Legislative Options for Financing Water Infrastructure - R42467

Claudia Copeland
Specialist in Resources and Environmental Policy

William J. Mallett
Specialist in Transportation Policy

Steven Maguire
Acting Section Research Manager

This report addresses several options being considered by Congress to address the financing needs of local communities for wastewater and drinking water infrastructure projects and to decrease or close the gap between available funds and projected needs. Some of the options exist and are well established, but they are under discussion for expansion or modification. Other innovative policy options for water infrastructure have recently been proposed, especially to supplement or complement existing financing tools. Some are intended to provide robust, longterm revenue to support existing financing programs and mechanisms. Some are intended to encourage private participation in furnishing drinking water and wastewater services.

Six options that are reflected in recent legislative proposals, including budgetary implications, are discussed.

• Increase funding for the State Revolving Fund (SRF) programs in the Clean Water Act (H.R. 1877 in the 113th Congress) and the Safe Drinking Water Act (H.R. 5320 in the 111th Congress),

• Create a federal water infrastructure trust fund (H.R. 3582 and H.R. 1877 in the 113th Congress),

• Create a “Water Infrastructure Finance and Innovation Act” Program, or WIFIA (S. 601 and S. 335 in the 113th Congress),

• Create a national infrastructure bank (H.R. 2084, H.R. 2553, S. 1716, and H.R. 505 in the 113th Congress),

• Lift private activity bond restrictions on water infrastructure projects (included in the Administration’s FY2014 budget request and S. 939 and H.R. 1802 in the 112th Congress), and

• Reinstate authority for the issuance of Build America Bonds (included in the Administration’s FY2014 budget request and H.R. 535 and H.R. 789 in the 113th Congress).

A number of these issues and options were examined in hearings by House and Senate committees in the 112th Congress. Legislation to create a WIFIA program (S. 601) has been passed by the Senate and is being considered by a House-Senate conference committee.

Consensus exists among many stakeholders—state and local governments, equipment manufacturers and construction companies, and environmental advocates—on the need for more investment in water infrastructure. There is no consensus supporting a preferred option or policy, and many advocate a combination that will expand the financing “toolbox” for projects. Some of the options discussed in this report may be helpful, but there is no single method that will address needs fully or close the financing gap completely. For example, some may be helpful to projects in large urban or multi-jurisdictional areas, while others may be more beneficial in smaller communities. It is unlikely that any of the recently proposed options could be up and running quickly, meaning that, at least for the near term, communities will continue to rely on the existing SRF programs, tax-exempt governmental bonds, and tax-exempt private activity bonds to finance their water infrastructure needs.

Date of Report: November 27, 2013
Number of Pages: 25
Order Number: R42467
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EPA Standards for Greenhouse Gas Emissions from Power Plants: Many Questions, Some Answers - R43127

James E. McCarthy
Specialist in Environmental Policy

As President Obama announced initiatives addressing climate change on June 25, 2013, a major focus of attention was the prospect of greenhouse gas (GHG) emission standards for fossilfueled— mostly coal-fired—electric generating units (EGUs). EGUs (more commonly referred to as power plants) are the largest anthropogenic source of greenhouse gas emissions, accounting for about one-third of total U.S. GHGs. If the country is going to reduce its GHG emissions by significant amounts, as the President has committed to do, emissions from these sources will almost certainly need to be controlled.

The President addressed this issue by directing EPA to re-propose GHG emission standards for new EGUs by September 20, 2013. He also directed the agency to propose guidelines for existing power plants by June 2014, and finalize them a year later.

EPA had already proposed standards for new sources in April 2012, but the public comment period had generated more than 2.5 million comments—the most ever for a proposed EPA rule— and the agency had not yet finalized the rule.

The re-proposed standards were released September 20. They would set an emissions limit of 1,100 pounds of carbon dioxide (CO2) per megawatt-hour (MWh) of electricity generated by new coal-fired EGUs, and a standard of either 1,000 or 1,100 lbs/MWh (depending on size) for new natural gas-fired plants. Coal-fired plants would find it impossible to meet the standard without controls to capture, compress, and store underground about 40% of the CO2 they produce—a technology referred to as carbon capture and storage (CCS).

Under the Clean Air Act, the EPA Administrator has a great deal of flexibility in setting these standards. The statute requires that New Source Performance Standards (NSPS) reflect the degree of emission limitation achievable through application of the best system of emission reduction that has been “adequately demonstrated.” The Administrator can take costs, health impacts, environmental impacts, and energy requirements into account in determining what has been adequately demonstrated.

Many in the electric power and coal industries maintain that CCS has not been adequately demonstrated. Given the high cost and energy use of CCS components, they view the re-proposed standards as effectively prohibiting the construction of new coal-fired power plants.

EPA, on the other hand, states that the components of CCS technology have been demonstrated on numerous facilities. Details are provided in the preamble to the proposed rule. Despite this, the agency concludes that no coal-fired EGUs (other than DOE-sponsored or other demonstration projects) will be built in the next 10 years regardless of whether the rule is finalized, and therefore no units will be required to use CCS before EPA must review the standard. Given the projected low cost and abundance of natural gas, all new fossil-fueled units are likely to be powered by gas, according to EPA. The standard proposed for these facilities (combined cycle natural gas units) can be met without add-on emission controls, according to the agency.

Although the September 20 proposal would only affect new EGUs, the potential impacts of the rule’s issuance extend beyond these sources, because the agency is obligated under Section 111(d) of the Clean Air Act to promulgate guidelines for existing sources within a category when it promulgates GHG standards for new sources. The President directed EPA to propose such guidelines by June 2014 and to finalize them a year later. Using these guidelines, states will be
required to develop performance standards for existing sources. These could be less stringent than the NSPS—taking into account, among other factors, the remaining useful life of the existing source—but the standards could have far greater impact than the NSPS, given that they will affect all existing sources.

Many in Congress oppose GHG emission standards. In the 113th Congress, hearings have been held and several bills to prohibit or limit EPA GHG standards have been introduced. The proposed standards have stirred new interest in congressional action.


Date of Report: November 15, 2013
Number of Pages: 21
Order Number: R43127
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Geoengineering: Governance and Technology Policy - R41371

Kelsi Bracmort
Specialist in Agricultural Conservation and Natural Resources Policy

Richard K. Lattanzio
Analyst in Environmental Policy

Climate change policies at both the national and international levels have traditionally focused on measures to mitigate greenhouse gas (GHG) emissions and to adapt to the actual or anticipated impacts of changes in the climate. As a participant in several international agreements on climate change, the United States has joined with other nations to express concern about climate change. Some recent technological advances and hypotheses, generally referred to as “geoengineering” technologies, have created alternatives to traditional approaches to mitigating climate change. If deployed, these new technologies could modify the Earth’s climate on a large scale. Moreover, these new technologies may become available to foreign governments and entities in the private sector to use unilaterally—without authorization from the United States government or an international treaty—as was done in the summer of 2012 when an American citizen conducted an ocean fertilization experiment off the coast of Canada.

The term “geoengineering” describes an array of technologies that aim, through large-scale and deliberate modifications of the Earth’s energy balance, to reduce temperatures and counteract anthropogenic climate change. Most of these technologies are at the conceptual and research stages, and their effectiveness at reducing global temperatures has yet to be proven. Moreover, very few studies have been published that document the cost, environmental effects, sociopolitical impacts, and legal implications of geoengineering. If geoengineering technologies were to be deployed, they are expected to have the potential to cause significant transboundary effects.

In general, geoengineering technologies are categorized as either a carbon dioxide removal (CDR) method or a solar radiation management (SRM) method. CDR methods address the warming effects of greenhouse gases by removing carbon dioxide (CO2) from the atmosphere. CDR methods include ocean fertilization, and carbon capture and sequestration. SRM methods address climate change by increasing the reflectivity of the Earth’s atmosphere or surface. Aerosol injection and space-based reflectors are examples of SRM methods. SRM methods do not remove greenhouse gases from the atmosphere, but can be deployed faster with relatively immediate global cooling results compared to CDR methods.

To date, there is limited federal involvement in, or oversight of, geoengineering. However, some states as well as some federal agencies, notably the Environmental Protection Agency, Department of Energy, Department of Agriculture, and the Department of Defense, have taken actions related to geoengineering research or projects. At the international level, there is no international agreement or organization governing the full spectrum of possible geoengineering activities. Nevertheless, provisions of many international agreements, including those relating to climate change, maritime pollution, and air pollution, would likely inform the types of geoengineering activities that state parties to these agreements might choose to pursue. In 2010, the Convention on Biological Diversity adopted provisions calling for member parties to abstain from geoengineering unless the parties have fully considered the risks and impacts of those activities on biodiversity.

With the possibility that geoengineering technologies may be developed and that climate change will remain an issue of global concern, policymakers may determine whether geoengineering warrants attention at either the federal or international level. If so, policymakers will also need to consider whether geoengineering can be effectively addressed by amendments to existing laws and international agreements or, alternatively, whether new laws and international treaties would need to be developed.

Date of Report: November 26, 2013
Number of Pages: 42
Order Number: R41371
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