Joseph Krist
Publisher
CARBON PIPELINE VETO
In Iowa, House File 639 would have increased insurance requirements for hazardous liquid pipelines, limited carbon pipeline permits to one 25-year term and changed the definition of a common carrier for pipelines, making it more difficult for the projects to use eminent domain. The bill would have required pipeline operator to carry insurance that covered any loss or injury from accidental, negligent or intentional discharges from the pipeline, and to cover insurance increases that landowners face due to the pipeline.
The bill passed after a four year effort. It received support from both parties in the Legislature. Nonetheless, Governor Kim Renyolds – who is not running for Governor in 2026 – vetoed the bill. She claimed that the bill was too broad and threatened the state’s ethanol industry. She cited the aviation fuel industry as a potential source of demand for biofuels and said that the bill would stifle that industry.
The arguments at the core of the debate have always been over private property rights. Over the years, the arguments have been over whether the pipelines are a public or private carrier. Those opposed to the project say a private company should not be given the right to condemn agricultural land. South Dakota voters recently codified that opinion with a law that specifically bans CO2 pipelines from the right of eminent domain.
Politically, the veto seems to fly in the face of public sentiment. Even the 2025 Iowa Republican party platform opposes the use of eminent domain by the use of a private party or for-profit entity. It was an issue in the 2024 Iowa Republican caucuses. Nevertheless, further attempts to revisit pipeline regulations in Iowa in the near term are unlikely.
A special session of the legislature could be called but two-thirds of the Legislature must sign a petition to request a special session, and to override a veto, two-thirds of the members from each chamber must vote to pass the bill again.
IS THERE A POLICY?
Microsoft Corp. announced some 15 days ago that it has agreed to purchase up to 622,500 tons of low-carbon cementitious materials from Sublime Systems’ first commercial factory in Holyoke, Mass., as well as the full-scale factory it plans to develop in the next six to nine years. Imagine the surprise at Sublime and in the Commonwealth at the news that this very project would not be receiving a promised $87 million from the Department of Energy. This stems from the proposed termination of the DOE Office of Energy Development which we covered last week.
The Holyoke factory is expected to be completed in 2027 and provide jobs for at least 70 people after it opens. The plant will still get some subsidies, including $47 million in federal tax credits that remain in place, $1.05 million in state tax credits, and $351,000 in local property tax breaks. It has significant private funding support – $45 + million in venture capital and investments from two legacy cement producers of $75 million.
Here is where ideology triumphs again. This project has significant public and private support. Some of the funding comes from large concrete producers for whom a project like this could be competition. They are investing as rational business people. Why is that bad policy?
OFF THE RAILS
With the President’s comments this week, the already highly troubled California high speed rail line managed to be cited as a justification for sending troops into the City of Los Angeles. That follows after the US transportation secretary released a compliance review report that said the project was in default of the terms of its federal grant awards. He said, “there’s no viable path to complete the rail project on time or on budget.”
The project has long been a favorite target of criticism from the President. In 2019, Donald Trump cancelled almost $1bn in funding for the project. The Biden administration, however, restored that funding and later allocated another $3.3bn toward the project. The state has supplied 82% of the $14bn already spent on the project. The state has now focused not on the original route designed to connect California’s metropolitan areas, but on a 171-mile stretch in the Central valley, which is expected to be completed by 2033 at a cost of more than $35bn.
Governor Gavin Newsom’s budget proposal before the legislature extends at least $1 billion per year in funding for the next 20 years “providing the necessary resources to complete the project’s initial operating segment.” The Feds insist that this is insufficient to fund the $7 billion gap to complete the Central Valley section.
USDOT gave California until mid-July to respond and then the administration could terminate the grants.
Earlier, the U.S. Department of Transportation and Amtrak released a joint statement on April 14, 2025, announcing that the previously awarded $63.9 million grant under the Corridor Identification and Development program for the Dallas to Houston HSR line was being cancelled, and Amtrak would no longer be a partner on the project. Investors for Texas Central have indicated they will continue to pursue the project as a fully privately funded venture.
Separately, Fort Worth and Arlington have also commissioned an economic impact study to determine the benefits of the proposed HSR line from Dallas to Fort Worth. That study is anticipated to be complete by the end of 2025.
In the meantime, the coalition of rural Utah counties pushing the development of an 88-mile railroad connecting the Uinta Basin oilfields with the national rail network approved a plan to seek $2.4 billion in private activity bonds from the U.S. Department of Transportation to fund the railroad’s construction. That is some $500 million more in bond financing than was requested by the counties in 2023.
The bonds are only expected to cover 70% of the cost of the project, so the bonding request pins total construction around $3.4 billion, or around $3.8 million for every mile of track. When the Surface Transportation Board reviewed the project in 2020, the projected cost of the Uinta Basin Railway was $1.4 billion. The Transportation Department is authorized by Congress to distribute no more than $30 billion in the tax-exempt bonds, an amount that was doubled in the 2021 Infrastructure Investment and Jobs Act.
COAL REALITIES
The effort to force electric utilities to operate coal-fired generation plants in spite of their uneconomic operating profile got a little less support from the data. A recent report was released which reviewed the economics of operating coal plants across the country. It comes as operators in Michigan and Pennsylvania face the reality that operating these plants will only drive up the cost of power to retail customers.
The cost to generate electricity from coal has increased faster than the rate of inflation, the new report found. It was 28% more expensive to generate electricity from coal last year than it was in 2021. The latest report analyzed 181 coal plants that were still in operation at the beginning of this year. One state which stood out was the coal hotbed of West Virginia. Among the 15 where costs increased the most: The Pleasants Power Station in Pleasants County, WV which was supposed to shut down in 2023.
The impact on customers? According to data from the U.S. Energy Information Administration, the cost to generate electricity rose 162% at Pleasants from 2021 to 2024. Appalachian Power and Wheeling Power’s three West Virginia plants saw cost increases of more than 50%. Residential electricity rates in West Virginia have increased 24% since 2021, the report says, higher than the 16% increase in the Consumer Price Index in the same time.
BAY AREA TRANSIT WOES
A recent analysis for the Metropolitan Transportation Commission found that collectively, BART, Muni, AC Transit, Caltrain and Golden Gate Transit face a total deficit of $3.7 billion in the five fiscal years beginning in July 2026.
BART and San Francisco’s Muni system account for $2.9 billion of that total, with both facing staggering shortfalls — $380 million for BART, $320 million for Muni — in fiscal 2026–27.
BART said that it might have to suspend service on two of its five lines, reduce service on those runs to just one or two trains every 60 minutes, shorten daily service hours and shut down some stations as a result. Muni management has made it clear that the agency might need to suspend service on 20 bus lines, cut the frequency of service by 50% and end service at 9 p.m.
A bill, SB 63, recently passed the Senate and will be taken up next by the Assembly Transportation Committee. It would impose additional sales taxes in San Francisco, Alameda and Contra Costa counties to support day-to-day operations and to improve regional transit connections. The MTC has estimated that the sales taxes — a half-cent in Alameda and Contra counties and up to one cent in San Francisco — would raise up to $550 million a year. The bill also allows San Mateo and Santa Clara counties to opt in to the ballot measure, a decision each county would have to make by Aug. 11.
The legislation comes as ridership on BART remains well below prepandemic levels negatively impacting farebox revenues.
FLORIDA TOURISM
Orange County, FL released data for collections of its tourism taxes for the month of April. $30.3 million was collected in April, which was down nearly 10% or $3.3 million from April 2023. It’s the biggest decrease since February 2021. April 2024 collections were lower than March 2024 collections by $10.2 million or 25.3%. It is difficult to make a true “apples to apples” comparison because of the different timing of Easter and Spring breaks between the years.
That’s disappointing because it’s harder to assess the Canadian effect on tourism to Florida. We look at what data we can. According to StatCan, for the month of May 2025, Canadian-resident return trips by air from the U.S. were down 24.2% year over year. The May 2025 decrease is even bigger than the drops in April 2025 (19.9%) and March 2025 (13.5%).
Last month’s 24% decline in air travel from Canada to the U.S. is eclipsed by the decline in Canada-to-U.S. automobile traffic. Canadian-resident return trips by automobile dropped 38.1% in May 2025. It’s the fifth consecutive month of year-over-year declines. It’s also the biggest drop in three months, surpassing the 35.2% decrease in April 2025, and the 31.9% decrease in March 2025.
TEXAS WATER
Given its historic reliance on underground water supplies, Texas is facing many of the same issues impacting water supplies which face its western neighbors. The supply situation has spawned a number of ideas for solutions including multi-state pipelines. The feasibility of those ideas has not proven out so now the state and its fossil fuel industries are generating another idea.
Governor Greg Abbott has signed a law that allows oil and gas companies to treat and sell fracking wastewater — also known as produced water — for reuse. That could include discharging it into rivers and streams or even applying it on farmland for crop irrigation. That has generated immediate pushback from a variety of interest groups. Texas Agriculture Commissioner said the most logical use for treated produced water may not be on crops at all. “I would suggest, probably, a better use of it would be fracking. Let this oil industry reuse it.”
The law shields oil producers, landowners, and treatment facilities from legal liability if treated water causes harm, unless there is gross negligence or criminal behavior.
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