A River Runs Through It: Congress finds a potential way to fund water infrastructure projects despite sequestration
The Senate Environment and Public Works Committee (“EPW”) marked up legislation Wednesday that provides millions for dredging, hurricane risk reduction and environmental restoration projects. Normally, Congress providing funds for water infrastructure projects would not seem that remarkable. However, with sequestration cuts impacting defense to domestic spending, as well as a ban in place on earmarking for specific projects, it is remarkable that any legislation authorizing additional infrastructure funds would receive bipartisan support and sail unanimously through a committee mark-up. Credit this to the broad scope of S. 601, the Water Resources Development Act of 2013 (“WRDA”), which reauthorizes the ongoing water infrastructure program run by the Army Corps of Engineers, provides funding for new water projects, and streamlines the environmental review process for all projects. Equally, if not more important to WRDA’s support, is the fact that the funding for all water projects is provided solely from user fees and financing, and not by the taxpayer. WRDA increases this pot of cash by dedicating the entire revenue from the Harbor Maintenance Trust Fund, which normally sees a portion of its revenues diverted to port projects. Altogether, this suggests a new model for infrastructure funding in these days of tight budgets.
Authorizing projects without earmarking them. As noted above, Congress forbids itself from earmarking federal funds to any specific projects. Title 1 of WRDA avoids earmarking any new water projects by authorizing work to proceed on any project where “a report of the Chief of Engineers has been completed and a referral by the Assistant Secretary of the Army for Civil Works has been made to Congress as of the date of enactment” (Section 1002). The EPW Committee notes in its summary of WRDA that this currently represents “18 projects that address all of the major mission areas of the Corps of Engineers including flood risk management, navigation, hurricane and storm damage risk reduction, and environmental restoration.”
Spending a Harbor Maintenance Trust Fund surplus that has reached almost $7 billion by dedicating it to ongoing port projects. The Harbor Maintenance Trust Fund (“HMTF”) was created by Congress in 1986 to pay for the operation and maintenance of harbors and the deepening of channels (Public Law 99-662). It is funded by a tax that is imposed on imports of waterborne cargo, as well as on tickets for cruise ships. However, because of uneven appropriations by Congress, only half of the HMTF’s proceeds go to port projects; the rest is used to help finance the federal government’s activities. Title 8 of WRDA creates the “Harbor Maintenance Trust Fund Guarantee,” which requires that annual expenditures from the fund “shall be equal to the level of receipts plus interest credited…for that fiscal year” (Section 8003(a)). While increasing the level of funding available for ongoing port projects, WRDA also includes a set-aside in Section 8003(b) for ports located in states that contribute “not less than 2.5 percent annually” to the HMTF, but receive less than 50 percent of the total annual amount collected by the State from the HMTF (i.e., smaller ports that lose out in WRDA funding to the larger “mega-ports” located on the East and West Coasts and along the Gulf of Mexico).
Faster environmental review, including intervention by the President if necessary. Title 2 of WRDA would streamline the environmental review process in a number of ways. For instance, it would require the coordinated environmental review of water infrastructure projects by “all Federal, State and local governmental agencies and Indian tribes” that either 1) have jurisdiction over a project; or 2) are required by law to issue a permit or provide an opinion on the project (Section 2045(j)). Any agency that misses a deadline would be penalized $10,000 or $20,000 per week until a decision is made (Section 2045(k)(6)). And the Army Corps of Engineers would be required to work to resolve any delays in the environmental review process. If it is unable to do so, the matter would be referred to the Council on Environmental Quality and, ultimately, the President (Section 2045(k)(5)).
$50 million in annual water infrastructure financing. Title 10 of WRDA establishes the “Water Infrastructure Finance and Innovation Act of 2013” to provide loans and loan guarantees to water infrastructure projects. The goal would be to finance projects with dedicated, non-federal, funding sources (such as user-fees). Sections 10007 and 10008 lay out the types of eligible projects and activities, which include:
- Flood or hurricane control projects
- Levees, dams, tunnels and aqueducts
- Projects for enhanced energy efficiency
- Repair, rehabilitation, or replacement of a treatment works, community water system or aging water distribution facility
Fifty million dollars is authorized annually for a program to be run by the Army Corps of Engineers and the Environmental Protection Agency (Section 10014(a)).
Perfect Timing? EPW’s mark-up of WRDA comes the same day that the American Society of Civil Engineers (“ASCE”) issued its 2013 “Report Card for America’s Infrastructure,” found at www.infrastructurereportcard.org. The timing was perfect as the ASCE gave America’s Drinking Water, Levees, and Wastewater infrastructure all grades of “D.” Port infrastructure did slightly better, receiving a “C” grade. This could increase the demand for WRDA reauthorization. Already, we have seen supporters of similar legislation impacting inland waters looking to add this bill to WRDA (Inland Waterways Infrastructure also received a D from the ASCE). Reports also indicate the support from the Senate Democratic Leadership, possibly leading to a vote on the Senate floor soon. Whether similar support can be generated in the House of Representatives remains to be seen. But in a time when Congress’s approval is extremely low, passing a WRDA reauthorization indicates one way for Democrats and Republicans to show they can still do work on behalf of the nation.