The second day of the WWEMA workshop in Indianapolis concluded with a presentation by Fred Andes on State Revolving Funds (SRF) and the legislative outlook. Fred represents Barnes & Thornburg and leads the firm’s water team within its environmental law department. He provided an update on funding, regulatory actions, enforcement, and the current political outlook.
Regarding funding, Fred noted that State Revolving Funds and Water Infrastructure Finance and Innovation Act (WIFIA) funds are expected to remain at their current levels. However, the additional funding provided through the Infrastructure Investment and Jobs Act (IIJA) is scheduled to end in September 2026. This could create a funding gap as additional utility projects move forward. Fred noted that addressing any potential gap could take time, particularly given the upcoming election season and the need for any changes to receive federal approval.
Another factor affecting SRF funding is the use of earmarks. Fred explained that earmarks can place additional financial pressure on SRF programs because they are generally structured as grants and therefore do not return funds to the SRF for future projects.
On the topic of the EPA, Fred discussed changes to both staffing and budgets over the past year. Some employees have left voluntarily, while other positions have been filled with staff who have less experience. These changes have occurred alongside regulatory actions in Washington that have reduced or modified certain programs and requirements, including those related to climate change and Waters of the United States (WOTUS).
At the same time, Fred noted that these changes do not apply across all areas of environmental regulation. The current administration continues to address drinking water standards related to per- and polyfluoroalkyl substances (PFAS). As a result, the regulatory environment includes both changes to certain requirements and continued work on other existing standards.
Fred also discussed uncertainty surrounding federal enforcement of PFAS requirements related to industrial effluent. He noted that this issue could be subject to legal challenges, with future enforcement dependent in part on EPA actions and decisions. Changes in enforcement could have financial implications for industrial water utilities.
Regarding enforcement more broadly, Fred highlighted changes in federal enforcement activity occurring alongside staffing reductions at the Department of Justice. He noted that enforcement priorities could change under the next administration, creating the possibility of changes in regulatory expectations for utilities. He also noted that state-level enforcement could increase in areas where federal enforcement activity decreases.
Fred also discussed changes within the environmental legal landscape. He noted that some environmental organizations have been less active in challenging regulatory changes, while specialized, regional environmental law groups have become more involved. He also pointed to the ongoing adherence to PFAS and the connection between environmental law and personal injury litigation as individuals pursue legal action related to PFAS exposure.
Fred concluded with an overview of the current political environment on Capitol Hill. He noted that the House has a narrow Republican majority and that maintaining agreement across the caucus can be challenging. Budget reductions and regulatory changes remain areas of focus, while the outcome of the 2026 elections could affect the direction of future legislation.
The Senate has a different dynamic, with a greater emphasis on bipartisan consensus and the federal deficit. There is still interest in regulatory changes in the Senate, although the approach differs from that of the House. He discussed the possibility of changes in Senate control in future election cycles, including 2028.
In conclusion, Fred highlighted the potential for changes in congressional priorities through and following the 2026 election season. For utilities, this could result in continued uncertainty around funding, regulatory requirements, and enforcement priorities. Over the longer term, utilities may need to monitor potential changes to regulatory requirements, particularly those involving PFAS.
It is also important to note the Congressional Review Act timeline. Depending on when a rule is finalized, rules issued during the relevant review period could potentially be subject to review and reversal by a subsequent Congress and administration. Fred noted that rules finalized after approximately spring 2028 could potentially fall outside that window, depending on the timing and outcome of the 2028 election.