February 2016, Vol. 71 No. 2
Features
Underground Construction Initiatives Highlight 2016 DC Docket
by Stephen Barlas Washington Editor
Amendment Would Allow Tax-Exempt Bonds For WIFIA loans
There are a couple of major underground construction initiatives circulating in Congress and regulatory agencies this year. But the prospect of an upcoming presidential election means that many bills, which might otherwise pass, may get bogged down as House and Senate members shift their thoughts to re-election bids as opposed to legislating. The “election season” could slow down regulatory dockets, too, as regulators start to wonder whether they ought to be taking significant steps that could be reversed by the next administration.
The big ticket prospects involve pipeline safety and broadband bills. On the regulatory front, the Federal Energy Regulatory Commission’s (FERC) implementation of its new environmental review policy may reverberate. The Pipeline and Hazardous Materials Safety Administration (PHMSA) could finalize its proposed rule on liquid pipeline safety and finally issue a proposed rule on natural gas interstate pipeline safety.
New pipeline safety bills have been passed every four or five years by Congress, and the latest effort began in December with passage by the Senate Commerce, Science and Transportation Committee of the Securing America’s Future Energy: Protecting Infrastructure of Pipelines and Enhancing Safety (SAFE PIPES) Act. The bill (S. 2276) passed the committee with Republican and Democratic support, meaning it is likely to pass the Senate, and serves as a beacon of sorts for the House, letting it know that if it, too, passes a pipeline bill, one is likely to pass Congress and go to President Obama’s desk before the November election. However, the bill is a pale shadow of the 2011 pipeline safety bill which imposed numerous new mandates on PHMSA, which is way behind on implementing most of them. The one significant mandate in this new bill is for PHMSA to issue a regulation mandating safety standards for underground gas storage facilities. The underground storage facilities requirement would apply to depleted hydrocarbon reservoirs, aquifer reservoirs, or solution mined salt cavern reservoirs. Minimum uniform safety standards would have to be issued within two years.
But the Senate bill is composed mostly of requirements that the PHMSA study “this” and analyze “that.” One such requirement is to investigate and report on advanced mapping technologies for pipeline networks. The mapping provision specifically cites the “improvement of damage prevention” as the rational for the mapping study the agency would have to undertake. The report PHMSA would have to submit to the Commerce Committee a year after the bill passes would include recommendation on how to incorporate technological improvements and practices that may help prevent accidental excavation damage.
The Senate bill has some language that requires the Government Accountability Office (GAO) to analyze a PHMSA final rule on gas pipeline safety improvements which is among the many 2011 Act mandates long past due. PHMSA has been trying for months to publish a proposed rule, but the White House has apparently declined to give its approval.
However, the PHMSA did publish a proposed rule last fall seemingly adding new requirements in the area of liquid pipeline safety. It would modify the integrity management criteria, both by expanding the list of conditions that require immediate remediation and consolidating the timeframes for remediating all other conditions, and apply those same criteria to pipelines that are not subject to the IM requirements, with an adjusted schedule for performing non-immediate repairs. The proposed rule would improve the quality and frequency of tests used to assess the condition of pipelines and establish more strict repair guidelines for high-risk pipelines.
Pipeline construction
While improvements to pipeline safety – liquid and gas – is being talked about in Washington, pipeline construction approval is not. The Senate may – or may not – take up an energy bill the House passed in December which contains an amendment affecting FERC’s ability to approve projects. The North American Energy Security and Infrastructure Act of 2015 (H.R. 8) passed the House by a vote of 249-174, which means it had a small amount of Democrat support, leaving hope the bill could be passed in some form by the Senate. The bill gives agencies such as the Environmental Protection Agency (EPA), National Park Service and others 90 days after FERC finishes an environmental review to let the FERC know if they have problems with an application. It would provide a minor improvement in the current process.
Even if the House energy bill does not pass Congress, its FERC provision could be theoretically implemented owing to creation of the new Federal Permitting Improvement Council which was created by the highway bill Congress passed in early December. The Council is tasked with developing best practices for efficient federal permit reviews of all types of construction, not just gas and liquid pipelines, and establishing recommended project review timelines for each category of projects. The bill puts into law some initiatives which were announced under President Obama’s infrastructure permit streamlining initiative launched in 2012 under Executive Order 13604. Those include such things as the appointment of agency Chief Environmental Review and Permitting Officers and development of a coordinated project review process which requires designating a federal lead agency and developing a project review schedule for each project.
While FERC permitting of interstate pipelines isn’t likely to speed up much, it may slow down a touch as the agency continues to implement its new policy on environmental reviews, and as environmentalists and landowners push the agency to hew closely to that new policy, announced last November. The order the agency issued followed a federal appeals court decision mandating that the agency go back and redo the environmental assessment for a Tennessee Gas Pipeline Co. project in Pennsylvania shale country. The Appeals Court said that FERC had failed to give “serious consideration” to the cumulative environmental impact of that Tennessee Gas project when combined with three other Tennessee Gas projects which had already been built. The FERC went back, did that cumulative analysis per the court’s deadlines, and again approved the project, which has already been built. But environmental groups are now arguing that FERC must apply the new “cumulative” policy to other Tennessee Gas projects in Pennsylvania shale country. Other proposed construction projects elsewhere may face similar environmental group pressure.
Broadband, WIFIA
While it has not received the same level of congressional attention as pipeline permitting, broadband permitting will become a more visible issue this year. The House Energy and Commerce Committee was expected to pass a bi-partisan bill early in 2016 which focuses primarily but not exclusively on the Department of Interior’s processing of applications for access to rights-of-way for broadband construction projects, both above and below ground. The bill would also establish a national inventory of federal assets on which fiber can be hung, antennas can be attached, or wires can be trenched.
Another provision would require certain federally funded highway projects to include conduit for communications facilities. That provision comes out of another bill called the Broadband Conduit Employment Act, also called the “Dig-Once” bill, which has been introduced and was the subject of a House hearing late last fall. The Government Accountability Office estimates that the efficiencies implementing a “dig-once” policy can save between 25 and 33 percent in construction costs in urban areas and roughly 16 percent in rural areas.
The House broadband bill won’t necessarily provide any federal financial support from highway funds, but the highway bill Congress passed in December contained a provision which will likely spur funding of sewer and drinking water projects. An amendment in that bill removes a ban on the use of tax-exempt bonds in combination with WIFIA loans. WIFIA is the Water Infrastructure Finance and Innovation Act created by Congress in 2014 in an effort to provide funding to local communities and states beyond the grants underlying the Clean Water and Drinking Water State Revolving Funds. WIFIA will provide low-interest federal loans for up to 49 percent of large drinking water, wastewater and water reuse projects. However, the law prohibited tax-exempt bonds from funding the remaining 51 percent, taking away the most cost-effective tool for communities that seek WIFIA loans. The prohibition is now wiped away.
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