November 2018 No. 73 Vol. 11

Washington Watch

Congress to Pass Water Infrastructure Bill

Congressional passage of a water infrastructure package looks like a done deal, after the House easily passed the Senate’s America’s Water Infrastructure Act of 2018 (S. 3021).

The main focus of the bill is authorization of some major Army Corps of Engineers’ projects involving dams and harbors. It has been non-controversial and undoubtedly will be signed by President Trump sometime this fall. Key provisions include authorization of more than $4.4 billion over three years for the Drinking Water State Revolving Loan Fund (DWSRF) and $100 million over the next two fiscal years for areas affected by natural disasters that need help repairing drinking water systems or hooking up to other ones to obtain potable drinking water.

DWSRF amounts are: $1.174 billion in fiscal year 2019, $1.3 billion in fiscal year 2020, and $1.95 billion in fiscal year 2021. But these funds must be appropriated every year; the foregoing figures are essentially ceilings. The appropriation for fiscal 2018 was $1.16 billion.The bill also reauthorizes the Water Infrastructure Finance and

Innovation Act (WIFIA) for another two years at $50 million a year. WIFIA was approved by Congress in 2014 to augment DWSRF by focusing on large water improvement programs. Funds were first appropriated to the EPA in 2017 and the agency is just now making loans.

WIFIA’s viability going forward was threatened, according to some underground water infrastructure lobbies, when the Senate included a new program called the Securing Required Funding for Water Infrastructure Now (SRF-WIN) Act in the broader bill. This program takes SRF funding and gives it to small communities at concessionary rates lower than regular SRF loans. Water groups complained that this new SRF-WIN was something of the camel’s nose under the tent and might end up eroding WIFIA funding, which is just getting underway.

The water infrastructure bill authorizes SRF-WIN at $5 million – only if $50 million or more is appropriated for WIFIA and DWSRF gets 105 percent more than the year before. The American Water Works Association (AWWA), Association of Metropolitan Water Agencies and Water Environment Federation stated their concerns in a letter to the Senate last May: “We believe that SRF-WIN Act is a fundamentally flawed proposal that, if enacted, would pose a severe threat to the future viability of the WIFIA program. For these reasons, our organizations will withdraw our support for S. 2800 if it advances with SRF-WIN provisions.” S. 2800 morphed into S. 3012, which became the final water infrastructure bill, and the SRF-WIN proposal was apparently watered down enough so the three groups are supporting S. 3021. Tommy Holmes, legislative director of AWWA, said the fact SRF-WIN only received $5 million for two years makes SRF-WIN “somewhat pointless.” However, he added, “Proponents may be gambling that they can convince appropriators to not only waive the requirement that WIFIA get $50 million and the SRF’s 105 percent of previous year funding before SRF-WIN can get funded but, in addition, talk appropriators into providing more funding.”

Numerous other provisions authorize various grant programs at mostly low levels, that will have to have their funds appropriated by the Appropriations Committees, which may or may not happen. Among those grant programs is one devoted to drinking water infrastructure resilience and sustainability focused on underserved and disadvantaged communities when an imminent and substantial endangerment is present.This section provides $4 million in grants for water system programs in fiscal

years 2019 and 2020 that assist in planning, design, construction, implementation, operation or maintenance of resilience to natural hazards. Another provision gives $25 million in the next three years for voluntary school and child-care lead testing program enhancement. Again, the money must go to disadvantaged communities.

Republicans Seek to Diminish State Authority to Stop Pipeline Construction

Republicans in Congress have initiated an effort to change some provisions in the Clean Water Act that have been used by certain states to block interstate pipeline approvals. The biggest example is New York State’s refusal to grant a water quality certification under the Clean Water Act for the Constitution pipeline, which would bring Marcellus shale gas from Pennsylvania to New England – where natural gas supplies last winter were badly compromised.

The Water Quality Certification Improvement Act of 2018 (S. 3303) was introduced in late July by Sen. John Barrasso (R-Wyo.), chairman of the Senate Environment and Public Works Committee. Hearings were held on Aug. 16. The bill amends Section 401 of the Clean Water Act to clarify these reviews are limited to water quality impacts only. States, when evaluating water quality, could only consider discharges from the federally permitted or licensed activity itself, not from other unrelated sources.

The Interstate Natural Gas Association of America (INGAA) agrees with the change. “INGAA supports this measure to bring clarity to section 401 of the Clean Water Act,” said Don Santa, INGAA president and CEO. “In recent years, a handful of states have used this provision of federal law to disrupt or delay infrastructure projects, sometimes using justifications unrelated to water quality.”

The Barrasso bill will not pass in 2018; the GOP is essentially signaling its intent to pursue the issue in 2019, the success of which will depend on the makeup of the new Congress. It won’t be a hit among many Democrats. “The bill substantially robs states of the rights they exercise under the Clean Water Act and abandons the cooperative federalism approach that has been a centerpiece of federal environmental law,” said Sen. Kirsten Gillibrand (D-NY), a member of the committee, at the hearings.

However, some Democratic opposition might be reversed by labor unions’ support for the bill. At the August hearings, Brent Booker, secretary-treasurer, North American’s Building Trades Unions, complained about New York’s blocking of the Constitution pipeline.

“This permit denial is still delaying about 2,400 direct and indirect jobs from the pipeline construction, generating $130 million in labor income and economic activity for the region,” he said. “The decision continues to cost local governments approximately $13 million in annual property tax revenue.”

EPA Proposes Changes to Compressors, Leak Repair Rule

The Environmental Protection Agency (EPA) proposed changes to its major rule on oil and gas air emissions of methane and volatile organic chemicals (VOCs), including an easing of provisions affecting pipeline compressor stations and leak repair. The oil and gas New Source Performance Standards were finalized by the Obama administration on June 3, 2016, and subsequently became the subject of petitions for reconsideration by industry players, including the American Petroleum Institute (API). The standards were then put on hold and reviewed by the EPA in accordance with an executive order signed by President Trump regarding existing regulations that potentially burden the development of domestic energy resources, and what regulations are necessary to protect the public interest or otherwise comply with the law.

The Sept. 11, 2018 EPA proposed rule relates to specific issues for which reconsideration was granted. That includes several revisions to the requirements for the collection of fugitive emissions components located at well sites and the collection of fugitive emissions components located at compressor stations. It is that last change regarding compressor stations that may reduce costs for pipelines. In total, the EPA said its oil and gas targeted improvements package is expected to save up to approximately $484 million in regulatory costs from 2019 to 2025, or $75 million annually.

INGAA had argued that the EPA’s mandate for quarterly emissions at compressor stations was unnecessary. Instead, INGAA wants annual surveys, based on its belief that the agency overestimates emissions using Method 21 because the data is not representative of the oil and natural gas sector. The EPA said it may support a revision of the evaluation of the Method 21 alternative that is more representative of the oil and natural gas sector. The INGAA Board of Directors on July 19 formally affirmed its commitment to minimize methane emissions from interstate natural gas transmission and storage facilities through a series of voluntary pledges.

API also supports the revision. “We welcome EPA’s efforts to get this right, and the proposed changes could ensure that the rule is based on best engineering practices and is cost-effective,” said API Senior Director of Regulatory and Scientific Affairs Howard Feldman.

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