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Using American Rescue Plan Act Funds to Invest in Clean Drinking Water
On March 11th, Congress enacted the American Rescue Plan Act (ARPA), a $1.9 trillion economic stimulus package focused on addressing the immediate and long-term public health, economic, and societal challenges exacerbated by the COVID-19 pandemic; the stimulus package included $350 billion to help state, local, territorial, and tribal governments address the evident economic challenges in responding to COVID-19.
Posted on May 25, 2021
On May 10th, the Treasury department released guidance to State, local, territorial, and Tribal governments with regard to the disbursement and eligible use of the $350 billion Coronavirus State and Local Fiscal Recovery Fund (Fiscal Recovery Funds). The guidance outlined six eligible funding areas, including Water and Sewer Infrastructure.
Replacing Lead Service Lines: A Clear Mandate
In a clear extension of the Biden Administration’s effort to remove Lead Pipes across the U.S. (already signalled in the American Jobs Plan), this guidance explicitly encourages Lead Service Line Replacement. The plan states the “Treasury encourages recipients to consider projects to replace lead service lines” – a clear mandate to use these funds in the ongoing war on lead in an effort to continue to bring clean drinking water to all Americans.
Recipients are able to use Fiscal Recovery Funds to invest in a broad range of projects that improve drinking water infrastructure, such as building or upgrading facilities and transmission, distribution, and storage systems. These types of initiatives can impact LSL projects as well as other drinking water programs in a variety of ways.
120Water encourages utilities to focus their efforts on Lead Service Line Inventorying in advance of directing this funding. Up-front work toward inventorying will put your system in a position to take full advantage of these funds and help you on the road to compliance when the Lead and Copper Rule Revision deadlines hit, which requires full LSL Inventories. “Shovel-ready” projects will likely be prioritized in terms of funding, and that simply can’t be done without an inventory–or at the bare minimum an estimation of lines.
The current administration has clearly signalled the prioritization of updating critical infrastructure, going so far as calling the postponement of investments in this area a “threat to national prosperity.” The call to action is clear–it’s time to get the lead out, and this guidance gives a clear directive on how to fund these projects.
Eligible Uses of Funds
There are three relevant uses of funding included in the interim final rule to help systems understand exactly how they can direct funds toward their projects:
Improving Drinking Water Infrastructure
The guidance states: “Recipients may use Fiscal Recovery Funds to invest in a broad range of projects that improve drinking water infrastructure, such as building or upgrading facilities and transmission, distribution, and storage systems, including replacement of lead service lines.”
Addressing Disparities in Public Health Outcomes
The guidance specifically calls out “remediation of lead paint or other lead hazards to reduce risk of elevated blood lead levels among children.” We believe this language was left intentionally broad and could encompass lead in drinking water reduction projects (e.g. testing and LSLR).
Funding Projects Eligible for State-Revolving Funds
The guidance states that “the Interim Final Rule aligns types of eligible projects with the wide range of projects (aligned with EPA project categories) that can be supported by the Environmental Protection Agency’s Clean Water State Revolving Fund and Drinking Water State Revolving Fund”.
Areas of Flexibility
In addition to more explicit directives for the use of resources, the guidance also opens the door for additional flexibility in the funding. The Treasury allows recipients flexibility to use the funds for water and sewer infrastructure as they see fit based upon their State guidance and criteria or immediate needs. This type of flexibility could cover projects on privately-owned infrastructure, projects eligible for funding with State and Local Fiscal Recover Funds, and more. We encourage you to contact your SRFs and city officials directly to discuss more opportunities for how this funding could be used.
Timeline & Suggested Next Steps
Below is a timeline of relevant dates related to the funding:
March 3, 2021 – Funds can be used to cover costs incurred beginning on this date
December 31, 2024 – Funding received for infrastructure projects should be designated or under contract by this date, but is not required to be spent.
December 31, 2026 – Completion of performance period for projects that received Fiscal Recovery Funds
We recommend all water systems begin the process of inventorying Service Lines in their communities to ensure they are “shovel-ready” and eligible for replacement projects under this funding. Our Inventory guide walks through step-by-step suggestions for creating and validating a Lead Service Line Inventory, and can help your system be prepared for funding opportunities in addition to staying ahead of new compliance mandates under the revised Lead and Copper Rule.
Secondly, we recommend utilities begin the process of testing for lead in schools and facilities, a key new requirement of the revised LCR.
Finally, we recommend you reach out directly to SRFs and city officials to discuss using these funds in the most effective way to help you achieve goals and protect public health.
