Questions Arise On SRF Stimulus Funding

Questions are beginning to arise from states and localities about the requirements for spending the water infrastructure funds in the stimulus bill, called the American Recovery and Reinvestment Act (ARRA) of 2009.

Since Congress passed the bill in February, the Environmental Protection Agency (EPA) has distributed $1.4 billion of the $4 billion the stimulus bill provided for the Clean Water and Drinking Water State Revolving Funds. States must commit 100 percent of their funds by Feb. 10, 2010.

But some states are uneasy about certain conditions for spending the funds. Chief among the sticky wickets is the “Buy American” provision. It states that construction companies must use U.S. made iron, steel and manufactured goods on all sewer and drinking water projects funded with stimulus dollars. The EPA issued guidance on April 28 spelling out under what conditions states can apply for an exemption from that provision. (EPA Buy America guidance is at: 29 2009_BA_waiver_process_final.pdf)

Exemptions will be applied for on a large scale, apparently. The day after that guidance was issued, Matthew J. Millea, acting president, New York State Environmental Facilities Corporation, told the House Transportation and Infrastructure Committee that there is “an inherent conflict” in the Buy American provision and the Green Reserve incentive. “While we would prefer to have these monies invested domestically, the reality is that many technological innovations require foreign-made systems and materials,” Millea said. The Green Reserve provision in the stimulus bill requires states to use 20 percent of their total grant for such things, in the sewer area, as energy efficient retrofits and upgrades to pumps and treatment processes, or for green infrastructure which could include restoring natural hydrology by infiltrating, evapotranspiring and capturing and using stormwater. In the context of the DWSRF, green infrastructure consists of site specific practices, such as green roofs and porous pavement at drinking water utility facilities.

Lisa Jackson, the EPA Administrator, acknowledged to the committee that her agency
is working closely with industry and municipal representatives to gain a better understanding of the nature of needed equipment and materials and the costs involved in complying with the Green Reserve provision. “We have made a great deal of progress on this issue, and guidance and procedures on the provision have been posted to the agency’s Recovery Web site,” she said. “However, we will need to closely monitor our implementation of this provision.”

EPA has designated Craig Hooks, acting assistant administrator of the Office of Administration and Resources Management, as its senior accountable official. That means he is the police chief on SRF funding violations. A stimulus steering committee comprised of senior managers from across the EPA is monitoring state stimulus planning and implementation on a weekly basis. In addition, the stimulus bill provided EPA’s Office of the Inspector General (OIG) with $20 million for oversight and review.

Another issue that has come up with regard to states divvying up their SRF stimulus funds relates to which projects are funded. In New York, the decision was made to download ARRA funds only to SRF projects which were on the state’s 2009 Intended Use Plan, which was developed prior to the stimulus bill being passed. That decision has apparently knocked some noses out of joint, including noses belonging to members of the U.S. House, who had hoped to see projects in their congressional districts funded. New York’s 2009 CWSRF IUP included more than $4.5 billion in requests. Following the enactment of ARRA, Governor David Paterson received an additional $6.5 billion in requests for ready to go sewer and wastewater treatment projects in New York.

“While this was a difficult decision to make, and not one that was taken lightly by staff or our Board of Directors, we felt it was important to dedicate our efforts to identifying and working with previously listed, ready to go projects,” explained Millea. “I would like to assure the members of this committee, however, that we will work with every community seeking financial assistance to determine their projects eligibility for SRF funding and we will list those projects on the 2010 IUP for future funding opportunities.”

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