Washington Update

July 24, 2014 Update

PREPARED BY CATHY CONNOR - MANAGER OF GOVERNMENT AFFAIRS

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On Wednesday morning, the Senate Democratic leadership was able to get Unanimous Consent (UC) to bring the House-passed Highway Trust Fund (HTF) bail-out bill, HR 5021, directly to the Senate floor for consideration. HR 5021 includes both a short-term extension of the MAP-21 authorization to May 31, 2015 and a transfer of $10.8B from the General Fund to the HTF. The UC agreement permits debate on four floor amendments. Each amendment and final passage of the bill requires 60 votes. The hope had been that the Senate would immediately begin to debate HR 5021, but instead leadership opted to take up other legislation and consideration of the HTF bill is now likely not occur until Tuesday, July 29. This is three short days before US DOT said it will start to delay and reduce reimbursements to state DOTs for highway expenditures and before the August 1 start of the five-week congressional summer recess.

The first of two amendments that could get the needed 60 votes to pass is an amendment that will be offered by Senators Boxer (D-CA), Carper (D-DE), and Corker (R-TN) to reduce the short-term funding transfer to the HTF from $10.8B to $8B and shorten the MAP-21 authorization extension to December 19, 2014 in an effort to keep the pressure on Congress to act on longer-term funding and reauthorization, potentially in a post-election Lame Duck session. This amendment has the support of most of the transportation stakeholder groups. The second amendment will be offered by Senators Wyden (D-OR) and Hatch (R-UT) to substitute the offsets used to pay for the General Fund transfer that were agreed to by the Senate Finance Committee.

It is unlikely that an amendment on devolving the highway and transit programs to the states or an amendment exempting certain emergency projects from federal environmental permitting regulations will be able to garner the 60 votes needed to pass.

 

If the Senate does not agree to any of the four amendments but does pass the bill, it will go to the President to sign, which he is expected to do. If any of the Senate amendments pass, then the bill goes back to the House for consideration. Given the very short amount of time left before the start of the recess next Friday, it is likely that the House would hold the bill until the last minute, vote to strip out the Senate amendments, and send it back to the Senate where the Senate would be forced to accept the House-passed version or risk a shutdown of the highway and transit programs at the height of the summer construction season.

 

Other News

 

  • In the July 22 Federal Register, FTA published the list of awardees for the FY'13 and FY'14 Passenger Ferry Grant Program.  MAP-21 established a new discretionary Ferry Program as a take-down under the Section 5307 Urbanized Area Formula Grants.  FTA received 31 proposals from 15 states plus Puerto Rico totaling $115.8M in response to the August 21, 2013 Notice of Funding Availability (NOFA).  FTA has awarded $59.9M (the total available funding) to 26 projects in 13 states plus Puerto Rico - CA, FL, GA, IL, MA, MD, ME, NJ, NY, PR, RI, TX, VA and WA.  The largest grants are $6M each going to projects in CA, NJ and NY.  The smallest grant is $196K going to a project in RI.  Here is a link to the Federal Register notice with the list of grants awarded.

 

  • Here is a link to a letter sent to Congress on July 21 by US DOT Secretary Anthony Foxx and 11 former US DOT Secretaries - both Republicans and Democrats.  The letter urges Congress to take action soon to find a long-term solution to the HTF solvency crisis and to increase investment in transportation.

 

  • This morning, the Senate voted by voice vote to confirm the nominations of Victor Mendez to be US DOT Deputy Secretary and Peter Rogoff to be US DOT Undersecretary for Policy. Both have been acting in those roles for a number of months. Mendez was previously FHWA Administrator and Rogoff was FTA Administrator. The White House will now be able to nominate candidates for FHWA and FTA Administrators, but in the meantime, the modal Deputies - Greg Nadeau and Therese McMillan respectively - will continue in their acting roles.

 

July 18, 2014

Yesterday afternoon, the Senate adjourned for the week without taking action on the Highway Trust Fund (HTF) fix legislation. Following passage of the House bill, HR 5021, on Tuesday, Senate Majority Leader Harry Reid (D-NV) announced that he would attempt to get Unanimous Consent (UC) to bring the House-passed HTF bill directly to the Senate floor.  Under the UC agreement, five amendments would be in order:

  • A Wyden (D-OR) amendment replacing the finance title of H.R. 5021 with the different $10.8B package of funding offsets previously approved by the Senate Finance Committee.
  • A Boxer (D-CA) amendment shortening the MAP-21 authorization extension in H.R. 5021 from May 31, 2015 to December 19, 2014. It would not reduce the $10.8B transfer of General Funds to the HTF. Senator Boxer's goal is to keep pressure on Congress to work on a longer-term funding solution, potentially in the post-election Lame Duck session.  A number of transportation stakeholder groups plan to advocate in support of the Boxer amendment. 
  • A Lee (R-UT) amendment adding the text of S. 1702, a bill to devolve the federal highway program to state and local governments, which industry stakeholders plan to oppose.
  • A Toomey (R-PA) amendment exempting the reconstruction of bridges destroyed during declared emergencies from federal environmental permitting if reconstructed within the footprint of the original structure.
  • A Vitter (R-LA) amendment described only as a "partition of funds", but believed to relate to eliminating bike, pedestrian and other enhancement-type programs from HTF funding eligibility.

If any of the amendments pass - each requires 60 votes which is a very high threshold - the amended bill would be sent back to the House for consideration where the House would likely vote to strip out the Senate amendments.  If none of the amendments pass, but the bill does - also requires 60 votes - it would go to the President for signature.  In the recently released Statement of Administration Policy (SAP), the White House expressed its support for the House bill. 

Senator Reid is expected to continue to pursue the UC agreement early next week with the hope of bringing HR 5012 to the Senate floor for a vote next week. Congress adjourns for a five-week August recess two weeks from today on August 1. If they do not act to patch the HTF, US DOT has indicated it will start to delay and reduce highway reimbursements to the states as early as August 1.

If all of this has you confused and depressed, here is a link to a hilarious piece on the HTF by Jon Stewart on Wednesday night's Daily Show entitled "Shabby Road".  

Other News

 

  • Yesterday, during a visit and speech in Delaware, President Obama announced a new infrastructure financing initiative.  The President will be signing a presidential memo creating a "Build America Investment Initiative" designed to bring more private-sector dollars into transportation.  The White House describes it as "a government-wide initiative to increase infrastructure investment and economic growth by engaging with state and local governments and private sector investors to encourage collaboration, expand the market for public-private partnerships (PPPs) and put federal credit programs to greater use."  The initiative includes plans for a "Build America Transportation Investment Center" to be housed at US DOT that will "serve as a one-stop shop for state and local governments, public and private developers and investors." The Administration will also create an interagency working group and hold an infrastructure summit in Washington DC on September 9. Here is a link to information about the Initiative.

The initiative does not include any new funding, however, if the Administration's surface transportation reauthorization proposal, the "GROW AMERICA Act", were to pass Congress, it includes $87B in additional funding for new programs, such as expanded innovative financing options. 

In related news, the House T&I Committee's special P3 panel is expected to produce its final report before the August recess. 

 

  • This week, Rep. Janice Hahn (D-CA), Co-Chair of the Congressional Ports Caucus, introduced the National Freight Network Trust Fund Act of 2014, H.R. 5101. The legislation calls for transferring five percent of all import duties collected by U.S. Customs and Border Protection (calculated to be about $1.9B annually) into a new freight trust fund. Her goal is to use this bill to continue the freight funding discussion as the House Transportation and Infrastructure Committee starts to draft its MAP-21 reauthorization bill.  Hahn's bill:
    • operates as a competitive grant program in which the U.S. Secretary of Transportation makes the selections;
    • requires a federal project cost share of 90 percent;
    • names ports, states, and local and regional transportation bodies as eligible entities;
    • names state freight plan projects and state transportation plan projects as eligible;
    • specifies that funds can be used for connectors, regional freight projects, cross-border projects, on dock rail, and intermodal freight facility projects;
    • requires state freight plans be updated every five years.

 

  • This week, the US DOT National Freight Advisory Committee (NFAC) released its recommendations and convened a series of meetings and briefings on Capitol Hill and at US DOT headquarters. The purpose of the joint meetings with congressional leaders and staff was to urge incorporation of the NFAC recommendations in the MAP-21 reauthorization proposals that are currently being drafted by congressional committees.  NFAC released 81 recommendations upon which the 47-member committee (co-chaired by Mort Downey) reached consensus. The recommendations range from capacity enhancement, best practices and streamlining approaches, to getting projects built. The NFAC recommendations will be considered as US DOT moves forward in developing the National Freight Strategic Plan. Here is a link to the NFAC recommendations.

 

 

July 15, 2014

This afternoon, the House passed HR 5021, the "Highway and Transportation Funding Act of 2014", by an overwhelming vote of 367 to 55. Of the 55 votes in opposition, 45 were Republicans and 10 were Democrats. The bill was debated under a closed rule which did not permit floor amendments to be offered.

The bill would transfer approximately $10.8B from the General Fund into the Highway Trust Fund (HTF) - $8.8B into the Highway Account and $2.0B into the Mass Transit Account - to keep the HTF solvent and provide funding for highway and transit programs at current levels through May 31, 2015. During the floor debate, Rep. Earl Blumenauer (D-OR) offered a motion to recommit the bill to the Ways & Means Committee with instructions to change the date from May 31, 2015 to December 31, 2014 in an effort to force Congress to act sooner rather than later on a long-term funding solution, but the motion did not pass (193 - 227).

The cost to the General Fund would be offset by various "pay-fors", all of which are unrelated to transportation and most of which extend over 10 years. They include "pension smoothing", an extension of custom duties, and a transfer of $1B from the Leaking Underground Storage Tank Trust Fund (LUST).

The bill also includes an extension of the MAP-21 authorization through May 31, 2015 at current funding levels, pro-rated for the eight-month length of the extension - October 1, 2014 to May 31, 2015.

Questions have been raised about whether $10.8B is a sufficient patch to extend HTF solvency through May 31 since the Congressional Budget Office (CBO) recently estimated that $8B was needed to avoid slowdowns in federal reimbursements through December 31 alone. The House-passed bill only provides an additional $2.8B to cover all of January through May 2015, even considering that HTF expenditures typically slow down during the winter months.

In advance of the House vote, the White House issued a Statement of Administration Policy (SAP) in support of the bill, much to the dismay of many industry stakeholders and the Democratic leadership of the Senate EPW Committee who continue to push for a shorter extension, only through December 2014, in order to keep the pressure on Congress to act on a longer-term funding solution, possibly during the post-election Lame Duck session. Here is a link to the SAP.

Both the conservative Heritage Action and the Club for Growth groups issued a "key-vote" alert urging House members to vote against the bill. Heritage said that "an inability to control spending combined with costly regulations that inflate the cost of projects has rendered the HTF model functionally obsolete." The Club said that "this bill uses budget gimmicks and fee increases to bail out a wasteful and inefficient program that shouldn't even exist."

Last week the Senate Finance Committee passed its own version of a short-term HTF funding bill. The Senate bill also transfers $10.8B into the HTF with similar offsets, but it does not currently include an extension of the MAP-21 authorization and it is silent on how long the funding fix would last.

Now that the House has passed its bill, the Senate has several options. It can simply vote to approve the House version of the bill, it can take up the House bill, amend it and send it back to the House for consideration, or it can vote on the bill passed by the Senate Finance Committee. No schedule has been announced yet for Senate action. Congress leaves for its August recess on Friday, August 1.

Parsons Brinckerhoff employees around the country have joined with other industry stakeholders in a grassroots effort to contact their Members of Congress in strong support of both short-term and long-term solutions to the HTF insolvency. 

Other News

  • On July 11, the Federal Railroad Administration (FRA) published a Notice of Funding Availability (NOFA) in the Federal Register for intercity passenger rail grade crossing improvement projects, positive train control implementation projects and Passenger Rail Corridor Investment Plan projects.  Applications for funding are due to FRA by September 15, 2014.  Approximately $58.3M is available in already appropriated funding - $41.8M is available in FY'14 funding from previously unobligated mag lev funding originally authorized in SAFETEA-LU and at least $16.5M is available from unobligated funds previously appropriated for High-Speed Rail Intercity Passenger Rail Program (HSIPR) projects that came in under budget or were not completed.  The notice is also intended to establish a pool of applications that could receive any additional funding that may become available under similar circumstances.  Here is a link to the FR notice.

 

  • The Federal Transit Administration (FTA) has issued the FY'16 Reporting Instructions for New Starts and Small Starts as well as updated New Starts and Small Starts templates (Part 1 and Part 2) and SCC workbooks to be used for the FY'16 reporting cycle. Of note, New Starts and Small Starts project sponsors who are seeking an FTA funding recommendation for FY'16 funds or whose project has had significant changes since last year's evaluation should submit their updated information to FTA by September 10, 2014.

 

  • Yesterday, the White House released a new report from the Council of Economic Advisers and National Economic Council on the long-term economic benefits of transportation investment and why conditions in the infrastructure sector are ripe for innovation, with new technologies and approaches promising significant gains in productivity, efficiency, and resilience.  In addition to the report, the White House released an interactive transportation map detailing the condition of and consequences for each state's roads and bridges as well as the jobs that would be put at risk, if Congress fails to act. Here is a link to the report and a link to the map.
  • The Senate Commerce Committee met in an informal session today and voted to approve the nomination of Victor Mendez to be US DOT Deputy Secretary and Peter Rogoff to be Undersecretary for Policy. The hope is that the full Senate will vote to approve the nominations before the August recess.

 

July 10, 2014

The House Ways & Means Committee and the Senate Finance Committee both acted today to move bills to provide for a short-term bail-out of the Highway Trust Fund (HTF). Congress will only be in session for three more weeks before adjourning for the August recess and before US DOT has indicated it will be forced to implement cash management strategies which will delay highway reimbursements to state DOTs.

The House Ways & Means Committee met this morning to mark up HR 5021, the "Highway and Transportation Funding Act of 2014". The Committee passed the bill by a voice vote. The bill would transfer approximately $10.8B from the General Fund into the Highway Trust Fund - $8.8B into the Highway Account and $2.0B into the Mass Transit Account. This amount would provide enough money to support highway and transit programs at current levels until approximately June 1, 2015. The cost to the General Fund would be offset by various "pay-fors", all of which are unrelated to transportation and most of which extend over 10 years. They include "pension smoothing", an extension of custom duties, and a transfer of $1B from the Leaking Underground Storage Tank Trust Fund (LUST). Next the bill goes to the House floor for a vote - likely sometime next week.

At the mark-up, Rep. Earl Blumenauer (D-OR) offered an amendment to limit the extension of spending authority through December 31, 2014 only in an effort to keep the pressure on Congress to act soon than later on a long-term funding solution, potentially in a post-election Lame Duck session. However, his amendment failed on a party-line vote of 16 to 23. Most transportation stakeholders groups continue to push for Congress to limit the length of a Trust Fund fix. The fear is that if the extension goes into mid-2015, Congress will delay action until close to the deadline. At that point, the political pressures of the 2016 presidential election cycle may make it difficult for Congress to support a gas tax increase or make other hard choices regarding long-term funding.

This afternoon, the Senate Finance Committee acted on a similar proposal to temporarily fix the Trust Fund. They voted by voice vote to send the bill to the Senate floor where it is expected to be debated next week. The Senate offsets are similar to the House offsets with the addition of several relatively obscure changes to IRS tax compliance rules. Before the July 4 recess, Finance Committee Chairman Ron Wyden (D-OR) had been pushing for a short-term patch through the end of 2014. However, over the recess, he came to an agreement with Ranking Republican Orrin Hatch (R-UT) to provide more funding ($10.8B) than his original proposal of $8B, but to leave open the expiration date. During the mark-up, Senator Tom Carper (D-DE) offered an amendment to reduce the funding level in an effort to force Congress to address a long-term fix this year rather than next year, but his amendment was defeated.

Here is a link to a press release from House T&I Committee Chairman Bill Shuster (R-PA) following committee passage of the House Ways and Means bill, a link to the House Ways & Means bill, a link to details about the revised version of the Senate Finance Committee bill (see links at end of press statement), and a link to a letter from FHWA to State DOTs outlining how delays in reimbursements from the Highway Trust Fund will be implemented.

Here is a link to a letter to Congress from the "Big 7" state and local government groups. The letter urges Congress to find a long-term fix for the Highway Trust Fund and to pass a multi-year surface transportation authorization bill. It is signed by the heads of the US Conference of Mayors, National League of Cities, National Governors Association, National Conference of State Legislators, National Association of Counties, Council of State Governments and the International City/County Management Association. The letter is a significant development. Governors and mayors, in particular, have considerable influence with Members of Congress. This is the first time in many years that all seven groups have joined together to push for surface transportation legislation.

 

July 1, 2014 Interim Update

With Congress on recess this week, there is not much new to report on the legislative front about the Highway Trust Fund solvency crisis, however, today US DOT Secretary Anthony Foxx sent letters to state DOTs, transit agencies and US DOT employees on this critical issue.  In addition, President Obama held a rally with transportation stakeholders at the Key Bridge in Washington, DC to urge Congress to act quickly to resolve the Trust Fund crisis and to pass comprehensive transportation legislation, saying that more than 700,000 jobs are at risk. 

Secretary Foxx's letters state that absent congressional action, US DOT will begin implementing cash management procedures for highway programs on August 1 and that the Mass Transit Account is expected to reach a similar point as soon as October.

In a blog post earlier today Secretary Foxx stated, "Under normal circumstances, each state is assigned a percentage based on an annual federal formula.  States then spend money on bridges and highways and they forward their bills to us. We pay the bills as we get them, and subtract the total from the state's allotment. The process is similar for transit agencies. But once the Trust Fund falls below a crucial point, which we expect to happen during the first week of August, we'll have to stop reimbursing states for each bill as they come in, and we'll begin a new process.  Under the new plan, we'll use the same percentage each state is assigned annually to determine how much they'll receive of whatever is left in the fund. States will be paid their percentage not as they send in their bills, but every two weeks as money from the gas tax trickles into the Fund.  We believe this is the most prudent and most equitable approach to managing such an uncertain situation.  But, to be clear, there is no good option here. On average, states will see a 28 percent drop in federal transportation dollars.  Depending on how they manage the funds, each state will feel the effects differently, but everyone will feel the impact sooner or later."

Here is a link to the state DOT letter, a link to the transit agency letter, a link to the US DOT Highway Trust Fund Ticker website, a link to a DOT FAQ on cash management options, and a link to the Foxx's July 1 blog post. 

In his letter to US DOT employees, Secretary Foxx says that hiring and pay should not be affected by the potential Highway Trust Fund insolvency, but all employees are asked to limit or defer administrative expenses.  In addition, some offices will be required to restrict travel - "As you know, the Highway Trust Fund provides funding for more than road, bridge, and transit work across the country.  It also provides funding for many DOT employees who oversee this work, as well as some employees who manage safety-related projects in NHTSA and FMCSA and other DOT components. We do not expect the Highway Trust Fund's impending insolvency to directly impact hiring and pay for DOT employees.  However, I am requiring components within the U.S. Department of Transportation to restrict travel and administrative spending until these issues are resolved.  I am counting on all of you to do your part to restrict spending throughout the Department.  We are "One DOT."  Therefore, we expect everyone to assess spending decisions and act with special vigilance during this time.  This means that everyone in DOT should limit or defer administrative expenditures to the maximum extent possible."

 

June 27, 2014 Update

Congress has adjourned for the July 4th recess. They will return to session on July 8 and remain in session until the summer recess begins on August 1. That will give Congress four weeks to complete a number of critical bills, in particular a "must do" fix for the Highway Trust Fund. The Trust Fund crisis seems to have finally gotten the attention of Congress and the media, but how to solve it, even in the short-term, is proving difficult. 

MAP 21 Reauthorization

There was significant activity this week on the looming Highway Trust Fund (HTF) solvency crisis, but Congress adjourned for the recess before taking any specific legislative action.

On Tuesday, Senator Ron Wyden (D-OR), the chair of the Senate Finance Committee, introduced the "Preserving America's Transit and Highways Act of 2014" - the PATH Act, a bill which would transfer $9B (a subsequent version reduces it to $8B based on updated CBO estimates) from the General Fund to the Highway Trust Fund to ensure its solvency through December 31, 2014. The transferred funds would be "paid for" by a variety of sources. Wyden's initial plan included only one transportation-related "pay for", an increase in the heavy vehicle use tax, but that proposal was later dropped. Wyden had hoped to act on the bill in committee yesterday, but the ranking Republican, Senator Orrin Hatch (R-UT) strongly opposed the plan, primarily because of the offsets. Wyden agreed to pull the bill and work with the Republicans over the July 4 recess to come up with a bi-partisan plan. Senator Barbara Boxer (D-CA), chair of the Senate EPW Committee, held a press conference on Wednesday to indicate her support for Wyden's bill despite her strong desire to avoid short-term fixes in favor of a longer term approach, such as S. 2322, the six-year MAP-21 reauthorization bill she recently moved through her committee.  

Reaching bi-partisan consensus may be difficult since Senate Republicans and Democrats currently do not agree on how to pay for the Trust Fund patch. Wyden is proposing a variety of miscellaneous changes to the tax code dealing with inherited IRAs, denial of passports for delinquent taxpayers, and transfers from the Leaking Underground Storage Tank Trust Fund. Hatch and Senate Republicans seem to be leaning towards spending cuts, potentially such as Amtrak subsidies and bike and ped funds, and rolling back federal regulations, such as Davis Bacon. Of general concern is the fact that most of the proposed offsets use 10 years-worth of cuts/savings to pay for only a few months of additional revenue.

Almost 50 amendments to the PATH Act have been filed to date by various Senators, with almost all being miscellaneous tax provisions having nothing to do with the HTF. However, Senator Tom Carper (D-DE), chair of the EPW subcommittee on Transportation & Infrastructure, has filed an interesting amendment which would restore the purchasing power of the gas tax by retroactively indexing the gas and diesel taxes back to 1993 - the last time the taxes were increased. The increases would be phased in over three years until the gas tax reached 30.3 cents a gallon.

In the House, the previous leadership plan to pay for a Trust Fund fix by reducing Saturday mail service is now dead. House Ways & Means Committee Chairman Dave Camp (R-MI) says he is working on a proposal that he will introduce after the July 4 recess. House Speaker John Boehner (R-OH) has indicated he prefers a longer, nine to twelve month fix through mid-2015. Most transportation industry stakeholders prefer a shorter patch, only through the end of the calendar year, in order to keep the pressure on Congress to act on a long-term fix, such as a gas tax increase, perhaps during a post-election Lame Duck session.

In the meantime, US DOT Secretary Anthony Foxx sent a letter to transit agencies this week outlining DOT's need to curtail federal payments if Congress does not act in time to bail out the Highway Trust Fund. This follows a similar letter sent to state DOTs last weekwhich said that US DOT will soon need to institute cash management strategies designed to keep the highway account solvent, such as delaying reimbursements to states. The highway account is expected to hit its minimum practical balance of $4B in late July or early August with the transit account following suit around early October.

On a related issue, last week Senators Chris Murphy (D-CT) and Bob Corker (R-TN) announced a bi-partisan proposal to increase the gas tax and then index it for inflation. Their plan would increase both the federal gas and diesel tax by 12 cents (phased-in over two years) in order to fund a long-term reauthorization of highway and transit programs. The increase would potentially raise $190B in additional revenue for the Highway Trust Fund over 10 years, which would be enough to maintain current funding levels plus inflation.

The impact of the gas tax increase on families and businesses would be offset with a variety of proposed tax cuts, including permanent extensions of the research and development tax credit, state and local sales tax deduction, and other elements of the "tax extenders" package currently under consideration in Congress.

The Murthy/Corker proposal received very positive reaction from the transportation industry in particular because it is bi-partisan and because Senator Corker is a very well respected senior Senator, close to leadership, from a rural, Red state. In addition, the concept of "offsetting" the impact of a gas tax increase on lower and middle income taxpayers seems to make the proposal more palatable to many Members, particularly Republicans.  

FY'15 Appropriations

The FY'15 appropriations process got off to a quick and unusually early start this spring, including the THUD bill which funds US DOT programs. However, the progress came to a halt last week when the THUD bill was pulled from the Senate floor. The DOT funding bill has passed the House and was being debated on the Senate floor as part of a three-bill "minibus". Democratic concerns over taking votes on potential Republican amendments to roll back recent Obama Administration environmental directives on reducing greenhouse gas emissions from power plants and expanding the scope of Corps of Engineers' jurisdiction over "waters of the US" caused Majority Leader Harry Reid to discontinue debate on the bill.

The delay in Senate consideration of the FY'15 funding bills makes it more likely that Congress may simply pass a short-term Continuing Resolution (CR) extending current level funding until after the November elections.

 

June 17, 2014 Update

There has been a great deal of activity in Congress over the past few weeks on the FY'15 appropriations bills and various infrastructure authorization issues; however, the outlook for the rest of the summer session and into the fall is murky at best. Congress is in session only a limited number of days between now and the August recess which begins on August 1 and extends through September 8. Congress is scheduled to recess for the November mid-term elections on October 3. House Republicans are currently preoccupied with the fallout from House Majority Leader Eric Cantor's loss in his primary race and the subsequent House leadership elections to replace him which will take place this week. Cantor's loss and the upcoming November elections may make Members of Congress even more skittish about taking tough votes on such issues as solving the Highway Trust Fund crisis. 

MAP-21 Reauthorization

With recent estimates showing the highway account of the Highway Trust Fund running out of money as early as mid-August, prior to the September 30 expiration of MAP-21, Congress must act on some sort of funding fix before they adjourn on August 1 for a five-week recess or critical reimbursements to the states may be substantially delayed. That gives them less than six weeks in session to come up with and pass a plan. With that limited amount of time, only a short-term fix is currently being contemplated. A longer-term solution, such as a gas tax increase, moving to a sales tax, repatriation of overseas corporate profits, a per barrel oil fee, etc., will have to wait until after the November elections, possibly in a post-election Lame Duck session or not until next year.

The current House Republican leadership plan is to use 10 years-worth of savings from reducing Saturday mail service to provide approximately six months of revenue into the Trust Fund. The plan is to bring this proposal directly to the House floor before the end of June. Despite the fact that "beggars can't be choosy", the transportation industry and many others are in an uproar over this very controversial proposal. Previous efforts to cut back Saturday mail service have failed and using such savings to pay for anything other than bailing out the postal service, is "a gimmick, not a pay for", according to US DOT Secretary Anthony Foxx.  

As previously reported, in the Senate, the Environment & Public Works Committee has passed the highway title of a MAP-21 reauthorization bill, S. 2322, which is a welcome start, but the bill, which funds highway programs at current levels plus a bump up for inflation for six-years, does not include a funding provision. The Banking Committee, which has jurisdiction over transit programs, and the Commerce Committee, which has jurisdiction over highway safety, rail and freight programs, have yet to schedule any action on their titles of the bill. And more importantly, the Senate Finance Committee, which must approve the funding title, has not determined how to proceed, other than to say that they will first focus on a short-term patch in the range of $10B, which they hope to pass before the July 4 recess.   

FY'15 Appropriations

Congress has moved more quickly than usual to debate and pass many of the FY'15 federal agency funding bills. This is due in part to last year's budget agreement which set overall spending levels for two years - FY'14 and FY'15. However, despite the progress made to date, it is unclear how many of the appropriations bills will pass as stand-alone bills rather than as one or more omnibus bills and whether any or many can be completed before the October 1 start of the new fiscal year.

The THUD (US DOT and HUD) funding bill is off to a fast start and has been passed by the full House and the Senate Appropriations Committee. The Senate will take up the bill on the floor starting today as part of a package of three bills.

Here are links to the House bill, HR 4745, the House Committee Report, H. Report 113-464, the Senate bill, S. 2438 and the Senate Committee Report - S. Report 113-182.

The House bill cuts a number of popular programs including funding for Amtrak, transit Capital Improvement Grants (New Starts/Small Starts/Core Capacity) and TIGER Discretionary Grants (as well as restricting the uses of TIGER grants to highway and freight projects only). As anticipated, the Senate restored or increased funding for those programs, as well as the Airport Improvement Program, in part because they had a larger funding allocation.

Pages 82 and 83 of the Senate Committee Report (see link above) list those FTA New Start, Small Start, and Core Capacity projects identified for specific funding in FY'15. Pages 54 and 55 of the House Committee Report (see link above) describe how the House recommends allocating funding for those types of projects but does not list specific projects. Both bills provide the Administration's recommended level of funding for all projects with existing Full Funding Grant Agreements. Final decisions on which additional Capital Improvement Grant projects are funded will be made when the House and Senate reconcile their bills in conference.

As you can see from the chart below, the Administration's FY'15 budget request includes significant new funding for most programs because it assumes passage of the Administration's surface transportation reauthorization proposal, the GROW AMERICA Act. The GROW AMERICA Act proposes to raise, in addition to the existing gas tax revenue, approximately $37.5B per year for four years, totaling $150B, through various forms of corporate tax reform. If approved by Congress, that amount would be enough to fill the $63B funding gap in the Trust Fund and support $87B over four years in new funding. On the other hand, the House and Senate FY'15 funding bills provide only current funding levels (or less). Any additional funding is contingent on Congress approving a short or long-term revenue fix.

Program

FY'14 Current Funding

FY'15 US DOT Request

FY'15 Full House - Passed 229 to 192

FY'15 Senate Full Comte

Core Highway Program - Obligation Limit

$40.25B

$47.32B

$40.25B

$40.25B

Transit Formula - including Bus and Bus Facilities

$8.6B

$13.91B

$8.6B

$8.6B

Transit Capital Improvement Grants (New Starts/Small Starts/Core Capacity)

$1.94B plus unused prior year funding =$2.13B total

$2.5B

$1.69B

$2.16B

Airport Improvement (AIP) Grants

$3.35B

$2.90BB

$3.35B

$3.48B

TIGER Discretionary Grants

$600M

$1.25B

$100M

$550M

Amtrak Total

$1.39B

$2.45B

$1.19B

$1.39B

High Speed Rail

$0

$0

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Other News

On June 10, President Obama signed into law the Water Resources and Reform Development Act (WRRDA) of 2014. Here is a link to the legislative text of the final version of the bill, a section-by-section summary, and a shorter summary of the bill. The new law authorizes funding for flood control, dredging, navigation and other capital projects carried out by the US Army Corps of Engineers. Controversy has arisen over a provision that creates a new financing program - WIFIA, modeled on the popular TIFIA program. Industry groups had pushed hard for inclusion of WIFIA, but the final language prohibits selected projects from using any other source of tax exempt bond proceeds, making use of WIFIA much less attractive to project developers.

On June 2, FHWA and FTA jointly published two important notices in the Federal Register - an NPRM on Statewide and Metropolitan Transportation Planning and Policy Guidance on Metropolitan Planning Organization (MPO) Representation. Here is a link to the NPRM. The changes proposed to the transportation planning process are mandated by MAP-21 and include a new requirement for state DOTs and MPOs to take a performance-based approach to planning and programming, a new emphasis on nonmetropolitan planning through the creation of regional planning organizations (RTPO), and revisions to the integration of the planning and environmental review process. Comments are due by September 2, 2014. Here is a link to the MPO policy guidance which also implements provisions in MAP-21. It requires that public transit providers be represented in each MPO that serves a TMA, no later than October 1, 2014.

On June 4, the Federal Transit Administration announced the availability of approximately $100M in competitive grant funds through its new "Ladders of Opportunity Initiative." The funds may be used to modernize and expand transit bus (but not rail) service specifically for the purpose of connecting disadvantaged and low-income individuals, veterans, seniors, youths, and others with local workforce training, employment centers, health care, and other vital services. Applications are due to FTA by August 4. Here is a link to additional information.

 

May 15, 2014 Update

This morning, the Senate Environment & Public Works Committee, chaired by Senator Barbara Boxer (D-CA), unanimously approved a six-year (FY'15 to FY'20) reauthorization of the highway title of MAP-21 by a voice vote.  MAP-21 expires on September 30.  The bill, S. 2322, was introduced earlier this week by the bi-partisan "Big 4" leaders of the EPW Committee.  The bill only authorizes those programs, primarily highway, that fall under the jurisdiction of the EPW Committee.  Today's committee action was very short and non-controversial, with no amendments offered, other than a limited Manager's amendment of provisions that had already been agreed upon by the committee leadership.  The most significant change in the Manager's amendment was to lower funding for the popular TIFIA program from $1B a year in the original draft to $750M per year.  The $250M cut was redirected to fund portions of the highway research program.

The bill will not move to the Senate floor for consideration until the other key committees introduce and pass their pieces of the overall bill - the Banking Committee which has jurisdiction over the transit program, the Commerce Committee which has jurisdiction over highway safety, rail and some freight programs, and the all-important Finance Committee which must determine how to pay for the entire bill.  The leaders of the House T&I Committee have indicated they are working on their version of the bill, but there is no date set yet for its introduction. 

S. 2322 is a six-year, $265B bill which authorizes highway and several transportation research programs at current FY'14 funding levels, plus a modest increase for inflation.  With only very limited new funding to spend, the bill generally maintains the current MAP-21 programs, including the MAP-21 core highway program structure and state funding formulas.  The bill does not address the gap between current funding and revenue into the Highway Trust Fund.  That is the responsibility of the Senate Finance Committee which held a hearing on the issue last week, but came to no conclusions.  Over $100B is needed just to maintain the current funding levels over six years. 

Here is a link to the bill text and a link to a bill summary prepared by the EPW Committee.  Here is a link to a summary prepared by ARTBA.

Among other things, the bill:

  • Authorizes $38.4B for the core state highway programs in FY'15, ramping up to $42.6B in FY'20, for an average of $40.5B per year.  This is an inflationary increase (roughly 2%) above current funding levels.
  • Adds $6B (beginning in FY'16) for a new road-focused formula-based freight program to improve the movement of freight on the national highway freight network.  We anticipate that the Commerce Committee will likely draft a more comprehensive, multi-modal freight program and that Senators may offer more expansion freight provisions when the bill comes to the floor.  The bill maintains MAP-21's limited 27,000-mile cap on the Primary (Highway) Freight Network, but allows States and local governments to designate critical rural and urban corridors not otherwise included.   
  • Provides $115M per year to assess highway system financing alternatives.  US DOT will fund research and development to test at least three user-based revenue mechanisms.  The pilot projects are intended to address implementation, interoperability, public acceptance, personal privacy, equity, compliance and administrative costs.
  • Amends and expands a number of provisions in MAP-21 aimed at streamlining environmental and regulatory reviews, including tasking US DOT to create a template for programmatic agreements between agencies for handling environmental reviews across jurisdictions; aligning NEPA reviews with historic preservation requirements; and further integrating planning decisions and documents into the NEPA permitting and processes.
  • Adds $2.4B ($400M per year) for a renewed Projects of Regional and National Significance Program with expanded eligibility for local governments, port authorities, and political divisions of states to apply for the competitive grants.  The project cost threshold has been lowered from $500M to $350M and the funding would come from the Highway Trust Fund. 
  • Creates the American Transportation Awards Program to reward states and MPOs for improving performance and delivering projects ahead of schedule and under budget.  The program is funded at $125M per year. 
  • Does not address the issue of tolling, unlike the US DOT reauthorization proposal, the GROW AMERICA Act, which greatly expands the options for tolling, including on the Interstate. 

 

May 7, 2014 Update

Today, the House THUD Appropriations Subcommittee marked-up and approved the FY'15 US DOT funding bill.  It was a short, non-controversial session with no amendments offered.  The bill was passed by voice vote.  The full House Appropriations Committee is expected to act on the bill during the week of May 19. 

Despite the unusually early action by the House on the THUD bill, there is speculation that the bill may be one of the last appropriations bills to be passed by Congress since there is not enough revenue in the Highway Trust Fund to fully fund highway and transit programs for the entire fiscal year and authorization for the surface transportation programs, through MAP-21, expires prior to the start of FY'15.  There is also the thought that the THUD bill may be used as a legislative vehicle for a short-term transfer of General Funds to keep the Trust Fund solvent for some period of time, likely beyond the November elections. 

Here is a link to a Subcommittee press release and summary of the bill and a link to the bill text as released by the Subcommittee.

Highways - the House bill includes $40.25B for the core highway program obligation limitation - the same as in FY'14.  However, funding is contingent upon enactment of new surface transportation authorization legislation. 

Transit - the bill includes $8.6B for the FTA formula programs, which include the bus and bus facilities program - the same as in FY'14.  However, the discretionary Capital Improvement Grant program (New Starts/Small Starts/Core Capacity) is reduced to $1.69B.  The CIG program is currently funded at $2.13B which includes $1.94B in new FY'14 funding plus additional unused prior year funding.  The bill does not include specific funding for any projects.  The funding level appears to be sufficient to honor the existing Full Funding Grant Agreements and Small Starts Grant Agreements, but leaves little room for new projects.  The bill includes language lowering the maximum federal share for new FFGAs from 60% to 50%. 

Rail - the bill does not include any funding for high-speed rail - consistent with previous House appropriations bills.  There was no funding appropriated for high-speed rail in FY'14.  Funding for Amtrak operations is the same as in FY'14 - $340M, but funding for Amtrak Capital Grants is reduced from $1.05B to $850M.  The Senate is likely to restore much of the funding for Amtrak.  The bill includes several provisions related to RRIF loans, the Surface Transportation Board, and TIFIA credit assistance that would negatively impact the California high-speed rail project. 

Aviation - the House bill includes $3.35B for the construction-related Airport Improvement Program (AIP) - the same as in FY'14.

TIGER- the bill includes $100M for the popular TIGER program which is less than the $600M in current FY'14 funding, but more money than in previous House bills which zeroed out the program.  The general assumption is that the Senate will include more funding for TIGER in its version of the DOT appropriations bill.  The House bill includes language restricting TIGER funds to highway, bridge, and port and freight rail intermodal projects.  Transit, passenger rail, bike and pedestrian paths, and street-scaping projects, as well as planning projects would no longer be eligible. 

The Senate Appropriations Committee has not yet announced the schedule for introducing and acting on its version of the FY'15 DOT funding bill.  

 

 Program

FY 2014 Funding

House Subcomte

FY'15

Core Highway Program - Obligation Limit

$40.25B

$40.25B

Transit Formula Programs (including Bus and Bus Facilities)  

$8.6B

$8.6B

Transit Capital Grants (New Starts/Small Starts/Core Capacity)

$1.94B plus unused prior year funding for a total of $2.13B

$1.69B

Airport Improvement Program (AIP) Grants  

$3.35B

$3.35B

Amtrak - Operating

$340M

$340M

Amtrak - Capital

$1.05B

$850M

TIGER Discretionary Grants

$600M

$100M

Washington DC WMATA

$150M

$150M

High Speed Rail

$0

$0