October 21, 2021

Senate Approves Legislation To Expand Eligible Uses of ARPA Recovery Fund

On October 19, the Senate cleared by unanimous consent legislation (S. 3011) – sponsored by Senators Alex Padilla (D-CA) and John Cornyn (R-TX) – that would provide states and local governments with additional flexibility in the use of their American Rescue Plan Act (ARPA) funds.

While ARPA explicitly allows counties to spend Recovery Fund allocations on water, sewer, and broadband projects, investments in other key infrastructure categories are not permitted. Pursuant to S. 3011, counties would be allowed to spend a portion of their COVID-19 relief dollars for a wide range of infrastructure-related purposes, including, but not limited to: road, bridge, and safety improvement projects; rural surface transportation program projects as authorized by the Infrastructure Investment and Jobs Act (IIJA; HR 3684); public transit; and, Community Development Block Grant (CDBG) projects. Under the bill, entities would be permitted to direct up to $10 million (or 30 percent, whichever is greater) of their Recovery Fund allocations toward investments in the expanded program areas.

In addition to the aforementioned provisions, S. 3011 would allow states and local governments to spend ARPA funds to provide emergency relief from natural disasters and their negative economic impacts, including temporary emergency housing, food assistance, financial assistance for lost wages, or other needs. Furthermore, the bill would provide additional ARPA expenditure flexibility by allowing entities to allocate up to $10 million of their Recovery Fund allocations for the provision of government services without being required to calculate revenue loss.

It should be noted that there was a strong yet unsuccessful push earlier this year to have the Padilla-Cornyn bill included as an amendment to the Senate-passed infrastructure package (IIJA). Looking ahead, CSAC is working closely with Senator Padilla to build support for quick consideration and passage of the legislation in the House.

Uncertainty Looms Over President Biden’s Economic Agenda

Democratic congressional leaders have set a target date for the end of this month to complete action on President Joe Biden’s multi-trillion-dollar economic agenda. However, with just over one week to go before the self-imposed deadline, House Speaker Nancy Pelosi (D-CA) and Majority Leader Chuck Schumer (D-NY) are facing significant political and procedural hurdles in their bid to advance the two pieces of legislation that embody the president’s ambitious spending plan.

While the Senate has already cleared the aforementioned infrastructure bill totaling $1.2 trillion, House Democrats have held the legislation pending agreement on a package of investments designed to strengthen the social safety net and combat climate change. The latter measure, known as the Build Back Better Act, is currently the subject of intense negotiations between progressive Democrats – who favor investing at least $3.5 trillion – and a group of Senate moderates – who are demanding a much smaller price tag for the bill. It is expected that a final package could total roughly $2 trillion, though it remains to be seen how Democrats will prioritize funding to stay under the cap.

Senate Appropriators Unveil Remainder of FY 2022 Spending Measures

On October 18, Senate Appropriations Committee Chairman Patrick Leahy (D-VT) released the text of nine fiscal year 2022 spending bills. When combined with the three funding measures that the panel approved in August, the bills provide a 13 percent increase for non-defense discretionary programs and a five percent increase for defense programs. It should be noted that the bills were crafted without Republican input, and as such, are unlikely to garner much, if any, bipartisan support. At this point, the measures are considered an opening bid by Senate Democrats in negotiations with the House over a year-end spending package.

Looking ahead, Congress has until December 3 to pass legislation funding the entirety of the federal government. To follow are several key highlights of the Senate spending bills that were released earlier this week:

Transportation-Housing and Urban Development – The fiscal year 2022 Transportation, Housing and Urban Development, and Related Agencies (THUD) spending bill would provide $82.9 billion in discretionary budget authority, which is $8.3 billion more than the fiscal year 2021 enacted level. Within this amount, the Department of Transportation would be in line for an additional $3.8 billion, with funding increases distributed among all modes of transportation. Under the bill, the Department of Housing and Urban Development would receive $5.7 billion in discretionary resources above current spending levels. Funding increases are largely focused on programs that reduce homelessness and increase the supply of affordable housing. Specifically, the legislation would dedicate nearly $3.3 billion for Homeless Assistance Grants (+ $260 million), $1.45 billion for the HOME Investment Partnerships Program (+$100 million), and $3.55 billion for the Community Development Block Grant program (+$100 million).

Homeland Security – The fiscal year 2022 Homeland Security measure would provide $71.7 billion in discretionary funding, which is $136 million less than the fiscal year 2021 enacted level. It should be noted that the legislation places an emphasis on programs that improve climate resilience, including funding ($76 million) to start transitioning to a zero emission Federal fleet with new investments in electric vehicles and vehicle charging and refueling infrastructure. The bill also strengthens FEMA’s Building Resilient Infrastructure and Communities (BRIC) Program with an additional $1 billion (on top of the current balance of $1.6 billion) to incorporate climate adaptation into national preparedness and community grants and projects. Finally, the measure would increase funding (+$184 million) for FEMA grants and training to state and local government entities.

Interior-Environment – The legislation would provide $44.6 billion in discretionary funding for the Department of the Interior, the Environmental Protection Agency (EPA), and related agencies. This would amount to an increase of nearly $6.2 billion from the fiscal year 2021 enacted level. Within that amount, the National Park Service would see a $340 million increase, the Bureau of Land Management would receive a $231 million boost, the U.S. Forest Service would get an additional $817 million, and the EPA would be in line for a budget increase of $1.3 billion. With regard to addressing the wildfire threat, the legislation would increase funding for programs that improve forest restoration and fire risk reduction efforts. It also doubles funding for hazardous fuels reduction and for the Collaborative Forest Landscape Restoration Program. Finally, the legislation would fully fund the Payments-in-Lieu-of-Taxes (PILT) program for an additional year.

Commerce-Justice-Science – The Senate’s spending bill provides a total of $79.7 billion in discretionary funding – $8.55 billion more than the fiscal year 2021 level. This includes an increase of $2.4 billion for the Department of Justice and $1.7 billion more for the Department of Commerce. It should be noted that the bill contains the highest funding level ever ($760 million) for grants provided under the Violence Against Women Act (VAWA) – an increase of 48 percent.

EPA Launches Plan to Combat PFAS Pollution

On October 18, the EPA announced a comprehensive Strategic Roadmap to address contaminants from PFAS or “forever chemicals”. The agency’s overall strategy is focused on three guiding strategies: researching PFAS; restricting their release into the air, land and water; and, broadening cleanup efforts. In addition to the Strategic Roadmap, the EPA announced a new national testing strategy that requires PFAS manufacturers to provide the agency with toxicity data and information on categories of PFAS chemicals. In the coming weeks, agency officials will be engaging with stakeholders to continue to identify collaborative solutions to the PFAS challenge, including two national webinars that will be held on October 26 and November 2. Additional information on the Strategic Roadmap is available here. A White House Fact Sheet detailing other actions being taken by the administration can be found here.