Webinar

Understanding the Infrastructure Investment and Jobs Act

Thursday, January 13, 2022
Bridget Bennett/REUTERS
Speakers

Senior Vice President and Chief Strategy and Digital Officer, Xylem

Adjunct Senior Fellow, Council on Foreign Relations

Presider

Vice President for National Program and Outreach, Council on Foreign Relations

Heidi Crebo-Rediker, adjunct senior fellow at CFR, will discuss the provisions in the bipartisan Infrastructure Investment and Jobs Act (IIJA) and implications for infrastructure projects at the state and municipal level. Albert Cho, senior vice president and chief strategy and digital officer at Xylem, will discuss how money is allocated to water infrastructure in the IIJA.

FASKIANOS: Welcome to the Council on Foreign Relations State and Local Officials Webinar. I’m Irina Faskianos, vice president for the National Program and Outreach here at CFR. We’re delighted to have participants from forty-eight states and U.S. territories joining us today. Thank you for taking the time to be with us. This discussion is on the record. As you know, CFR is an independent and nonpartisan membership organization, think tank, and publisher focusing on U.S. foreign policy. CFR is also the publisher of Foreign Affairs magazine. Through our State and Local Officials initiative we serve as a resource on international issues affecting the priorities and agendas of state and local governance by providing analysis on a wide range of policy topics.

We are pleased to have Heidi Crebo-Rediker and Albert Cho with us today. We’ve shared highlights from both of their bios, but I will give you a brief overview. Heidi Crebo-Rediker is an adjunct senior fellow at CFR and a partner at International Capital Strategies. Prior to coming to CFR, she served as the U.S. Department of State’s first chief economist. Ms. Crebo-Rediker was also the chief of international finance and economics for the Senate Committee on Foreign Relations. Albert Cho is the senior vice president and chief strategy & digital officer at Xylem, where he’s responsible for efforts to digitize water infrastructure. Previously he was the senior advisor to the deputy secretary of the U.S. Department of State, and a White House fellow serving on the secretary of state’s policy planning staff. Mr. Cho serves on the board of directors for the U.S. Water Alliance and the Canadian Water Network. So thank you both for being with us.

Heidi, let’s begin with you to give us an overview of the Infrastructure Investment and Jobs Act, and what was—what’s in it, what’s not, and metrics that the group should be looking for.

CREBO-REDIKER: So, first of all, thank you, Irina, so much for inviting us both to come and speak today. When we’ve talked about infrastructure in the past, it’s always been, like, we have to do this—like a rallying cry. And even though a lot of the media attention has been on Build Back Better, you know, it overshadows the fact that we had a major victory—bipartisan victory in getting the 1.2 trillion (dollar) bipartisan infrastructure investment bill passed. And it includes Highway Trust Fund funding, but also 550 billion (dollars) in new infrastructure spending. And I guess what we’re here to talk about today is, you know, not just that this was monumental, but it’s really implementation time. So the passing of the law was just the start. It’s not meant to be a stimulus bill. It’s actually investment. It’s a—you know, it’s a marathon, not a sprint. And it’s really supposed to solve for a lot of the infrastructure deficit that we’ve had from a lack of investment over the course of the past several decades.

So on the federal side they’re, you know, working on standing up a number of new programs that are addressing different policy issues. And Al’s going to go into more detail on water specifically. But on the state and local level, because so much infrastructure is owned and operated, looking at whether you are going to repair, renew, hire—you know, hire workers in a time of labor shortage, and still with the restrictions of COVID and some supply chain issues around construction of goods and materials. It’s a good time to gather this group together, because we’d like to learn from you as well.

So in this I think we’ve widened the definition of infrastructure and looked at really expanding some of the objectives, in particular focusing on resilience, on climate and cyber resilience, looking at issues of equity in infrastructure investments. We put a huge—there’s a huge amount of funding in energy, money to upgrade the grid and transmission lines. And we’ve had a lot of creativity in the private sector, in state and local governments, and investment in new energy sources, clean energy sources, so that having a grid that is able to actually take on some of the new types of energy that’s becoming available is actually—it’s a critical part of it. It’s not enough funding. We have about seventy-five billion (dollars) that we’ve seen in the energy infrastructure sector.

And I think we’re going to see—you know, we’re going to see the need for a great deal more in terms of whether resilience, figuring how to protect, again, from cyber threats. And then in addition we have a significant amount that’s gone to broadband. So we have—water is a big part of this. Transportation and traditional roads and bridges are really the bulk of where the infrastructure funding is targeted. But I think there are some really interesting new areas that have opened up questions about how we think about infrastructure broadly. And so I will—I’ll stop with that as sort of the thirty-thousand-foot, and talk a little bit more about what I think was missing and what we could do next time around on a bipartisan basis, and also some of the metrics that we need to look at to see if this is actually—if this is enough, and how we measure success.

FASKIANOS: Great. Thank you. Should we turn to Al, and then we’ll dig deeper?

CHO: Sure. I’d be happy to dive in. And just wanted to say thank you so much to you, Irina, and Heidi, and for everyone who’s here for tuning in to talk about infrastructure, which is my favorite subject. I’m going to put up a couple of pages, because I know we are probably all enjoying a couple of different things at the same time on Zoom, but some pictures can sometimes help tell the story. So just by way of introduction—can everyone see my screen?

FASKIANOS: It looks good.

CHO: Very good. So I’m going to talk about renewing America’s water infrastructure. And I’m just going to start briefly with a quick introduction. My name is Al Cho. I’m Xylem’s chief strategy and digital officer. In a previous life I did work with Heidi at the State Department and was a term member at CFR. I’m really glad to see that we’re doing some more domestic work today, because Xylem’s a U.S.-based public company and we focus on water technologies that help eliminate water as a constraint to health sustainability and prosperity. We’re also really proud to be a leader in sustainability, and most recently we were recognized by Newsweek as being one of America’s top twenty responsible companies. And so I’m glad to be with you today.

Now, I’m going to give you quick overview on three topics about water, the strategic state of the water sector, what’s in the infrastructure bill, and what are some of the key policy issues for state and local government. So with that, I’m going to go to the next page. And I’m going to assume that not everyone on this call is a water professional, and just start with the basics around water infrastructure and managing the cycle of water. We all know water is essential to life. What we may not realize is that we’re constantly surrounded by water infrastructure, whether we know it or not, including the abstraction and treatment of drinking water, its distribution through pipes and meters to consumers. We often use the water and turn it into wastewater in various ways. And that wastewater gets collected in sewage pipes and taken to treatment plants or sewage tanks, septic tanks, discharged into the watersheds, where it then becomes available for other use.

You know, what you might not think about, though, is water is very heavy to lift, and it’s difficult to contain. And that makes water the most capital-intensive utility service. It’s also typically the single biggest municipal energy consumer, because it takes a lot of water to pump the water and to blow bubbles through the sewage to eliminate all the nutrients that are in it. And finally, it’s the one with the most system losses because it’s very difficult to assess to what’s happening in water infrastructure. It’s buried. It’s expensive to dig up to observe or to repair it. And so there are a lot of challenges with the infrastructure that we’ve built.

And so in terms of vital signs, the strategic situation is not great. The American Society of Civil Engineers publishes a regular report card, and it gives water infrastructure in America bad grades. Because in a lot of parts of the country the water infrastructure is actually close to failing. Pipes are leaking 20 to 30 percent of their water before it reaches customers. Water mains break every two minutes in the U.S. And billions of gallons of sewage, untreated, are released into the natural environment from combined sewer overflows every year. And those things are met by a crisis of confidence and inequality in a lot of parts of the country, where 60 million Americans, for example, just won’t drink their tap water. That’s not a great signal of healthy water infrastructure.

So how did we get here? The reality is that after an initial bout of federal funding to build up treatment plants after the passage of the Clean Water Act and the Safe Drinking Water Act, all of that infrastructure is in the ground then deteriorating, every year accumulating more and more of the capital investment gap that the U.S. Water Alliance estimated at about $100 billion every year. Meanwhile, the federal investment in water infrastructure has dried up, collapsing from about 31 percent of total capital and O&M spending in 1977 to just about 4 percent in 2017. So there have been some pretty big shifts that have led to a pretty big deferred maintenance and investment gap in water.

And at the same time, in the face of declining funding, there have been huge legacy issues as well as emerging concerns that require new investment. Whether that’s the painful legacy of lead service lines in homes and schools, poisonous forever-chemicals that we’re learning more about called PFAS, or rising water stress driven by climate change and economic development, particularly in the Western United States. But other water issues related to resilience, like flooding in New Jersey, where I know Irina is, those are all big challenges that we have to deal with every single day. And it’s led us to an unsustainable equilibrium that hopefully the money in this jobs act will be able to help us break out of.

And so I want to offer a strategic framework before I go into the details of the infrastructure investment. It’s something I call the trilemma for water policy management. A trilemma is a situation where you want three things, but you can only have two. And Heidi will be familiar with that from the trilemma in international macroeconomics, but this one’s about water policy. So this sector has three needs. First, we need resilient water infrastructure the functions well and reliably 24/7 because people need water constantly, whether it’s hospitals, or schools, or restaurants. And that takes investment.

Second, process stability. Water, as my friend George Hawkins, who used to run D.C. Water likes to say, is the only utility whose products we put inside our bodies. So it’s highly regulated and the physical and human infrastructure is hard to adapt. This isn’t a sector where we encourage a lot of kind of fun experimentation because it really matters that we get it right. And so it’s not an area where process changes are welcome for change’s sake. And that leads to a desire for process stability and using solutions that we know have worked for decades.

The third good is affordability. Studies show that water and wastewater rates can consume up to 20 percent of the discretionary income of 20 percent of American households. So it’s not very popular to increase rates, particularly where we have large populations of people on low or fixed incomes. And as you’ve seen in the previous slides, relying on local revenue mobilization to fund infrastructure has produced a pretty staggering investment deficit in water.

And so the essence of the problem is that you want these three things, and you can’t have all of them. You can’t have resilient and affordable infrastructure without significantly improving the productivity and efficiency of investment in that infrastructure. And that requires challenging what we’ve been doing in the past. Throwing more money at the problem without changing how we do water won’t fix the issue. And so we have to take advantage of this once-in-a-generation infrastructure funding opportunity to drive a major technological improvement that ensures the long-term viability of water infrastructure, applying 21st century technologies to this enduring problem.

And so to make this really concrete, I want to give you the example of South Bend, Indiana. If you know the secretary of transportation used to be the mayor there. And South Bend is on the St. Joseph River. It experienced flooding and combined sewer overflows that led to a pretty significant federal consent decree. Now, if any of you live in communities with flooding and sewage flooding, the traditional engineering approach is to build a giant sewage tunnel that uses kind of once every couple of months during peak periods to contain overflows. In South Bend, that investment was going to cost a billion dollars, which is $10,000 for every person in a city where the per capita income is about 20k.

If you ever heard Secretary Pete—Secretary Buttigieg talk about smart sewers, you’ll know that the city was able to solve this problem better with data, by applying sensors and software that helped the city make better use of the existing sewage capacity in real time. And so during a period when rainfall nearly doubled over ten years, the city managed to cut sewage overflows in half without building that tunnel, saving over $400 million through an amended federal consent decree by better operating the infrastructure they already had, using new technology. These are the kinds of investments that we need to be making with the jobs act, investments that give us reliability and resilience while making infrastructure permanently more efficient.

And so what I want to do now is talk us through the provisions of the Infrastructure Investment and Jobs Act in water. They include, principally, over $60 billion in new funding for water infrastructure, including over 60 billion—fifty billion (dollars) that’s headed to EPA to address core infrastructure funding, lead service line replacement, and emerging contaminants, as well as $8 billion headed largely to interior to address the specific challenges of western water. Now, most of that funding will go through EPA. And the key message here is that 80 percent of the EPA money will flow through what are called state revolving funds, which are financial entities operated at the state level to disperse long-term low-interest funding loans and, in some cases, grants to finance water infrastructure capital improvements.

That funding represents a sixfold increase in recent appropriations to those revolving funds and a major increase in the grant proportion that states are authorized to provide, especially for underserved communities. Now, that money is allocated to states via an allocation formula. And specific details of those allocations are available on the EPA website. The state revolving fund administrators in each of your states have significant latitude in awarding the funds to eligible applicants based on a state intended use plan that lays out kind of policies and priorities, which is reviewed with the EPA.

And as we think about those funds, and I cut that off at D.C., but the full list is available on the web, one operational challenge that we can see right now is the need to significantly ramp up capacity at the state level in order to handle the flow of applications to state revolving funds. As you can see in this chart, there’s a lot of steps in this process around concepts, intended use plan prioritization, public hearings, environmental impact reviews, reviewing and approving applications. And in the IIJA there’s money earmarked for technical assistance and administration. And I know the EPA right now is working with states to shape a technical assistance agenda that will help, you know, deal with the scale-up and influx in demand.

But the other thing to bear in mind in terms of implementation considerations is that historically these state revolving funds have not always been reaching all the communities that can use their support. In some states, and maybe this is true in yours, SRF funds have not been fully expended for many years. In fact, a recent analysis of funding data in the drinking water state revolving fund showed that only 7 percent of systems, representing less than a third of the total population of the U.S., has made use of SRF funding in the last decade, with the Dakotas leading the way around 20 percent of systems, and then the rest of the states in the country being well below that. Part of the challenge is the extreme fragmentation of the water sector. There are over fifty thousand water utilities and around twenty thousand more wastewater and storm water utilities compared to, like, three thousand electric utilities and cooperatives. And so that means that a lot of them are very small and will likely need support to make use of new funds.

So I’m going to wrap up there with a few policy considerations and implementation considerations. On the policy side, the tension that exists here is that the money is federally appropriated and there are some very clear federal policy priorities around how the money should be used—for things like environmental justice, made in America provisions, and getting the money out the door pretty quickly. But the states also have authority over the state revolving funds that 80 percent of the money is going to go through, thought there are some levers that the federal government has to influence how states ultimately spend the money.

So, first, in the environmental justice area, the White House has laid out a Justice40 agenda, with the objectives that 40 percent of the overall benefits of federal investment in climate and clean energy will go to disadvantaged communities. There are a number of detailed provisions in the legislation here relating to small and disadvantaged communities and water. And I would expect dialogue with the EPA around how state intended use plans for the SRFs reflect the needs of small and disadvantaged communities.

A second policy theme is that there’s going to be a tension between shovel-ready and shovel-worthy projects. There’s going to be pressure to get money out the door quickly to demonstrate benefits and traction from infrastructure investment, especially with respect to job creation. And in the past, that’s led some utilities—water utilities in particular—to use the funds to support projects that are shovel ready to move quickly versus really taking the time to shape adoption of solutions, including those that leverage better technology to drive greater economic and environmental impact. States and local governments have an important role to play here in guiding the investment in directions that lead to longer-term sustainability, because while the funds today will finance capital expenses, communities will be on the hook for longer-term operations and maintenance.

And finally, there are much stronger domestic content requirements as part of the made America—made in America chapter in the legislation, which requires that all inputs used in federally supported projects be manufactured in America. Speaking as someone who’s followed the water sector very closely for the last decade, without a lot more flexibility than is currently in the law that policy runs the risk of increasing costs and causing significant project delay because very broad categories of technology in the water sector use global supply chains that are not currently available in the United States and would take a lot of time to develop.

And so there is further guidance coming in from OMD and EPA that over the coming sixty days. It’s just something to watch from an implementation perspective. And that’s where I’d start, on the bottom right of this page. Those domestic content requirements typically create significant documentation and proof burdens for every one of the thousands of components used in water projects. And your SRFs will need to be prepared to address those documentation burdens. Finally, as I mentioned, the SRFs will also have to be prepared to take full advantage of technical assistance resources to scale up the delivery of funds. And we’ll see more guidance from all of these funds from OMB and the White House and the EPA in the next sixty days or so.

I’ll end with just one last slide. If this is a topic on water that you guys want to learn more about, we’re hosting a webinar focused on highlighting assistance resources for communities to support state and local governments on implementing this funding in small, disadvantaged communities. And so let us know if you’re interested in further information on that. But with that, I’ll stop and hand it back over to Heidi and to Irina.

CREBO-REDIKER: So just—if I can jump in—Al, you know, you spoke to the fact that this is—that this is a significant amount of money. One of the targets of the funding for water was to achieve the elimination of lead pipes in America. Is this a substantial, you know, way to get there? Or are we going to be short funds? And if so, how do we make up for achieving that goal?

CHO: Yeah, this is a very, very large down payment in the money that’s going to be needed to address the lead pipe issue in the United States. The numbers that I’ve seen suggest that the billions of dollars that have been appropriated for lead service line replacement in this tranche of funding is not enough to fully address the issue. And so there will need to be, you know, further local mobilization of money and/or future infusions of funds in order to kind of get to the point of zero lead service line levels in the United States. There is more money, for example, in some of the reconciliation bill that is under discussion today. And there will be likely future asks for appropriations around this issue. But as of right now, it doesn’t look like there’s enough money to fully address the issue.

The one thing I would say from a technology perspective is that it’s important to look at how to comply in as efficient a way as possible. And so there’s some startups and technology firms that are doing really good work and using machine learning to pinpoint—with pinpoint accuracy predict which locations actually have lead service lines to guide prioritization of where municipalities direct construction funding first so that you’re not kind of going all over the place digging up pipes that aren’t lead, because in many cases those inventories don’t exist. But actually targeting those neighborhoods first that have the highest likelihood of having a very high concentration of lead pipes.

CREBO-REDIKER: So you sort of almost—you preempted my next question, which is that there’s a lot of innovation that’s happening around both AI and ways to use big data to actually benefit infrastructure investment. And that’s in many parts of—you know, whether you’re looking at transportation, or energy efficiency. What do you see as being the most important breakthrough technologies, in addition to the one you just mentioned, that can help direct state and local communities to both attack the problem that is, you know, in the most—in the most reliable way? And also, how can you—are there funds available through the bipartisan infrastructure bill to actually have state and local governments afford the purchase or the use of those new technologies? Or is that something that would be outside of the scope?

CHO: Those are great questions. In water specifically, you know, if we come back to the thesis that there’s a once-in-a-generation opportunity to invest in the next generation of water infrastructure, so we don’t end up in twenty years without another huge deferred maintenance gap, we have to spend the money that we have now to set ourselves up for a more sustainable—financially sustainable water infrastructure sector in the future. And a bit part of doing that—and this is I think where the water sector is headed—is investing in smarter technologies that eliminate waste, because there’s a tremendous amount of waste in how we approach asset management in the water sector, reactive maintenance in the water sector, and leakage and losses in the water sector. And so we’re spending a lot of money on things that we’re going to have to maintain that we don’t really need.

In the bill, in think the opportunity is to set water utilities up for longer-term success by investing in three kinds of information technology assets. One is the foundational stuff, right? A lot of utilities today still don’t have the asset management capabilities to know where their assets are, to have them in GIS maps, to have kind of data centers that can store the information. And so there’s a lot of foundational capability building that needs to happen in water utilities. And I see a question in the chat. You can use ARPA money for that. And in terms of building out some of the licenses and capabilities that you need to capitalize in order to build those foundations, in-state intended use plans prioritizing smart asset management is a great foundational use of incremental funding for water utilities.

A second area is cybersecurity. Water utilities have to be cybersecure if they’re going to take advantage of these technologies. There have been some examples in recent memory. You probably saw the incident in Florida where someone hacked into the system, tried to put sodium hypochlorite (ph), which is a chemical, into the water system. And luckily that was caught and nothing bad happened, right? But we’re seeing an increased kind of threat level on all critical infrastructure, of which water is one. And utilities have to get ready for the future. Whether they upgrade or whether they stay the same, there will be vulnerabilities. And cybersecurity should be a major source of investment. And to your point, Heidi, in the law there’s a lot of language about cybersecurity through the lens of resilience, where when we talk about the sustainability and resilience of infrastructure, cybersecurity is a really critical element of ensuring operational reliability, continuity, and resilience. And so that’s a major investment area, where if we don’t take advantage of this funding to go there, we’ll be leaving a big vulnerability.

And the third area is—just as you mentioned—it is operational investments in areas like real-time sensing, digital twins of infrastructure that help manage assets more effectively. So in the South Bend example I gave you, they used sensors, built a digital twin, and were able to use optimal control to figure out where the sewage should flow because they knew how the system worked, using artificial intelligence. And we see more and more applications like that. Again, treatment plans being a great example, where, like, if you look at the picture behind me, wastewater treatment plants are one of the biggest municipal energy consumers because it takes so much energy to blow air through your sewage to make sure that the bacteria in the sewage can survive long enough to eat all of the chemicals that are in the sewage. And the problem is that most cities over-aerate their sewage, and you can save a significant amount of energy and money if you use sensors to figure out how much air is in the sewage and then use models and controls to optimize the performance of your treatment system. We’ve seen very significant improvements in energy consumption and cost. Those are the kinds of technologies that set us up better for the future. And, yes, you can use the funds to upgrade systems in that way.

CREBO-REDIKER: So, just in terms of looking, I guess, more broadly outside of just the use of funds for water projects, there is a pretty big effort of dig—you know, dig once. If you’re going to dig—if you’re going to be, you know, upgrading a road or upgrading a sewage pipeline or water infrastructure, that you use the opportunity to bury transmission lines or to put—you know, extend broadband and cables, and basically—so you’re digging once and making the whole project multimodal, but more efficient. Do you see that in the way that the funding has been structured? Because sometime you can get very siloed—very siloed access to different types of infrastructure funding. Is that something that you’re looking at?

And I guess there are some really good questions that are popping up in the Q&A that I hope we get to, because this is a very—this is an incredibly well-informed crowd that we have collected today. And so I think that their questions would probably be even more—you know, more insightful than mine. But I just would love to hear about the dig once.

CHO: Yeah. I don’t think there’s a lot in the funding that enables or prevents cities from using the funding to dig once. But the reality is that there’s huge benefit if there is coordination at the state or county level around those kinds of projects. You know, let’s start with how much waste there is. So in terms of, for example, pipe replacement programs, EPA studies have demonstrated that a lot of money gets replaced—invested in replacing pipes that are still perfectly good, that aren’t likely to cause water main breaks. And so funding is spent on what are effectively less productive pipe replacement projects. There are a number of companies now that are looking at using, again, artificial intelligence to map out, first, where are the pipes that are most likely to fail? So that you can update pipe replacement programs and allocate needed funding just to those areas that actually need it.

But the second order is those algorithms can also be used to incorporate and ingest where, for example, are other city departments already planning to dig? So the optimization function goes around creating clusters of projects that cost the lowest amount of money for the city. What is important there is that the different siloes in any organization are talking to each other. Often we found that that’s the hardest part in project management, is that, you know, multijurisdictional coordination or even multi-departmental coordination over getting engineering ops, roads, and sewers to work together is the hardest part of getting that kind of ideal win of dig once to happen. The law doesn’t really fix that issue. It doesn’t prevent better things from happening. But I do think there are now some data-oriented solutions that can enable city planners to make multi-departmental plans work in a way that didn’t exist five or ten years ago, to get a lot more out of the infrastructure funding that’s supplied.

CREBO-REDIKER: So I think we have, Irina, there—do you want to—do you want to take over? I think we’ve reached the half-hour point. And I know that there are a lot of good questions. And actually in the past I’ve learned more from listening to some of the discussions on pilot projects and specific areas of concern or optimism from state and local officials. So I see there are a couple of questions in the—in the Q&A. But over to you.

FASKIANOS: Great. And as Heidi—thank you, Heidi. And now we want to hear from all of you. And please share what’s happening in your communities and what you’re doing, because this is a forum to exchange ideas. Laura Dent has written a question but also raised her hand. So I’m going to go first to you, Laura. If you could just—you might want to revise it based on what you’ve heard.

Q: OK. Well, Albert partially answered my question. I’m Laura Dent, on the city council in Harrisonburg, Virginia.

We had planned in our city council to allocate some of the ARPA funding to the water and sewer projects that were put on hold because of the pandemic. And that’s part of the purpose of the ARPA funding, obviously. And then when we heard that the infrastructure act would include water and sewer, we put that aside to say maybe we should use that instead. However, my concern is then we’d have to apply to the state and go through a competitive process, versus being able to just decide for ourselves based on what our water guy requested. So my question was—I just wanted to elaborate some on my question of how would you navigate that overlap? How would you recommend which funding to go for what?

CHO: Heidi, if you want to jump in, please do, otherwise I’m happy to take the question.

CREBO-REDIKER: Please. This is right down your—

CHO: So first, Laura, you’re lucky to live in Harrisonburg. I’m down the road in Woodstock. And love your—love your city. The question is a really good one, which is around what pots of money can be used for what and how to kind of differentiate between where they go. The nice thing about the first bucket is that you basically have immediate control over how you want to spend the money, as opposed to what’s going to be happening with the SRFs. There’s still a process that is going to take a couple of months to roll out in terms of the money being dispersed to the states, clear guidance being issued from, you know, EPA and OMB to, in this case, the Virginia state authorities that are responsible either for the state drinking water state revolving fund or for the clean water revolving fund.

And they then are going to have to kind of put things on the list for the intended use plan, get that intended use plan agreed with the EPA. All of that can move very quickly and it could be seamless, but to your point it does require more steps in the process in order to get a line around whether that money’s going to be dispersed or not. And so I would say for things that are really urgent or that you don’t think will make it onto the list of the intended use plan at the state level, then that’s a great candidate for using more discretionary funding that you can apply to those things. Whereas if there are things that—as the state of Virginia kind of lays out its intended use plan priorities—that you think are really, really good candidates for moving their way up in the state intended use plan, then those projects might be better candidates for the Infrastructure Investment and Jobs Act money.

That’s the kind of discussion where right now it’s probably best to have the discussion with the state revolving fund administrators. Virginia’s undergoing a change in government right now, and so some of those priorities may evolve. And they’re also probably still waiting for guidance from EPA around exactly how the federal guidance is going to impact the prioritization of projects within their own intended use plan. I don’t know if that answers your question, but some indicative principles.

Q: Well, how long do you think EPA is going to take to come up with this guidance? Is there a set deadline?

CHO: Everything I’ve heard is that the guidance will come out by the end of February.

FASKIANOS: Great. So we’ve a question from Ellen Smith.

I don’t believe that people’s reluctance to consume public water is due to actual poor water quality. There’s a great deal of marketing activity designed to undermine confidence in our public water in order to sell household water treatment systems and bottled water. Is there any possibility that the EPA will spend a tiny fraction of the funding to help people better understand water and be less susceptible to misinformation?

CHO: That is a great question. I’m happy to take it, Heidi, unless you want to?

CREBO-REDIKER: Absolutely over to you.

CHO: So this is a great question. And I guess I have my own doubts about whether messaging from the EPA on this would be effective. Not because EPA’s not great and credible, but because some of the things that we’ve found is that the most credible spokespeople around water are actually local authorities and state authorities. There’s also a campaign which I would direct your attention to, if you haven’t been involved in it, called the Value of Water Campaign, which is a multi-stakeholder alliance of cities, of water trade associations, of private companies that are all kind of investing in helping Americans understand more about why, in particular, public water infrastructure is so important and so valuable. And so there’s a lot of annual polling, there’s media information, there are assets and resources that states can use to communicate the value of public water systems, the safety of public water systems, et cetera.

The other are I might point you toward is the environmental policy innovation center is a think tank that runs an annual water data prize. And last year, the water data prize was about using innovation in house data is presented in the annually mandated consumer confidence reports that EPA mandates through the Safe Drinking Water Act, to improve how that presentation of information can be disseminated to people to improve their confidence in what public water actually has in it. And so some of the winners from that have made their platforms publicly available. And so if you’re interested in learning more about that it’s the Environmental Policy Innovation Center’s water data prize.

FASKIANOS: Great. Thank you. And Ellen in Oak Ridge, Tennessee.

We have a raised hand from Representative Nakamura in Hawaii. If you unmute yourself, that would be terrific.

Q: Thank you. I’m calling from the state capitol in Honolulu, Hawaii. I’m a representative from the island of Kauai.

I have a couple of questions. One is who approves—does EPA approve the state’s intended use plan? And if so, what is that process and what does that process involve?

CHO: So, as I understand it, EPA certainly reviews the state intended use plan. I don’t want to speak out of school on the specific legal authorities here and whether that has to be approved or whether there’s just a process of review, but there’s definitely guidance provided by EPA on the IUPs, a dialogue that takes place, and a review. And then the state are able to go apply the funding according to the IUP that’s been reviewed by EPA. But I’ll have to get back to you on the specific legal pieces because I don’t want to say something that’s out of school.

And I see your second question around how long that will take. You know, I think they are trying to move this as quickly as possible, but it takes as long as it takes the states to develop the intended use plans and then complete it with EPA, which is a non-answer as the answer. What will happen, again, is hopefully the guidance will come out at the end of February. The state will, you know, rack and stack the different projects and go through their process. And then I know that everyone at EPA right now that I’ve spoken to is hellbent on moving as quickly as possible, to be responsive to what the states come up with. And so that process will play out ideally over the course of 2022.

FASKIANOS: Thank you. We have a written question from Mayor Jules Walters of West Linn.

In the Pacific Northwest we are focused on earthquake resilience. All but one of our reservoirs in my suburb of Portland won’t withstand a moderate quake, let alone a much larger event that is anticipated. I see this as a capital project, but wondering if there are ways—examples of ways to apply technology as well to make us more resilient?

CHO: Very good question. So I think there’s probably a couple of different ways to answer the question. The first is, I don’t know but I would imagine that the sustainability and resilience funding that is kind of a big policy thread through the bill would make this eligible for a number of state intended use plans. That’s a discussion to have with the state. The second is thinking about whether or not this particular thing would also be eligible for funding through the western water infrastructure money via Interior. And so it’s worth obviously having a conversation with Interior, Bureau of Reclamation, Army Corps, et cetera, around the money that they’re getting particularly around critical infrastructure resilience in the western U.S.

The third thing I would say is that there are a lot of really interesting emerging solutions in the structural engineering industry around monitoring the impact of geological movements on concrete infrastructure, using LiDAR, using measurements of ground movement, height, shifts in the position of infrastructure relative to the ground and the water level. And they’re able—with pretty high resolution—able to see things often before they happen, which might improve the ability to respond in advance of things happening.

And so if you look at that big dam release that happened in Brazil, or the Oroville situation in California, at least what these technology providers claim—and not being one of those providers, I can’t speak to it. But I’ve seen many of their presentations—that there were signals and patterns in the remote sensing data that was able to show an increasing amount of risk in the civil infrastructure because of movements in the ground. And so having any of that predictive information I think would help a community be more proactive rather than reactive in situations where there’s dams that could overwhelm a community. Whether or not that can be funded through these specific vehicles I think is a conversation with your state

FASKIANOS: Thank you. And, Heidi, feel free to jump in at any point here.

The next question is a written question from Mayor Diana Mahmud. She’s the mayor of South Pasadena, California. In California’s Central Valley many smaller underserved communities have had their wells run dry due to over-pumping by ag. Would this legislation help to fund construction of connecting pipe to larger water purveyors?

CHO: That’s a great question. I think that’s a question about agriculture. Happy to answer it, but, Heidi, if you want to jump in as well, please do so.

CREBO-REDIKER: So this is really—this is, in terms of all of the water infrastructure questions, I think we wanted to focus as much as possible on you while we have you.

CHO: Super. So the question about over pumping in Central Valley for ag, making it harder for smaller communities to access water supplies, will the funding support interconnections? I think the answer is that, I feel very confident, it will, both because, you know, addressing the needs of small and underserved communities is a really big priority from an equity perspective for the California state government, but also for what’s embodied in the federal priorities. And so I cannot imagine a world in which a well-conceived project to increase the resilience and access of water in underserved communities in Central Valley would not be well supported by both the state drinking water SRF and the federal counterparts at EPA. That’s an area where—the webinar that I mentioned, in terms of assistance to communities who want to apply for that kind of funding, might be really helpful because organizations like RCAP, or Moonshot Missions, or DIGDEEP might be helpful in assisting your city in framing that application and getting the funding. But it’s a great question.

FASKIANOS: A question from Bob Marsh, a councilmember in Maricopa, Arizona.

Is anyone working on solving the western drought with something like a combination of coastal desalination plants coupled with a North American water grid to enable getting water from where it is to where it will need to be?

CHO: That’s a fabulous question. And I grew up not far from Maricopa, so also jealous that you get to be out there, especially when it’s really cold outside here.

So the question around the national water grid, I come back to the thesis that water is very heavy to move, right? And because water is very heavy to move, it becomes very energy intensive to move it. And when you have to move it and it’s energy intensive, it also becomes very expensive. And so both the capital and the operating costs of large-scale water transfer projects can be very expensive. And desalination, as a technology today, is also very energy intensive. It is often the best option in certain use cases, because if you’re coastal and you have a place to discharge the brine it’s a readily available source of water.

What I see happening probably faster, from a policy and implementation perspective, are investments in wastewater recycling and industrial water recycling. To take used water that has some pollutants in it that are already getting treated for safe discharge into the natural environment and upgrading the quality of that water to the point where it can be injected either indirectly or directly into the municipal drinking water system. So by closing the loop, what you’re doing is effectively keeping water close to the source so you’re not having to move it as far away, and you’re basically increasing the number of cycles that the same water can be used in order to meet local needs.

Those technologies are well-prove and well-established. The barrier has been principally public reaction to the idea of drinking formally used wastewater. But a lot of our public research has shown that there’s been a huge shift in the last five years in people’s willingness to incorporate water reuse into a municipal drinking water supply portfolio. I think that’s probably the nearest term solution for improving the resilience of water supply, particularly in the west.

FASKIANOS: Representative Nakamura also has—I’m not sure if you’ve raised your hand again, or if you’ve never lowered it.

Q: No, I had a second question relating to—

FASKIANOS: Great, go ahead.

Q: —whether the infrastructure funds can be used for new facilities to increase capacity, or whether it can only be used to fix existing facilities?

CHO: So there are some restrictions in the authorizing language around the revolving funds around what kinds of facilities can be—can be funded. And I can get back to you with the details on that. But in terms of expanding capacity, that’s definitely an authorized application of the funding. I believe that certain new facilities also qualify, but I want to come back to you on the specifics, because there are some restrictions and exclusions in the authorizing language.

FASKIANOS: We have a question—another question from Arizona.

Do you think the technological improvements you describe will help convince the public that wastewater can be made safe for drinking and other tap uses? And what future do you predict for making this reuse common? That comes from Jon Thompson, city councilman of Sedona, Arizona.

CHO: Gosh, everyone’s from such awesome places. It’s a great question. The technology is there to make it safe for wastewater to be recycled. But that wasn’t your question. The question is do you think the technology will help the public accept that? And I believe the answer to that question is yes. We did some polling about two and a half years ago in California, asking people the question about, you know, are you comfortable using municipal wastewater as a source of drinking water? We tried a couple of different scenarios to see how people responded. One interesting finding is that what you call it really matters. And what people really liked was the phrase “purified municipal water,” or “purified used water.” That phrase of purification as a description of the process really helped.

The second thing that really helped is that when people were on the phone talking about their reaction to this, when people understood what the steps were, and they understood how much technology was there to prevent anything bad from coming into the system, the levels actually went up very significantly. And I don’t have the numbers in the back of my head, but it was well over 90 percent of people who were like, yeah, purified municipal reused water, that’s totally fine with me. And that’s a big shift over where it was a decade ago.

FASKIANOS: Great. We have another written question, and people can raise their hands too. Emerson Gagnon.

What kind of opportunities are there to direct some of these funds towards supporting transportation management associations? And he’s in Representative Steven Owen’s office in Massachusetts.

CHO: I’m going to give that one to Heidi. (Laughs.)

FASKIANOS: Heidi, I think that one is yours, yes.

CREBO-REDIKER: So in terms of—in terms of the specifics of transportation management associations, I don’t—I don’t know. I know that the—I know that there—you know, as the funds, you know, are predominantly—you know, the first chunk are for Highway Trust Fund money that would go to more traditional roads, transportation, bridges. I think, you know, that is going to be—that’s going to be more standard—more standardized. The new funding that’s coming out for transportation is—you know, I don’t know specifically for transportation management associations. I will have to—I’ll have to come back to you on that. There’s a lot for highway and pedestrian safety. There’s a lot of funding, about 39 billion (dollars) for public transit and freight and airports, and ports and waterways. But, and quite a bit of new money for EV infrastructure. But not—I don’t think—I don’t know specifically for associations.

FASKIANOS: OK. The next question is from Cristy Lenski, a councilmember in Snellville, Georgia.

Would it be possible to use BIA funds to provide sewer connections to those city residents, neighborhoods that are currently on—from septic? Would you be able to apply through SRF for this project?

CHO: So I’m not sure about BIA funds. But the—I’m not sure if that’s the Bureau of Indian Affairs, if that’s the question. But the general question around can you use funds to provide sewer connections to city neighborhoods that are currently on septic, can that be something eligible through the SRFs? Almost certainly, yes. And so those are the kinds of projects that the clean water state revolving fund is there for, and particularly for communities that are not well-served by a community sewer. That’s an allowable area within the fund. And again, particularly if these are underserved neighborhoods, that will be a priority for certainly the federal government and likely in the state intended use plan as well.

The one thing I just want to emphasize from my earlier remarks as well is that the grant-funding component of the money that’s being allocated to the states is particularly targeted towards small and disadvantaged communities. And so that might be a helpful thing for you to know and look into as you discuss that with your state.

FASKIANOS: Thank you. So we will be sending out a link to this webinar, the transcript, as well as information about the upcoming webinar that you mentioned.

We have another question from Mayor Jules Walters. Let’s see. In the PNW, as in Texas, we learned how essential the power grid was to water infrastructure during last year’s ice storms. I’d love to know if there’s a good way to supply that power besides costly generators that rely on huge amounts of costly fuel.

CHO: I can take part of that, and then maybe hand it over to Heidi, if you have something to add. Again, resilience is a huge deal. And so investments in infrastructure resilience are going to be a big-ticket item for this funding cycle, as Heidi mentioned. In water infrastructure in particular, I think, you know, there are certain parts of it that you can run off of battery, which is also pretty expensive right now. But, for example, there’s battery backup for major data systems that can be used to determine certain things about flow and consumption across the network.

The second thing I would say is that more and more cities are also looking at can you take the energy that is embedded in wastewater and use it as recovery, and power generation that can be used by wastewater plants in order to become more resilient and self-contained? And so a lot of discussion right now is about taking sludge that comes out of wastewater treatment facilities and building anaerobic digesters that have kind of sludge fermentation tanks that create natural gas that can fuel power generation on-site at the treatment plant, so that if transmission grids go down there’s a secondary source of power that can be used to fuel ongoing treatment works, et cetera.

So those are some ideas, but Heidi, you may have broader insights.

CREBO-REDIKER: Just in terms—I mean, there’s a lot of creativity around the different types of backup systems or distributed generation that cities and towns are experimenting with right now. To the extent that the resiliency and infrastructure funding goes to specifically have backup energy sources—I mean, Texas is a very—is a specific case, because they’re not connected to the rest of the grid in the U.S. for backup. But the contingency preparations for flooding and extreme weather to be able to tackle backup systems for grids are definitely contemplated in the infrastructure bill. And I think there’s about 46 billion (dollars) that was allocated. So I would imagine that that is something that’s contemplated in this legislation.

FASKIANOS: Heidi, Marvin Kenison, a commissioner in Juab County Utah, asked if any funds are being targeted to agriculture.

CREBO-REDIKER: So I’m not sure in this specific legislation if there is—I mean, there’s—this is really—again, it’s focused primarily on transportation and—you know, basically transportation. Water is the next big—is the next allocation. Energy, power, and infrastructure. Broadband is enormous. You know, a whole different, you know, area to go into. Agriculture, I don’t think that it is—that it’s particularly—that it’s core to this particular legislation.

FASKIANOS: Heidi, is there anything that you think—or, that was in the bill that got left on the cutting floor that you wish had been left in, or had been thought of it be put in?

CREBO-REDIKER: So I think this is a huge down payment overall. I mean, if you look at the—at the amounts of federal funding going on, it’s impressive but it doesn’t actually—if you look at the American Society of Civil Engineers, they have the estimates of what you actually need to upgrade infrastructure across all different modes to sort of 21st century standards. It’s not—it hasn’t reached that amount, nor has it reached anywhere near that amount in the resilience category. I mean, burying utility lines would be enormously—you know, far, far—you know, far more than what’s been allocated in this particular bill. But it’s a really good first down payment.

What I think—what was left on the cutting board at the last minute was a national infrastructure bank, which was actually part of this on a bipartisan basis up until the very last minute. Then it was—it was cut. I think this is a—you know, because this is a time-bound deployment of investment over the life of this law, you have the ability, you know, if you do have the bipartisan agreement there, to put something that is more institutional and have, you know, much longer-run way. Hopefully, next time—next time around, if you get another bite at the apple for bipartisan infrastructure that’ll be in there.

FASKIANOS: Great. There’s one last question I want to try to squeeze in for you, Al, from Jason Haas in Milwaukee, Wisconsin.

We have aged sewage infrastructure that will not be prepared to take on what we will see from climate change. Have you heard of local public resistance to making infrastructural improvements, such as storm water absorption, for example, turning a public park into a giant bio-swale?

CHO: That’s a great question. And, you know, Milwaukee’s lucky. You have great municipal sewage leadership. And the specific answer to your question on community resistance to those infrastructure improvements, I’ll give you an example in South Bend. You know, they have this digital twin of sewage infrastructure and how it will behave under different aspects of storm water mitigation. And as part of the consent decree process that they went through in order to, you know, basically amend the consent decree with DOJ by using this digital twin, what they did was look through all of the different scenarios for new infrastructure improvements that could be made to contain storm water in the future, to look for the least-cost, most efficient set of options.

And there were certain options that did have public resistance. So, you know, don’t put any pumping station in this park, right? Or don’t put a sewage retention base in this, you know, particular part of the city. And so, you know, basically the beauty of having a digital twin is that you can run thousands of simulations of different ways of, you know, where you put infrastructure and what impact that will have. And that allows you to have a little bit more of a fact-based discussion about alternatives, right? It could go here. It could go there, and then figure out what are the different ways that you can get to a stormwater mitigation solution that both meets the environmental objective, but also the cost objective, and the public kind of objective through consultation. So it is a common issue. It’s the natural not in my backyard issue of water infrastructure. But there are better tools now, I think, for dealing with it.

FASKIANOS: Wonderful. Well, we are unfortunately out of time. But, again, we want to thank you both—Heidi Crebo-Rediker and Albert Cho—for this terrific hour. We appreciate your sharing your expertise with us. We will share the resources from this discussion. And Heidi and I are planning to focus in on—in future calls—on other parts of the bill. So we will do one that looks at the energy, et cetera, so that we can really have focused discussions. So tune in, or look out for those invitations.

Again, I would like you to know that you can follow Albert Cho’s work on Twitter at @al_cho and Heidi is at—Heidi at @heidirediker. You can also follow State and Local Officials Initiative on Twitter at @CFR_Local. Please go to CFR.org, ForeignAffairs.com for more expertise and analysis. And you can email us with your comments, suggestions, anything else we can do to support the important work that you’re doing in your communities. Email [email protected]. Again, Heidi and Al, thank you very much for being with us. We really appreciate it.

(END)

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