This week’s Pipeliners Podcast episode features Stuart Saulters, VP of Government Relations at the American Public Gas Association, discussing the Billion Dollar PHMSA Grant Program.

In this episode, you will learn about the Billion Dollar PHMSA Grant Program that was included in the recently enacted Infrastructure Investment and Jobs Act, what it covers, who is eligible, and how you can learn more. Stuart also outlines some of the resources offered by APGA.

PHMSA Grant Program: Show Notes, Links, and Insider Terms

• Stuart Saulters is the Vice President of Government Relations at American Public Gas Association. Connect with Stuart on LinkedIn.
  • American Public Gas Association (APGA) is the only not-for-profit trade organization representing America’s publicly owned natural gas local distribution companies (LDCs) and represents approximately 1,000 communities across the United States that own and operate their retail natural gas distribution entities. APGA represents the interests of public gas before Congress, federal agencies, and other energy-related stakeholders by developing regulatory and legislative policies that further the goals of its members.  In addition, the trade association organizes meetings, seminars, and workshops with a specific goal to improve the reliability, operational efficiency, and regulatory environment in which public gas systems operate.
• API (American Petroleum Institute): Since its formation in 1919 as a standards-setting organization, API has developed more than 700 standards to enhance industry operations. Today, it is the global leader in convening subject matter experts to establish, maintain, and distribute consensus standards for the oil and natural gas industry.
• PHMSA (Pipeline and Hazardous Materials Safety Administration) is responsible for providing pipeline safety oversight through regulatory rule-making, NTSB recommendations, and other important functions to protect people and the environment through the safe transportation of energy and other hazardous materials.
• Department of Energy (Energy.Gov) is a cabinet-level agency of the federal government responsible for ensuring America’s security and prosperity by addressing its energy, environmental, and nuclear challenges through transformative science and technology solutions.
• FERC (Federal Energy Regulatory Commission) regulates, monitors, and investigates electricity, natural gas, hydropower, oil matters, natural gas pipelines, LNG terminals, hydroelectric dams, electric transmission, energy markets, and pricing.
• IIJA (H.R. 3684 Infrastructure Investment and Jobs Act) also called the Bipartisan Infrastructure Law or BIL, includes a program to fund the repair, replacement, and rehabilitation of existing pipeline infrastructure, in addition to certain equipment purchases. Participation in the program is limited to municipally or community-owned utilities.
• Leak Detection is a term that defines efforts to detect the leakages during the exploration and production of crude oil & natural gas, as well as during the transportation of oil & gas through America’s pipeline network, and if they occur, during refining.
• Leak Mitigation is the process an operator takes to reduce and mitigate gas leakages.
• PE Pipe is Polyethylene, a thermoplastic material produced from the polymerization of ethylene. PE plastic pipe is manufactured by extrusion in sizes ranging from ½” to 63″. PE is available in rolled coils of various lengths or in straight lengths up to 40 feet. PE Pipe is the most widely used plastic piping material for the distribution of natural gas. PE has a well-documented inertness to both the external soil environment and to natural gas.
• DIMP (Distribution Integrity Management Program) activities are focused on obtaining and evaluating information related to the distribution system that is critical for a risk-based, proactive integrity management program that involves programmatically remediating risks.
• OPID (Operator Identification Number) is assigned by PHMSA for gas and hazardous liquid pipelines or pipeline facilities, or for liquefied natural gas (LNG) facilities as prescribed and regulated by 49 CFR §191.22(a) or 49 CFR §195.64(a).
• Search for the Bipartisan Infrastructure Law on grants.gov.
• See more Grant Resources on APGA.org.

PHMSA Grant Program: Full Episode Transcript

Russel Treat:  Welcome to the Pipeliners Podcast episode 227, sponsored by the American Petroleum Institute, driving safety, environmental protection, and sustainability across natural gas and oil industry through world-class standards and safety programs. Since its formation as a standard-setting organization in 1919, API has developed more than 700 standards to enhance industry operations worldwide. Find out more about API at api.org.

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Narrator:  The Pipeliners Podcast, where professionals, Bubba geeks, and industry insiders share their knowledge and experience about technology, projects, and pipeline operations. Now your host, Russel Treat.

Russel:  Thanks for listening to the Pipeliners Podcast. I appreciate you taking the time. To show that appreciation, we give away a customized YETI tumbler to one listener every episode. This week, our winner is Robert Chappell with Southeast Gas. Congratulations, Robert. Your YETI is on its way. To learn how you can win this signature prize, stick around till the end of the episode.

This week, Stuart Saulters, who hadn’t been with us in a while is coming back. He’s joining us to talk about the billion dollar PHMSA grant program for utility infrastructure upgrade.

Hey, Stuart, welcome back to the Pipeliners Podcast.

Stuart Saulters:  It’s good to be back.

Russel:  It has been a while. It was 2019 the last time you were on the podcast. That’s been, goodness, almost three years now.

Stuart:  Yeah. A pandemic in between. That makes it feel a little longer even.

Russel:  If you think back, what was the reality we were living in October of 2019, it’s a very different reality than we find ourselves in now. What have you been up to since October of 2019?

Stuart:  I have continued my role at the American Public Gas Association. I actually, when I last spoke to you, I was focused on appliance efficiency rule makings and helping the public gas utilities that are our members, engage with the Department of Energy and the Federal Energy Regulatory Commission.

I’ve got a new role here. I’m the vice president of government relations and help our government relations team, both the regulatory and the legislative side, sift through all the policies and challenges these days that we have to deal with.

Russel:  That will certainly keep you busy, given what the current circumstances in our industry are just with all the changes, and the rising fuel prices, and the impact that’s having on policy. It’s very dynamic. We’ll just say that.

Stuart:  Yes. No, if I was to say, “Oh, I wish they talk about energy more.” I got my wish.

Russel:  Yeah. You wish they’d talk about energy more, but for different reasons, right?

Stuart:  Right, yeah.

Russel:  That’s so true. We get real well-known and highly thought about when the prices get high.

Stuart:  Yeah. No, absolutely.

Russel:  People don’t believe it, but we don’t really want the prices this high.

Stuart:  No, we prefer the stable market, predictable, if you will.

Russel:  Exactly. Listen, I asked you to come on to talk about the one billion, what I’m going to say this in the Austin Powers way, right? The one billion dollar grant program for public utility. Maybe a good way to start is just tell us what is this program, where is it coming from, and what’s its purpose, all that stuff.

Stuart:  Yeah. As much as negative as maybe folks see in the news and hear from politicians about fossil fuels and natural gas in particular, we had some positive news from the policymakers last fall. We were fortunate, and specifically public gas utility, so those utilities that are owned by cities and communities, and in co-ops even. There are a few of those around the country.

We were given a grant program in legislation that was enacted and signed by the President last November. The technical term for the bill was the Infrastructure, Investment and Jobs Act or the IIJA. Some people call it the Bipartisan Infrastructure Law or BIL.

Those are all the terms that it’s called. We were fortunate to get a billion dollars, so $200 million for the next five fiscal years, and specifically the money is to be used for repair, rehabilitation, or replacement of what they call leak, or leak prone pipe is the technical term, cast iron pipe, bare steel, some early vintage plastics.

That’s seems to be the main focus, but there is also a provision in the legislation for buying equipment. I think your listeners probably are well aware that PHMSA the pipeline regulator is this PHMSA in particular is focused on leak detection and leak mitigation.

That seems to be the heart at what this money, this grant program is trying to get at, is helping public utilities decrease their leaks.

Russel:  Yeah. That’s no small thing, particularly for the older, smaller public utilities, being able to have the capital for doing this kind of infrastructure lift is a really big deal. What are the kinds of things…? You’re saying it can be used for leak mitigation. I would assume that’d be things like cast iron pipe replacement, investments in technologies for leak location, just all of those kinds of things.

Stuart:  Yep. No, absolutely. We’ve had several conversations with PHMSA since the grant got enacted. They really want to work with APGAs members, the public utilities to make this program a success. In those conversations, we do get the sense that there is a focus on pipe replacement.

Like you mentioned, Russel, cast iron pipe, getting that out of the ground, replacing it with PE pipe, composite pipes, something that’s definitely more resilient, both from a damage prevention as well as just keeping stuff in the pipe normally perspective.

It is interesting though, and we want to remind them that there is that other caveat in the legislation that you can do stuff other than just replace pipe. No grant’s been awarded, so the applications still have to go in.

One example that I raise with our members is a lot of our members have small systems. When you think about doing your leak check, I can’t think of the technical term. Sorry about that. Walk in your system, feel if there are any leaks. You can do that in a year. You can do that in the amount of time that PHMSA awards.

Some of this kind of new whizz bang technology that’s out there. You may not think is worth investing in. With this grant program, perhaps that’s the opportunity where you take that plunge and look at a system that maybe you can put on top of a car, use a drone, or whatever to detect leaks, as opposed to having your guys walking. Does that make sense?

Russel:  Right. Yeah. No, absolutely. Because I’ve tried to put myself in the mindset of a small public utility and what I know about them, which is not a lot to be honest, is they don’t have a lot of resources and they don’t have a lot of budget.

They make enough money on their rates to maintain their systems. They don’t really make the money they need to do major lifts or major evaluations of their systems. A lot of times they don’t have the expertise.

I know it’s not uncommon in some cities with these very small gas utilities, there’s one guy who’s the gas engineer and he does it all. They can use the help for sure. Knowing that this is even out there, if I were one of those guys, I’d be like, “How do I get the money, man? And what can I spend it on?”

I probably want to say I want to figure out how I can get a survey done. Then based on that survey, target the things I would like to come back with a grant, or to get replaced and improved.

Stuart:  Yeah, no, absolutely. I’m hoping that folks listening to this podcast that may not be aware will come knock on my door and knock on APGA’s door to learn more because we do want to get the word out about this opportunity because it is great.

It’s an awesome opportunity to really invest in your system. Because you’re spot on. Heck, the way these municipals are designed is to be not for profits, so they’re not supposed to make money. I’m not trying to throw anybody under the bus, but they don’t have shareholders.

That part of their businesses is not there. If they make money, it goes back to the system because they have to operate as not for profits. One of the things that you point out and I want to make sure to raise, is you’re absolutely right. They don’t have the resources, specifically the engineering resources, to do some of these complex replacement projects or to think through that.

That’s one of these we want to make sure PHMSA considers is, is as these guys are going through these projects, even doing the grant applications that may cost money. All of that stuff needs to be considered as reimbursable through the grant program.

Or making sure you’re not doing a lot of upfront work, and then lo and behold, PHMSA doesn’t give you the money. I think $200 million, there are a thousand public utilities, so the money’s going to get spent. I think, the way it’s structured, there’s probably enough to go around. Things we’ve considered and monitored.

Russel:  Yeah. A billion dollars doesn’t go as far as it used to.

Stuart:  Very much so.

Russel:  How does somebody apply? If I’m with a public utility, how would I go about applying for this grant?

Stuart:  That’s the billion dollar question right now. The rumor we’ve heard is that mid-May PHMSA will issue their notice of funding opportunity or NOFO. That really kick start the process of people applying. We’ve also heard that it’s going to be a pretty quick application deadlines. In the neighborhood of 45 days for folks to get in their application.

They’ll do that process through the normal channels. I think grants.gov is the website that you’ll have to put all your application through. With that approaching notice a funding opportunity date, and then the quick turnaround, we’re encouraging our members and folks listening for sure, to do as much upfront work as you can.

I encourage folks to look at their DIMP plan initially, or make the first stop your DIMP plan. Is it up to snuff? Can you look at your distribution integrity management plan and find that piece of pipe, or find that segment of pipe that is going to be the most bang for your buck, because that’s what PHMSA wants to see.

They want to see risk reduced by them given you this money. Could that make you look at your DIMP plan and be like, “Man, I got to invest in my DIMP plan to get it up to speed.” Or, “I’ve got to look to some consultant, vendor, or whatever to help me make sure I can paint that picture for PHMSA that if they give me money, my system will reduce its risk.”

Russel:  Again, so you also said this is a five-year program. I would expect that this whole application for grant would be an annual process. If I miss this first date, there’s another one rolling around in a year.

Stuart:  Yup. For the next fiscal year, and then also to point out is operators have 10 years to spend the money? The most you can get as an operator is $125 million. You have 10 years to spend that amount of money.

Russel:  Goodness gracious. I’ll just make this comment. I don’t normally comment on politics because there’s enough people doing that, I guess would be my comment there. This is one of those places where I think the government’s doing something that’s actually a service, it’s actually a good, proper, and reasonable expenditure of federal funds.

Because what they’re doing is augmenting communities’ ability to rehab and modernize infrastructure. It’s one of those rare cases where the money being spent actually matches the name of the bill that justified the spending of the money.

Stuart:  We totally agree. We are excited and ready to spend the money. I think one of the things that we like to point out too, in all of our advocacy is, “Whatever it’s worth, you’re not necessarily prolonging fossil fuels if that’s the argument that people are raising.”

You’re preserving an asset that’s been invested in for years, you’re allowing a workforce that’s trained and knows how to operate an asset that could transport newer fuels, lower carbon fuels in the future. Folks are doing a ton of work to make sure natural gas is clean.

If it’s domestically produced is as clean as possible, no flaring, and no leaks upstream and midstream, then also…

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Stuart:  Oh, go ahead.

Russel:  I was just going to say that one of the biggest things that we can do in the United States to reduce methane emissions in the short term, like this year, next year, is rehab aging gas utility infrastructure.

We’re not getting rid of natural gas going into homes in the next 5 or 10 years. We may start to have other things going to homes, might have some hydrogen, we might be doing some other things. As an overall infrastructure, we’re not going to get that done in the next five years.

What we could do is make a massive change in methane emissions, by rehabbing old cast iron systems that are pretty full of leaks.

Stuart:  Yep. That’s exactly what this bill or what this grant program is aiming to do. Like I said, we were ecstatic that Congress agreed on this. They don’t agree on a lot, but they agreed on this and great way to spend the money.

Russel:  The other thing too, and I don’t know this, but I would expect that you’ll actually see gas consumption go down. You might see rates come down in some of these public utilities. If I start getting rid of leaks, that savings goes back to the customer in a public utility.

By statute, they can’t just make that money. You do something else with it.

Stuart:  Yeah. No, absolutely. It’s not just the tighter system, more efficient appliances, people taking time to invest in insulation for their houses, houses being built better with thicker studs or whatever. To your point, the best way to decrease emissions is investing in the existing system, and helping homeowners improve their houses to be more efficient.

Russel:  What might be helpful is to talk a little bit more in detail about how a DIMP plan might be used as a resource to help an operator or a public utility apply for this grant. Can you break that down maybe in a bit more detail as to what the APGA is recommending as an approach?

Stuart:  Yeah. Let me caveat first. I have an engineering degree, but it’s been a long time since I’ve done engineering. I’m going to speak in anecdotes here and I apologize. We do get a pretty good feeling from PHMSA that they want quantitative numbers in their application.

If you look through the legislation, there are parameters that PHMSA will weigh whenever they consider awarding grants. They’re looking at the motherhood and apple pie stuff, right? How many jobs you’re going to create, economic impact for your community. Are you helping low income rural and urban communities?

They also have a very significant focus on the amount of risk reduced. Most people have a DIMP. It’s, and again I apologize that I’m speaking in generalities. Russel, you may know more about this than me, so feel free to chime in.

Most people have a DIMP, but it’s system-wide. What you’re going to have to think about is, “OK, my system-wide DIMP, can I carve it down into where it’s Smith street? What’s the pipe along Smith Street that is cast iron? If I replace that, how is my risk going to be reduced?”

Then step back a little bit and look at it holistically, “OK. If I replace Smith Street, how’s that look from a system-wide standpoint? It’s really taken your DIMP segment by segment, versus holistic.

Then also too, I think maybe a little outside of your DIMP plan, but one of the things I’ve encouraged people to talk about is because there is a focus on this administration, and. because like you said, it’s appropriate to reduce leaks, can you quantify the amount of emissions reduced by replacing a pipe?

Obviously easier said than done, but is there some kind of like rough number if you look at your lost and unaccounted for gas. I’m not saying that’s possible, but just a thought. If you look at lost and unaccounted for gas, can you say, “OK. If I replace this pipe, then my lost and unaccounted for drops down?” Things like that, that I think it’s important for people to think about.

Russel:  Again, I’m a little out of my depth as well. We’re talking about things we’re not experts in. I think what I would do if I were a small public utility, the first thing I would do is I look at my trunk lines. I’d looked at the larger diameter, higher pressure lines that are feeding gas around the city. Anything that I’m owning and operating.

I’d probably focused there first. I’m thinking about what’s an easy evaluation. The next thing I would do is if I can get to lost and unaccounted for on those systems, that’s a pretty easy evaluation. I can say, “Well, look. I ought to be able to reduce my lost and accounted for from X to Y. That represents this reduction in emissions. Here’s my basis for that analysis.”

That’s pretty easy to get to. I think the next thing I could do is I could do a leak survey, and say that, “We’re finding X number of leaks and we want to mitigate, rather than repairing those leaks, which will cost X. What we don’t do is just replace the line, which will cost Y. Then we get all the leaks, including those leaks we couldn’t sniff.”

That’d be a couple of ways to go after this that’s relatively short, and then I think the next thing…The whole idea of doing a leak survey as a basis for replacement is pretty good approach. I would think most operators are going to know this is the area of my system where I have the most issues, and I ought to be able to find the things I need to do to, to justify an application and get some grant money.

Stuart:  Yep. No, absolutely. One thing I’ve also tried to encourage folks to look to do is to look at your GIS. Is your GIS up to snuff? Because like I said, there is an element of trying to support low income communities, rural communities, urban communities.

Through your GIS, can you help paint that picture for PHMSA as well? That may mean a little bit upfront money, but at the same time, I think it pays off, not only for this grant program, but just from an overall safety.

Russel:  Yeah, no I think that’s a really good point. The point that’s really key here is that in your package to PHMSA, the more specific you can be about, “I’m looking at this piece of pipe or this pipe network, and these are the problems I’m currently having that by replacing them, I’m going to resolve those problems. Here’s the quantification of emission and risk improvement that I’m getting based on this project.”

I would be surprised if most small operators didn’t know that already. They’re familiar enough with their systems. They’re going to know that. The challenge is getting it into a piece of a package of stuff that you can submit to PHMSA. That’s a challenge.

Do you know if there’s anybody out there that’s consultants in this domain, or that are going around and helping these small utilities put these packages together?

Stuart:  Yeah. We’ve got some great associate members with APGA. Associate members are our classification for vendors, consultants, and service providers for our distribution members, the operators. That we’ve got a website on all things in terms of grant program. All those associate members are listed on that page.

I’m happy to share that website with you Russel, and you can get it up on the show notes for this episode. There are a handful that recognize the value in making this program a success. Obviously, we want to protect people, protect the environment. Safer infrastructure does that.

Then government relations, some advocacy, public affairs. For me, it makes our industry look better. If we’re able to invest in our system, have a safer system, have a tighter system, we as an industry look better to the public. Yeah, our associate members want to be a part of that mission.

Russel:  Interesting. What else should we visit about with regards to this in terms of the grant program? Is there any other just, “Hey, here’s some of the things you need to be aware of or pay attention to?”

Stuart:  That’s a good question. I think a couple points I will raise is there actually was some breaking news. It was a little quiet there for a few months after the legislation passed, but there was some breaking news last week. PHMSA sent a letter to all of the public utilities.

The ones that have their OPID and are regulated about PHMSA. They sent a letter to that list. They laid out some things you needed to do if you were planning to apply for the grant. Again, I’ll share a website. Has all that information up there for folks to look at. That’s the first step you need to do.

Obviously, first of many, we talked about a bunch, but that’s one that you definitely need to do is to…They ask you to register in a couple of places, grants.gov, a couple other government websites that help with the funding process. Then in that letter, they also ask for feedback.

Again, you don’t have to provide feedback on the grant program to make sure you get a grant, PHMSA is very clear about that, but they are looking for feedback. If you have some time you want to provide some input to PHMSA where obviously APGA is talking to them regularly. By all means, if they hear it more than once, that will make sense and that’ll help resonate the message.

Yeah, they’re looking for feedback for that. That’s the most nearest thing that folks need to do. Then like a said earlier, that May 15th date is what we’re all…I say May 15th because sometime middle of May, I’ve heard May 15th, but that’s…

[crosstalk]

Russel:  It’s coming up pretty damn quick. As we’re recording this, it’s right around the end of March and it’ll take us a couple of weeks to get this put out. By the time it gets out, I’m sure people are going to be…There’s not going to be a lot of time left. Maybe a month.

One of the things we’ll certainly do is for the listeners that don’t know this, I don’t mention this all the time, but probably in this case, it’s very worthwhile to mention it. At the Pipeline Podcast network website, we have a page for every episode.

Every episode, in addition to having the sound file, also has a full transcript, and it’ll also have show notes, which are links to resources. We’ll make sure to work with Stuart and we’ll get all these things linked up so that you can just go to the Pipeliners Podcast website and there’ll be a handful of links there to take you right to where you need to go to get started on and learn more about this process.

Hopefully that’ll be a help to the industry.

Stuart:  Yeah, we appreciate it. Like I said, we’re trying to get the message out, trying to make sure people know that this opportunity is out there.

One more thing I’ll mention is that we are doing some webinars. APGA staff is doing webinars for folks trying to educate them, let them know. I can let the website where folks can access the recordings of those if by the time this goes out, they have already happened and we’ve actually already had some.

Russel:  Cool, awesome. Look, Hey, Stuart. Good to catch up again. Great to have you back. We’ll try not to wait three years before we have you come again.

Stuart:  That’s right. Yeah. Three years and a pandemic. I’m happy to be back sooner than that.

Russel:  Oh no, we’re not having another one of those. That was no fun. I don’t recommend doing that again.

Stuart:  Absolutely. Thanks Russel, appreciate your time and letting us do this.

Russel:  Yeah, it’s great to have you. I hope you enjoyed this week’s episode of the Pipeliners Podcast and our conversation with Stuart.

Just a reminder before you go, you should register to win our customized Pipeliners Podcast YETI tumbler. Simply visit pipelinepodcastnetwork.com/win and enter yourself in the drawing. If you’d like to support the podcast, please leave us a review on Apple Podcasts, Google Play, or wherever you happen to listen.

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Russel:  If you have ideas, questions, or topics you’d be interested in or if you’d like to be a guest, please let me know either on the contact us page at pipelinepodcastnetwork.com or reach out to me on LinkedIn. Thanks for listening, talk to you next week.

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Transcription by CastingWords