WASHINGTON, DC - In an effort to increase investment in our nation's critical water infrastructure and spur job creation and economic development, U.S. Senator Jack Reed (D-RI) today introduced the Clean and Safe Drinking Water Arbitrage Relief Act. This bill will allow states who leverage their federal water infrastructure funding in the bond market to keep "arbitrage earnings" to reinvest in future water infrastructure projects. Positive arbitrage earnings occur when governments borrow funds at tax-exempt rates by issuing municipal bonds and then invest the funds received from the issues in higher earning taxable securities.

"Safe and clean water is of great importance to our citizens' public health and our nation's economy," said Reed, a member of the Appropriations Subcommittee on Interior and Environment, which oversees federal spending on the Environmental Protection Agency (EPA) and water infrastructure programs. "This bill will allow more states like Rhode Island that leverage their investments in water infrastructure projects to create jobs, combat pollution, and ensure we have safe, clean drinking water."

Since 2004, the Rhode Island Clean Water Finance Agency has rebated over $1.5 million to the federal government. If the state had been able to keep the money, it would have meant almost $4 million in water infrastructure funding for projects throughout the Ocean State.

According to the EPA, the 20-year (2000-2019) national investment needs for wastewater and drinking water together total $662 billion. The capital spending gap, the amount between projected needs and current levels of spending totals, is estimated at $11.2 billion annually.

The American Public Works Association notes that every $1 billion dollars invested in water and wastewater infrastructure construction creates over 40,000 jobs. Critical sectors of our economy rely on clean water, including the $45 billion commercial fishing industry and the manufacturing sector that uses more than 13 trillion gallons of clean water each year.

"The Clean and Safe Drinking Water Arbitrage Relief Act will help narrow our nation's water infrastructure needs gap and provide additional financing for clean water and safe drinking water projects," said Reed. "Increasing our investment in water infrastructure projects will in turn create jobs, increase private investment, safeguard public health, and improve our nation's water quality."

The Clean Water and Drinking Water State Revolving Loan Funds (SRF) provides states with federal funding for water infrastructure and water quality projects. Current law requires states to rebate the arbitrage earnings to the Treasury rather than allowing the state to reinvest the funds in water infrastructure projects.

Senator Reed's legislation, which is co-sponsored by Senator Olympia Snowe (R-ME), would allow states to keep arbitrage earnings from SRF leveraged funds and reinvest the money in critical water infrastructure projects. The Council of Infrastructure Financing Authorities (CIFA), which supports the legislation, estimates that lifting arbitrage restrictions could provide an additional $400 million annually for investment in water and wastewater projects. The ability of states to leverage these earnings would allow state SRF administrators to potentially support an additional $800 mill to $1.2 billion in wastewater and drinking water infrastructure funding annually.

"The Environmental Protection Agency reports that 40 percent of our nation's assessed waters are currently too impaired for fishing or swimming. Discharges from aging and failing sewerage systems, urban storm water, and other sources continue to pose serious threats to our nation's lakes, rivers, and estuaries, endangering not only public health but fishing and recreation industries. This bill will provide states with additional resources to ensure the safety of our water," concluded Reed.