Towns face chicken-and-egg dilemma with nuclear project needs

The pathway to federal funds is uncertain for Kemmerer and Diamondville despite major infrastructure needs to host a nuclear power plant project.

KEMMERER-When a 16-inch diameter ductile-iron municipal water pipeline failed this spring, a crew dug in for repairs. They found that the 40-year-old line was so brittle that repressuring it after patching it up created more breaks 100 yards away. The crew chased and patched leaks over several days until they ran out of repair "bands" and had to find a manufacturer to build new ones.

Forty-seven homes were without potable water for days as the community pitched in with water deliveries and made sure people could shower at the recreation center.

"We definitely need upgrades," said Brent McClarnon, superintendent of the Kemmerer-Diamondville Water & Wastewater Joint Powers Board. In addition to failing pipelines, the twin-towns' wastewater treatment plant is 20-plus years beyond its estimated operational life, McClarnon added. That upgrade is estimated at $40 million to $60 million.

"We just keep babying it along," he said.

It's an investment that's long overdue, even if the communities were not preparing to host TerraPower's $4 billion Natrium nuclear power plant construction project, which promises to swell the local population of 2,800. A new commercial solar facility and a major expansion to ExxonMobil's nearby natural gas plant are also in the works.

Beyond water and sewer, community leaders here are also scrambling to figure out where to find money for road repairs and upgrades, as well as the housing, education, law enforcement and healthcare investments needed to serve the construction workers and their families who will temporarily call these communities home.

Despite the hundreds of millions of dollars available for such community needs via the Inflation Reduction Act and Infrastructure Investment and Jobs Act, such federal grants typically require matching funds from local entities. But communities like Kemmerer and Diamondville, where budgets have been backsliding for years, don't have the funds to land those federal dollars. And whether the state is prepared to step in to help remains a question.

At stake is whether Wyoming communities like these will be able to take full advantage of billions of dollars in investments to help the state transition to a cleaner energy economy or whether the state might see some of its communities steamrolled by it.

"You don't want a $40 million wastewater treatment plant, and another $40 million to $50 million to replace [pipelines] get in the way of a $4 billion plant," McClarnon said.

Preparing for impact

There's little doubt about the $4 billion Natrium nuclear power plant funding backed by the federal government, Microsoft billionaire Bill Gates and his fellow investors. There's also little doubt about ExxonMobil's $400 million for its CO2 sequestration project at its nearby natural gas processing plant at LaBarge. Those funds are secure. Scores of companies are already lining up for contracts to manufacture parts and build the energy facilities - on TerraPower's and ExxonMobil's own schedules.

But where the community investment dollars will come from - and when - is uncertain.

Though a big energy project can inject a healthy dose of revenue into surrounding communities and help buoy the local economy for years after, the demand for local services that accompany it often outpaces their availability. Even if the funding were secure today to modernize the Kemmerer and Diamondville wastewater treatment plant, McClarnon said, there's still years of engineering and buildout before it would be complete. The dilemma has long plagued Wyoming energy boom-and-bust towns.

The boomtown challenge inspired the creation of Wyoming's Industrial Siting Council in the 1970s as coal-power plant and coal mine construction work swelled many Wyoming towns. The law includes a provision for community impact assistance payments - essentially a monetary advance from state coffers to local community coffers, based on estimated sales and use taxes generated by a qualifying industrial project.

However, the program is intended to help only with "unmitigated needs," according to Industrial Siting Council Administrator Alan Edwards. For example, if a community lands a federal grant for road upgrades it couldn't double-dip by asking the ISC to help with the same item.

Communities such as Diamondville and Kemmerer may find other financial assistance through various state programs at the Wyoming Business Council, the Office of State Lands and Investments, or impose their own local tax initiatives.

Lincoln County is already considering a "6th penny" tax levied on retail sales and personal property, according to Kemmerer City Administrator Brian Muir. If approved, it could go a long way to pay for infrastructure upgrades such as roads, water and sewer projects.

Large industrial projects such as the Natrium facility also entice private developers to invest in things like housing and retail, Muir said, adding that his office regularly fields calls from developers interested in taking advantage of the economic opportunity.

But the primary source that Kemmerer and Diamondville leaders are looking to is the federal government. The Interagency Working Group on Coal and Power Plant Communities and Economic Revitalization is attempting to match hundreds of millions of dollars available through the Inflation Reduction Act and Infrastructure Investment and Jobs Act with communities in the midst of "energy transition."

"We're working on some of those specific targets and provisions to make sure that the communities have those resources right in their hands," Interagency Working Group Administrator Brian Anderson said.

Chicken-and-egg dilemma

There's a long and growing list of federal funds available via the Department of Housing and Urban Development, the Department of Transportation, Environmental Protection Agency and the Department of Agriculture. Identifying federal grant opportunities to match with multiple local community needs is "mind-boggling," Rusty Bell said. The former Campbell County commissioner now serves as director of the Office of Economic Transformation.

"It's almost impossible to know all of the different [federal grant] opportunities," Bell told WyoFile. "I mean, they're coming out [with new programs] on a weekly basis, and it's my job to track that stuff. You'd have to have a full-time staff dedicated to it, and there's just not that capability in Wyoming and especially in these smaller communities."

The complex nature of the federal granting environment is what drove the creation of the Interagency Working Group, Anderson said. His group also formed a Wyoming Rapid Response Team, understanding that community leaders need direct consultation to match funding opportunities with specific, qualifying needs.

"They have been very responsive and they do understand the problem," Bell, who takes part in the rapid response team's biweekly calls with Wyoming leaders, said. "They want to try to help as much as possible."

Part of the effort to help communities take advantage of federal grant opportunities includes a four-day Wyoming Federal Funding Summit in Sheridan in June. The event is being organized by Gov. Mark Gordon and Wyoming Sens. John Barrasso and Cynthia Lummis.

But another major obstacle - even when a community qualifies for a federal grant - is coming up with matching funds. The matching requirement for such energy community grants is typically a ratio of 80% federal funding with a 20% local match - often more than a small community can afford.

Whether the state's own various community granting programs can step in with matching funds "is a good question," Bell said. There's no pot of state money specifically intended for such purposes.

Communities like Kemmerer and Diamondville don't have $5 million or $10 million readily available to match a major federal grant, said McClarnon of the Kemmerer-Diamondville Water & Wastewater Joint Powers Board. Meantime, the clock is ticking.

"The people involved have all been trying to be as helpful as possible," he said. "But it's going to take at least three years to get all the engineering done and start building a wastewater treatment plant. I mean, these things don't happen overnight."

WyoFile is an independent nonprofit news organization focused on Wyoming people, places and policy.