April 2011 Vol. 66 No. 4

Washington Watch

Sharp Budget Knife at Throat of SRFs

The Environmental Protection Agency’s water infrastructure congressional appropriations are destined to sink, maybe like stones, this year. Republicans and some Democrats want to severely cut the appropriations for both the Clean Water and Drinking Water State Revolving Funds in fiscal year 2011, which started last Oct. 1.

President Obama has proposed a $947 million cut, total, for both programs in fiscal 2012, so there is bipartisan agreement that water infrastructure funding will be drastically cut. The only question is how far and how fast?

The Obama administration proposed a total CW and DW SRF budget of $2.5 billion in fiscal 2012 — a decrease of $947 million from fiscal year 2010 funding. But Congress will have to set a fiscal 2011 budget first. It has delayed doing that by passing a succession of what are called continuing resolutions (CR) which extend fiscal 2010 budget levels for all agencies into fiscal 2011. So the SRFs are being funding currently in 2011 at 2010 levels which, for the CWSRF is $2.0 billion and the DRSRF is $1.3 billion.

However, the House passed a bill (H.R. 1) on Feb. 19, which cuts the final budgets for 2011 for the CWSRF to $700,000 and the DWSRF to $557 million. Those are just two of nearly one hundred program reductions amounting to $61 billion spread over numerous federal agencies. The SRF reductions in H.R. 1 for 2011 are $400 million more than what Obama proposed for those two programs in his 2012 budget. Republicans would cut the SRFs sooner and deeper than the President. It is not clear whether the GOP would then seek additional cuts from the already crippled 2011 budgets in 2012.

The National Association of Clean Water Agencies (NACWA) and allied agencies call the “drastic cuts” to the SRFs in H.R. 1 “strongly misguided.” Ken Kirk, NACWA’s executive director, says, “At a time when water quality is suffering and regulatory burdens on local communities continue to increase, we must ensure that we do not lose the water quality progress we have worked so hard to achieve. The proposal before the House runs that very real risk.”

The Obama administration is arguing that small SRF appropriations will be augmented by a Sustainable Water Infrastructure Policy that focuses on working with states and communities to enhance technical, managerial and financial capacity. That policy will focus on convincing states, cities and counties to expand “green infrastructure” options instead of building “bricks and mortar” infrastructure. In that way the EPA can “adjust” future year SRF budgets, with the goal of providing, on average, about five percent of water infrastructure spending annually.

Shuster to support change to integrity program
Pipeline safety hearings were the rage in early March. The National Transportation Safety Board (NTSB) held hearings March 1-3 on last year’s PG&E explosion in San Bruno, CA. Then on March 7, the House subcommittee on railroads, pipelines and hazardous materials held a hearing in King of Prussia, PA, focusing on the explosion of a12-inch diameter main in Allentown, PA, owned by UGI Utilities, Inc. Five people died in that accident. Eight people died in San Bruno. A preliminary NTSB report hypothesized that the cause may have been a weld on a 30-inch transmission pipeline which blew apart.

In an interview, Rep. Bill Shuster (R-PA), chairman of the House pipeline subcommittee, who scheduled the Pennsylvania hearing, says it is still unclear what caused the accidents in California and Pennsylvania. Shuster adds that he plans to introduce a pipeline safety bill this fall and fight any Obama administration attempt to include pipeline safety changes in a highway bill, which could move through Congress sooner. Congress has temporarily extended highway programs with short-term bills, the latest passed in March, which were necessary to prevent federal highway programs from stopping dead in their tracks. The latest extension lasts until the end of September by which time Congress will consider a major highway bill. The Obama administration is pushing to include pipeline provisions in that highway bill. Shuster says he opposes that strategy. However, House and Senate efforts to pass stand alone pipeline safety bills went nowhere in 2010.

Moreover, Shuster explains that he plans to propose to change the gas transmission integrity management program so that pipelines re-inspect segments in high consequence areas (HCAs) based on the risk of the pipeline. Currently, pipelines are re-inspected based on a specified timeline. INGAA has been pressing for five years for a risk-based re-inspection program, without any luck in Congress. But Shuster appears ready to pick up that gauntlet.

Shuster also states that based on what he heard in the Allentown accident hearing, he thinks it would be a good idea if the Pipeline and Hazardous Materials Safety Administration (PHMSA) or the state Public Utility Commissions set up a certification program for private pipeline inspectors used by companies such as UGI Utilities. “That is not something I want to do for sure,” he states, “but I want to take a look at it.”

By waiting until the fall, Shuster would likely have recommendations from the NTSB included in a final San Bruno report. One of the surprising revelations coming out of the NTSB hearings was that the fire chief in San Bruno had no idea a 30-inch diameter PG&E transmission pipeline ran through his jurisdiction. Federal laws, amended as recently as 2006, require pipeline owners to educate local communities about the location of pipes. There was some concern even before the San Bruno accident that PHMSA rules on “public education” needed improvement. Those rules essentially site the American Petroleum Institute’s (API) recommended practice (RP) 1162 as the standard for these public awareness programs. In congressional hearings last year, Carl Weimer, accused the pipeline industry of meeting the 2006 requirement by seeing how many “innocuous brochures” they could mail out.

Congress May Prohibit EPA Imposition Of GHG Controls
Seemingly bowing to Republican congressional pressure, the EPA has put off the March 31, 2011, deadline for companies to report greenhouse gas (GHG) emissions to the agency. Transmission pipelines were to have reported emissions of carbon dioxide, methane and other GHGs from compression stations by that deadline if those emissions exceeded 25,000 metric tons in 2010. The EPA had not set a new reporting deadline as of this writing.

The agency said it was extending the deadline “following conversations with industry and others, in the interest of providing high quality data to the public this year.” The agency added: “This extension will allow EPA to further test the system that facilities will use to submit data and give industry the opportunity to test the tool, provide feedback, and have sufficient time to become familiar with the tool prior to reporting.”

Emboldened by that reporting delay, and by their November 2010 election gains, the GOP is now moving forward with legislation prohibiting the EPA from actually regulating (as opposed to simply reporting) GHG emissions. The Energy Tax Prevention Act (H.R. 910) introduced in March by House and Senate Republicans, with a smattering of Democratic support, would do that.

The EPA’s initial GHG regulation took effect in January 2011 when it issued a final rule requiring “major sources” of air toxics to apply for a permit when their emissions crossed the threshold of 25 metric tons on Jan. 1 because of the addition of GHG emissions, which were previously not computed in a program called “prevention of significant deterioration (PSD).” This could apply to gas transmission pipelines based on GHG emissions from compressions stations and vents.

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