Big Opportunities and Bigger Challenges: Texas Water Policy and the Bipartisan Infrastructure Law

Late last month, the Texas Sunset Advisory Commission released its report on the Texas Water Development Board (TWDB).  The report found that TWDB fell short in meeting the legislative benchmark for funding for rural and agricultural water projects by the State Water Implementation Fund for Texas, or SWIFT, which was created by the Legislature in 2013 to finance water projects in the State Water Plan.

The Sunset Commission’s report observes that many rural communities do not submit applications for TWDB financial assistance even though they are invited to do so.  A subsequent article in the Texas Tribune explored the reasons for rural communities’ nonparticipation.  In many cases, these communities’ lack of technical expertise, financial resources, and even knowledge of available programs precludes participation.

TWDB’s challenges in funding rural water supply projects point to a bigger issue for the state’s implementation of the US Infrastructure Investment and Jobs Act (IIJA) approved by Congress late last year.  The bill provides over half a billion dollars – a substantial sum – for the state’s clean and drinking water state revolving funds.  These two funds are genuine workhorses when it comes to financing water and wastewater infrastructure across Texas.

Both the IIJA and the US Environmental Protection Agency (EPA) have specific expectations with regard to how these state revolving fund dollars should be used.  Foremost among these is the emphasis on increased investment in disadvantaged communities.  According to the EPA guidance memorandum for IIJA implementation, disadvantaged communities can include low-income areas and communities of color, as well as smaller water systems.  Significant portions of state revolving fund dollars are set aside for these types of communities.

Here, the bigger issue for Texas’ water policymakers becomes apparent.  As the Sunset report and the Texas Tribune article point out, Texas already has a challenge in encouraging communities that may qualify as disadvantaged for applying for financial assistance through existing water programs.  The path towards successful IIJA implementation hinges on disadvantaged communities’ interest and capacity to participate in the funding opportunities.  And many of these communities have real problems with their water infrastructure, including significant rates of water loss or even non-compliance with state and federal health and safety requirements.

Beyond the focus on disadvantaged communities, IIJA includes other requirements that are new.  These include an emphasis on water infrastructure resilience, including protection from extreme weather and cyberattacks, as well as energy-efficient water systems.  In addition, both the IIJA and EPA’s guidance encourage an emphasis on regionalization, where smaller water and wastewater systems are interconnected, enabling better economies of scale.

Just as the IIJA offers new opportunities for investment in Texas water infrastructure, it presents challenges with regard to implementation.   The bill’s emphasis on disadvantaged communities, many of which may not have participated in state water funding programs before, will require changes in policy, especially with regard to the provision of technical assistance to qualified communities.  The same can be said of the other provisions within the Act.  

A “business as usual” approach to developing and financing water and wastewater projects won’t work well.  Rather, Texas Texas needs a strategic plan focused on state policy and programmatic changes needed to maximize the water opportunities in IIJA.  In the coming months, Texas 2036 will be working with key stakeholders in developing just such a plan.