House Committee Drastically Reduces SRF Budgets For Next Year

The House Appropriations Committee made huge cuts in the fiscal 2014 budgets of the Clean Water and Drinking Water State Revolving Funds (CWSRF and DWSRF), the main source of federal aid to cities and counties for the purpose of water infrastructure maintenance and construction.

The full House will probably go along with those reductions, leaving the Senate to help restore some of the funds. What is likely to happen is that the Senate will pass much higher levels, and a House-Senate conference committee will settle for figures somewhere in the middle.

Both houses of Congress are under intense pressure to reduce itemized federal spending throughout the government both as a means to reduce the federal deficit and as a means to replace the sequester, the policy adopted for fiscal 2013 which cuts almost all federal programs by four percent. Members of both parties believe the sequester is a “blunt tool” and want to replace the across the board spending cuts with targeted cuts to programs that have, in some cases, outlived their usefulness. Funding to the SRFs falls into that category, in some minds, because the funds are essentially permanently “capitalized” as cities and counties repay past loans.

The House Appropriations Interior subcommittee reduced the appropriations for the CWSRF and DRSRF from $1.4 billion and $909 million in the current fiscal year 2013, to $350 million and $250 million for fiscal 2014. President Obama proposed reducing the total for both programs from $2.3 billion to $1.87 billion, a 19 percent reduction.

The drastic House subcommittee reductions for the SRFs came as part of a larger reduction to the entire budget of the Environmental Protection Agency which includes $24.3 billion in base funding, which is a cut of $5.5 billion below the fiscal year 2013 enacted level. “This is a difficult budget year, and this bill reflects the extraordinarily hard choices needed to maintain critical investments and services for local communities,” House Appropriations Chairman Hal Rogers says. “In order to do more with less, the legislation seeks to protect vital programs that directly affect the safety and well-being of Americans, while dramatically scaling back lower-priority, or ‘nice-to-have’ programs.”

Dan Hartnett, spokesman for the Association of Metropolitan Water Agencies, says a number of so-called “discretionary programs” across the federal government have been reduced substantially by initial House Appropriations Committee actions — EPA programs perhaps more than most. “But I would be surprised if such low numbers hold up when the books are finally closed on the fiscal 2014 budget,” Hartnett states. A final decision on the SRF budgets will not be made until September.

The Senate is unlikely to follow the House’s lead. At hearings in May in the Senate Interior, Environment and Related Agencies Appropriations Subcommittee Chairman Sen. Jack Reed (D-RI) complained about a number of proposed EPA budget cuts to Bob Perciasepe, then the acting administrator. (Since, Gina McCarthy was subsequently confirmed by the Senate as EPA administrator.) Reed told Perciasepe that he was “most disappointed” in the Obama proposed cuts to the SRFs, which are not nearly as deep as the House cuts. “It is hard to understand how the President’s proposed cuts square with the President’s focus on job creation and infrastructure development,” Reed stated.

Senate to consider pipeline permitting reform, too
It looks like the Senate will take up some form of pipeline permitting reform but the bill may not resemble the one the House was expected to pass. Sen. Ron Wyden (D-OR), chairman of the Senate Energy and Natural Resources Committee, released a broad statement on natural gas issues on July 25. Fleshing out the details in a speech hosted by the Bipartisan Policy Center, Wyden laid out four areas – infrastructure, transportation, exports and shale development – where he has begun working to find bipartisan agreement. With regard to infrastructure, he wants to speed up pipeline development while also plugging the methane leaks that threaten the climate advantage that natural gas can provide. “I’m going to look for ways to not just build more pipelines, but to build better pipelines,” Wyden said.

Sen. Lisa Murkowski (R-AK), the top Republican on the committee, is also interested in moving forward with some sort of pipeline legislation, but apparently is a lot less interested in some broader natural gas bill. “We are doing our due diligence and seeing whether legislation is needed or whether the FERC can improve the permitting process administratively,” says Robert Dillon, spokesman for Murkowski. “Sometimes legislation leads to unintended consequences.”

Keith Chu, a spokesman for the Senate Energy Committee, says there isn’t a hearing scheduled for H.R. 1900 at the moment. He adds, “Chairman Wyden is interested in talking to colleagues about whether there is interest in speeding up permitting while also addressing methane emissions, but it’s too soon to say whether there would be legislation.”

Any Senate bill may contain some of the provisions in the Natural Gas Pipeline Permitting Reform Act (H.R. 1900) passed by the House Energy & Commerce Committee by a vote of 28-14 on July 17. But there wasn’t much Democratic support for that bill in the House. That means Wyden is likely to modify many of H.R. 1900’s provisions and probably add new ones, especially given his interest in seeing pipelines reduce methane emissions, a desire that tracks with the strategy on climate change announced by President Obama in June.

Wyden may well accept some elements of H.R. 1900 since its sponsor, Rep. Mike Pompeo (R-KS), agreed to make some changes in the bill to appease the Federal Regulatory Energy Commission (FERC). Those changes clarified that the expedited approval process endorsed by the bill would only be available to pipeline sponsors who put projects through the pre-filing process. That 12-month limit on how long the FERC could take to either approve or reject a project after completion of a final environmental impact statement would begin after the commission received a completed application from the sponsor. Even after those changes were made, however, 14 Democrats voted against the bill and only two voted for it, meaning the legislation has a GOP stamp on it, clouding its prospects in the Democratic-controlled Senate.

Hazardous liquids pipelines worry about Tier III proposal

Hazardous liquids pipelines are up in arms about an EPA proposal requiring a reduction in the amount of sulfur in gasoline. The proposed rule would pressure pipelines to reduce sulfur in pipelines as the petroleum travels through the distribution system. The EPA proposed rule is called “Tier III” and its purpose is to reduce automobile tailpipe emissions of hazardous pollutants such as carbon monoxide, nitrogen oxide and particulate matter, to name a few bad actors. Part of the rational for the proposal is to bring federal tailpipe emission standards into alignment with California’s LEV III program, which begins in 2015. California’s air emission limits are stricter than those in the EPA’s current Tier II program.

The problem with sulfur in gasoline is that it degrades the effectiveness of a car’s catalytic converter. The EPA proposed two options. The first maintains both the current 80 parts per million (ppm) refinery gate sulfur cap and 95-ppm downstream sulfur cap. Under the second approach, the refinery gate cap would be reduced to 50 ppm and the downstream cap would be reduced to 65 ppm.

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