May 2021 Vol. 76 No.5

Washington Watch

Washington Watch

By Stephan Barlas, Washington D.C. Editor

A big infrastructure package is a long way from getting passed by Congress, but the good news is that if and when it does  
pass, it will include ostensibly increased funding for both water projects and broadband deployment. 

The American Jobs Plan President Biden announced on March 31, resembles, not surprisingly, a bill Democrats in the House are preparing, especially in the portions devoted to drinking water and broadband investments. Democrats prioritize drinking water projects, especially lead replacement and particularly in underserved areas; sewer funding appears to be absent. A bipartisan bill passed by the Senate Environment and Public Works Committee does include funding for sewer projects, in addition to drinking water and broadband. 

The Senate’s Drinking Water and Wastewater Infrastructure Act of 2021 (DWWIA 2021) authorizes more than $35 billion for water resource development projects across the country, including $15.5 billion over five years for each of the Drinking Water and Clean Water State Revolving Funds (SRFs). 

It does up funding for the CWSRF, while the House bill and Biden plan do not, that increase was deemed insufficient by Kishia Powell, vice president of the National Association of Clean Water Agencies (NACWA). “While the Senate bill does not provide the full levels of funding needed to address the growing clean water infrastructure needs across the country, it serves as a good starting point,” she told the Senate Environment and Public Works Committee. 

However, the ultimate availability of those funds and others allocated in the Senate bill, for smaller U.S. Departments of Agriculture and Commerce water utility funds, is dependent on passage of separate appropriations bills. Their contours may – or may not – be shaped by the funding from Bidens’ proposed $2 trillion American Jobs Plan, which depends on large increases in corporate taxes. 

The House bill backed exclusively by Democrats – making it less likely to be accepted by the Senate – also includes water and broadband spending, and at much higher levels than the Senate bill. The House Democrats’ LIFT America Act includes provisions to extend and increase authorizations of $26.3 billion for essential drinking water programs. 

These include the Safe Drinking Water State Revolving Loan Fund, Indian Reservation Drinking Water Program, School and Child Care Program Lead Testing grants, Lead Drinking Fountain Replacement, Community Water System Risk and Resilience grants, and Public Water System Supervision grants to states. 

An emphasis in both the House and Senate drinking water and sewer (only in the Senate) is providing much higher levels of subsidies for state loans via their SRF programs. This is seen as a way of helping underserved and marginalized communities, typically black and brown communities. In the Senate bill, for example, of the $35 billion, more than 40 percent can be directly used to benefit small, disadvantaged, rural and tribal communities through additional subsidization from the SRFs or direct grant programs. 

Shellie R. Chard, past-president, Association of State Drinking Water Administrators (ASDWA), told the Senate EPW committee, “Although it is important for states to have the ability to provide subsidy for disadvantaged communities or to use subsidies to encourage innovative or necessary projects, using large percentages of the capitalization grants for subsidy can impede program growth and impact the ability to borrow.” 

The Biden plan, House and Senate bills all include substantial funding for broadband deployment, with an emphasis on rural areas. The LIFT America Act would invest almost $94 billion to expand access to broadband internet to underserved communities. 

New Policy Formalizes FERC Use of GHG Emissions 

A Republican commissioner at the Federal Energy Regulatory Commission (FERC) took the unusual step of advising interstate pipeline and liquid natural gas (LNG) companies to get ready to have pending applications for construction upended by the order that FERC issued on March 23, 2021, by a vote of 3-2. In that order FERC approved a 2020 application by Northern Natural Gas to abandon an old, leaky pipeline and replace it with approximately 87.3 miles of various diameter pipelines. 

FERC’s order was unexceptional for the most part – including approval of the safer replacement – except where the agency said, for the first time, it had considered the greenhouse gas emissions the new construction would emit. FERC explained that a proposed pipeline’s reasonably foreseeable greenhouse gas emissions are relevant to the commission’s determination as to whether a project meets the Natural Gas Act’s “public convenience and necessity” requirement. 

In the past, when considering new pipeline applications, the commission had concluded that it was unable to assess the significance of a project’s GHG emissions or those emissions’ contribution to climate change. The order then continued, stating, “Upon reconsideration, we no longer believe that to be the case. Accordingly, in the following paragraphs, we assess the significance of the project’s GHG emissions and their contribution to climate change. Based on the record in this proceeding, we conclude that those impacts are not significant.” 

“FERC’s order represents a sea change regarding its approach to GHG emissions and its obligations under NEPA,” said Jamie Auslander, co-chair of Beveridge & Diamond’s Natural Resources and Project Development Practice Group. NEPA stands for the National Environmental Policy Act. 

Even though FERC greenlighted the Northern project, a decision which Commissioner Robert Danly agreed with, he dissented with the change in FERC policy with regard to GHG emission considerations. 

His dissent sputtered with indignation, saying the order “represents regulatory malfeasance at its most arbitrary and capricious.” His objections centered on his view that the Commission had not established a “methodology” for weighing GHG emissions and, secondly, that it already had issued a request, called a notice of intent, asking for public comment on the GHG issue and others. Those comments weren’t due until April 25. 

“This order is likely to have profound consequences,” he wrote. “I reiterate the advice I have given to everyone who would listen since the Commission’s issuance in Algonquin last month: every single natural gas pipeline company, LNG company and shipper should intervene in every single certificate item. Start now.” Danly listed 50 projects that could be affected. 

Enbridge Gas Pipelines has projects in that group, either pipelines it owns outright, such as Algonquin Gas Transmission, or others it owns partially via a joint venture, such as Sabal Trail Transmission, LLC. 

  1. Martin Teague, vice president, US Gas Law at Enbridge, wrote to FERC on March 17, just before the order was formally published: “Enbridge Gas Pipelines are concerned about the possibility of industry-wide policy changes occurring in individual certificate dockets at the Commission. Such policy changes have the potential to apply generally to all natural gas industry participants, and affect the natural gas industry as a whole and each of the Enbridge Gas Pipelines individually in a manner not contemplated in discrete proceedings.”

In assessing the Northern project, FERC totaled up the GHG emissions likely to be created by construction of the project and compared them to national and state emissions in the states (South Dakota and Nebraska) the project will pass through. On that basis, FERC found the GHG emissions to be insignificant. What the commission did not do was add in the GHG emissions likely to be created “upstream” and “downstream,” in the first case, from the processing of the gas, and in the second, from transportation and distribution of the gas. 

“Future FERC projects may trigger a more robust analysis … such as where new service is provided or if they take place in states with GHG reduction goals/renewable portfolio standards,” said Auslander. Northern was simply replacing existing pipeline on an existing route. 

The commission explained in its order: “NEPA does not require that the studies, metrics and models – scientific and otherwise – on which an agency relies be universally accepted or otherwise uncontested. Instead, NEPA permits agencies to rely on the best available evidence, quantitative and qualitative, even where that evidence has certain limitations.” 

Danly differed, arguing, “Not only does the majority decline to institute an analytical framework, it does not even establish a threshold above which it will consider emissions to be ‘significant’ under the standard it adopts. 

“It is no standard at all, merely a black box comparison of numbers the commission can apparently apply however it sees fit on a case-by-case basis. In this case, Northern Natural Gas Company luckily passes. Other applicants, included in numerous cases currently pending before the commission, must now guess whether their own significant investments in critical infrastructure will also pass the commission’s ad hoc review."

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