Infrastructure Alert - April 13, 2012

Action on the hill is currently quiet as Congress is in the midst of their spring recess. Prior to skipping town, both houses passed a 90-day extension of federal transportation funding. Even though President Obama had hoped House Republicans would back the Senate’s two-year bill, the House wanted more time to work on their own multi-year bill. This extension is the ninth continuance of the last multi-year transportation bill. Elsewhere in Washington, demand for the TIGER Grant program is vastly outpacing supply and limited infrastructure funding has been made available for states that have had assets destroyed in natural disasters. At the state level, Maryland, Texas, and New York are all looking towards public-private partnerships as a way to launch new infrastructure projects in the midst of constrained budgets.

On the Hill

On March 30, President Obama signed a short-term, 90-day transportation funding extension. Passed quickly before the spring recess by both chambers in order to avoid a funding gap, the measure extends current funding levels until June 30. Although the Senate recently passed a bipartisan two-year transportation bill, the House was unable to pass its own funding legislation and refused to take up the Senate bill. This is the ninth continuing resolution of the last multi-year highway legislation that was originally set to expire in 2009.

Representative Ed Whitfield (R-Ky) has introduced legislation that would adopt a plan for fixing the nation’s locks, dams and waterways. The Waterways are Vital for the Economy, Energy, Efficiency, and Environment (WAVE4) Act would revise the cost-sharing arrangement between the federal government and the barge industry and provide needed maintenance of waterway infrastructure such as locks, dams, and levees. The bill comes at a point of contention between the administration and industry, as the president has put forward a plan to raise fees on shippers to pay for necessary maintenance through raising an additional $1 billion over 10 years.

On March 21 Senators Jeff Merkley (D-Ore.) and Richard Lugar (R-Ind.) introduced the Rural Energy Savings Program Act (S. 2216), which would create a new loan program through the Rural Utilities Services, an area of the Agriculture Department that helps to fund electric infrastructure such as power plants and transmission lines. The legislation would expand the government’s ability to provide loans to rural electric cooperatives to assist with performing energy efficient upgrades.

In two different Capitol Hill hearings on March 28, both Democrats and Republicans in the House Energy and Water Development Appropriations Subcommittee and the Senate Energy and Water Appropriations Subcommittee criticized the administration’s 2013 budget proposals for the Army Corps of Engineers and the Bureau of Reclamation. The president’s budget proposes a 5.4 percent reduction in the Army Corps fiscal year 2013 budget. Both subcommittees felt that this level of funding was inadequate to achieve necessary infrastructure and maintenance investment. 

At the Agencies

On April 2, U.S. Transportation Secretary Ray LaHood announced nearly $62 million in funding for seven states to help cover the costs of repairing roads and bridges that have been damaged by natural disasters or catastrophic events. The states receiving funds are Alabama, Alaska, Kentucky, Maine, South Carolina, Washington, and Wyoming.

Demand for Transportation Investment Generating Economic Recovery (TIGER) Grants continues to greatly outpace supply, with the Department of Transportation receiving application requests for $10.2 billion in funds. According to a statement from the Department of Transportation last week, requests are more than 20 times the $500 million available for the grant program, which funds projects that promote environmental and economic sustainability.

In collaboration with the Department of Energy and other agency participants, on March 30 the Obama administration issued a Memorandum of Understanding with the governors of Illinois, Michigan, Minnesota, New York, and Pennsylvania to announce an effort to streamline the efficient and responsible development of offshore wind resources in the Great Lakes. The memorandum will enhance collaboration between federal and state agencies to expedite the review of proposed projects.

On March 30, the U.S. Department of Transportation’s Maritime Administration awarded a $34.6 million contract for the design and construction of a new facility near Beaumont, Texas to house eight of the largest government ready reserve fleet cargo ships.

In the States

Maryland: Maryland Governor Martin O’Malley has proposed a bill to make it Maryland policy to seek out private partners to build, operate, and maintain public assets. The House of Delegates has already approved the controversial bill, which includes a committee amendment that would expedite the legal process for the defendants of public-private partnership lawsuits. On April 4, the Senate Budget and Taxation committee questioned members of the O’Malley administration about the amendment’s retroactive effect on a lawsuit filed by Baltimore business owners against a $1.5 billion State Center project. 

Texas: The city of Fort Worth is considering entering into a public-private partnership to design, build, and finance a new public safety center that will include facilities for the city’s police and fire departments. Fifteen teams have responded to the request for proposals and Fort Worth will begin the interview process this week. Fort Worth believes that the use of a public-private partnership will result in a shortened delivery time with a fixed date of completion.

New York: Continuing with the public-private partnership theme, New York Governor Andrew Cuomo is seeking legislation that would allow private equity firms to help finance public projects. Such a bill would authorize the state to lease existing infrastructure assets to help pay for the construction, maintenance, and operations of new infrastructure, including the new Tappan Zee Bridge.   While the New York State Senate has already passed legislation that would allow public-private partnerships, the State Assembly has yet to vote on their version of the bill.

On April 3, New York announced the infrastructure projects that will be financed by the New York Works program. The New York Works program, which was part of the same legislation that allowed design-build construction projects in New York, will fix and repair 2,000 miles of roads and 110 bridges using a mix of existing state and new federal money. Specific projects include $145 million in bridge work over the Hudson River near Albany, $85 million for the Peace Bridge toll plaza in Buffalo, $81 million for the Newburgh-Beacon Bridge southern span deck replacement in Orange and Dutchess counties, $32 million for replacing the Patterson Bridge in Corning, and $13 million for the Major Deegan Expressway in the Bronx. Cuomo said that the money spent in connection with the New York Works program will be in addition to money spent on core transportation projects.

California: California Governor Jerry Brown announced a $120 million dollar settlement with NRG Energy Inc. that will fund the construction of a statewide network of charging stations for zero-emission vehicles. The settlement announced today resolves 10-year-old claims against a subsidiary of Dynegy Inc., then a co-owner with NRG of the portfolio of power generating plants currently owned by NRG in California, for costs of long-term power contracts signed in March 2001. One hundred million dollars from the settlement will fund the fast-charging stations and the installation of the plug-in units and electrical upgrades, at no cost to taxpayers. The remaining $20 million will be directed to ratepayer relief. The plan is to build at least 200 public fast-charging stations and 10,000 plug-in units. Further, Governor Brown signed an executive order that sets forth targets for electric vehicles. These targets include ensuring that all major cities in California have adequate electric infrastructure by 2015 and putting 1.5 million zero-emission vehicles on California roads by 2025.  

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