Clean Water Bill Expands Funding to Nonprofits, But Cuts Subsidies for Private Utilities

The aptly named Clean Water SRF Parity Act of 2025 is shaking up who can get federal cash for water infrastructure projects and under what rules. This bill targets the Clean Water State Revolving Fund (SRF)—the pot of money states use to finance water quality projects—by opening it up to more players while simultaneously tightening the screws on how private utilities can use it.

The Good News: Nonprofits Get a Seat at the Table

Under this bill, qualified nonprofit organizations are now eligible to receive financial assistance from the SRF to build, buy, or improve water treatment works. This is a big deal because it expands the pool of entities that can tackle critical water infrastructure needs, especially in areas where municipal or private systems might be lagging. If you live in a small community served by a nonprofit water cooperative, this could mean faster access to funding for necessary upgrades, like replacing old pipes or modernizing a small treatment plant. The goal here is clearly to get more projects funded and built, regardless of whether the organization is a city department or a dedicated non-profit.

The Catch: Subsidies Are Off the Menu

Here’s where things get complicated. While the bill expands who gets funding, it clamps down on the kind of funding they can receive. The legislation explicitly prohibits states from giving extra financial subsidies (like principal forgiveness or negative interest loans) to two groups: 1) the newly eligible qualified nonprofits receiving assistance for treatment works, and 2) privately owned treatment works when they receive certain types of assistance. Think of it this way: they can still get loans, but the sweet deals that make those loans cheaper—the subsidies—are now off-limits in these specific cases (SEC. 2, New Restrictions on Subsidies).

For the private water companies that often serve large suburban or rural areas, this restriction on subsidies could mean that capital improvement projects become more expensive. If the cost of borrowing goes up for them, those costs usually find their way back to the customer—you—in the form of higher water bills. This restriction could slow down necessary investment if companies find the full-rate loans less appealing for major upgrades.

Protecting the Ratepayer, Not the Shareholder

Perhaps the most consumer-focused section of the bill deals directly with privately owned treatment works. If a private utility gets SRF money, the bill mandates that the funds must be used for things that directly benefit the system and its users: improvements, conservation efforts, reducing energy use, or enhancing security. Crucially, the bill states that this financial assistance cannot benefit the shareholders or the owners of the treatment works themselves (SEC. 2, Limitation on Financial Assistance).

This is a strong protective measure. It means that if your private water company gets federal money for an upgrade, that money must go toward improving your service (like better water quality or system reliability) and not toward increasing the company’s profit margin or dividend payouts. The state agency running the SRF is tasked with making sure this benefit flows primarily and directly to the customers. For the average person paying a water bill, this provision is designed to ensure public funds are used for public good, not private gain.