January 2022 Vol. 77 No. 1

Washington Watch

Infrastructure Bill Lavishes $44 billion in New Money on Water Construction

By Stephen Barlas, Washington, D.C. Editor

Congress dropped a load of new funding for drinking water and sewer construction in the Infrastructure Investment & Jobs Act (IIJA) which is meant to be over and above what the appropriations committees will provide annually for the Clean Water and Drinking Water State Revolving Funds, which typically get between $1–2 billion a year. 

The infusion of an additional $44 billion over five years, starting in this current fiscal year 2022, is spread over a bunch of new programs but also includes $11.7 billion over five years for both of the SRFs. It is split up this way: $1.902 billion in FY22, $2.202 billion in FY23, $2.403 billion in FY24, and $2.603 billion in FY25 The first two years (FY22 and FY23) have a reduced state match of 10 percent. The match reverts to 20 percent for FY24-26. The other main concession is that states are required to spend at least 49 percent of these funds in the form of grants or 100 percent principal forgiveness – a much higher share than usual not needing to be repaid. 

“Congress included a provision in the bill underscoring that their intention is for these to be supplemental – they still intend to provide annual funding each year to the SRFs on top of IIJA” explains Kristina Surfus, managing director, Government Affairs at National Association of Clean Water Agencies (NACWA). “NACWA will continue advocating for annual spending bills to provide robust funding for the SRFs each year.” 

In addition to that $23.4 billion for the SRFs, the bill distributes another $10 billion over five years for addressing emerging contaminants like per- and poly-fluoroalkyl substances (PFAS), a family of manmade chemicals found in many consumer products, which the Environmental Protection Agency says can negatively impact human health and the environment. That $10 billion is divided into three separate pots: 

  • $4 billion to address emerging contaminants in drinking water “with a focus on” PFAS. The funding will be appropriated evenly at $800 million per year from FY22 through FY26. The funds will be provided to states via the DWSRF with no required state match. All these funds must be awarded by states as grants or principal forgiveness loans.
  • $5 billion to help small and disadvantaged communities address emerging drinking water contaminants. The funding will be appropriated evenly at $1 billion per year from FY22 through FY26 and will be provided to states for projects that address emerging contaminants in communities eligible for assistance under section 1459A of the Safe Drinking Water Act.
  • $1 billion to help wastewater systems address emerging contaminants. The first $100 million will be appropriated in FY22, and an additional $225 million per year will be made available for FY23-FY26. Funds will be distributed through the Clean Water SRF and will not be subject to state matching requirements.
  • Lastly, the IIJA contains $15 billion to replace all service lines covered by the EPA’s Revised Lead and Copper Rule. That means lead lines and galvanized pipe downstream from a lead pipe.

“The $15 billion is significant,” states Tommy Holmes, legislative director, American Water Works Association. “Our own study showed that it will cost the nation a minimum of $60 billion to replace all service lines covered by the Revised Lead and Copper Rule. However, if $70 billion were to fall from the sky tomorrow, it would still take a considerable amount of time to replace all of the nation’s more than 6 million lead service lines. So, the $15 billion is very much appreciated, but the public needs to be aware that more money and time will be needed to replace all of the country’s lead lines. This is a great start, but not the end.” 

Permitting provision in Infrastructure Bill disguises federal threats elsewhere 

Interstate pipelines have complained for years about federal and state delays issuing construction permits over concerns about potential damage to waterbodies. But the “permitting” provision in the Infrastructure Investment & Jobs Act (IIJA) creates the illusion that help is on the way while at the same time the Biden administration is pursuing other initiatives to hamper pipeline permitting. 

The infrastructure bill signed by President Biden on Nov. 15 contains what can only be called a “ho hum” provision doing two things. The first is a mandate Transportation Department be required to develop a two-year timeline – not a rule which would have legal implications – for completing environmental reviews on major projects. But the provision contains no teeth. Administrations going back to George W. Bush have issued Executive Orders of one type or another instituting a two-year timetable, but they have been essentially either ignored or never implemented. President Biden revoked President Trump’s Executive Order 13807 which was aimed at the encouragement (whatever that means) “… reducing  
the time to two years for each agency to complete all environmental reviews and authorization decisions for major infrastructure projects.” 

The IIJA also re-authorizes the Federal Permitting Improvement Steering Council (FPISC) which was established in 2015. The Council has no power to do anything except lobby agencies such as the Federal Energy Regulatory Commission (FERC) and Environmental Protection Agency to keep environmental impact statements from dragging on. The FPISC would have otherwise gone out of business in December 2022. John Cossa, general counsel at the FPISC, admits, “We don’t have the authority to make a project’s environmental review go faster. The Permitting Council gets some of the most complex projects and often late in the process.” That makes it hard for the FPISC to have any impact on long delayed projects in its portfolio such as Penn East and Jordan Cove. 

That IIJA “permitting” provision will do nothing to reverse the Biden administration’s recent initiatives complicating life for gas pipelines looking for a simpler, faster federal approval process. The Army Corps of Engineers on Nov. 4, 2021, two weeks before Biden signed the IIJA, announced it is pausing all requests for coverage under 12 nationwide permits (NWPs) issued earlier this year. NWP12 used by the pipeline industry is one of the ones affected. Companies use it to get quick approval of construction that does minimal damage to a wetland. The announcement followed a California district court’s decision vacating the Section 401 Water Quality Certification Rule adopted by the Trump Administration in 2020. 

“However, the Corps has signaled that it is unable to finalize any permit decisions that rely on the 401 WQC Rule, including individual permits,” states Megan S. Haines, an attorney with Reed Smith. “Individual permits are typically more appropriate for projects that may have potentially significant applications and often take longer for the Corps to issue. Accordingly, we note that given the uncertainty of this matter, project schedules should be padded to reflect the likelihood that permitting approvals may take longer than expected.” 

In addition, the Biden administration is considering changes to the National Environmental Policy Act (NEPA) which dictates how federal agencies such as FERC must prepare environmental impact statements before issuing permits. The Trump administration in 2020 made pipeline-friendly changes to NEPA in one instance by limiting the scope of an agency’s analysis of “reasonable alternatives” to a project. The Biden administration wants to reverse that. 

In comments to the CEQ on Nov. 22, 2021, the American Petroleum Institute, Association of Oil Pipe Lines International and other pipeline-centric groups wrote: 

“Environmentally beneficial or not, IIJA projects will need to undergo NEPA reviews, and many are at risk of being sidelined by protracted agency reviews of unrealistic alternatives and effects that will not reasonably inform agency decision making."

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