Aging dams could soon benefit from a $7 billion federal loan program

Eight years after the program was created by Congress, the U.S. Army Corps of Engineers is taking the first step toward providing more than $7 billion in federally guaranteed loans to repair aging dams owned by states, governments local and private entities across the United States.

The Corps released a proposed rule for the low-interest loan program on Friday, kicking off a process that is expected to open aid applications in 2023, said Aaron Snyder, acting director of the water infrastructure financing program. from the body.

The Corps National Dam Inventory lists more than 92,000 structures across the United States, most of which are privately owned. The safety of the nation’s dams has come under increased public scrutiny in recent years, in part because of high-profile failures that forced the evacuation of thousands of residents in Michigan and California.

“There is a need to rehabilitate a number of our dams in the United States,” said Chuck Thompson, chief of the New Mexico Office of Dam Safety and president of the Association of State Dam Safety Officials.

But he added: “Rehabilitating a large facility like a dam requires quite a lot of funding, and that’s the kind of thing that even the biggest owners often struggle with.”

A recent Associated Press analysis counted more than 2,200 poor or unsatisfactory dams that are classified as high risk, meaning their failure would likely trigger a flood killing at least one person. That figure was up sharply from a similar AP analysis three years earlier.

The country’s dams have an average age of 61 years and often pose a higher risk than when they were designed and built. Homes, businesses and highways have been built under dams that once stood in remote places. A changing climate with intense thunderstorms has strained some dams beyond their original design. Maintenance has also been postponed, often because dam owners cannot afford to pay for it.

The Association of State Dam Safety Officials estimates that it could cost nearly $76 billion to rehabilitate the nearly 89,000 dams owned by individuals, businesses, community associations, states, local governments and governments. other entities in addition to the US government.

The new federal loan program “puts a pretty good dent in existing need,” Snyder said.

Most states do not have grant or loan programs specifically for repairing dams. Until recently, federal funds for dam improvements were also limited.

Since 2019, the Federal Emergency Management Agency has allocated nearly $32 million among 35 states and Puerto Rico to design and perform repairs on high-risk dams. Last year’s infrastructure act injected an additional $585 million into this program, including $75 million set aside for dam removal. It has also provided $118 million to rehabilitate aging dams built through the National Resources Conservation Service, among others.

But all of that pales in comparison to the billions of dollars in loans that will soon be available through the Corps.

“This program is critically important to improving public safety, reducing risk to vulnerable communities, and improving climate resilience to bring our aging infrastructure into the future,” said Michael L. Connor, Deputy Secretary of the army for the civil works, in a press release. announcing the proposed rule.

The Corps loan program was authorized under a 2014 law that also allowed loans for Environmental Protection Agency water systems. The EPA has issued 88 loans totaling $15 billion from 2018 to this year.

But until recently, Congress had not earmarked money specifically for dam-related loans. Therefore, the Corps had not developed rules necessary to issue loans for these repairs, Snyder said.

That changed in December 2020 when Congress began taking a series of actions by earmarking money to support the loan program. It received a big financial boost from the Infrastructure Investment and Jobs Act signed by President Joe Biden last November.

Under the proposed rule released Friday, loans would only be available for projects of at least $20 million, though repairs on multiple dams could be pooled together to meet that threshold, Snyder said. Loans can usually cover up to 49% of costs. But that could extend to up to 80% of project costs serving “economically disadvantaged communities” with low income levels, persistent poverty or high unemployment.

Beneficiaries could have up to 35 years to repay the loans.

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