August 2018 Vol. 73 No. 8

Washington Watch

Congress Readies Water Infrastructure Bill

Congressional passage of a water infrastructure bill heavily focused on Army Corps of Engineers’ projects appears imminent, after the House passed its version, Water Resources Development Act of 2018 (H.R. 8), almost unanimously – 408-2. The Senate version also passed the Environment and Public Works Committee by a unanimous vote.

Called the America’s Water Infrastructure Act of 2018 (S. 2800), it contains provisions in addition to those funding Army Corps projects. For example, one extends the authorization for the Water Infrastructure and Finance and Innovation Act (WIFIA), which the Environmental Protection Agency (EPA) is implementing as a means of supplementing federal funding for the sewer and drinking water state revolving funds (SRFs).

The EPA’s implementation of WIFIA, established by Congress in 2014, has been painfully slow despite Congress appropriating funds for the program in the last two budget cycles. The agency made its first loan in April of this year and its second in late June.

The Senate bill expresses considerable dissatisfaction with the EPA’s plodding implementation. WIFIA funding provides a much bigger bang for the federal buck through its loan subsidy mechanism, compared to the SRFs which involve mammoth federal appropriations. The Senate bill requires a federal study on the “obstacles” preventing the EPA from pushing out more WIFIA loans. The report would be due to Congress within a year.

Asked why the committee inserted that provision in the bill and the nature of its dissatisfaction with the EPA on WIFIA, Mike Danylak, spokesman for the Senate Energy and Public Works Committee, said, “I think you should reach out to the EPA on this question.”

An EPA spokeswoman did not respond to an inquiry about the obstacles the agency faces.

The first WIFIA loan went to King County, Wash., to help finance its Georgetown Wet Weather Treatment Station. Estimated to cost $275 million, EPA’s WIFIA loan will help finance nearly half that – up to $134.5 million. The second WIFIA loan of $69.7 million went to Omaha, Neb. to help finance its Saddle Creek Retention Treatment Basin.

The Army Corps portions of both bills provide congressional approval for local and state projects which the Corps has vetted. The lion’s share of the federal spending in the House bill is devoted to a project addressing erosion along the coast in Galveston, Texas, and restoring ecosystems, such as wetlands and marshes, to enhance protection from storm surge in the area damaged by Hurricane Harvey. Spending on that project accounts for $2.2 billion of the estimated total $2.7 billion federal costs for the entire bill, which would be dribbled out over the 2019-2028 period.

The Congressional Budget Office (CBO) estimates that construction spending for the other six projects and three modifications would total about $550 million over the next 10 years. Flood Risk Management projects approved for funding include the Ala Wai Canal (Hawaii) and Mamaroneck-Sheldrake Rivers (New York). Hurricane and Storm Damage Risk Reduction projects include St. Johns County (Florida), St. Lucie County (Florida) and Sabine Pass to Galveston Bay (Texas).

H.R. 8 would reauthorize the national dam and levee safety programs operated by FEMA and the Corps. Those programs provide grants to local and state governments to assist with maintaining databases for the nation’s dams and levees, and implement a public awareness and education program.

Trump Orders Recommendations on Stopping Coal, Nuke Power Plant Closings

Energy Secretary Rick Perry is taking a second bite of the apple as he prepares recommendations requested by President Trump aimed at delaying retirement of electric generation facilities that use coal and nuclear energy as inputs. President Trump’s National Security Council (NSC) drafted a memorandum which suggests Perry could delay retirement of those non-natural gas-using power plants by citing the Defense Production Act of 1950 and/or the Federal Power Act.

The DOE would ostensibly force “System Operators” to purchase electricity from “Subject Generation Facilities” for a period of 24 months. System Operators would be regional transmission organizations, independent transmission organizations and defense department facilities.

According to the draft memo, the Energy Department would exercise its emergency authority to order grid operators to give preference to plants “that have a secure on-site fuel supply” and that “are essential to support the nation’s defense facilities, critical energy infrastructure and other critical infrastructure.” Only coal and nuclear plants regularly keep fuel on site.

A White House statement on June 1 underlined the request saying: “Unfortunately, impending retirements of fuel-secure power facilities are leading to a rapid depletion of a critical part of our nation’s energy mix, and impacting the resilience of our power grid.”

In 2017, Perry asked the Federal Energy Regulatory Commission (FERC) to undertake a rulemaking to improve resiliency of the power grid. His intention was to convince FERC to subsidize electric generators using coal and nuclear energy. FERC declined to move forward with that and has opened a second inquiry on grid resilience.

The DOE press office did not reply to an inquiry asking if and when Perry might make his recommendations to President Trump.

The NSC memorandum buttresses its alarm about a potential, dangerous power grid interruption by noting the recent and, in some instances, accelerating retirement of coal- and nuclear-fueled power plants. But it also refers to the potential vulnerability of the U.S. gas pipeline network.

The financial difficulties of coal and nuclear plants are reflected in one instance by FirstEnergy Corp. (FES) Its subsidiary, First Energy Solutions, filed for bankruptcy in April amidst an announcement of the closure of three of its nuclear facilities and continuing financial troubles for two coal-fueled generators, all in the competitive non-regulated market. The FES asked the DOE for an emergency order to provide cost recovery to coal and nuclear plants in the PJM Interconnection market, the largest RTO in the U.S. The DOE has not responded to that request according to Thomas Mulligan, a spokesman for the parent company.

As evidence of pipeline network vulnerability, the NSC memorandum cites various regions of the U.S. where large amounts of megawatt availability depend on a single (i.e. precarious) natural gas connection: in New England more than 13,000 MW; in the Mid-Atlantic, 12,000 MW; in the Southeast 46,000 MW.

“There is absolutely no justification for the extreme intervention in energy markets suggested in the draft National Security Council memo. Such a move would be bad public policy, costly to American consumers and the economy, and legally questionable,” said INGAA President and CEO Don Santa. He called much of the rationale outlined in the draft National Security Council report “fundamentally flawed, particularly as it relates to natural gas pipelines.”

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