Sen. Kelly Pushes Congress to Reform Outdated Clean Water Fund Formula to Get Arizona Its Fair Share 

Kelly sounds alarm on obsolete, arbitrary formula in Environment and Public Works Hearing 

Yesterday, in an Environment and Public Works Committee hearing that he requested on the Clean Water State Revolving Fund (CWSRF), Arizona Senator Mark Kelly urged his colleagues to revisit and reform the formula the program uses to grant funds to state wastewater, stormwater, and groundwater projects.  

The CWSRF was created in 1987 and is the main formula funding program that’s used to help localities invest in wastewater, stormwater, and groundwater infrastructure. However, the formula has not been updated since its establishment, which means that rapidly growing states like Arizona are left out of the equation – literally – when it comes to funding critical water projects. 

Last March, Kelly sent a letter to EPW leadership urging the committee take on reforms to the CWSRF formula. In October 2021, Kelly introduced the bipartisan Clean Water Allotment Modernization Act, legislation that would update the 35-year old formula used to determine the allocation of federal Clean Water Act resources to states via the CWSRF. 

In the hearing, Kelly questioned Jonathan Ramseur, an Environmental Policy Specialist at with Congressional Research Service on ways Congress could do better by growing states like Arizona

Kelly addresses witnesses at EPW hearing on the Clean Water State Revolving Fund.

The Water Resources Reform and Development Act of 2014 required EPA to review the CWSRF and recommend changes. The EPA’s report, published in 2016, found that if the formula were updated to reflect current population trends and needs, Arizona’s allocation of CWSRF funds would increase from between 143 percent to 290 percent of current funding levels. 

Read a transcript of Senator Kelly’s remarks below, and watch his full remarks HERE. 

Kelly: Mr. Chairman, I want to start by saying thank you to you and Ranking Member Capito for holding this hearing today. Really appreciate it. 

As you know, this is an important topic to me, and to Arizona. I understand and appreciate the importance of carefully considering any potential changes to the Clean Water State Revolving Loan Fund formula.   

Population size and change is an important thing in Arizona, we’re a growing population. But to Senator Sullivan’s point, we also have similar issues. The Navajo Nation — hundreds of thousands of native people who often live without infrastructure, without water and sewer, often without electricity either, but I think it’s also important for us to acknowledge that the current formula needs to be reformed. 

This is the main source of funding for wastewater, stormwater, and groundwater infrastructure improvements.  

And estimates from EPA and the Government Accountability Office (GAO) indicate that fast growing states, with significant infrastructure needs, like Arizona, could see a two- or three-fold increase in the amount of funding they receive under this program if the formula were reformed. 

That’s why I have worked with Senator Rubio to raise this issue and propose solutions. Fixing the formula isn’t a partisan issue. It’s a question of making sure that we’re effectively using scarce federal dollars to meet the critical infrastructure needs of communities across the country.  

So, Mr. Ramseur, thank you for being here, thank you to all of you for being here today, I wanted to start with a few basic questions for you:  

First, the Clean Water SRF was created in 1987. Has the formula determining state allocations ever been updated since then?  

Ramseur: Not in the Clean Water Act statute. There have been some small tweaks to it through appropriations acts and EPA has made some administrative changes, but by and large it’s been the same allotment since 1987. 

Kelly: Thank you. And do we know how Congress determined this allocation formula?  

Ramseur: We don’t know precisely, based on the House and Senate bills that were led to the evolution of the 1997 amendments, both of those bills included factors of population and needs and other things. So, it’s likely that the formula included those. We don’t know explicitly what was included.  

Kelly: Congress did not take enough notes from back then. Alright, is there anything in the Congressional Record from the time which indicates that the formula was designed to consider the water infrastructure needs of the state?  

Ramseur: Well, not explicitly just based on the House and Senate bills that did include needs as a factor, one might assume that that was included, but we don’t know for sure.  

Kelly: Thank you. You note in your testimony that EPA has conducted 16 Clean Watersheds Needs Surveys since 1972 to determine water infrastructure needs of the state. Does the allocation formula used to distribute the Clean Water SRF take into account information from these needs surveys.  

Ramseur: No. 

Kelly: Does EPA have any legal authority to make adjustments to the Clean Water SRF based on the infrastructure investment need? 

Ramseur: Not to my knowledge, no, they have to follow the Clean Water Act provision that directs them to the table, which has the percentages for each state from 1987. 

Kelly: Thank you, as you know the EPA also manages a companion program to the Clean Water SRF called the Drinking Water SRF. Have the state allocations for the drinking water SRF been updated since it was enacted? 

Ramseur: Yes, several times. 

Kelly: And are those allocations updated based on need? 

Ramseur: Yes, that’s the requirement in this kind of drinking water state revolving fund program. The allocations are based on the most recent needs surveys which generally come out every four years.  

Kelly: So the Drinking Water SRF is based on need and has been updated, but the Clean Water SRF has not. 

Ramseur: Correct.  

Kelly: Alright, so Mr. Chairman, I have additional questions that I would like to get to but let me just say before my times up, I understand that it’s important to have deliberation and debate about funding formula changes. But not acting to change the Clean Water SRF formulas is kind of ridiculous. This formula was created 35 years ago. We don’t know how the formula was created and it’s not updated to account for evolving needs or changing populations and states.  

 We have good examples of other formula funding programs within this committee’s jurisdiction that are regularly updated based on the evolving needs of the state. We just pointed out one. But this committee has never acted to try to address this problem. Meanwhile, states like  Arizona which have significant and growing water challenges, are forced to do more with fewer federal resources, and I hope that this hearing is just the first step in a longer process to update the outdated formula and I appreciate that you and Senator Capito have taken the next step asking the Government Accountability Office to provide legislative recommendations for potential reforms. And as we see those recommendations, I look forward to working together with you both to continue making progress on this issue.