NUCA Nails Our 2021 Thesis to Congress’ Door

interior of Capitol Building dome

The many promises of infrastructure are finding large audiences in the new 117th Congress. As Congress prepares to debate this spring on a much-needed major infrastructure package, NUCA sent early in the session a letter to Congressional leadership and all relevant House and Senate committee leaders offering our studied perspective on issues and policies related to underground utility construction.

The letter, written by NUCA’s legislative staff and signed by CEO Doug Carlson, outlines our top priorities this year and opines on our expert perspective about what we think is best for this legislative package and for our member’s successes in the months ahead.

What follows are several edited selections from the six-page letter which can be read in its entirety at nuca.com (under Media/Comment Letters):

Fortifying our Infrastructure

The February 2021 widespread failure in Texas and other states in the face of cold weather is putting the dilapidated state of America’s power infrastructure in the spotlight. Modernizing the electrical grid to make it more resilient, efficient, and secure will be complex and expensive, and major improvements will require all local utilities to make major investments to improve their systems. In many cases, local utility companies lack the capital and political will to build a stronger grid on their own.

The federal government has an important role to play in achieving this goal. While putting together the wide range of elements that will be included in comprehensive energy legislation, Congress should set standards for efficiency and reliability that local utility companies, as well as generation and transmission providers of electric power, must meet and provide federal resources to help pay for the needed upgrades. In addition, it is increasingly clear that our national power grids are vulnerable to cyber-attacks, and that hardening the nation’s electrical supply is clearly a federal responsibility and a matter of national security. Energy policy must provide for a more efficient, flexible, and reliable electricity network while ensuring its security…

…Old and underfunded systems across the state suffered critical failures due to a variety of factors, including age, failure to be properly weatherized, and maintenance deferrals due to a lack of adequate funding. The longer that action is delayed, the more frequent – and expensive – these events will become.

Financing Programs

While NUCA members engage in all construction activities related to underground utility systems, the water and wastewater infrastructure of a community is the primary market of most of our members. Although there are several existing federal programs that finance these critical projects, all are woefully underfunded.

NUCA has long supported the doctrine that the massive funding needs facing America’s environmental infrastructure invite participation by both the public and private sector. Over the past several years, NUCA has supported a wide range of legislative proposals that would:

  • Reauthorize and increase appropriations for the EPA Drinking Water State Revolving Fund and Clean Water State Revolving Fund (SRF) programs. These efficient existing financing vehicles provide needed resources to the states for local communities to help refurbish their water and wastewater infrastructure. H.R. 2, a major infrastructure proposal from the 116th Congress, proposed CW SRF reauthorization of approximately $40 billion and DW SRF reauthorization of approximately $25 billion. NUCA urges Congress to target a similarly ambitious level of SRF reauthorization.
  • Increase funding for the Water Infrastructure and Innovation Act (WIFIA), which provides long-term, low-cost credit assistance for regionally and nationally significant water and wastewater projects. The WIFIA program has proven successful since its establishment but continues to suffer from a lack of adequate funding.
  • Authorize municipal grants for construction and planning/design of treatment works to address overflows of combined sewers, sanitary sewers, or stormwater systems, as well grants to promote workforce development in the water utility sector.

…Although our underground environmental infrastructure is indispensable to the health of our country, federal spending accounts for only a small percentage of investments. EPA cites funding needs at approximately a half a trillion dollars – a figure which will only grow as necessary improvements are neglected. The February 2021 water infrastructure calamity in Texas illustrated what can happen when these systems are neglected. This Congress can make rebuilding water and sewer systems a true priority rather than a convenient political soundbite.

Alternative Funding Sources

Federal funding for water systems has fallen by 77% since its peak in 1977 according to the CBO, leaving local municipalities and utilities scrambling to find the resources they require to build, maintain, or repairt hese systems…

…NUCA maintains that while increased public investment in our infrastructure is needed, there is a carefully defined role for private investment. Tax-exempt facility bonds are an effective existing tool for financing long-term, capital-intensive infrastructure projects. Also known as “private activity bonds,” tax-exempt facility bonds provide reliable financing that encourages state and municipal governments to collaborate with sources of private capital to meet a public need. This approach makes infrastructure construction more affordable for municipalities and ultimately for end users.

Exempt facility bonds utilize private capital instead of public debt and shift the risk and long-term debt from the municipality to the private partner. The lower cost financing often translated to lower costs for the customer. Exempt facility bonds have historically been issued to fund more politically attractive, short-term initiatives such as housing projects or providing student loans, instead of longer-term community projects like water and wastewater infrastructure. This is in part because of an annual volume cap in federal tax law applied to exempt facility bonds which hinders their use for water and wastewater infrastructure. As a result, on average less than 5 percent of exempt facility bonds are issued to water and wastewater projects annually.

Last year, the Moving Forward Act (H.R. 2) included a provision that would have revised the Internal Revenue Code to provide that wastewater infrastructure would no longer be subject to state volume cap limits subject to exempt facility bonds…

…NUCA looks forward to working with Congress on advancing a comprehensive infrastructure package that includes language that would remove both wastewater and water infrastructure from state volume cap limitations and in doing so, open up hundreds of millions of dollars to address our nation’s critical water infrastructure needs.

Eben Wyman, Principal, is with NUCA’s Government Affairs.

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