WATER

Water Protection and Reinvestment Act

Clean Water Trust Fund
Fact Sheet • August 2009

I n July 2009 Congressman Earl Blumenauer (D-OR) introduced the Water Protec-
tion and Reinvestment Act (H.R. 3202). This legislation would establish a federal
Water Protection and Reinvestment Trust Fund for both drinking water and wastewa-
ter infrastructure. The Trust Fund would provide between $10 billion and $13 billion
each year. It would use the current mechanism for distributing funds to the states,
the State Revolving Funds (SRFs), but would provide increased levels of funding. The
increased funds provided by the Trust Fund should allow for much-needed repairs
and improvements to water and sewer systems and would potentially dissuade locali-
ties from pursuing drastic rate increases and privatization schemes. Although the bill
provides a dedicated source for this essential funding, it should be strengthened to
restrict eligibility for funding to publicly owned and operated utilities.

Clean Water
Forty-eight percent of the Trust Fund’s funding would
be reserved for the Clean Water State Revolving Fund
(CWSRF). Funds from the CWSRF are made available
to publicly owned treatment works for infrastructure
projects that fall under the U.S. Environmental Protec-
tion Agency (EPA)’s regulations under the Clean Water
Act. This legislation would expand the types of projects
eligible for funding to explicitly allow funding of “green
infrastructure” and for conservation projects. In addi-
tion, the legislation would prohibit the use of funds from
the CWSRF for the purpose of subsidizing new develop-
ment. Funding would be limited to rehabilitating and
repairing existing infrastructure. The legislation also
would provide grants for technical assistance for rural
and low-income communities.

Drinking Water
Thirty-five percent of the Trust Fund’s funding would be
reserved for the Drinking Water State Revolving Fund
(DWSRF). Funds from the DWSRF are made available
to any public water system, whether publicly or privately including those that replace and repair treatment and
owned, for projects that fall under the EPA’s regulations storage facilities and those that increase water efficiency.
under the Safe Drinking Water Act and to further public The legislation would also fund a technical assistance
health objectives. As with the CWSRF, this legislation grant for small communities similar to the one available
would expand the types of projects eligible for funding, for wastewater infrastructure.
Provides a Dedicated Source of
Funding
The principal reason to have a federal water trust fund is
to guarantee adequate federal assistance for infrastruc-
ture funding. Currently, funding of the CWSRF and the
DWSRF is carried out through the appropriations pro-
cess. This means that funding for the SRFs can fluctuate
from year to year and is dependent on a committed focus
by Congress and the president. The Water Protection and
Reinvestment Trust Fund would not be subject to these
same constraints. Instead, the Trust Fund would receive
a dedicated source of revenue each fiscal year. Not only is
this revenue dedicated specifically for the Trust Fund, but
it is firewalled, meaning that Congress cannot appropri-
ate the funds for other purposes.
Funding Sources
The dedicated revenue would be generated by four new
taxes:
• A 4 cent tax on the glass, metal, plastic and other
containers of water-based beverages of five gallons or
less. A water-based beverage is water or any bever-
age in which water is added to make 50 percent of
the average. Alcohol, milk and fruit juice not from
concentrate would be excluded from this tax.
• A 3 percent wholesale tax on disposable products
normally flushed or disposed of through sewer sys-
tems. Products would include soaps, detergents, toi-
letries, toilet paper, water softeners and cooking oils.
• A 0.5 percent wholesale tax on pharmaceuticals.
• A 0.15 percent tax on corporate profits over $4
million a year. This tax is similar to the Corporate
Environmental Income Tax (CEIT) previously used to
fund the Superfund program.
Taken together these taxes would raise between $10 bil-
lion and $13 billion a year. Currently, the SRFs receive
less than $4 billion a year combined.
Analysis of the Water Protection
and Reinvestment Act
The strength of the Water Protection and Reinvestment
Act lies in its use of diverse revenue sources that are
dedicated for the Trust Fund and protected from being
used for other purposes. At the same time, the increased
funding generated by these revenue sources would see a
larger contribution to each state’s SRF. Increased fund-
ing would mean states are better able to help localities af-
ford repairs and maintenance. Thus, the temptation and
pressure many localities feel to either drastically increase
rates or privatize their systems would be alleviated.
Unfortunately the legislation includes DWSRF eligibility
language that allows privately owned systems access to
SRF funding. While this is the current law, this legisla-
tion would provide privately owned water utilities access
to a much larger share of taxpayer’s dollars; therefore,
it should be changed to limit SRF funding to publicly
owned and operated drinking water utilities. Research
has shown that public utilities provide service that is
faster, cheaper and more efficient than privately owned
facilities.
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Copyright © August 2009 Food & Water Watch