S. 5016: Clean Water Allotment Modernization Act of 2026

This bill would change how some federal clean water funding is divided among states, tribes, and U.S. territories.

What the bill changes

• It rewrites Section 205 of the Federal Water Pollution Control Act, which governs how certain clean water funds are allotted.
• It creates or updates definitions for terms used in the funding formula, including:
  • Buy American oversight: federal oversight activity related to section 608.
  • Clean watersheds needs survey: the survey used to measure wastewater and water infrastructure needs.
  • State: the 50 states, the District of Columbia, and Puerto Rico.
  • United States territory: American Samoa, Northern Mariana Islands, U.S. Virgin Islands, and Guam.

How the money would be set aside

Before money is divided among states, the bill requires the Environmental Protection Agency to reserve certain portions of the available funds each fiscal year:

• At least 0.1% for Buy American oversight.
• 2% for Indian tribes, under existing tribal water program rules.
• 1.5% for U.S. territories, with amounts intended to stay consistent with what they received in fiscal year 2026.

How state allotments would be calculated

The remaining funds would be split among states using a new formula:

• 60% based on each state’s share of documented clean water and wastewater needs from the most recent needs survey.
• 20% based on each state’s share of the national population.
• 20% based on each state’s share of people living at or below 200% of the federal poverty level.

The EPA would publish the initial formula and allotment amounts in the Federal Register after the first clean watersheds needs survey done after the bill becomes law. The agency would also update the allotments each year based on the latest census, population estimates, poverty estimates, and needs survey data.

Limits during the transition

For the first four fiscal years after the new formula is first published, the bill limits how much a state’s yearly allotment can change:

• No state’s allotment could rise by more than 200% from the prior year.
• No state’s allotment could fall by more than 25% from the prior year.

Other changes

• It updates the minimum allotment language in Section 205 to apply beginning in fiscal year 2027 and later.
• It says the bill does not change funding already provided under the Infrastructure Investment and Jobs Act for these programs, or the way those amounts are allocated.
• It amends the clean watersheds needs survey section by removing one subsection and renumbering the rest.
• It expands the uses of certain state capitalization grant funds so that states may use up to 0.5% of those funds each year to help carry out the clean watersheds needs survey work.

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