Trump Water Plan a Boon for Rural Areas, Private Sector (2)

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By David Schultz

The Trump administration’s $1.5 trillion infrastructure proposal would open up several federal water infrastructure programs to the private sector for the first time, according to a summary of the plan released Feb. 12.

Under the long-delayed proposal, private companies would have access to EPA wastewater loans established under the Clean Water Act as well as to a new loan subsidy program called WIFIA that is currently only available to public water utilities.

The plan sets aside $50 billion in funding specifically for water, roads, broadband, and other projects in rural areas.

Some of these areas have crumbling infrastructure, but others never had any infrastructure to begin with, Mike Keegan, a legislative analyst with the National Rural Water Association, said.

“It’s real positive,” Keegan told Bloomberg Environment. “There’s a lot of good aspirational ideas in there.”

President Donald Trump spoke of an infrastructure program as being one of his first priorities upon taking office, but health care and the tax bill got more immediate action.

Sen. Jim Inhofe (R-Okla.), former chairman of the Senate Environment and Public Works Committee, said the outlines of Trump’s infrastructure plan had been telegraphed by the administration in recent months.

“It’s now ready to go,” Inhofe told reporters. “But there’s really not anything that’s brand new [or] not expected. There are no surprises in there.”

Funding Breakdown

Though the White House said its plan will spur $1.5 trillion in projects, the plan only allocates $200 billion in direct federal spending.

In addition to the $50 billion for rural areas, the Trump administration wants to allocate another $100 billion in matching funds that would encourage states, cities, and private companies to move forward with projects.

One of the main goals with this $100 billion is to give states and cities a strong incentive to create new revenue streams for themselves, according to an administration official who spoke during a Feb. 10 White House teleconference.

This $100 billion would be divvied up between the Environmental Protection Agency, the Army Corps of Engineers, and the Department of Transportation.

Beyond this, the White House plan would allocate $20 billion to “transformative programs” that “possess unique technical and risk characteristics that otherwise deter private sector investment.” It would send another $14 billion to government financing programs, such as WIFIA.

The plan would establish a $10 billion fund to help agencies purchase their facilities rather than sign on to long-term leases. It would also defer $6 billion in government revenue by making it easier for cities to issue tax-free municipal bonds for projects that have partial private funding.

Challenges

That last item, the changes to rules on municipal bonds, is one reason Keegan expects that much of this White House plan may never actually become a reality. He said this measure came up during the debate last year about the Republican tax bill, and lawmakers explicitly rejected it.

Additionally, Keegan said he thinks it will be difficult for the Trump to persuade the deficit hawks in his own party to go along with $200 billion in new spending. By comparison, the stimulus bill signed into law by President Barack Obama in February 2009 contained slightly more than $100 billion for infrastructure.

“I don’t see a path to getting the votes to putting this together the way it’s contemplated by the president,” Keegan said.

Nearly all of the provisions of this infrastructure proposal, including and especially the funding allocations, would need approval from Congress to become reality.

Lawmakers need a better understanding of “how we somehow magically turn $200 billion into $1.5 [trillion] or $1.7 trillion of infrastructure improvements” that Trump initially promised during his 2016 presidential campaign, Sen. Tom Carper (Del.), the top Democrat on the Senate Environment and Public Works Committee, said. States are going to have their own concerns that the plan essentially inverts what has been an 80 percent federal and 20 percent local and state cost-sharing arrangement, Carper told reporters Feb. 12.

“Do you really expect to convince the states that the 80-20 funding ratio they’re used to should be 20-80? Is that something that is going to fly?” Carper asked.

Private Sector

The plan makes scant mention of public-private partnerships, of which the president himself is reportedly skeptical. It does, however, include numerous provisions that benefit the private sector—especially in the water industry.

In addition to opening up EPA loan programs to private companies, the plan would reduce the number of reviews required for water infrastructure projects that are only partially financed with federal funding, including big flood control or dredging.

The plan also calls for the limit on the length of Army Corps contracts to go from its current five years to 50 years. This would mean a private company that wants to partner with the Corps to build an infrastructure project could now sign a contract that would last for the entire life of that project, instead of having to renew every five years.

Though this could create new opportunities for some companies, others are looking at it as a potential new burden in disguise. Mike Toohey, president and chief executive of Waterways Council Inc., a shipping industry trade group, said he hopes the infrastructure plan isn’t a prelude to the federal government abdicating its role of building and maintaining water facilities.

Toohey said in a statement that, while President Trump has said “Together we will fix it,” the proposal “actually seems to mean that commercial operators and shippers are the only ones who will be expected to pay, and significantly more, for the Nation’s waterways transportation system.”

— With assistance from Dean Scott

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