In recent years, Congress has considered several legislative options to help finance water infrastructure projects, including projects to build and upgrade wastewater and drinking water treatment facilities. In 2014, Congress established the Water Infrastructure Finance and Innovation Act (WIFIA) program, which creates a new mechanism of providing financial assistance for water infrastructure projects. The fourth section identifies selected issues that may be of interest to policymakers. Program Overview

The WIFIA approach for supporting investment in water infrastructure is modeled after the Transportation Infrastructure Finance and Innovation Act (TIFIA) program, which was established in 1998 (see textbox below for further details). As discussed below, the Water Resources Reform and Development Act of 2014 (WRRDA 2014) established and authorized appropriations for the WIFIA program. In 2018, America's Water Infrastructure Act of 2018 (AWIA) reauthorized appropriations for the program and amended certain WIFIA provisions. Congress provided appropriations to EPA to administer the WIFIA program in FY2014. Project costs must generally be $20 million or larger to be eligible for credit assistance. Responding to concerns from some groups that WIFIA could impair and diminish support for clean water and drinking water SRF programs under the Clean Water Act and Safe Drinking Water Act (see discussion below), the act requires the EPA Administrator, when the agency receives applications for WIFIA assistance, to notify state infrastructure financing authorities and give them the opportunity to commit funds to the project. AWIA 2018

AWIA, enacted on October 23, 2018, amended WIFIA in several ways:
It removed WIFIA's designation as a pilot program. P.L. For FY2019, the Consolidated Appropriations Act, 2019 ( P.L. EPA estimated that its budget authority ($60 million) would provide approximately $6 billion in credit assistance. Selected Issues

		Subsidy Amount for Credit Assistance

From the federal perspective, an advantage of the WIFIA program is that it can provide a large amount of credit assistance relative to the amount of budget authority provided. In federal budgetary terms, WIFIA assistance has less of an impact than a grant, which is not repaid to the U.S. Treasury. Proponents of WIFIA have argued that loans for water projects are likely to be less risky than transportation projects, because water utility collections for services (i.e., water rates) provide an established revenue stream and repayment mechanism; thus the subsidy cost would be lower and the amount of credit assistance higher (per dollar of budget authority). At this subsidy rate, a $10 million appropriation could support a direct loan (or loans) totaling $1.10 billion. Additionally, the WIFIA program has the potential to limit the federal government's exposure to default by relying on market discipline through creditworthiness standards and encouraging private capital investment. On the other hand, the Congressional Budget Office (CBO) has argued that the federal government underestimates the cost of providing credit assistance under such programs because it excludes
the cost of market risk—the compensation that investors require for the uncertainty of expected but risky cash flows. Several groups representing state environmental officials opposed the establishment of a WIFIA program (in the 113 th Congress). 113-121 .
The Water Infrastructure Finance and Innovation Act (WIFIA) program provides financial assistance for water infrastructure projects, including projects to build and upgrade wastewater and drinking water treatment systems. Congress established the WIFIA program in the Water Resources Reform and Development Act of 2014 (WRRDA 2014, P.L. 113-121).
The WIFIA concept is modeled after a similar program that finances transportation projects, the Transportation Infrastructure Finance and Innovation Act (TIFIA) program. Proponents of the WIFIA approach, including water utility organizations, cite several potential benefits:
WIFIA provides credit assistance to large water infrastructure projects that may otherwise have difficulty obtaining financing. WIFIA provides credit assistance, namely direct loans, at U.S. Treasury rates, potentially lowering the cost of capital for borrowers. WIFIA assistance has less of a federal budgetary effect than conventional project grants that are not repaid, because only the subsidy cost of a loan (representing the presumed default rate on loans) is required to be appropriated. WIFIA support limits the federal government's exposure to default, because projects must be found creditworthy with a revenue stream for repayment to be eligible for assistance.
On the other hand, opponents of the WIFIA approach, including organizations that represent state environmental agency officials, have cited several concerns:
Federal funding for a WIFIA program could have a detrimental effect on federal support for established State Revolving Fund (SRF) programs that provide the largest source of water infrastructure assistance today. If WIFIA funding resulted in a decrease in SRF assistance, smaller projects may face financing challenges. The Congressional Budget Office has warned that the future costs of a WIFIA program to the federal budget may be underestimated.
America's Water Infrastructure Act of 2018 (AWIA; P.L. 115-270), enacted on October 23, 2018, removed the pilot designation from the WIFIA program, reauthorized appropriations, and revised provisions related to program administration.
Appropriations for the WIFIA program have increased since its inception, allowing EPA to provide increasing amounts of credit assistance each year:
FY2017 appropriations totaled $30 million. FY2018 appropriations totaled $63 million. FY2019 appropriations totaled $68 million.
On April 5, 2019, EPA announced a third round of WIFIA funding, inviting prospective borrowers to submit letters of interest to EPA. From these submittals, the agency will select projects for funding. EPA estimated that its budget authority would provide approximately $6 billion in credit assistance.