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Federal shutdown impacts drinking water sector

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The partial shutdown of the federal government may not be having an immediate, dramatic effect on the drinking water sector, but depending on how long it goes on, it could have some long-term effects. Among the legislation being held up in the dispute over fiscal year 2019 funding and a wall on the southern U.S. border is the bill that would fund the U.S. Environmental Protection Agency (EPA).

EPA employees were on the job until agency funding ran out Dec. 28. Drinking water in the United States is regulated under the Safe Drinking Water Act (SDWA) under the jurisdiction of EPA. Under the SDWA, states are the primacy agents for administration of the SDWA once they have adopted standards, at least as strict as federal standards. (Wyoming and the District of Columbia are the only states/governing entities that do not have primacy.) Therefore, enforcement of the SDWA will go on largely as before. That said, state governments do count on assistance for that enforcement and general administration of the SDWA via the federal Public Water System Supervision (PWSS) grant program, plus set-asides in the annual grants for the state revolving loan fund (SRF) programs for drinking water and wastewater and from EPA regions. The PWSS spreads about $100 million across the country to state agencies and certain territories. Legislation passed in the last session of Congress increased the authorized amount of PWSS funding to $125 million.

Infrastructure finance
Speaking of the SRFs, sources tell us states are still drawing on FY2018 funds, but if the shutdown drags on, states will start feeling the pain this summer. The SRFs are, as the name says, revolving loan programs, meaning that as loans are repaid, funds are deposited back into state accounts. That will help cushion the effects of a prolonged federal shutdown, but after too much time, there will be pain.

S. 3021, America’s Water Infrastructure Act of 2018, authorized $50 million for three new grant programs in fiscal year 2019 - Assistance for Small and Disadvantaged Communities Grant, Reducing Lead in Drinking Water Grant, and Lead Testing in School and Child Care Program Drinking Water Grant. Of these three grant programs, the application process had begun only for the lead testing grant program. Letters of interest are due in February. EPA told its National Drinking Water Advisory Council in December that it would distribute guidance for the other two programs this month.  

The Water Infrastructure Finance and Innovation Act (WIFIA) program is strictly a federally administered program. That means not only are there no new funds for additional loans right now, but administrative work on existing applications appears to have come to a halt. AWWA staff placed a series of phone calls to WIFIA staff and heard voicemail messages saying that those federal employees will be out of the office for the duration of the shutdown.

Rule development
When EPA decision-makers are not at work, it further complicates the already challenging administrative process for developing regulations. The agency has statutory and legal deadlines that are not altered by the shutdown. Consequently, EPA will either need to find administrative shortcuts or miss court-ordered deadlines. Meeting the New York Southern Circuit’s expectations for proposing a perchlorate standard is one example. EPA staff were already wondering how they would meet the statutory deadlines assigned to the agency in S. 3021, enacted late in the last Congress, and those fears were before the shutdown. Staff were concerned that a status-quo budget was inadequate to the task. For new requirements, in particular those regarding security and resiliency, water systems still need to move forward to meet statutory deadlines. AWWA’s standards provide a foundation for utilities to take steps to meet the tight statutory deadlines for risk assessments and emergency response plans.

EPA has identified revising the Lead and Copper Rule and addressing per- and polyfluoroalkyl substances as priorities for this year. Neither of these activities have specific deadlines that must be met, but administration officials are aware of the need to act. Just as in rule development, the shutdown is delaying steps underway to shift the agency’s enforcement priorities. This transition was already expected to take the better part of this year, so while immediate effects will not be visible, there will be additional delay in seeing impacts.