Federal Water Tap, March 11: Congress Finalizes 2024 Budget for Water, Energy Agencies

The Rundown

• President Biden signs budget package for water, environment, and energy agencies that includes earmarks for water projects and an EPA spending cut.
• Reclamation publishes a final environmental impact statement for a short-term Colorado River conservation plan.
• IRS clarifies the tax status of lead service line replacements for homeowners.
• SEC finalizes a rule requiring companies to disclose climate risks to investors.
• EPA strengthens its rules for preventing chemical disasters, requirements that apply to water and wastewater systems.
• USGS outlines its research priorities for induced seismicity – a.k.a. earthquakes caused by injecting water and other substances deep underground.
• USGS also publishes a pair of reports on knowledge gaps related to water pollution.
• EPA renews the charter for its financial advisory board.

And lastly, the nation’s spy agencies will publish their annual report this week on national security threats, including water and climate.

“Thanks to our Bipartisan Infrastructure Law, 46,000 new projects have been announced all across your communities. And, by the way, I noticed some of you who’ve strongly voted against it are there cheering on that money coming in.” – President Joe Biden during the State of the Union address. A Department of Energy map shows the location of low-carbon energy investments stemming from the infrastructure law. Many are clustered in the South and Midwest, states whose Republican senators largely voted against the bill.

By the Numbers

$500 Million: Additional federal funding for the wildfire crisis. Most of the money will be funneled to 21 areas identified by the U.S. Forest Service as “priority landscapes” where people, critical infrastructure, and water supplies are located.

28 Percent: Amount of federal infrastructure law money that the EPA had obligated, as of the end of 2023. That’s according to a report from the agency’s internal watchdog. Even less money had been paid out – just 6 percent of the $60 billion the agency was allocated in the bill.

News Briefs

Budget Matters
As Bon Jovi said, we’re halfway there.

President Biden signed a partial 2024 budget package of six appropriations bills, providing funding for federal agencies involved in water, energy, and environment. Negotiations continue for the six remaining bills.

Though the EPA sees a 9 percent spending cut, the package maintains last year’s spending levels for water-related activities like the state revolving funds and regional ecosystem programs such as the Great Lakes Restoration Initiative.

Earmarks are once again part of the budget, and a source of controversy. Here’s the 100-page list of earmarks that senators requested under EPA and Interior programs.

The controversy: money requested as earmarks for water infrastructure projects is subtracted from the allocations to the state revolving funds, or SRFs. These funds provide low-interest loans for water infrastructure projects. Water advocates say that continuing to pull earmarks from the SRFs jeopardizes the future of the SRFs because there will be less money to loan.

Of the roughly $1.6 billion for the Clean Water State Revolving Fund, nearly half ($787 million) will be set aside for earmarks. For the $1.1 billion Drinking Water State Revolving Fund, earmarks ($631 million) are more than half.

Colorado River Short-Term Conservation Plan
The Bureau of Reclamation published the final environmental impact statement for a short-term plan to conserve water in the Colorado River basin. Under the plan, water users in Arizona, California, and Nevada will reduce demands by 3 million acre-feet combined over the next two years. Most of the conservation will be compensated by federal taxpayer dollars.

The basin is still haggling over the dimensions of a long-term plan to reduce water use. Upper and lower basin states submitted competing plans last week for Reclamation to analyze as part of the process to update its reservoir management plan. Current rules expire at the end of 2026.

Chemical Disaster Prevention
The EPA finalized changes to its Risk Management Program, which aims to reduce the number and size of hazardous chemical disasters – spills, explosions, fires, and other such toxic releases that harm life and property.

The changes take several forms. Facilities will be required to increase public access to information about the location of hazardous chemicals in their communities; to assess the use of less-hazardous chemicals as possible substitutes; and to evaluate the risk from natural hazards like floods, fires, and earthquakes.

Water and wastewater systems are among the 11,740 facilities affected by the rule change. Water system operators store chlorine and other chemicals that are a part of the treatment process. Water sources can also be polluted by these disasters.

Climate Risk for Businesses
Two years after the initial proposal, the SEC finalized new requirements that large public companies disclose to investors their climate-related financial risks and their plans to manage them.

Sustainable business groups said the rule was too timid in key areas, such as reporting greenhouse gas emissions.

Climate risks could be physical: facilities located in areas of high water stress. Or they could be transitional: how the shift to low-carbon energy affects business.

The rule also requires disclosure of losses and costs associated with extreme weather.

Tax Status of Lead Service Line Replacements
The IRS clarified that the use of public funds to replace a homeowner’s lead service line is not taxable income for the homeowner.

The Infrastructure Investment and Jobs Act, signed in 2021, provides $15 billion over five years for lead service line replacements.

Studies and Reports

Recipe for Earthquakes
The U.S. Geological Survey outlined its five-year research program for “induced seismicity.” This is when injecting fluids deep underground causes earthquakes.

The plan focuses on three seismic sources: oil and gas operations, geothermal production, and carbon sequestration.

Key research questions: How better to distinguish induced earthquakes from natural ones? Can faults at risk for induced earthquakes be identified before shaking occurs? Can induced earthquakes be forecasted?

What Else Don’t We Know?
Impacts of water pollution, for one.

The U.S. Geological Survey also published a pair of reports on “knowledge gaps” in water science.

One gap: how water pollution (nutrients, salinity, metals, industrial chemicals) affects the availability of water for human and environmental use.

Another: how pollutants impair aquatic ecosystems.

On the Radar

Threat Assessment Report
Mid-March is when U.S. spy agencies traditionally release their annual report on national security threats. Expect the 2024 edition this week.

The Senate Intelligence Committee has scheduled a hearing on the threats report for March 11 at 2:30 p.m. Eastern.

The 2023 report noted the risk of conflict over water, land, and the Arctic.

Wildfire Response Hearing
On March 12 at 10:00 a.m. Eastern, the Senate Committee on Energy and Natural Resources will hold a hearing to discuss recommendations from the Wildland Fire Mitigation and Management Commission.

Congress established the commission to provide policy solutions to the wildfire crisis. The group of more than 50 national experts submitted its report last September, calling the crisis “urgent, severe, and far reaching.”

Then on March 14, the Senate Homeland Security Committee will hold its own hearing on the wildfire crisis.

In context: New Mexico’s Largest Fire Wrecked This City’s Water Source

EPA Advisory Board Charter Renewed
The EPA is keeping its financial advisers on board, for at least two more years.

The agency renewed the charter of the Environmental Financial Advisory Board, a group of outside experts that provides advice on how to pay for environmental improvements.

Federal Water Tap is a weekly digest spotting trends in U.S. government water policy. To get more water news, follow Circle of Blue on Twitter and sign up for our newsletter.

Brett Walton

Brett writes about agriculture, energy, infrastructure, and the politics and economics of water in the United States. He also writes the Federal Water Tap, Circle of Blue’s weekly digest of U.S. government water news. He is the winner of two Society of Environmental Journalists reporting awards, one of the top honors in American environmental journalism: first place for explanatory reporting for a series on septic system pollution in the United States(2016) and third place for beat reporting in a small market (2014). He received the Sierra Club’s Distinguished Service Award in 2018. Brett lives in Seattle, where he hikes the mountains and bakes pies. Contact Brett Walton