February 2022 Vol. 77 No. 2
Features
Washington 2022: The Good, the Bad and the Ugly
By Stephen Barlas, Washington D.C. Editor
The Biden administration has a schizophrenic attitude towards underground construction.
On one hand, it proposed – and Congress agreed to – a $1.2-trillion infrastructure bill. Signed by the president on Nov. 15, 2021, it will pump out huge sums for sewers, drinking water, broadband, electric line hardening, highway, and other construction projects over the next five years, starting in 2022.
At the same time, however, the Biden regulatory agencies are in the midst of imposing, or have already imposed, a number of new regulatory constraints on that construction activity.
The Infrastructure Investment and Jobs Act (ILJA) provides, for example, $1 billion a year over and above what Congress will otherwise approve for each of the two state revolving funds (SRFs) the Environmental Protection Agency (EPA) uses to support state and local drinking water and clean water (sewer) projects. The total spending over five years will be $43 billion. Nearly half is available as grants or principal forgiveness loans that remove barriers to investing in essential water infrastructure in underserved communities across rural America and in urban centers.
The EPA is already pumping out the amounts designated to be awarded and presumably spent, in 2022. On Dec. 2, 2021, the EPA announced it will allocate $7.4 billion to states, tribes and territories in California for 2022, including over $600 million to help the state address the high SRF demands that have historically exceeded available funding. As of February 2021, the state received applications requesting over $10 billion in funding from its Clean Water and Drinking Water SRFs.
SRF projects have been the highest-visibility winners in the ILJA spending boom. But they are far from the only ones, even as far as the EPA goes. Consider Superfund sites, which have gone un-remediated and, in many cases, require the digging and replacement of large amounts of soil.
On Dec. 20, for example, the EPA announced a $1-billion investment from the ILJA to initiate cleanup and clear the backlog of 49 previously unfunded Superfund sites and accelerate cleanup at dozens of other sites across the country. Thousands of contaminated sites exist nationally, due to hazardous waste being dumped, left out in the open or otherwise improperly managed. These sites include manufacturing facilities, processing plants, landfills and mining sites.
Broadband
ILJA also included large sums for a cornucopia of broadband projects – new and existing. The biggest chunk of that money goes to a new State Broadband Deployment grant program to the tune of $42.45 billion over five years. Each state will get at least $100 million, with totals dependent on the number of unserved locations in its jurisdiction.
One of the other new programs is called the Middle Mile Infrastructure grant program, funded at $1 billion. Broadband providers and others will compete for grants to construct, improve and acquire middle-mile infrastructure. Successful applicants will need to prioritize connecting this infrastructure to last-mile networks that provide broadband service to households in unserved areas and offer wholesale broadband service at reasonable rates on a carrier-neutral basis. The program will favor proposals that leverage existing rights-of-way, assets and infrastructure, and facilitate the development of interconnection facilities.
In addition to these new programs, IIJA contains appropriations for existing broadband programs, including $2 billion to support tribal broadband connectivity and another $2 billion for loans and grants to construct and improve facilities providing rural broadband service
ILJA also created a new category of tax-exempt municipal bonds for “qualified broadband projects.” Those will be available to cities and towns in rural areas, where at least 50 percent of the residential households do not have access to fixed service. It’s also for projects designed to provide higher speed broadband services in areas where no service is provided, or the current service falls below certain minimum requirements.
Some of the lower-visibility spending in ILJA was heralded by industry, as well. About $73 billion was allocated to the national electric grid resiliency, including $7 billion to build new electric vehicle charging stations, most of which require some subsurface construction; $21 billion to environmental remediation projects, such as improved storm water drainage systems; and $1 billion directed toward replacement of corroding or obsolete municipal gas distribution pipes and hardware.
Regulatory bad news
That ILJA spending is the good news. The bad news is the conflicting news from various federal agencies about plans to impose either new regulatory impediments on underground construction or new safety requirements.
Take the EPA and the Army Corps of Engineers, when it comes to wetland construction. The Corps, on Nov. 4, 2021, a couple weeks before Biden signed IIJA, announced it is pausing all requests for coverage under 12 nationwide permits (NWPs) issued earlier this year.
NWP12 used by the pipeline, telecommunications and electric energy industries is one of the programs 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,” stated 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 the Federal Energy Regulatory Commission (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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