Obama Again Proposes Big SRF Cuts

President Obama has once again proposed significant cuts in funding to the federal government’s main grant program supporting water infrastructure development at the local level.

His fiscal 2015 budget proposal cuts funding from the Environmental Protection Agency (EPA) for the Clean Water and Drinking Water State Revolving Funds (SRFs) by 33 percent, the second year in a row the president has tried to radically reduce federal funding.

The Clean Water SRF would receive $1.018 billion in fiscal 2015 (starting Oct. 1, 2014) and the Drinking Water SRF $757 million. The total of $1.775 billion is nearly a $581 million reduction from the fiscal 2014 enacted budget. Cities, counties and states use the money as low-interest loans which they then repay to the SRFs.

This follows the script from last year where President Obama proposed an only slightly-less draconian spending cut of $472 million. The House GOP-controlled House went Obama one better, cutting the CWSRF by $1.2 billion and the DWSRF by $550 million. The Senate refused to go along with those reductions and the final fiscal 2014 budget, set as a result of the bipartisan Rep. Paul Ryan (R-WI)-Sen. Patty Murray (D-WA) omnibus 2014 appropriations agreement in December 2013, was $2.4 billion.

Asked if Obama’s proposed reduction for fiscal 2015 had a chance of being approved by Congress this year, Pat Sinicropi, director, legislative affairs, National Association of Clean Water Agencies, says, “We have very good champions in both the House and Senate for the SRF but it’s always a negotiation and every year brings a different set of pressures on the appropriations process. Having an administration that isn’t championing the SRFs makes it a steeper climb for supporters on the Hill to restore the funding.”

Whatever the final SRF budgets end up at for fiscal 2015, they will not reach the levels advocated by water infrastructure groups. They sent a letter to President Obama on Jan. 31, 2014, asking him to “continue robust funding levels of at least $1.449 million and $907 million for the U.S. Environmental Protection Agency (EPA) Clean Water and Drinking Water State Revolving Fund (SRF) programs respectively.”

The EPA budget document accompanying the Obama 2015 proposal says that the reduced funding will be targeted to “small and underserved communities with a limited ability to repay loans, while maintaining state program integrity.” In addition, 20 percent of the CWSRF capitalization grants will go to green infrastructure projects including those to manage stormwater, which helps communities improve water quality while creating green space, mitigating flooding and enhancing air quality.

Safety of rail transportation growing congressional concern (subhed)

Both House and Senate committee leaders with jurisdiction have begun to show impatience with what they view as out-of-date federal regulations on railroads carrying oil produced in the Bakken, Eagle Ford and Marcellus shale regions. “The shale oil boom has dramatically changed the energy sector in our country,” says Sen. Jay Rockefeller (D-W V), chairman of the Senate Commerce Committee. “While the changes bring opportunities for robust economic development, they also raise serious safety concerns of shipping large amounts of crude on the railroads running through our communities.” The committee held hearings on March 6.

House members, who held their own hearings on Feb.26, and senators quizzed Cynthia Quarterman, administrator of the Pipeline and Hazardous Materials Safety Administration (PHMSA), about the agency’s progress on a number of rulemakings aimed at modernizing regulations related to rail transportation of hazardous liquids such as crude oil. PHMSA is in the midst of revising regulations on such things as rail car strength and is responsible for ensuring that shale producers take safety measures when shipping liquid hazardous materials.

At both hearings, some legislators and industry officials used the multiple, recent shale rail accidents to point out the need for the Keystone XL pipeline, which President Obama is expected to make a decision on soon. One of those recent tank car oil spills caused the loss of 27 lives in Quebec. At the February House Transportation and Infrastructure Committee, Rep. Kevin Cramer (R-ND) alluded to a fire in Casselton, ND, inside his district, caused by the derailment of an agricultural products train which was hit by a crude carrying railroad traveling toward the derailed train. Cramer said it stemmed from “the lack of pipeline capacity.”

The PHMSA has been conducting an investigation of whether Bakken oil is being tested adequately and shipped in appropriate tank cars. That is known as Operation Classification. The first notices of probable violations based on that effort were issued in early February to Hess Corporation, Whiting Oil and Gas Corporation and Marathon Oil Company, with fines totaling $93,000. As a follow-up to those notices, on Feb. 26 the agency required all shippers to test product from the Bakken region to ensure the proper classification of crude oil before it is transported by rail, while also prohibiting the transportation of crude oil in the lowest-strength packing group.

Rep. Jeff Denham (R-CA), chairman of the House Subcommittee on Railroads, Pipelines and Hazardous Materials, pressed Quarterman during the February hearings about her agency’s progress revising standards for what are referred to as DOT Specification 111 tank cars. They are used to carry crude from Bakken and elsewhere. The railroad industry adopted voluntary rail car construction standards in October 2011 which upgrade the DOT 111 standards. But Robert L. Sumwalt, a member of the board of the National Transportation Safety Board, told the House subcommittee that the NTSB is not convinced that these modifications offer significant safety improvements.

“The NTSB continues to assert that DOT-111 tank cars, or tank cars of any successor specification, that transport hazardous materials should incorporate more effective puncture-resistant and thermal protection systems,” he stated. “This can be accomplished through the incorporation of additional protective features such as full head shields, jackets, thermal insulation and thicker head and shell materials.”

Last fall, PHMSA published an advanced notice of proposed rulemaking on a series of potential changes to rail car safety standards. Some of those changes would upgrade the DOT 111 rail car standard. Denham pressed Quarterman as to when the agency will finalize the rule. Quarterman replied that the agency had received over 100,000 comments, and that the next step was issuing a proposed rule. She said she hoped that would be published “as soon as possible this year.”

EPA sets guidelines for fracking with diesel fuel

The Environmental Protection Agency (EPA) appeared to essentially split the difference between positions held by industry and environmentalists with regard to use of diesel fuel in fracking. The agency issued final guidelines to state and federal officials who administer the underground injection control (UIC) program under the Safe Drinking Water Act. Those guidelines give the officials what appear to be considerable flexibility in the specifics of the permits they issue for fracking with diesel fuels.

Diesel fuel is rarely used in hydraulic fracturing (HF). An EPA analysis posted in 2012 on the chemical disclosure registry website FracFocus found that diesel fuels appeared in fewer than two percent of the wells.

Environmental groups had pressed the agency to ban the use of diesel fuels. The American Petroleum Institute (API) argued there was no justification for requiring permits in the first place. An API spokesman said the group was studying the guidelines and had no comment. Lee O. Fuller, vice president of Government Relations, Independent Petroleum Association of America (IPAA), says the guidelines really only apply to five chemicals, only one of which, kerosene, is still used in fracturing, and then only sporadically.

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