	Introduction

Drinking water and wastewater treatment systems treat and safeguard the nation's water resources. More recently, water infrastructure issues have been receiving increased attention by policymakers and legislators. The renewed attention is due to a combination of several factors. For both wastewater and drinking water systems, a key concern is that EPA's funding programs, the largest sources of federal assistance, do not, in the main, support repair and replacement; their focus is upgrades and new construction needed to achieve wastewater and drinking water standards. This report identifies a number of issues receiving attention in connection with water infrastructure. It begins with a brief review of federal involvement, describes the debate about funding needs, and then examines key issues, including what is the nature of the problems to be solved; who will pay, and what is the federal role; and questions about mechanisms for delivering federal support, including state-by-state allotment. Recent congressional and Administration activity on these issues also is briefly reviewed. Background: History of Federal Involvement

The federal government has a lengthy history of involvement with wastewater and drinking water systems. EPA has the most significant role, both in terms of regulation and funding. Context for the Water Infrastructure Debate: Investment Needs

Some of the factors that have led to increased attention to water infrastructure reflect long-standing concerns (for example, how cities will meet federal regulatory requirements), while others are more recent (such as analyses of broader funding needs, including maintenance and repair of older systems). Consequently, stakeholders continue to press Congress to reauthorize and increase appropriations for the DWSRF program. CBO Reports

A 2002 report by the Congressional Budget Office (CBO) also contributes to the discussion about water infrastructure investment needs. For example, CBO's reports and EPA's Gap Analysis caution that projections of future costs associated with water infrastructure are highly uncertain and could lie outside of the ranges that they present. However, these funds are used primarily to comply with Safe Drinking Water Act and Clean Water Act requirements, and it is uncertain how readily these funds might become available for security measures. Legislation intended to provide such an exemption has been introduced in each Congress since the 109 th . Such technologies have the potential to significantly reduce treatment costs and needed infrastructure investments. Congressional and Administration Activity

Momentum in Congress to consider the issues discussed in this report has grown since the 107 th Congress, partly in response to urgings of stakeholder groups, but no legislation other than appropriations has been enacted. During this period, the Administration has promoted a number of steps to ensure that investment needs are met in an efficient, timely, and equitable manner. Building on these concepts and on a request in the President's FY2010 budget, in October 2010 EPA issued a "Clean Water and Drinking Water Infrastructure Sustainability Policy" addressing management and pricing of infrastructure funded through SRFs to encourage conservation and provide adequate long-term funding for future capital needs. The Obama Administration shifted the debate from its predecessor in regard to federal budgetary resources for water infrastructure investments.
Policymakers are giving increased attention to issues associated with financing and investing in the nation's drinking water and wastewater treatment systems, which take in water, treat it, and distribute it to households and other customers, and later collect, treat, and discharge water after use. The renewed attention is due to a combination of factors. These include financial impacts on communities of meeting existing and anticipated regulatory requirements, the need to repair and replace existing infrastructure, concerns about paying for security-related projects, and proposals to stimulate U.S. economic activity by building and rebuilding the nation's infrastructure.
The federal government has a long history of involvement with wastewater and drinking water systems, with the Environmental Protection Agency (EPA) having the most significant role, both in terms of regulation and funding. The U.S. Department of Agriculture also plays an important role in rural communities through its water and wastewater loan and grant programs. These programs have been popular; however, states, local communities, and others have asserted that program gaps and limitations may diminish their potential effectiveness. They also point to the emergence of new infrastructure needs and issues, while federal resources for these programs have declined.
Reports on infrastructure funding needs and related policy issues have been issued by interest groups, EPA, and the Congressional Budget Office (CBO). They present a range of estimates and scenarios of future investment costs and gaps between current spending and future costs. EPA and CBO, in particular, caution that projections of future costs are highly uncertain, and that funding gaps are not inevitable. Increased investment, sought by many stakeholders, is one way to shrink the spending gaps, but so, too, are other strategies such as asset management, more efficient pricing, and better technology.
Congressional interest in these issues has grown for some time. In each Congress since the 107th, House and Senate committees acted on legislation to reauthorize and modify infrastructure financing programs in the Clean Water Act and Safe Drinking Water Act, but no bills other than appropriations were enacted. EPA's recent initiatives support strategies intended to ensure that infrastructure investment needs are met in an efficient, timely, and equitable manner. The Obama Administration has focused attention on providing increased federal budgetary resources for water infrastructure investments and on encouraging sustainable water infrastructure policies.
This report identifies issues that continue to receive attention in connection with water infrastructure investment. It begins with a review of federal involvement; describes the debate about needs; and then examines key issues, including what is the nature of the problems to be solved, who will pay, what is the federal role, and questions about mechanisms for delivering federal support. Congressional and Administration activity on these issues since the 107th Congress also is briefly reviewed.