vvEPA

FACT SHEET

Bipartisan Infrastructure Law:

State Revolving Funds Implementation Memorandum

March 2022

President Biden signed the Bipartisan Infrastructure Law (BIL) on November 15, 2021. The law's investment in
the water sector is nothing short of transformational. It includes $50 billion to the Environmental Protection
Agency (EPA) to strengthen the nation's drinking water and wastewater systems—the single largest investment
in clean water that the federal government has ever made. A significant portion of water infrastructure dollars
will flow through the Clean Water and Drinking Water State Revolving Funds (SRFs), which represent a
partnership between the Agency, states, tribes, territories, and local communities. EPA is committed to
maximizing the impact of these funds in addressing urgent water challenges facing communities.

EPA's implementation memorandum provides information and guidelines on how EPA will administer the SRF
capitalization grants appropriated to states under the law. The implementation memorandum is expected to be
applicable to all five years of BIL appropriations.

Provide Flexibility to Meet Local Water Needs

A fundamental principle of the SRFs is the flexibility provided to states and borrowers to address a wide variety
of local water quality and public health challenges. EPA continues to support and actively encourages flexibility
in the implementation of SRF funding included in the BIL. With supplemental funding to the CWSRF and
DWSRF—and creation of dedicated funding within the SRFs to tackle lead and emerging contaminants—states
will have a great deal of flexibility in program administration.

Increase Investment in Disadvantaged Communities

A key priority of the Bipartisan Infrastructure Law is to ensure that disadvantaged communities benefit equitably
from this historic investment in water infrastructure. Disadvantaged communities can include those with
environmental justice concerns that often are low-income and communities of color. Disadvantaged
communities experience, or are at risk of experiencing, disproportionately high exposure to pollution—whether
in air, land, or water.

The Bipartisan Infrastructure Law mandates that 49 percent of funds provided through the DWSRF General
Supplemental Funding and the DWSRF Lead Service Line Replacement Funding must be provided as grants and
forgivable loans to disadvantaged communities. The BIL also requires that at least 25 percent of funds provided
through the DWSRF Emerging Contaminants Funding be provided as grants and forgivable loans to
disadvantaged communities or public water systems serving fewer than 25,000 people. For the CWSRF, the law
mandates that 49 percent of funds provided through the CWSRF General Supplemental Funding must be
provided as grants and forgivable loans to communities that meet the state's affordability criteria or certain
project types, consistent with the Clean Water Act. To accomplish this, states may need to:

•	Evaluate and revise, as needed, the DWSRF disadvantaged community definition and CWSRF
affordability criteria.

•	Evaluate the SRF priority point system for project ranking commensurate with need.

•	Use technical assistance funding to help disadvantaged communities identify needs and access funding.

•	Engage residents and community stakeholders in disadvantaged communities.

Page 1 of 3


-------
EPA will collaborate with state SRF programs to share models, examples, and build state capacity to target
resources to disadvantaged communities.

Make Rapid Progress on Lead Service Line Replacement

The BIL contains a historic $15 billion in dedicated funding through the DWSRF for lead service line (LSL)
identification and replacement. This funding is being provided to states with no match requirement. EPA will
collaborate with state SRF programs to share models, guidance, and build state capacity to assist local
communities and ensure lead service line funding is effectively and equitably deployed. DWSRF supplemental
funding and base funding can be used for LSL identification and replacement. The implementation
memorandum provides examples of eligible projects. Any project funded under this appropriation must replace
the entire LSL, not just a portion, unless a portion has already been replaced.

Address PFAS and Emerging Contaminants

The BIL provides $5 billion through the SRFs to reduce people's exposure to perfluoroalkyl and polyfluoroalkyl
substances (PFAS) and other emerging contaminants through their drinking water and to help address
discharges through wastewater and, potentially, nonpoint sources. By law, these funds must be distributed to
communities entirely as forgivable loans or grants. States are not required to provide matching funds. This
demonstrates an unprecedented commitment from Congress to addressing PFAS water contamination across
the nation. The implementation memorandum provides a description of emerging contaminants for the SRF
programs to use in evaluating project eligibility.

Support Resilience and One Water Innovation

One of the defining features of the State Revolving Funds is the broad range of eligible projects that states can
fund to flexibly support priority needs. EPA encourages states to utilize the significant increase in SRF funding for
infrastructure projects that make water systems more resilient to all threats—whether it is natural disasters,
climate change, or threats such as bioterrorism and cyber-attacks.

Support American Workers and Renew the Water Workforce

The Bipartisan Infrastructure Law is not only an opportunity to reinvest in America's water infrastructure, it is an
opportunity to invest in the American worker. SRF projects are protected by Davis-Bacon prevailing wage
requirements, consistent with federal law. BIL investments will create jobs in construction, operations and
maintenance, and other family-supporting careers—at a pivotal moment when more than one-third of the
water workforce will retire in the next five years. As it implements BIL, EPA is committed to working with states,
tribes, and territories—as well as labor organizations, employers, and educators—to renew America's water
workforce and create good-paying jobs in communities across America.

Cultivate Domestic Manufacturing

Acting in a bipartisan fashion, Congress passed the Build America Buy America (BABA) Act in 2021, concurrently
with the Bipartisan Infrastructure Law. Congress established this domestic preference program to create long-
term opportunities for domestic manufacturers and manufacturing jobs and build resilient domestic supply
chains for a wide range of products. BABA expands existing American Iron and Steel (AIS) requirements for SRF
recipients to include additional materials and manufactured goods. In the coming weeks, EPA plans to issue
implementation procedures for BABA compliance for federal water infrastructure funding programs. EPA will
work closely with states, tribes, and territories on technical assistance and training.

Page 2 of 3


-------
Fully Enforce Civil Rights

Under Title VI of the Civil Rights Act, EPA has a responsibility to ensure that federal funds are not being used to
subsidize discrimination based on race, color, or national origin. EPA's nondiscrimination regulations prohibit
recipients of EPA financial assistance from taking actions in their programs or activities that are intentionally
discriminatory and/or have a discriminatory effect based on race, color, national origin, age, disability, or sex.
EPA intends to carefully evaluate the implementation of SRF funding under the BIL to ensure compliance with
civil rights laws.

Refine State SRFs to Build the Pipeline of Projects

EPA encourages states to strategically use funds from the Bipartisan Infrastructure Law as a catalyst to continue
building and maintaining a robust project pipeline of SRF projects. EPA recommends states use practices already
exemplified in some SRF programs, such as simplifying and streamlining their application process, using set-
asides and technical assistance to build capacity in small and disadvantaged systems, encouraging integrated
and regional approaches, and increasing internal and external outreach about the new funding opportunities
through the SRF programs.

BIL SRF Funding Details

SRF Funding Program

Total Funding

State Match

Additional
Subsidy

Eligible for Additional Subsidy

Clean Water SRF
Supplemental

$11,713,000,000

10% in 2022 & 2023
20% in 2024 - 2026

49%

Assistance recipients that meet
the state's affordability criteria
or project types as described in
section 603(i) of the CWA.

Drinking Water SRF
Supplemental

$11,713,000,000

10% in 2022 & 2023
20% in 2024 - 2026

49%

Disadvantaged Communities

Clean Water Emerging
Contaminants

$1,000,000,000

0%

100%

No restriction

Drinking Water Emerging
Contaminants

$4,000,000,000

0%

100%

25% for Disadvantaged
Communities or Public Water
Systems Serving Fewer Than
25,000 Persons

Drinking Water Lead

$15,000,000,000

0%

49%

Disadvantaged Communities

Page 3 of 3


-------