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1 (June 14, 2005)

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                                                                 Order Code RS22037
                                                               Updated June 14, 2005



 CRS Report for Congress

               Received through the CRS Web



       Drinking Water State Revolving Fund:

             Program Overview and Issues

                              Mary Tiemann
                    Specialist in Environmental Policy
                Resources, Science, and Industry Division

Summary


     In the Safe Drinking Water Act (SDWA) Amendments of 1996 (P.L. 104-182),
 Congress authorized a drinking water state revolving loan fund (DWSRF) program to
 help public water systems finance infrastructure projects needed to comply with federal
 drinking water regulations and to protect public health. Under the program, states
 receive capitalization grants to make loans to water systems for drinking water projects
 and certain other SDWA activities. Since the program was first funded in FY1997,
 Congress has provided $7.8 billion, including roughly $844 million for FY2005. The
 President has requested $850 million for FY2006. Through June 2004, the DWSRF
 program had provided $7.9 billion in assistance and had supported 6,500 projects.

     The Environmental Protection Agency's (EPA's) 2001 survey of capital
 improvement needs for public water systems found that these systems need to invest
 $150.9 billion on infrastructure improvements over 20 years to ensure the provision of
 safe water. Several new standards and security concerns have increased these needs. Key
 issues include the gap between estimated needs and funding; SDWA compliance costs,
 particularly for small systems; and the broader need for cities to improve their water
 infrastructure, apart from SDWA compliance. This report will be updated.


    The 104th Congress substantially revised the Safe Drinking Water Act with the 1996
SDWA Amendments. A key new provision, Section 1452, authorized a drinking water
state revolving loan fund (DWSRF) program to help public water systems finance
improvements needed to comply with federal drinking water regulations and to address
the most serious risks to human health. The law authorizes EPA to make grants to states
to capitalize DWSRFs. States must match 20% of the federal grant and develop intended
use plans that indicate how allotted funds will be used. States may use the DWSRF to
provide loans and other assistance to eligible public water systems for expenditures that
EPA has determined will facilitate SDWA compliance or significantly further the Act's
health protection objectives. Eligible projects include installation and replacement of
failing treatment facilities, distribution systems, and certain storage facilities. Projects to
replace aging infrastructure are eligible if they are needed to maintain compliance or to
further public health protection goals. Projects to consolidate water supplies also may be


       Congressional Research Service x The Library of Congress

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