Funding for Small and Rural Water Systems
The CWSRF was created by the 1987 amendments to the Clean Water Act to help finance water infrastructure projects. Through the program, the U.S. Environmental Protection Agency and states partner to fund projects that address states’ priorities. The EPA provides grants to the states. Historically, states contribute an additional 20% to match the federal grants, although that requirement may be reduced or eliminated via an act of Congress, as was the case with the American Recovery and Reinvestment Act of 2009 and the Infrastructure Investment and Jobs Act of 2021.
The DWSRF was established in 1996 through amendments to the Safe Drinking Water Act. The fund helps water programs meet the health requirements outlined in SDWA. The EPA provides grants to the states, and states contribute an additional 20% to match the federal grants, although that requirement may be reduced or eliminated via an act of Congress. The SDWA requires that states make at least 15% of their annual allotment available to public water systems that serve 10,000 or fewer persons.
||Types of Assistance
|Clean Water State Revolving Fund
Purchase of debt or refinance
Guarantees and insurance
Guarantee SRF revenue debt
- Construction of publicly owned treatment works
- Nonpoint source
- National estuary program projects
- Decentralized wastewater treatment systems
- Water conservation, efficiency and reuse
- Watershed pilot projects
- Energy efficiency
- Water reuse
- Security at publicly owned treatment works
- Technical assistance
|Drinking Water State Revolving Fund
Guaranteeing local debt
Purchasing bond insurance
- Transmission and distribution
- Creation of new systems
Source: U.S. Environmental Protection Agency
While mostly used for larger water infrastructure projects, the WIFIA can also help finance small and rural water projects, including building and upgrading wastewater and drinking water treatment systems. To qualify, projects must cost $5 million or more and be located in small or rural communities with populations of 25,000 or less. Unlike the revolving funds, the WIFIA provides direct loans at U.S. Treasury rates to eligible entities, including state financing authorities; federal, state, local or tribal governments; partnerships; or corporations. The maximum amount eligible for financing with a WIFIA loan is 49% of the project’s total cost.
Based on annual appropriations, the EPA also competitively awards millions of dollars to nonprofit organizations to provide training and technical assistance for small systems funding. The awards assist small water systems in maintaining compliance with the SDWA, building their financial and managerial capacity to provide safe drinking water over the long term, ensuring sustainable operations and improving water quality.
Further, the EPA provides training and tools to improve small wastewater system operations and management practices and make them more sustainable and resilient. The assistance is available through a grant program titled Training and Technical Assistance for Rural, Small and Tribal Municipalities and Wastewater Treatment Systems for Clean Water Act Prevention, Reduction, and Elimination of Pollution.
Additional EPA funding sources for small and rural water systems include:
- Nonpoint Source Grants Program: Provides grants for education, training, technical and financial assistance, technology transfer, demonstration projects, monitoring nonpoint source implementation projects, and other activities. Eligible projects focus on pollution from nonpoint sources and include decentralized wastewater systems.
- Public Water System Supervision Grants Program: Assists states, territories and tribes in developing and implementing programs to enforce SDWA requirements.
- Water Pollution Control Grants Program: Assists states, territories, the District of Columbia, Indian tribes, and interstate agencies in establishing and implementing ongoing water pollution control programs.
- Small and Disadvantaged Communities Grant Program: Helps communities afford projects to comply with SDWA regulations. Recipients include public water systems or tribal water systems that serve a disadvantaged community or a community of 10,000 or fewer people. The program requires a cost-share of no less than 10% of the total project costs, but that may be waived if it would cause the recipient financial hardship.
In addition to the EPA, the U.S. Department of Agriculture’s Rural Utilities Service Water and Environmental Programs (WEP) provide loans, grants and technical assistance for small rural drinking water systems. WEP funding can be used to build water and waste facilities in rural communities and assists organizations that offer technical assistance and training to rural communities. Programs include the Rural Decentralized Water Systems Grant Program, which helps nonprofits and tribes create a revolving loan fund to increase access to clean, reliable water and septic systems; the Circuit Rider Program, which assists rural water systems that are experiencing day-to-day operational, financial or managerial issues; and the Water and Waste Disposal Loans and Grants Program, which helps fund clean and reliable drinking water systems, sanitary sewage disposal, sanitary solid waste disposal, and stormwater drainage.
Additionally, the U.S. Department of Housing and Urban Development’s Community Development Block Grant Program provides funds for long-term community needs, including rehabilitation, construction or purchase of public facilities and infrastructure for water treatment and wastewater systems. Program regulations require that at least 70% of a grantee’s funds must benefit low- and moderate-income people.
Recent Funding for Small and Rural Systems
The American Rescue Plan Act of 2021 allows Coronavirus State and Local Fiscal Recovery Funds to be used to address the consequences of deferred maintenance in drinking water systems and the removal, management and treatment of sewage and stormwater, along with additional resiliency measures. Eligible projects include those under the Clean Water and Drinking Water State Revolving Funds as well as lead remediation and stormwater infrastructure.
Examples of recent state legislation:
Florida (SB 2500, 2021): $25 million to the Department of Environmental Protection for a small-community wastewater grant program to assist with septic to sewer programs and wastewater system upgrades. Grants shall be provided to Rural Areas of Opportunity (Fla. Stat. §288.0656) and Fiscally Constrained Counties (Fla. Stat. § 218.67(1)). The department may not require a local match for such grants.
Nebraska (LB 1014, 2022): $7 million for a rural drinking water project serving at least four communities in two contiguous counties to convert to groundwater sources and to provide for water system infrastructure and distribution.
Oklahoma (SB 429, 2021): Appropriations to the state Water Resources Board, including:
- $5 million in grants for communities that own dams assessed to be in poor or unsatisfactory condition. Priority is provided to communities with a population of 7,000 or less.
- $20 million to establish a grant program and to match tribal investment in rural water infrastructure projects.
- $25 million in grants for communities of fewer than 7,000 residents or to water districts with fewer than 2,300 nonpasture taps for water and wastewater investments.
- $20 million in grants for communities with more than 7,000 residents or to water districts with more than 2,300 nonpasture taps for water and wastewater investments.
South Carolina (HB 4408, 2022): $900 million to the Rural Infrastructure Authority to administer and operate three programs providing grants to improve water, wastewater and stormwater infrastructure throughout the state.
South Dakota (SB 62, 2022): $600 million to the Board of Water and Natural Resources to help fund water, wastewater, stormwater and nonpoint source projects. The grants are targeted to systems or municipalities with small populations.
Utah (State and Local Fiscal Recovery Funds 2022 Report): $46.5 million to improve drinking water infrastructure in rural communities by replacing, upgrading, repairing or extending essential infrastructure while protecting public health.
Virginia (HB 7001, 2021): $50 million to the Department of Health to support equal access to drinking water at small and disadvantaged community waterworks.