Budget issues, new regulations that directly impact local governments, House passage of a job training bill that includes a provision that could harm local job training programs, several public safety bills, a “YIMBY” bill, a pair of homeless assistance bills, new federal grant guidelines, and several grant availability announcements dominated federal news of interest to cities and counties over the past six weeks.

FY 2025 Budget

Congress barely took a moment to breathe after completing work on the FY 2024 budget before turning their attention to FY 2025 appropriations bills.

The FY 2025 process begins with new leadership in the House. Appropriations Committee Chair Kay Granger (R-TX) relinquished the gavel and House Republicans quickly chose veteran appropriator Tom Cole (R-OK) to helm the Committee. After the change in leadership, the House last week Committee officially released its discretionary spending cap and the allocation of that cap to the 12 subcommittees that will write the FY 2025 appropriations bills (https://tinyurl.com/3sm536ce).

House appropriators will stick to the spending caps set by last year’s debt limit deal, minus any “side agreements” related to non-Defense spending. As a result, the House Appropriations Committee will work with a total discretionary spending cap of $1.605 billion, a 1% increase over the FY 2024 total. However, the 302(b) allocations would not distribute that total cap evenly. Defense discretionary spending would increase by 1% to $895.2 billion while non-Defense discretionary would decrease by 6% to $710.7 billion. In addition, the 302(b) allocations would not spread the pain evenly between non-Defense bills. For example, the Homeland Security Appropriations bill is allocated $61.8 billion, a 5% increase above the FY 2024 level while the Labor-HHS-Education Appropriations bill is allocated $184.5 billion, an 11% decrease.

For those concerned about these 302(b) allocations, it is important to note that the Senate Appropriations Committee plans to craft FY 2025 spending bills that include a 3% increase to both Defense and non-Defense discretionary spending, and the final appropriations bills will reflect negotiations between the House and Senate. That said, local governments will have to work hard to protect funding for local government priorities, especially CDBG and HOME. On those two programs, the Administration has proposed a cut for CDBG and level funding for HOME, which absorbed a cut last year.

Those seeking earmarks and otherwise tracking the FY 2025 appropriations process will soon have more details because the release of the 302(b) allocations coincided with the release of the committee’s schedule for the considerations of FY 2025 appropriations bills: https://tinyurl.com/3sm536ce.

Regulations

The Administration issued several new regulations that directly impact local governments.

Most notably, the Environmental Protection Agency (EPA) issued new Safe Drinking Water Act (SDWA) standards for several per-and polyfluoroalkyl substances (PFAS). EPA also issued a final rule designating several PFAS substances as hazardous substances under the Superfund Program while the Department of Justice (USDOJ) issued Americans with Disabilities Act (ADA) standards for the accessibility of state and local government websites and mobile apps.

• The new SDWA regulations set standards for six specific PFAS compounds and requires public water systems to complete initial monitoring for them by 2027, provide public information about them by 2027, and to implement solutions to meet the new standards by 2029. EPA estimates that compliance with the new standards will cost $1.5 billion annually and provide $1.5 billion in health benefits annually. The Infrastructure Investment and Jobs Act of 2021 provides $9 billion in funding to specifically address emerging contaminants in drinking water, but most of the cost of meeting the new standards will likely be borne by water utilities and their ratepayers.
   
• The EPA Superfund rule designates two of the most widely used PFAS and PFOS substances as hazardous substances under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). The rule will take effect 60 days after it is formally published in the Federal Register, will likely happen next week. The rule comes a week after EPA set PFAS standards under the SDWA, which is expected to impose considerable costs on water utilities. PFAS, PFOS, and similar substances are used in a wide array of products, ranging from nonstick cookware and cosmetics to fire suppressant foam, stain resistant fabrics, and toys. They have been dubbed ‘forever chemicals’ because they resist degradation and remain in the environment, allowing them to accumulate in the environment and in animals, including humans. Their perseverance makes them difficult to remediate. It also makes them ubiquitous, meaning that almost every American, even newborns, have PFAS substances in their blood.

Local governments argue that the combination of the SDWA standard and the Superfund designation will impose major unfunded mandates on water utilities, with costs borne by their ratepayers. The two major domestic producers of PFAS—3M and Dupont—have sought to stave off liability via class action settlements. 3M last year agreed to a $10.3 billion settlement under which they will distribute funds to water utilities over the next decade without admitting any liability, while Dupont and its successor companies announced a $1.18 billion settlement. However, many water utilities have declined to join the settlements, arguing that it falls far short of addressing the costs manufacturers have impose on them.

Under the final rule, EPA will require any entity that releases a pound or more of the listed substances in any 24-hour period to report those released. It will also pursue enforcement to recoup remediation costs from potentially responsible parties (PRPs). Local governments have voiced concerns that the proposed and now final rule exposes them to major legal costs and potentially to even larger remediation costs, both with contamination related to water and wastewater, as well as contamination at municipal solid waste landfills and airports and contamination linked to firefighting suppressants.

In response, EPA intends to pursue a policy of “enforcement discretion” for the two newly listed substances. EPA issued an enforcement memo to EPA enforcement and compliance staff instructing them to exercise enforcement discretion under CERCLA in matters involving PFAS. The introduction to the enforcement memo clarifies that:

As more fully described in Section IV of this memorandum, and subject to the limitations set forth in Section V, EPA does not intend to pursue otherwise potentially responsible parties where equitable factors do not support seeking response actions or costs under CERCLA, including, but not limited to, the following entities:

1. Community water systems and publicly owned treatment works (POTWs).
2.  Municipal separate storm sewer systems (MS4s).
3. Publicly owned/operated municipal solid waste landfills.
4. Publicly owned airports and local fire departments.
5. Farms where biosolids are applied to the land.

Nevertheless, local governments generally remain concerned that they will face significant costs under the proposed rule and have been advocating for legislation that would provide liability protection for PFAS remediation under CERCLA for water, wastewater, and stormwater systems, municipal solid waste landfills, airports, and fire suppressants. They argue that they are passive receivers of the substances and that the manufacturers of them, not local taxpayers, and utility ratepayers, should bear the cost of remediating them. Senator Cynthia Lummis (R-WY) has introduced a series of bills to provide such liability protection: S 1429 (municipal solid waste landfills), S 1430 (water and wastewater), S 1432 (fire suppressant users), and S 1433 (airports).

The Senate Environment and Public Works Committee held a hearing on the liability protection issue last month, but none of Lummis’ bills have advanced. However, this week, Representatives John Curtis (R-UT) and Marie Gluesenkamp Perze (D-WA) introduced a companion bill (HR 7944) to S 1430. By statute, EPA cannot provide liability protection under CERCLA; it requires congressional action. Local governments concerned about this issue should therefore contact their delegation to ask for their support of these bills.

• The USDOJ final rule sets new ADA accessibility standards and regulations for state and local government information and services provided via the web and mobile apps readily accessible to persons with disabilities. State and local governments serving fewer than 50,000 people would have to comply with regulations three years after the publication of the final rule. State and local governments serving 50,000 or more people would have to comply with regulations two years after the publication of the final rule.

The final rule adds a new subpart H to title II of ADA regulations (28 CFR part 35) that sets forth technical requirements for ensuring that web content provided by state and local governments is readily accessible to and usable by individuals with disabilities, whether that content is provided directly or through contractual, licensing, or other arrangements. The new regulations require state and local government information and services provides via the web and mobile apps meet the internationally recognized Web Content Accessibility Guidelines 2.1 (WCAG 2.1) Level AA set by the Web Accessibility Initiative, the principal international organization that develops protocols and guidelines for the web.

The final rule exempts five categories of content from the new standards:

1. Archived web content.
2. Preexisting conventional electronic documents, unless such documents are currently used to apply for, gain access to, or participate in the state or local government’s services, programs, or activities.
3. Content posted by a third party, unless the third party is posting due to contractual, licensing, or other arrangements with the state or local government.
4. Conventional electronic documents related to specific individuals, their property, or their accounts, and are password-protected or secured.
5. Pre-existing social media posts.

Job Training

By a vote of 378-26, the House passed legislation (HR 6655) that would reauthorize federal job training programs under the Workforce Opportunity and Investment Act (WOIA) through FY 2030.

Although local governments support the reauthorization of the federal job training programs and praised the House for working on the issue in a bipartisan manner, they have serious concerns about several provisions in the bill that they fear could weaken or even eliminate local workforce investment boards.

Most notable, they are concerned about Section 115 of the bill, which 6655 would allow governors to redesignate or even eliminate local workforce development areas, even if most local workforce investment boards objected. Local governments argue that local workforce development boards ensure that job training programs meet the needs of the local economy, as understood by local businesses, local economic development officials, and local elected officials, and that Section 115 poses a threat to a strong local role in job training.

Local governments are also concerned about Section 143 of the bill, which would require 50% of funds allocated to a local workforce investment board to be used be used to provide eligible individuals with skills development through an ITA or a contract with an employer or provider, such as for “on-the-job training,” “incumbent worker training,” “employer-directed skills development,” and pay-for-performance contracts. Local governments argue the provision would limit the ability of local workforce development boards to tailor job training programs to local needs and conditions and to nimbly respond to changing local dynamics. They are also concerned about a provision in Section 131 of the measure, which would allow governors to reserve 10% of federal job training funds for a Critical Industries Skills Fund. That provision would increase the funding reserved by governors to 25%, a level that would hurt local job training efforts, especially given the status quo level of funding that the bill would authorize.

The bill now goes to the Senate, which has not yet begun major work on its reauthorization proposal.

Public Safety

Several public safety measures advanced in recent weeks.

• By a vote of 393-13, the House approved legislation (S 870) to reauthorize federal firefighter assistance programs. The Senate approved the measure last spring by a vote of 95-2. As evidenced by the votes in both chambers, the bill enjoys broad bipartisan support. President Biden will likely sign the bill when it reaches his desk, though the Senate must first approve technical changes that the House made to the bill.
• The House passed a bill to expand the COPS Hiring Program (S 546) by a vote of 370-18, clearing it for President Biden’s expected signature. Dubbed the Recruit and Retain Act, it would expand the eligible uses of COPS grants to include support for hiring activities by law enforcement agencies experiencing declines in officer recruitment by reducing application-related fees, such as those for background checks, psychological evaluations, and testing. It would also the use of up to 2% of a COPS grant for administrative costs related to hiring officers. In addition, the measure would create a Pipeline Partnership Program for grants to partnerships between law enforcement agencies and educational institutions for recruitment activities.

Housing and Community Development

The House Financial Services Committee approved legislation (HR 3507), dubbed the "Yes in my Backyard" or "YIMBY" Act, that would require recipients of Community Development Block Grant (CDBG) funds to submit a land use plan to track and reduce discriminatory land use policies. The bill is part of a growing, bipartisan effort to address housing affordability by addressing local zoning and land use policies that its sponsors argue constrain the construction of new housing in general and affordable housing in particular.

A companion bill (S 1688) has been introduced in the Senate. Congress appropriated $85 million in FY 2023 and $100 million in FY 2024 for a new grant program, Pathways to Remove Obstacles to Housing, also known as YIMBY Grants, designed to help local governments adopt new zoning and land use regimes.

The YIMBY bill and the new grant program illustrate that proponents of new local zoning and land use policies are proposing both “stick” and “carrot” approaches to the issue. However, so far only the new grant program has been enacted into law. In addition, Congress has not moved any especially big sticks; the only “stick” bill to move is this YIMBY measure, which imposes new reporting requirements on CDBG recipients but does not mandate that they change their policies.

Homeless Assistance
The House Financial Services Committee approved two bills (HR 7480 and HR 8430) to improve access to assisted housing for disabled veterans. The bills would amend the definition of “persons of low and moderate income” under the CDBG (42 USC 5302(a)(20) and the Housing Act (42 USC 1437a(b)(4)(B))to specifically exclude any service-connected disability compensation from the Department of Veterans Affairs.

Grants
The Office of Management and Budget (OMB) announced “substantial” updates to the general guidelines for federal grantees. In addition, USDOT and EPA announced major new grant opportunities of interest to local governments.

The new OMB guidance generally takes effect on October 1, 2024. However, some grant awards made this summer may be governed by the new guidelines, so local governments receiving grants this summer should check whether the new regulations apply to their grant award.

Among the many changes to the guidelines are a new name, changed from “OMB Guidance for Grants and Agreements” to “OMB Guidance for Federal Financial Assistance.” However, it appears that the guidelines will continue to be commonly called the “Uniform Guidance.”

The overarching goal of the updated guidelines are to “streamline and clarify requirements for federal funding” so that “agencies and recipients can invest in mission outcomes rather than in administrative overhead, while ensuring Federal agencies can effectively safeguard taxpayer resources... which will allow agencies and recipients of Federal funds to focus more time and money on delivering meaningful results for the American people.”

Some highlights of the new guidelines include:

• Requiring funding notices to use plain language and definitions.
• Increasing the single audit threshold from $750,000 per fiscal year to $1 million per fiscal year.
• Allowing grant recipients to use local hiring, local sourcing, and other geographic preferences.
• Requiring funding notices to provide links to relevant regulations, laws, and other resources.

The OMB press release: .

The (12-page) reference guide.