Climate Package Takes Critical Step Forward

Aug 3, 2022

On Wednesday, July 27th, Senate Majority Leader Chuck Schumer (D-NY) and Senator Joe Manchin (D-WV) announced that they had come to agreement on a path forward for FY2022 Budget Reconciliation legislation – after much debate and uncertainty spanning over the past year. The deal, titled the Inflation Reduction Act of 2022, brings together a number of priorities for both Congressional Democrats and the Biden Administration to address energy security and climate change, prescription drug prices, and tax provisions.

The announcement caught many people off guard because Sen. Manchin, whose vote is critical for Senate Democrats in order to pass reconciliation bills, had stated publicly just a few weeks prior that he would not be able to support a deal if the eventual package raised taxes or included climate provisions. However, as evidenced by the latest action, negotiations were made in earnest to find compromise.

Now that Schumer and Manchin have set the stage, they are leading the effort to gain support for the package from all 50 Senate Democrats and their House of Representatives counterparts. Democrats cannot afford to lose a single vote from their party, and the focus has turned to Sen. Sinema (D-AZ) as the most crucial outstanding commitment. The Senate Parliamentarian is also working to review the bill and ensure that all of the provisions included conform with Senate rules for expedited consideration under the budget reconciliation process. Senate Democrats hope to be in a position to move to a vote in the coming days, but any of these factors could hinder their ability to pass the package.

While the Reconciliation package is not focused on water, given the nexus between climate change, energy, and water the package includes opportunities for communities to explore investments to benefit clean water services.

For example, the Department of Transportation would receive nearly $1.9 billion to support efforts to improve walkability, safety, and affordable transportation access. Stormwater management improvements related to surface transportation in disadvantaged areas are an eligible use.

The Department of Housing and Urban Development will receive funding to support water and energy efficiency improvements in affordable housing, potentially providing a way to target low-income renter households to benefit from more efficient in-home plumbing.

The package in total proposes over $300 billion in spending to cut greenhouse gas emissions and promote clean energy production. It provides energy tax credits for qualified biogas to electricity production and renewable natural gas investment, in addition to community and household solar, wind, and related technology incentives.

It also provides additional funding for conservation programs at the U.S. Department of Agriculture via the Environmental Quality Incentives Program (EQIP) and Regional Conservation Partnership Program (RCPP), which would see increases of $8.45 billion and $6.75 billion respectively. The RCPP has been leveraged by clean water utilities for watershed-based projects to address nutrients.

The Bureau of Reclamation will also receive $550 million for grants, contracts, or financial assistance for disadvantaged communities for up to 100% of the cost of the planning, design, or construction of water projects to provide domestic water supplies to communities or households that do not have reliable access in Bureau of Reclamation states.

The package is also clearly notable for the clean water sector given its overall objective of addressing climate change, supporting adaptation and mitigation, and advancing environmental justice objectives. The package would move the U.S. toward achieving its emissions reductions goals, while also providing targeted incentives to bolster continued domestic fossil fuel production to ease the transition to renewable fuels.  

NACWA also advocated for the direct inclusion of clean water funding for resilience, sewer overflows, and low-income assistance. While these provisions received important support from key Democrats they were not included in the final package, with concerns cited over direct spending on water already having been prioritized in the BIL.

As the reconciliation process moves ahead – or halts – over the coming week NACWA will continue analyzing the bill and keep members updated. NACWA will also continue advocating for the importance of clean water and the role utilities play in achieving climate, environmental justice, and overall public health goals.

Please contact Kristina Surfus, NACWA’s Managing Director of Government Affairs, with any questions or to discuss further.

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