Washington DC Update - July 2020
Flurry of Legislative Activity as Legislative Window Begins to Close Ahead of Election
July had quite a bit of activity on the legislative front, with a shrinking number of working days left before the approaching election. Early on, the House passed their $1.5 trillion infrastructure package. This large bill is based in part on a $760 billion infrastructure framework unveiled in January by House Democrats. Parts of that as well as more recent legislation on surface transportation, energy, and other infrastructure were stitched together into a larger master proposal that lays down a clear marker of where Democrats want to go in the infrastructure space. The package (prior to amendments) would invest $25 billion into the Drinking Water State Revolving Fund (SRF), including a new program to assist drinking water systems with projects related to removing emerging contaminants like PFAS. On the wastewater side, the bill would invest $40 billion in the Clean Water SRF. The bill also exempts water and sewer projects from the state allocation cap on private activity bonds, potentially unlocking billions in private investment in water infrastructure. Some interesting water-related amendments we were tracking passed as well. Perhaps most notably, an amendment from Rep. Tlaib (D-MI) to add $4.5 billion/year for five years for replacing lead service lines. Priority would be given to vulnerable disadvantaged, low-income, tribal or Indigenous communities and those of color. Passed 240-181, drawing 8 Republicans in. While these are good victories, they are unfortunately largely symbolic. This bill is dead in the Senate, and the Trump folks want nothing to do with this package either; they are in the process of crafting their own infrastructure plan. And in the Senate, the best hope for infrastructure will likely be for them to stitch together their AWIA/DWIA bills with a surface transportation bill and call it “the infrastructure bill” and pass that.
Also related to infrastructure funding, we saw the House pass its package that contained the annual appropriations for the EPA programs like the SRFs and WIFIA. The version that made it out of committee has some significant one-time plus-ups for the SRFs (totaling nearly $10 billion), which is certainly a welcome surprise. BUT this is the bill also includes language that could endanger WIFIA applications that are under consideration or are moving through the process, an unwelcome surprise. The Alliance and other water sector organizations quickly weighed in to express concern. Some positive language was added in amendment, but the issue remains unresolved for now. Hopefully this can be corrected by the Senate.
The negotiations for the next COVID relief package also kicked off. After Democrats laid their marker out with the $3 trillion HEROES Act in May, Senate Republicans finally unveiled the package their caucus was able to hammer out with the White House, the $1 trillion HEALS Act. In something of a surprise, the HEALS Act includes a second stimulus check, though sent only to qualifying individuals and families. With the Democrats including a second check in their package (though to a wider set of people), and with the White House backing this as well it’s likely this makes it into the final package. The HEALS act also includes some enhanced unemployment benefits, though considerably less than the $600 bonus in the CARES Act passed in March which expire at the end of July. The HEROES Act would have extended this into 2021. Both packages also contain more funding for the popular Paycheck Protection Program (PPP) of forgivable loans. Some things that set the Republican package apart are bonuses for employees that return to work and liability protections for schools, business, and hospitals to prevent them from being sued over COVID-19 related issues. On the Democratic side, issues unique to their package include extended moratoria on evictions and utility shutoffs, with expansion to cover nearly all rental properties in the US and significant rental assistance payments.
While there are some overlap in priorities, there is still considerable distance between the Democrat and Republican approaches and we expect the final package to be somewhere in the middle of the two proposals. It seems likely that a second round of stimulus checks and extensions of enhanced unemployment benefits make it into the final package, but at what level remains to be negotiated. Likewise, more funding and expansions of eligibility for the PPP will likely make it in as well with the final details to be hammered out. Beyond that, it remains to be seen if both sides will want to horse trade their respective priorities in or agree to leave everything else on the cutting room floor in favor a package they can agree to quickly and pass before the extended August recess or the election.