Eight years after Congress created the program, the US Army Corps of Engineers is taking a first step to offer more than $7 billion in federally backed loans to repair aging state, local government-owned dams and private entities located in the United States
The Corps released a proposed rule for the soft loan program on Friday, beginning a process that is expected to open applications for the aid in 2023, said Aaron Snyder, interim director of the Corps’ water infrastructure financing program.
The Corps’ National Inventory of Dams lists more than 92,000 structures in the United States, most of which are privately owned. The safety of the nation’s hydroelectric dams has attracted increased public attention in recent years, in part because of high-profile failures that have forced the evacuation of thousands of Michigan and California residents.
“A number of our dams in the United States are in need of remediation,” said Chuck Thompson, director of the New Mexico Dam Safety Bureau and president of the Association of State Dam Safety Officials.
But he added: “The rehabilitation of a large facility like a dam requires quite a lot of funding, and that’s something even the larger owners often struggle with.”
A recent analysis by the Associated Press found more than 2,200 dams in poor or unsatisfactory condition that are classified as highly dangerous, meaning their failure would likely trigger a flood that would kill at least one person. That number was significantly higher than a similar AP analysis three years ago.
The country’s dams have an average age of 61 years and often pose a greater risk than when they were designed and built. Homes, businesses, and highways were built under levees that were once in remote locations. A changing climate with intense rainstorms has stressed some dams beyond their original designs. Maintenance has also been deferred, often because dam owners don’t have enough money 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 groups, states, local governments and other entities in addition to the US government .
The new federal loan program “rather expresses the need that exists,” Snyder said.
Most states do not have grant or loan programs specifically designed for dam repairs. Until recently, federal funding for dam improvements was also limited.
Since 2019, the Federal Emergency Management Agency has allocated nearly $32 million across 35 states and Puerto Rico to design and repair high-risk dams. Last year’s Infrastructure Act pumped an additional $585 million into this program, including $75 million earmarked for dam removal. It also provided $118 million to rehabilitate aging dams built by the National Resources Conservation Service, among others.
But all of that pales in comparison to the billions of dollars in credit that will soon be available through the Corps.
“This program is critical to improving public safety, reducing risk to vulnerable communities, and improving climate resilience to future-proof our aging infrastructure,” said Michael L. Connor, Army Assistant Secretary for Civil Works, in a statement announcing the proposed rule.
The Corps’ lending program was approved under a 2014 law that also allowed loans for water systems from the Environmental Protection Agency. The EPA has provided 88 loans totaling $15 billion from 2018 to this year.
But until recently, Congress had not earmarked any money specifically for dam-related loans. As a result, the Corps has not developed any rules required to issue credit for these repairs, Snyder said.
That changed in December 2020, when Congress began taking a series of steps to allocate money to support the lending program. It received a major funding boost from the Infrastructure Investments and Jobs Act that President Joe Biden signed into law last November.
Under the proposed rule, released Friday, the loans would only be available for projects of at least $20 million, although repairs to multiple dams could be pooled to meet that threshold, Snyder said. Loans could usually cover up to 49% of the costs. But that could account for up to 80% of the cost of projects that serve “economically disadvantaged communities” with low incomes, persistent poverty or high unemployment.
Recipients could have up to 35 years to repay the loans.
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