Drinking Water State Revolving Fund: Limited Information Available on State or Local Requirements That Are Equivalent to Federal Cross-Cutting Environmental Requirements

What GAO Found

Sixteen federal cross-cutting environmental requirements apply to the grants states receive from the Environmental Protection Agency (EPA) to capitalize their Drinking Water State Revolving Funds (SRFs) and the loans that utilities and municipalities receive from state Drinking Water SRFs, according to EPA guidance and officials. These cross-cutting requirements are generally found in laws other than the Safe Drinking Water Act as well as Executive Orders and apply to all projects and programs that receive federal financial assistance. EPA guidance issued in 2003 and 2015 identify these cross-cutting requirements. According to this guidance and EPA officials, the Clean Air Act, National Environmental Policy Act, and 14 other environmental cross-cutting requirements apply to certain loan projects and activities funded by the Drinking Water SRF.

Limited information is available on whether federal cross-cutting environmental requirements that apply to projects financed through the Drinking Water SRF program are equivalent to state or local requirements. EPA officials GAO interviewed were not certain of requirements at the state or local level that are equivalent to federal cross-cutting environmental requirements for the Drinking Water SRF program. However, they stated that states with larger tribal populations may have requirements similar to section 106 of the National Historic Preservation Act. They also noted that states bordering oceans and states with more low lying areas may have more stringent flood plain management requirements than Flood Plain Management Executive Order 11988. In addition, officials GAO interviewed five organizations that represent drinking water systems and states, such as the Association of State Drinking Water Administrators and the American Water Works Association, did not have specific examples of environmental requirements at the state or local level that are equivalent to federal environmental requirements. Further, GAO’s literature review did not identify any materials addressing state or local laws that are equivalent to federal cross-cutting environmental requirements.

An effort by the Council of Environmental Quality is underway to develop memoranda which compare and contrast state and local environmental review requirements with the National Environmental Protection Act (NEPA) requirements. None of the memoranda completed as of August 2019 determine whether state and local requirements are equivalent to NEPA.

Why GAO Did This Study

The grants states receive from EPA to capitalize their Drinking Water SRFs and the loans that utilities and municipalities receive from state Drinking Water SRFs are subject to environmental and other federal cross-cutting requirements. The America’s Water Infrastructure Act of 2018 includes a provision for GAO to examine federal cross-cutting environmental requirements and potentially equivalent state and local requirements. This report describes (1) the federal cross-cutting environmental requirements that apply to drinking water infrastructure projects financed by loans from the Drinking Water SRF program; and (2) what is known about which federal cross-cutting environmental requirements are equivalent to state or local requirements.

GAO reviewed EPA’s guidance and interviewed EPA officials. Additionally, GAO conducted a literature review that included law reviews and journals to find any reviews, reports, or analyses that addressed state or local requirements equivalent to federal cross-cutting environmental requirements. GAO also interviewed officials from five organizations that represent or assist states, local governments, or drinking water systems.