August 2017 Vol. 72 No. 8

Washington Watch

EPA Finalizes WIFIA Fee Rules, Congress Provides Additional Funding

The Environmental Protection Agency (EPA) took another major step toward issuing its first credit subsidies for water infrastructure projects. It published a final rule in June, specifying fees it would charge counties and cities expected to vie for money in the first round of funding under the Water Infrastructure Finance and Innovation (WIFIA) fund, which is meant to supplement federal loans from the Drinking Water and Clean Water State Revolving Funds. Congress passed WIFIA in 2014, and it has been struggling to get off the ground ever since. The agency is vetting 43 applicants vying for credit subsidies of $25 million which could support $1.5 billion in infrastructure projects.

In a belated show of support for the program, the Senate and House in May added an extra $8 million to the WIFIA credit subsidy pot in the current fiscal year, 2017, which began Oct. 1, 2016. This was on top of the $17 million for fiscal 2017 previously cleared in December 2016.

“I do believe our warnings and the warnings of other professional associations in the past on the nation’s need to reinvest in its water infrastructure has taken root in Congress,” said Tommy Holmes, legislative director, American Water Works Association. “The devil has always been in the details of where the money will come from in this era of massive budget deficits. That is why WIFIA – the newest water infrastructure finance tool – was designed to be budget neutral, just like TIFIA.” TIFIA is a similar, long-standing Transportation Department program.

Holmes does not think the fees the EPA finalized in June will be a disincentive for applicants for WIFIA credit assistance. Those fees are similar to ones the Department of Transportation charges for a similar program that has been in operation for years, and will apply to the applicants chosen from the 43 who submitted letters of interest in January. Some of those will be invited to submit applications.

For fiscal year 2017, the application fee is $25,000 for projects serving small communities (population of not more than 25,000 people). For all other project applications, the fee is $100,000. There will be a second, much larger credit processing fee due after the EPA completes its review of the application, or at the time an applicant pulls its application, for whatever reason. The original application fee amount would be subtracted from the credit processing fee, which the EPA estimates could be in the range of $350,000 to $700,000
per project.

The WIFIA allows the EPA to reduce its fees where Congress appropriates additional funds beyond the $2.2 million earmarked for EPA’s administrative costs of staffing, program support contracts (separate from the expert services described previously), and other internal administrative needs. According to Holmes, Congress has appropriated $5 million for WIFIA administration in fiscal 2017.

EPA can (but does not have to) allocate additional administrative funds (apparently $2.8 million) by reducing fees by an equal amount per loan for projects that serve a population with a median household income that is 80 percent or less of the state median household income. If additional administrative funds remain, EPA will reduce fees by an equal amount per loan for those projects serving a population of not more than 25,000. If additional administrative funds still remain, EPA will reduce fees by an equal amount for each remaining loan.

Congress considers dueling pipeline approval reform

The House and Senate are on a collision course, sponsoring different pieces of legislation that attempt to give the Federal Energy Regulatory Commission (FERC) new authority to speed approval of new pipeline projects. The bill the House Energy & Commerce Committee passed on June 28 ups the ante in favor of the industry, compared to an earlier draft of the “Promoting Interagency Coordination for Review of Natural Gas Pipelines Act” (H.R. 2910) introduced in May, which generally followed the lines of similar legislation introduced in past Congresses, but never passed.

Instead, the June 28 version included a number of new elements aimed at giving FERC additional leverage to green-light a new pipeline project if other federal agencies dragged their feet on environmental reviews required by their own laws. For example, the Commerce Department often reviews projects under the Coastal Zone Management Act, and the Environmental Protection Agency under the Clean Water Act.

The Interstate Natural Gas Association of America (INGAA), supports the revised House bill, which “strengthens FERC’s lead agency role under the National Environmental Policy Act and encourages broad permitting agency participation in the development of a single environmental review,” said INGAA’s Cathy Landry. The House bill attracted only two Democratic votes, probably indicating it would have a hard time passing the Senate even if similar to the Senate version.

The House committee’s Democratic staff published a memo criticizing some elements in the new version of H.R. 2910, and stated the provisions do not address concerns raised by an FERC official at subcommittee hearings in May. The bill introduces new terms such as “NEPA review” and “Project-related NEPA review,” and creates a “non-designation” status that prohibits certain agencies from being able to “request or conduct a NEPA review that is supplemental to the project-related review conducted by the Commission…”

The bill prohibits FERC from considering any comments or other information provided by a non-designated agency, or including its comments or supplemental information in the record. Other new language introduced in H.R. 2910 requires agencies responsible for federal authorizations to deem applications for such authorizations “sufficiently complete for the purpose of commencing consideration, regardless of whether supplemental information is necessary to enable the agency to complete the consideration required by law…”
Besides opposition from Democrats, environmentalists are likely to oppose the modified House bill, too. “H.R. 2910 as passed by the House Energy and Commerce committee would appear to be another FERC streamlining solution looking for a problem,” said Carl Weimer, executive director, Pipeline Safety Trust. “Even FERC has testified that their current NEPA process leads to 88 percent of projects getting approved within a year, and that the major cause of delays is not from other agencies, but from industry applicants not providing information in a timely manner.”

Appeals Court tosses EPA temporary suspension of methane rule

A federal appeals court in Washington told the EPA on July 3 that it could not delay the compliance deadline for new air emission rules that will force interstate pipelines to monitor compressor stations quarterly for emissions of methane, and adopt what INGAA views as an overly expensive leak detection and repair approach.

The EPA in April suspended compliance for 90 days beyond the June 3 deadline included in the final rule published by the Obama administration. More recently, the agency said it wanted to extend that 90-day extension to two years. The federal appeals court will hold a hearing on that two-year suspension separately.

The court did say the EPA could reconsider the 2016 rule requiring compressors with wet seals to achieve a 95-percent reduction of methane and VOC emissions through flaring, or by routing captured gas back to a process. Rod packing systems in reciprocating compressors will have to be replaced at or before every 26,000 hours of operation, or every 36 months.

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