May 2011, Vol. 66 No. 5

Washington Watch

SRF Budgets Take Beating, Pipeline Safety In Focus, Fracing Initiative Announced

The EPA sewer and drinking water construction budgets for the current fiscal 2011 year dropped precipitously in the final budget passed by Congress. Fiscal 2011 actually started last Oct. 1 but Democrats and Republicans in the House and Senate had been unable to agree on a budget.

Instead, they passed a series of continuing resolutions (CR) which allowed federal programs to be funded in fiscal 2011 at fiscal 2010 levels.

But when Republicans and Democrats finally agreed on a final fiscal 2011 budget in mid-April, it included a severe cut in funding for the EPA’s Clean Water and Drinking Water State Revolving Funds. The program provides money to state governments which in turn make low-interest loans to cities and counties for infrastructure construction projects. In fact, the cuts to the two SRF budgets were among the biggest in the entire final fiscal 2011 budget, a reduction of $997 million total from the fiscal 2010 total of $3.487 billion.

In FY 2010, the CWSRF received $2.1 billion and the DWSRF $1.387 billion. In FY 2011, their budgets will be $1.525 million and $965 million.

Water infrastructure lobbyists in Washington had slightly different views of the cuts. Ken Kirk, executive director, National Association of Clean Water Agencies (NACWA), believes that the budget cuts “are misguided and ignore the very real needs and financial constraints facing states and municipalities in meeting a growing array of costly Clean Water Act (CWA) requirements.”

Diane VanDe Hei, executive director, Association of Metropolitan Water Agencies, admits the cut to the drinking water SRF is disappointing. But she tries to look on the bright side. “We’re encouraged that the DWSRF’s appropriation of $965 million is $135 million more than what it would have received under H.R. 1, and represents the third-highest annual appropriation in the history of the program,” she states. H.R. 1 was the bill the House passed in February which would have cut the entire federal 2011 budget by $61 billion. It never passed the Senate.

SRF funds allow cities such as Pueblo, CO, to receive a $25 million loan at 2.8 percent interest to put in place an active sludge mode of treatment for removal of ammonia from its wastewater. That sewer loan was obtained about a year and a half ago. Gene Michael, the wastewater director in Pueblo, says the city would have had to pay 6 percent for a bank loan.

Richard W. Wanta, executive director, Wisconsin Underground Contractors Association,
says, “We are not surprised in the least by the SRF funding cuts. With water infrastructure, it is ‘out of sight, out of mind.’ In the last few years, the city of Milwaukee has had two sinkholes resulting from cracks in city water mains that are 85 years old. Those flooded city streets mean loss of revenue for businesses in those neighborhoods.”

Beyond the inability of states to fund city and county projects, diminished SRF funds make it even harder for underground construction companies to train new employees. Wanta says fresh blood is badly needed given the average age of the workforce is 45 years. “You need to train people by showing them how to lay pipe,” he explains. “Technical college doesn’t do that.”

PHMSA Forum kicks off new pipeline safety focus
It is still unclear if anything substantive will result from the pipeline safety forum Transportation Secretary Ray LaHood held on April 18. The forum followed a press conference LaHood and PHMSA Administrator Cynthia Quarterman held in Pennsylvania on April 4 where they announced a vague “action plan” meant to respond to a recent series of pipeline explosions, the latest in Allentown, PA, in February when a distribution line ignited killing five people.

LaHood wants to “accelerate rehabilitation, repair and replacement programs for high-risk pipeline infrastructure and to re-qualify that infrastructure as fit for service.” He has supplied no specifics, and a spokesman at the Pipeline and Hazardous Materials Safety Administration (PHMSA) declined to do so prior to the April 18 Forum, which ostensibly was held to get ideas from natural gas transmission, gas distribution and hazardous liquids pipeline industry officials on how to accomplish LaHood’s general goals.

Don Santa, president and CEO of the Interstate Natural Gas Association of America, says transmission pipelines will work with LaHood, and have already adopted guiding principles to improve the industry’s safety performance and restore public confidence in the natural gas pipeline infrastructure.

LaHood has been specific in saying he wants to increase PHMSA’s civil penalty authority, which he requested from Congress last fall when he submitted the Strengthening Pipeline Safety and Enforcement Act of 2010. It increased civil penalties and added inspectors. The bill went nowhere.

Also in the fall of 2010, in testimony to Congress, Quarterman announced that the PHMSA was considering a host of additional safety measures. Those included identifying additional areas along pipelines that should receive extra protection or be included in the high consequence area category for integrity management protection and establishing minimum requirements for point-to-point leak detection systems. But PHMSA has never proposed actual regulatory changes in those areas via a rulemaking, nor asked Congress for authority to do so.

This year, Sen. Frank Lautenberg (D-NJ), chairman of the Senate subcommittee on surface transportation and merchant marine infrastructure, safety and security, has introduced the Pipeline Transportation Safety Improvement Act of 2011 (S. 275). It does increase PHMSA civil penalties for “major consequence violations” and mandates a regulation to require the use of automatic or remote-controlled shut-off valves (or equivalent technology) on pipelines

Obama administration announces fracing initiative
President Obama mentioned a new “fracing” initiative in the energy policy proposal he issued at the end of March. The president wants to increase “transparency about the use of fracing chemicals . . . and develop recommendations for shale extraction practices that will ensure the protection of public health and the environment.” That will apparently be done through the Department of Energy’s Energy Advisory Board, which meets twice a year and whose members are mostly former high-ranking government and industry executives.

Daphne Magnuson, spokeswoman for the Natural Gas Supply Association, says the NGSA would be happy to work with Energy Secretary Steven Chu on the initiative. “We haven’t heard from the department yet,” she adds.

Department of Energy officials did not respond to e-mails asking for details about the new initiative.

The Environmental Protection Agency already has a “fracing” study in progress, and it is not clear how the DOE initiative will differ from what the EPA is already doing. At Senate hearings on April 12, Bob Perciasepe, deputy administrator of the EPA, said the EPA study would not present results until the end of 2012. Despite national publicity around the issue of potential groundwater contamination from fracing, none of the witnesses at the hearings in the Senate Environment and Public Works Committee presented any evidence to support those allegations.

Jeff Cloud, vice chairman, Oklahoma Corporation Commission, told the Senate committee hydraulic fracturing has been used for over 60 years in Oklahoma, and more than 100,000 Oklahoma wells have been hydraulically fractured over that period. “Over that more than half century of hydraulic fracing experience, there has not been a single documented instance of contamination to groundwater or drinking water as result of hydraulic fracturing,” he said.

In terms of disclosing use of fracing chemicals, Sen. Bob Casey (D-PA), who accompanied LaHood and Quarterman to Pennsylvania on April 4, reintroduced the FRAC Act in the Senate in mid-March. That bill had been introduced in the last session of Congress, but no action had been taken. The FRAC Act would require producers to disclose fracing fluid composition to the EPA under the Safe Drinking Water Act. States would make that information public.

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