans to improve the quality of the nation’s drinking water and will be used to help modernize water infrastructure systems.  

Rather than creating a new program, similar to what was done with the Low-Income Household Water Assistance Program (LIHWAP), these financing vehicles have been used for years. This will decrease the friction of distributing funds to water utilities and local municipalities and improve the efficiency in which capital can be deployed – allowing water utilities to focus on implementing these programs. Additionally, it gives the local stakeholders the ability to use the funding in a way that best fits their system’s needs to ensure safe drinking water and improve water quality infrastructure. 

The EPA has started to release details on how these funds will be distributed through the SRFs and WIFIA programs. In 2022, more than $7 billion will be funneled through state funds with the EPA promoting a focus on providing resources to disadvantaged communities, lead-free water for all, the development of lead service inventories, and remediation of forever chemicals (PFAS). These funds will be provided either as grants/principal forgiveness loans or as low interest loans. 

The WIFIA program also will provide innovative financing to support public health and environmental challenges. These loans will also focus on underserved communities, supporting projects that help protect infrastructure from extreme weather events, cybersecurity, green infrastructure, and water reuse. Along with the funds specifically from the IIJA, the EPA is encouraging communities to leverage the American Rescue Plan funds, base SRF funds, Water Infrastructure Finance and Innovation Act funds, as well as opportunities through the U.S. Department of Housing and Urban Development, the U.S. Department of Agriculture, state, and local resources. 

Conclusion 

Quality, maintained, and right-sized infrastructure enables utilities to deliver clean, affordable water to customers, unlocking public health and economic benefits in communities across the U.S. – especially in those that need it the most. 

Utilities will need to efficiently and effectively mobilize their workforce to seize on the benefits of the influx of funding. This will also require prioritization of the highest value system improvements and allocation of resources to execute on projects.