Budget-Strapped Wyoming Towns Race for Federal Funds to Fix Aging Water, Sewer Systems

After a town council shakeup, Micah Foster was suddenly mayor of his tiny eastern Wyoming agricultural town. A wave of resignations last April meant that in addition to getting up at 2 a.m. each day for his regular job — delivering bread to grocery stores for Bimbo Bakeries — Foster found himself running his 400-person town.

In June, as Foster was still adjusting to his new role, he got some good news. Lingle was awarded a $1.4 million American Rescue Plan Act grant to upgrade aging sewage pipelines — a big deal for any small town, sparing it from having to borrow the money because it cannot possibly raise rates high enough to cover such an expense. Lingle even secured the required 10% match from the state, Foster said.

But there was a hitch. To complete the required engineering plan, the town still needed the cooperation of BNSF Railway to cross its tracks on the south side — a slow process and an effort that the town’s small, overworked staff struggled to accomplish.

Wyoming officials, in July, reminded town leaders that the engineering plan must be complete, contracts signed and the project “shovel-ready” by Oct. 1, or the state would be forced to revert, or claw back, the grant to preempt the federal government from taking the money back — from Lingle and the state.

“There’s no way we can get that done,” Foster said, adding, “We’re not Cheyenne,” referring to the capital city’s advantage in having a full professional staff. “We don’t have an engineer on staff to do this and push it. So we were happy [when initially approved for the grant] and then we were sad.

“It’s like dangling a carrot in front of you but it was never really there,” he added.

Many Wyoming towns and entities that have been awarded ARPA grant dollars administered by the state worry they may suffer the same fate. In August, the Office of State Lands and Investments hosted a webinar with municipalities and others, striking a tone of urgency as staff reiterated the Oct. 1 deadline to prove ARPA grant projects are ready for shovels to hit dirt, or lose the money.

“We want to have this opportunity to make long-term investments with these dollars,” Wyoming Grants Management Office Administrator Christine Emminger told attendees. “So create the pressure on your contractors to get these dollars obligated, get them contracted at your local government or your entity level. Because if they are not contracted, and you do not provide that evidence to the Office of the State Lands and Investments (OSLI), we will have to go back and recapture those dollars.”

More than 50 of 159 state-administered ARPA grant recipients for water and sewer projects have yet to file completed compliance documents to avoid recapture, according to state officials.

“OSLI is in regular communication with all the entities that have not yet provided the necessary information, and are making every effort to provide assistance, where possible,” Gov. Mark Gordon’s press secretary Michael Pearlman told WyoFile.

The state is also facing a tight deadline, and is at risk of losing potentially tens of millions of federal dollars that budget-strapped communities desperately need. Wyoming’s mineral royalty revenues, which used to fund such water infrastructure funds, are drying up due to the declining coal industry.

State officials, under the guidance of the governor’s office, will determine in October which ARPA grants to claw back, then rush to “redeploy” those dollars before the federal government’s Dec. 31 deadline, they say.  Though Gordon has indicated his priorities for redeploying ARPA dollars, exactly who and what projects the state might choose before the end of the year is yet to be determined.

“Any funds available after the Oct. 1 deadline may be deployed to local governments to reimburse or reduce local matches for previously approved water infrastructure projects,” according to an Aug. 19 press release from the governor’s office.

Meanwhile, there’s an increasingly urgent need among Wyoming towns to update water and sewer systems.

The neighboring oil boom-and-bust towns of Midwest and Edgerton in the middle of the historic Salt Creek oilfield are relying on ARPA dollars to help cover an estimated $5 million cost to replace 7 miles of potable water pipeline at risk of corrosion due to acidic soils in the oilfield.

In the neighboring towns of Kemmerer and Diamondville (with a combined population of about 3,000) in the state’s southwest corner, town officials have described a chicken-and-egg dilemma to fund long-overdue upgrades necessary to not only meet current demands, but to meet the needs of construction workers arriving for the $4 billion Natrium nuclear energy project already underway. The construction workforce is expected to peak at 1,600 in 2028, although many of the workers will commute from other nearby towns, according to officials. Project developers, backed by both the U.S. Department of Energy and Microsoft billionaire Bill Gates, say it’s up to local government entities in Wyoming or the federal government to make any needed investments.

Human-caused climate change plays a role, too, forcing many towns to consider increasing competition for secure sources of water made more scarce due to warming and drying trends.

Cascading water challenges

Sometimes when you patch a leak, you spring another one down the line. Then another, and another.

That was the challenge for city water crews in Rawlins over Labor Day weekend. They chased and patched six leaks at gushing “weak points” in the aging municipal water system that serves both Rawlins and neighboring Sinclair without major interruptions to water deliveries, according to officials.

It’s a routine that many water crews in Wyoming towns have become well practiced at in recent years: Fixing one leak in a frangible network begets another — a result of depressurizing then re-pressurizing segments of pipe. The problem worsens when you’re dealing with an aging system long overdue for upgrades.

And towns like Rawlins aren’t just patching leaks. They’re looking at systemwide water and sewer upgrades vital to simply meet existing demand, not to mention potential population growth and previously unfathomed pressures of climate change.

In March 2022, Rawlins residents were under a boil order for nearly a week due to a “catastrophic” failure in the 100-plus-year-old wood-stave pipelines that deliver the majority of water to the municipal system from springs 30 miles south of town.

In addition to the expense and task of gradually upgrading the wooden pipelines — nearly 2 miles have been replaced so far — the town also brought back online a long-derelict pre-water treatment plant so it can supplement its water supply by pumping from the North Platte River, as needed. Flow from the springs that provide Rawlins and Sinclair most of their water varies greatly, depending on seasonal snowpack, according to city officials. And those seasonal flows are only becoming more unpredictable.

All told, it will take nearly $60 million for necessary water system upgrades, according to Rawlins officials. They’ve already had some success landing grant dollars from state and federal sources, including ARPA dollars. But to secure those grants, and other funds in the form of loans, water users have been asked to pony up.

The average residential water utility bill has increased by about $30 per month since 2022, officials say.

“Our rates were too low to support the maintenance and the work that we have to do on our lines,” Rawlins City Manager Tom Sarvey said.

“A lot of these grants or loans require that you show community buy-in,” Rawlins spokesperson Mira Miller said. “So you can’t apply for these things if you can’t show that you are charging your customers a fair rate.”

Rawlins — because it’s been in emergency mode for the past two years — is confident about the security of its state-administered ARPA funding so far, according to officials. But many other towns with pressing water system improvement needs aren’t so sure.

Many small towns, even those that clearly qualify for federal grants, struggle to complete engineering and other required planning in the arduous process due to a basic lack of resources and expertise, Wyoming Association of Municipalities Member Services Manager Justin Schilling said.

“Municipal government, it’s a constant rotation of people, so they might not have been aware how urgent [completing grant requirements] was,” Schilling said. “So, we had a bunch of these small communities that got a lifeline tossed to them, but because of engineering delays, the state’s got to pull it back and slide it to shovel-ready projects so that it doesn’t just go back to the feds.”

State officials, in their August webinar with ARPA recipients in the state, fielded about a dozen questions from concerned community leaders.

“I know the process has been cumbersome,” State Loan and Investments Grants and Loans Manager Beth Blackwell told attendees, adding that state officials knew all along that the ARPA requirements were going to be a major challenge for many small, resource-strapped towns to meet. “My staff is working extremely hard, and it’s just, we’ve got to make sure that at the end of the day, the state’s not on the hook to paying these funds back.”

In Lingle, without the ARPA grant, there’s no alternative plan in the works to fund the wastewater system upgrades, Mayor Foster said.