Tomorrow, President Obama will deliver a speech at the Jacksonville Port Authority. The speech is expected to involve remarks on the nation’s infrastructure and how the Administration will advance infrastructure investment. This is his second speech at a port this year. In March, President Obama announced his Partnership to Rebuild America four-year infrastructure plan at the Port of Miami.
On July 12, US Airways shareholders voted to approve the merger with American Airlines by a margin of 99.8 percent to 0.2 percent. The $12.8 billion merger still has several more hurdles to clear. The European Commission has announced that it will decide by August 6 whether it has approved the deal, after US Airways and American Airlines offered several concessions. The Department of Justice has been examining the deal for more than six months, and many state attorney generals have joined that investigation as well.
ON THE HILL
The House Transportation and Infrastructure Subcommittee on Highways and Transit held a hearing yesterday titled “How the Financial Status of the Highway Trust Fund Impacts Surface Transportation Programs.” Polly Trottenberg, the Under Secretary for Policy in the Department of Transportation, and Kim Cawlye, the Unit Chief in the Natural and Physical Resources Cost Estimates Unit of the Congressional Budget Office (CBO), testified. CBO has projected that the Highway Trust Fund annual deficit will near $100 billion by 2022.
Secretary Trottenberg discussed the modern history of the federal gasoline tax, noting that it had not been raised in 20 years, and the most recent two increases were done through bipartisan legislation. She added that, while the Obama Administration is proud of its increased CAFE standards, the accomplishment will reduce contributions to the Highway Trust Fund that need to be addressed. Chairman Thomas Petri (R-Wis.) asked what the Administration’s position was on funding the shortfall in the trust fund, to which Secretary Trottenberg replied that the Administration advocated that funds available from commitment drawdowns in Iraq and Afghanistan should be used to fund transportation programs at their current levels and to fund a new rail title as well. Rep. Nick Rahall (D-W.Va.), Ranking Member of the full committee, added that using the “peace dividend” would still be subject to a partisan congressional appropriation, and that it should be viewed as a “band-aid approach.” Rep. Donna Edwards (D-Md.) suggested raising the federal gasoline tax and indexing it to the consumer price index, but she was the only one to advocate a tax hike. Rep. Janice Hahn (D-Calif.) noted that because she has driven an electric automobile for the past two years, she personally has not paid federal gasoline taxes, and the law must adapt so that highway users such as herself will pay into the Highway Trust Fund somehow. While discussing alternative methods to fund the Highway Trust Fund, Secretary Trottenberg referenced the Oregon VMT (vehicle miles travelled) tax pilot program, and stated that while she was not advocating for its widespread adoption, she believed that innovative methods such as that should be considered.
Yesterday, the Senate voted to limit debate and proceed on S. 1243, the appropriations bill for the Department Transportation and the Department of Housing and Urban Development. The cloture vote was 73-26. Several Republican senators, including Appropriations Ranking Member Richard Shelby (R-Ala.), objected to the bill basing its budget on pre-sequestration amounts that exceed spending caps established by the Budget Control Act of 2011. The White House has threatened to veto the House bill, H.R. 2610, which is currently being considered in the House.
While the Senate bill is now expected to pass, the $54 billion Senate bill and the $44.1 billion House versions are so different that neither may pass before the new fiscal year. Notable differences include discrepancies between Amtrak and Transportation Investment Generating Economic Recovery (TIGER) grant funding. The Senate bill funds Amtrak at $1.45 billion, $137 million more than the FY2013 enacted level, whereas the House bill funds Amtrak at $950 million. The Senate bill funds TIGER grants at $550 million, whereas the House bill eliminates the program. Both the House and Senate bills fund the air traffic control contract towers through September. Both bills fully fund the Federal Transit Administration and federal highway program at the full Moving Ahead for Progress in the 21st Century (MAP-21) authorized levels. Both bills fund Airport Improvement Program grants at $3.35 billion.
On Monday, the House passed H.R. 2353, a bill that would permit the continued operation of trucks on the U.S. Route 41 corridor in Wisconsin when it becomes an interstate without regard to federal weight limitation requirements. The bill, introduced by Transportation and Infrastructure Subcommittee on Highways and Transit Chairman Thomas Petri (R-Wis.), would have no impact on the federal budget, according to the CBO. The exemption allows trucks that use the route to continue to do so without being subject to the stricter federal weight limit that federal interstate carry.
This morning, the Senate Committee on Environment and Public Works will hold a hearing titled “Oversight Hearing on the Implementation of MAP-21’s TIFIA Program Enhancements.” Notably, newly sworn-in Secretary of Transportation Anthony Foxx will testify for his first time representing the department as secretary. In the second panel, witnesses will include James Bass, Chief Financial Officer of the Texas Department of Transportation; Geoffrey Yarema, partner at Nossaman, LLP; Arthur T. Leahy, Chief Executive Officer of Granite Construction Incorporated; and D.J. Gribbin, Managing Director of Macquarie Capital. Testimony and video will be available here.
Rep. Bill Shuster (R-Pa.), Chairman of the House Committee on Transportation and Infrastructure, will face opposition in the Pennsylvania 9th District Republican primary. Shuster, who has won seven elections since his father, former Rep. Bud Shuster, resigned in 2001, has not faced a primary opponent since 2004. Art Halvorson, a businessman and Coast Guard veteran, and Travis Schooley, a farmer, are both challenging Rep. Shuster in the primary.
Rep. Peter DeFazio (D-Ore.) is the new Ranking Member of the House Committee on Natural Resources, after Rep. Raúl Grijalva (D-Ariz.) did not request a vote. In order to accept the new position, Rep. DeFazio resigned his chairmanship of the House Transportation and Infrastructure Subcommittee on Highways and Transit. Del. Eleanor Holmes Norton (D-D.C.) and Rep. Corrine Brown (D-Fla.) are both vying for the post. Del. Holmes Norton is the more senior of the two.
Rep. Matt Cartwright (D-Pa.) and six House Democrats have introduced H.R. 2730, the Safe and Fair Environment on Highways Achieved through Underwriting Levels (SAFE HAUL) Act. The bill would increase the truck insurance minimum from $750,000 to $4,422,000, and would allow the minimum to be adjusted annually to account for inflation relating to medical care. The minimum has not been changed in 30 years.
Senate Commerce Chairman Jay Rockefeller (D-W.Va.) has requested the Government Accountability Office to examine the impact of shale oil and gas development on existing transportation channels, including pipelines, rail, and highways, and potential new infrastructure.
Sen. Chuck Schumer (D-N.Y.) has requested that the Transportation Research Board and the National Transportation Safety Board investigate the impacts of extreme heat on the national rail infrastructure.
Sen. Ed Markey (D-Mass.) has joined the Senate Committee on Commerce, Science and Transportation.
H.R. 1848, a bill that would allow the FAA to create new certification process for small-plane manufacturers, passed the House by a vote of 411-0 on July 16. Mike Pompeo (R-Kan.) introduced the bill, and the bill enjoys a wide bipartisan support in the Senate as well. The bill aims to remedy the current certification process, which is considered to be both expensive and convoluted, through new FAA regulations by 2015.
AT THE AGENCIES
Janet Napolitano resigned as Secretary of Homeland Security on July 12 to become the President of the University of California system. President Obama has not yet nominated a successor.
The Department of Transportation Inspector General has initiated an audit of the Federal Highway Administration’s major projects. The audit will assess select projects to determine if FHWA oversight ensures that states prepare initial finance plans and project management plans that comply with FHWA guidance and update plans to address the actions needed to mitigate cost, schedule, and funding risk.
On July 15, the FAA released its final rule on second-in-command airline transport pilots. These pilots are now required to be at least 23 years of age and have accumulated 1,500 hours of total flight time as a pilot. The rule became effective July 15 and compliance is required by August 1, 2013.
IN THE STATES
Massachusetts: On Friday, July 19, Governor Deval Patrick vetoed the Massachusetts transportation financing bill. The governor had threatened to veto the transportation financing bill if the legislature did not include a gas tax provision that he requested, and despite his insistence, both the Senate and the House of Representatives passed the bill without it. Governor Patrick vetoed the bill, instructing that a provision be added to provide for an automatic increase in gasoline taxes if some tolls are removed on the western portion of the Massachusetts Turnpike, as is scheduled in 2017. The Senate, however, passed the bill by a 29-9 vote, a margin above the two-thirds required to overturn the governor’s vote, and the law is expected to pass over the governor’s veto by the end of the week. The bill will increase taxes by $500 million over the next 10 years to finance stalled transportation projects.Regardless of the governor’s requested provision, the bill increases the gasoline tax by 3¢ per gallon to 24¢ per gallon, would increase the cigarette tax by $1, and would impose the state sales tax on computer and software services.
North Carolina: Leadership in the North Carolina House and Senate have reached an agreement on a $20.6 billion budget deal. On the infrastructure front, the budget would overhaul the state Highway Trust Fund. The budget would use the Strategic Mobility Formula, which will consolidate funding streams and is designed to accelerate infrastructure projects at the state, regional and local level.
Virginia: The American Road and Transportation Builders Association (ARTBA) and the National Conference of State Legislatures (NCSL) have filed an amicus curiae brief in the Virginia public-private partnership (P3) case before the Supreme Court of Virginia. ARTBA and NCSL disagree with the lower court ruling that Virginia’s P3 law is unconstitutional because it allowed the Virginia Department of Transportation to set toll rates. ARTBA and NCSL also have expressed their concern that the ruling may discourage P3 laws and agreements in other states.
Last week, President Obama released his FY2014 budget, outlining several proposals to fund new infrastructure programs. The budget proposes $40 billion for “Fix it First” projects to repair existing infrastructure, as well as $10 billion for new infrastructure spending. The proposal also includes a call for the creation of a National Infrastructure Bank, a policy he alluded to in his State of the Union address this year. The National Infrastructure Bank would utilize both loans and loan guarantees and would operate as “an independent, wholly-owned Government entity outside of political influence.” The budget additionally proposes an America Fast Forward (AFF) Bonds program to attract private capital for infrastructure investment, such as public pension funds or foreign investor funds. The budget includes $40 billion over five years to fund development of passenger rail programs, particularly high-speed rail, and $1 billion for the implementation of the Next Generation Air Transportation System (NextGen). Absent from the budget proposal, however, were methods to fund the aforementioned infrastructure programs.
The International Longshoremen’s Association (ILA) has approved a new six-year contract that would cover about 15,000 dockworkers on the Atlantic and Gulf coasts. The negotiations between the ILA and the U.S. Maritime Alliance (USMX) have been ongoing for over a year and have nearly resulted twice in strikes, first in December 2012, then again in February 2013. The contract includes a $1 hourly wage increase in 2014, 2016 and 2017, a new payment advancement scale, protection of ILA members displaced by new technology, container royalties split between the ILA and USMX exceeding $225 million, and employer contributions of $1 per hour to local pensions and benefits.
ON THE HILL
Members of Congress wrote Secretary of Transportation Ray LaHood and the Federal Aviation Administration (FAA) last week expressing their opposition to federal funding cuts to 149 air traffic control towers on June 15. Most notable of the signatories of the bipartisan letter were Sen. Jay Rockefeller (D-W.V.), Chairman of the Senate Commerce Committee, Sen. John Thune (R-S.D.), Ranking Member of the Senate Commerce Committee, Rep. Bill Shuster (R-Pa.), Chairman of the House Transportation and Infrastructure Committee, and Rep. Nick Rahall (D-W.V.), Ranking Member of the House Transportation and Infrastructure Committee.
Several bills have been introduced to continue funding some or all of the towers. In the House, Rep. Tom Cotton (R-Ark.) introduced H.R. 1432, the Air Traffic Control Tower Funding Restoration Act, which would prevent the cuts and provide the $50 million in funding through cutting the FAA’s research and facilities funding. In the Senate, Sens. Richard Blumenthal (D-Conn.) and Jerry Moran (R-Kan.) introduced S. 687 to prohibit the closing of air traffic control towers. The bipartisan S. 687 currently has 29 cosponsors.
The Senate voted 87-11 to confirm Sally Jewell to head the Department of Interior. Prior to her confirmation, Jewell was the CEO of REI. The confirmation comes after Sen. Lisa Murkowski (R-Alaska) and the Department of Interior negotiated a deal to revisit the Department of Interior’s decision to block construction of a road that would provide health care access to Aleutian villagers through the Izembek National Wildlife Refuge. Sen. Murkowski had been considering placing a hold on the nomination prior to this agreement.
The Congressional Budget Office has scored S.601, the Water Resources Development Act (WRDA) of 2013. Whereas the WRDA of 2007 was scored at $23.2 billion over 10 years, S.601 has been scored as costing $12.5 billion over the next 10 years (while requiring $135 million in offsets). The WRDA reauthorization bill lacks earmarks, which contributed to the higher WRDA of 2007 score. To avoid earmarking, S.601 grants authority to the U.S. Army Corps of Engineers to determine which projects will receive authorized funds.
Rep. Rosa DeLauro (D-Conn.) released a statement announcing her intention to reintroduce her bill, the National Infrastructure Development Bank Act, this Congress. In the 112th Congress, H.R. 402 had 78 co-sponsors, all of whom were Democrats.
AT THE AGENCIES
The FAA has postponed its air traffic control tower funding cuts for two months. The FAA has announced that it will stop funding all of the 149 air traffic control towers on its list on June 15, achieving about $600 million in budget cuts to satisfy budget sequestration. Originally, the FAA intended to cut funding at three staggered dates: 24 towers would have lost funding April 7, another 46 towers would have lost funding April 21, and the remaining 79 towers would have lost funding on May 5. The delays, however, are still prompting criticism from several lawmakers and industry groups. The American Association of Airport Executives and several individual airports have filed suit against the FAA in an effort to prevent some of the funding cuts. The loss of funding does not necessarily mean that all of these towers will close; some state governments are considering funding some towers in lieu of federal funding.
Amtrak ridership has increased by one percent in the first half of FY2013. Amtrak has seen ridership increases in 26 of its 45 routes. In FY2012, Amtrak recorded a record ridership high of 31.2 million passengers. March also set a record for the most ridership in Amtrak’s history. 2.8 million riders used Amtrak in March, a 1.9 percent increase from March 2012.
Boeing completed its sole test flight for the FAA’s re-rectification process of the 787 Dreamliner. The flight was reportedly “uneventful” and was to demonstrate that the newly redesigned lithium ion battery system is safe and not prone to the battery fire issues that grounded the plane in January. The FAA has not indicated what the review process timeline will be moving forward. Regardless, British Airways has committed to purchasing 18 new Dreamliners.
On March 29, the Department of Transportation released a total of $1.4 billion in Superstorm Sandy aid to the Metropolitan Transportation Authority, PATH, New Jersey Transit, and the New York City Department of Transportation. By statute, $2 billion had to be allocated to reimburse transit agencies by the April 1 deadline. Prior to these transfers, $554 billion had been allocated to transit agencies in New York, New Jersey, Pennsylvania and Connecticut in early March.
Customs and Border Protection has delayed its implementation of furloughs and overtime cuts in response to increased funding over sequestration levels in the continuing resolution.
BEFORE THE COURTS
The Supreme Court denied certiorari to Spirit Airlines v. U.S. Department of Transportation, an airline challenge to a 2012 Department of Transportation rule requiring airlines to display the total price of a ticket most prominently including in the largest type size. The plaintiffs claimed that rule is a violation of speech rights as it prevents airlines from suitably demonstrating the impact of taxes and fees on the final price of a flight, as well as unfair because other industries are not required to demonstrate prices and taxes in such a manner.
The merger of American Airlines and US Airways has cleared federal bankruptcy court. The merger still requires approval from the Department of Justice and US Airways shareholders. The merger will give shareholders of the AMR Corporation 3.5 percent of the new airline.
IN THE STATES
After the failed Port of Virginia privatization, Fitch Ratings believes that future “port privatizations will be similarly challenging.”
California: Los Angeles has completed a 30-year, $400 million software synchronization of all of its 4,500 traffic signals. The effort to boost commuter and vehicle efficiency will reportedly raise the average automobile speed to 17.3 miles per hour from 15 miles per hour and significantly reduce average driving times.
Maryland: The Maryland Senate has joined the House of Delegates in passing the transportation bill, on a vote of 27-20. The bill would phase in the higher gasoline taxes over several years, with the first increase of 4¢ occurring in July. The bill indexes the 23.5¢ per gallon tax on gasoline to inflation, allowing automatic increases each year. The bill also relies on a federal action to allow states to collect out-of-state sales tax on Internet retailers, as does an early passed Virginia transportation bill. If Congress does not pass legislation empowering states to levy this tax by 2015, then Maryland’s sales tax on gasoline will automatically increase an additional 2 percent.
Massachusetts: State lawmakers are considering various tax increases to fund transportation. The $500 million package would raise the gasoline tax by 3¢, increase taxes on tobacco products, including an additional $1 tax per pack of cigarettes, and modify the tax code with respect to computer software design. The increased revenue is projected to create more than $300 million to invest in infrastructure by 2018. Governor Deval Patrick has an alternative package that would increase the income tax to 6.25 percent and lower the sales tax to 4.5 percent to fund $1.9 billion in education and transportation projects.
Michigan: Governor Rick Snyder signed SB 233, granting $21 million to dredge 58 harbors. He also signed SB 252, which provides low-interest loans to dredge private marinas.
New Hampshire: The New Hampshire House of Representatives has given its final approval of a 12¢ gasoline tax increase on a 206-158 vote. The bill originally passed in the House on March 6 and touted a 15¢ tax. As the bill involves state revenue, it had to return to the House Ways and Means Committee again, and be voted on a second time to pass. The bill advances to the Republican-controlled Senate, where it faces little chance of advancing to the Governor.
New York: The New York Metropolitan Transportation Authority is constructing a two-mile long steel seawall to prevent future flooding. The $38 million project will stretch along the A subway line to the Rockaway peninsula, and be seven feet taller than the rails.
Virginia: Governor Bob McDonnell’s proposed changes to the General Assembly-passed transportation bill have been approved by both houses of the General Assembly. Among Gov. McDonnell’s changes is a reduction to the proposed hybrid vehicle annual fee, reducing the proposed fee from $100 to $64. In the original General Assembly-passed package, the motor vehicle sales tax was increased from 3 percent to 4.4 percent, but Gov. McDonnell’s submitted changes proposed an increase from 3 percent to 4.15 percent. The plan is expected to raise almost $6 billion over five years.
The 112th Congress adjourned before voting on any Hurricane Sandy relief bill. Although the Senate passed a $60.4 billion relief bill, the House did not hold a vote on it nor the Republican-backed alternative $27 billion bill. After the 113th Congress has convened, the speaker has announced that the House will vote Friday, January 4, on a $9.7 billion bill to increase the borrowing authority of the National Flood Insurance Program and will follow up with a January 15 vote on a separate bill containing $50 billion in relief.
The International Longshoremen’s Association and the U.S. Maritime Alliance have agreed to a new collective bargaining agreement in principle to avoid strikes in 14 ports along the East and Gulf coasts. The deal allows for a 30-day extension of negotiations in finalizing the collective bargaining agreement. The principal disagreement, a royalty fee the Maritime Alliance has paid dockworkers since the 1960s to offset wage decreases, has been settled in the agreement but not disclosed.
On the Hill
The Senate passed its Sandy relief bill on December 28 by a vote of 62-32, with all Senate Democrats voting in the affirmative. The bill would provide an additional $11.5 billion for the Federal Emergency Management Agency’s Disaster Relief Fund, $10.8 billion for the Federal Transit Administration, and a $9.7 billion increase in borrowing authority for the National Flood Insurance Program. Prior to the vote, the Senate rejected several amendments that would limit spending from Senator Tom Coburn (R-Okla.) and Senator McCain (R-Ariz.). Prior to the vote, McCain also withdrew his proposed amendment that would restrict the $336 million to Amtrak for Sandy-related damage. Senator Rand Paul’s (R-Ky.) amendment declaring the bill regular spending instead of emergency spending, and therefore requiring equal offsetting cuts, was also rejected.
Congress passed its deal to prevent the immediate effects of the fiscal cliff, with several provisions affecting infrastructure and transportation policy. Notably, the deal extends the railroad maintenance tax credit equal to 50 percent of gross expenditures for maintaining railroad tracks that are owned or leased by Class II or Class III railroads through 2013. Over the next 10 years, the extension of this railroad tax credit will cost $331 million. The deal also restores the commuter tax break for 2012 (retroactively) and 2013, bringing the transit tax break in parity with the parking provision. Commuters can now use $240 monthly for pretax transit expenses. The commuter transit provision is estimated to cost $220 million over 10 years.
Three major infrastructure authorizations will require reauthorization in the 113th Congress: the Moving Ahead for Progress in the 21st Century Act (MAP-21), the Passenger Rail Investment and Improvement Act of 2008 (Amtrak reauthorization), and the Water Resources Development Act of 2007 (WRDA). MAP-21 will expire at the end of 2014 and members will need to consider new surface transportation legislation prior to the end of the 113th Congress. Of the greatest importance, the Highway Trust Fund is dwindling due to decreased revenue for gas taxes and, short of major reform, Congress will need to make changes to the federal excise tax on gasoline to meet this funding need. The Amtrak reauthorization will likely feature a debate on the success of Amtrak and the possibility of privatization, as former chairman of the Transportation and Infrastructure Committee John Mica (R-Fla.) pressed for during his tenure.
Michael Huerta has been confirmed to a five-year term as the administrator of the Federal Aviation Administration (FAA). Huerta has been serving as acting administrator since he was nominated in late 2011, but a hold on the nomination delayed his confirmation until January 1, 2013.
The remaining vacancies of the House Transportation and Infrastructure Committee have been filled by 10 Republicans and 10 Democrats. Reps. Steve Daines (R-Mont.), Roger Williams (R-Texas), Markwayne Mullin (R-Okla.), Scott Perry (R-Pa.), Rodney Davis (R-Ill.), Thomas Massie (R-Ky.), Mark Meadows (R-N.C.), Trey Radel (R-Fla.), Tom Rice (R-S.C.), and Daniel Webster (R-Fla.) will join the Committee from the Republican Party. From the Democrat Party, Reps. André Carson (D-Ind.), John Garamendi (D-Calif.), Rick Nolan (D-Minn.), Dina Titus (D-Nev.), Ann Kirkpatrick (D-Ariz.), Sean Patrick Maloney (D-N.Y.), Cheri Bustos (D-Ill.), Lois Frankel (D-Fla.), Elizabeth Esty (D-Conn.), and Janice Hahn (D-Calif.) have joined the 60-member committee as well. Subcommittee chairs have not yet been announced.
At the Agencies
The Army Corps of Engineers has diverted additional water to the Mississippi River as it attempts to stave off a potential shutdown of the crucial shipping waterway due to low water levels. The corps has estimated the water level is falling faster than expected, and some tugboats may not be able to operate within the next week. The corps has released water from Carlyle Lake to delay a shutdown, but a commercial river shutdown may occur as soon as January 15. Several senators and representatives have called on the corps to divert more water to ameliorate the increasingly shallow waters, but the corps has cited a lack of jurisdictional authority in its reluctance to do so.
In the States
Pennsylvania: Governor Tom Corbett is expected to release his administration’s transportation plan early this year. The highly anticipated plan will use the state’s Transportation Funding Advisory Commission report as a blueprint, and will address highways, bridges, mass transit and rail. The report revealed that of the 25,000 bridges the Commonwealth of Pennsylvania maintains, about 20 percent are classified as structurally deficient. More than 8,000 miles of state-maintained road has been rated in poor condition. The report recommends generating $2.5 billion in annual revenue to fund transportation improvements.
New York: According to a report released by Comptroller Thomas DiNapoli, state and local governments face an $89 billion shortfall for infrastructure funding over the next 20 years. The report cites the recession, high construction and energy costs, and lowered property tax collections as contributing factors. The report recommends spending of $250 billion on water, sewer and highway systems at the state, county, city and authority level over the next 20 years, but collectively New York is expected to only raise and spend $161 billion.
The New York Thruway Authority approved a $3.1 billion design to replace the Tappan Zee Bridge. The project was sped up by Governor Andrew Cuomo, who encouraged the state legislature to pass a law allowing the bridge to be built as its designed. The Tappan Zee Contractors, a consortium of The American Bridge Company, which built the existing Tappan Zee Bridge in the 1950s, Fluor Enterprise, and others, were awarded the contract over two competing contractors. The project will also require $500 to $800 million in environmental mitigation, management and financial costs.
Washington: The state of Washington has passed a law that will require electric car owners to pay a $100 yearly fee. The intention of the fee is to supplement revenue lost from electric car owners not paying the state 37.5¢ gasoline tax, the largest source of tax revenue for Washington’s infrastructure spending. Critics of the fee, however, contend that the fee is barely large enough to cover administrational overhead in collecting the fee, and that the tax is unfair as electric vehicle owners already pay taxes on the electricity used to fuel their vehicles. The fee will apply to about 1,600 vehicles in the state, and does not apply to hybrid vehicles or those incapable of travelling speeds of over 35 miles per hour.
What’s currently being done?
The Cybersecurity Act of 2012, that was defeated in the Senate in August, provides strengthened protection against cyber attacks in the federal government and in private, critical infrastructure systems. The bill would allow the government and private enterprises the ability to share information about threats more easily. In the absence of legislation, the Obama administration has indicated that it is prepared to move forward with an Executive Order that addresses key issues.
Is the legislation dead?
Not exactly. While the Cybersecurity Act of 2012, which is a bipartisan bill supported by a majority of Senators, did not survive a procedural vote in August, Senate Majority Leader Harry Reid (D-NV) has stated that the bill will be revisited after the November elections. Secretary of Defense Leon Panetta and General David Alexander, head of U.S. Cyber Command have both urged congressional action on cybersecurity after the election.
What’s the difference between the potential Executive Order and legislation?
The Executive Order would set policy under current law in regards to cybersecurity standards on critical infrastructure. The Executive Order cannot provide liability protection. A cybersecurity bill that passed the House in April and the Senate Cybersecurity Act both provided liability protection for private entities that shared information regarding cyber threats with the Administration. Without the incentive of liability protection, an Executive Order cannot be as effective as legislation.
On July 6, President Obama signed the transportation reauthorization bill, culminating a three-year stretch of bipartisan back and forth over highway and transit spending. Last week, the US Conference of Mayors released its annual U.S. Metro Economies Report which indicated American cities will become more congested, straining their transportation systems. At the state level, Georgia is scheduled to hold a referendum for a proposed one-cent transportation sales tax to raise revenues for future infrastructure projects.
On the Hill
On July 6, President Obama signed the bipartisan transportation bill. The law provides $100 billion in transportation spending for the next 27 months and also extends the federal flood insurance program for five years.
Significantly, the law as enacted is aimed at greatly enhancing the scope of the Transportation Infrastructure Finance and Innovation Act (TIFIA). TIFIA funding will be increased from $122 million to $1 billion, with the ability to lend up to $10 billion. The law expanded the program’s eligibility by eliminating a series of onerous requirements for project selection, including a substantial environmental requirement. The Department of Transportation Credit Council will now approve projects based on creditworthiness and the loans will be disbursed on a rolling basis. The transportation bill also creates the National Public Transportation Safety Program. The program will allow the Department of Transportation to put in place new federal safety requirements for mass transit.
In other federal news, last week, the Congressional Budget Office released a report titled “Infrastructure Banks and Surface Transportation.” The CBO stated that an infrastructure bank could enhance investment in surface transportation projects by providing new federal subsidies in the form of loans to a limited number of large projects. The CBO also considered such large projects would have significant national or regional economic benefits. Proposals for infrastructure banks that had requirements for internal mechanisms to generate revenue, such as tolls, were considered potentially too restrictive for many potential applicants.
The GAO released a report last week indicating that while the federal government is making substantial progress in implementing the OMB’s cloud computing initiative, they are having problems implementing cloud services. The OMB policy, called “Cloud First,” requires that agencies utilize cloud services whenever a secure, reliable, and cost-effective cloud solution exists. Agencies have found implementation of cloud solutions to be difficult due to federal security requirements and certifying vendors.
On July 18, the House Natural Resources Committee approved HR 6082, a bill that would replace the Obama administration’s current offshore drilling plan with a more expansive strategy. The legislation would create a timeline for the lease of 28 specific areas over the course of the next five years, whereas the Obama plan only provides for 15 areas. According to a Congressional Research Service report released earlier in the week, 15 offshore leases over the course of five years would be the lowest allotment offered since 1980.
On July 19, the U.S. Conference of Mayors released the next installment of its ongoing series of U.S. Metro Economies Reports, providing 2011 economic output numbers for the nation's 363 metro areas in addition to the 2012 economic outlook. The report, prepared by IHS Global Insights, indicates that metropolitan areas will absorb the vast majority of the nation’s population growth over the next 30 years, taxing the nation’s infrastructure. The total urban population will increase by about a third, with some larger cities, such as Dallas, Atlanta, Tampa, and Denver, on track to grow by more than 50 percent. Population growth, in addition to rising congestion costs and exports, will place greater strain on transportation systems.
At the Agencies
The Department of Defense and the Department of Transportation announced the approval of $180 million from the Office of Economic Adjustment (OEA) for the Federal Highway Administration (FHWA) to widen U.S. Route 1 through Fort Belvoir. Acting through an interagency agreement, the Federal Highway Administration Eastern Federal Lands Highway Division will complete the project in coordination with Fairfax County, the Virginia Department of Transportation, and the Command at Fort Belvoir. The project will begin once all environmental requirements have been met.
The Federal Railroad Administration (FRA) has issued a Notice of Intent that it will prepare an Environmental Impact Statement to evaluate potential passenger rail improvements on the Northeast Corridor (NEC) between Washington, D.C., and Boston. The purpose of the NEC Future program is to define current and future markets for improved rail service and capacity on the NEC, to develop a plan to incrementally meet those needs, and to create a regional planning framework to engage stakeholders throughout the region in the development of the program.
On July 9,Amtrak released a new plan for a $151 billion redevelopment of the entire Northeast Corridor. The plan is highlighted by high-speed rail travel, including 37-minute trips between Philadelphia and New York. Amtrak would improve existing tracks, signals, bridges, and power lines and also build a separate high-speed corridor between Washington and Boston to accommodate trains traveling at 220 m.p.h. From a cost benefit perspective, Amtrak claims that the project would create 40,000 construction jobs a year for a 25-year period and 22,000 permanent jobs. The high-speed segment between New York and Washington would be completed by about 2030, and the route between New York and Boston by 2040.
As the nation's pipeline industry and merchant electric power sector remain at odds over how to address the need to expand the infrastructure to ensure enough future delivery capacity, the Federal Energy Regulatory Commission (FERC) is preparing to hold five regional conferences on natural gas-electric power coordination issues next month.
In the States
New York: On July 13, New York Governor Andrew Cuomo announced that $9 million in flood mitigation and control grants will be awarded through the state’s NY Works program. The money will be given to 23 counties to help restore and rehabilitate waterways that were severely impacted by Hurricane Irene and Tropical Storm Lee in 2011. In addition, New York State is providing $7 million in funding so counties can meet their 25 percent non-federal match requirements to be eligible for federally funded stream restoration projects through the USDA Natural Resources Conservation Service.
New Jersey: A report by the Tri-State Transportation Campaign, “Tracking State Transportation Dollars” was released on July 17 and noted that New Jersey infrastructure spending is increasingly being shifted from transit projects to highway expansion. While New Jersey still allots 31 percent of its transportation budget to transit spending – compared with the national average of 20 percent – that figure is down almost 20 percent from the 50 percent spent on transit in 2004. Transportation advocates would like to see more money spent on maintaining existing roads and bridges, 50 percent of which are deemed deficient.
In more ranking news, CNBC’s “America’s Top States for Business Survey” dropped New Jersey from 30th in 2011 to 41st in 2012. The state was ranked worse than last year in six categories measured by CNBC, did better in only three categories. The biggest drop was in the “infrastructure and transportation” category, where New Jersey fell from 23rd to 41st. That category measures “the vitality of each state’s transportation system by the value of goods shipped by air, land and water” as well as “the availability of air travel in each state, and the quality of the roads.” Unsurprisingly, Lt. Gov. Kim Guadango has already questioned the validity of CNBC’s ranking system. For those wondering,CNBC declared that the top states overall for business were Texas, Utah, Virginia, North Carolina, and North Dakota, and the top five states in the “infrastructure and transportation category” were Texas, Minnesota, Georgia, Tennessee, and Nevada.
Georgia: On July 31,Georgia voters will decide whether to adopt a regional one-cent transportation sales tax that could potential raise billions of dollars to help pay for infrastructure projects across the state for the next decade. Interestingly, the plan will be voted on in 12 regions throughout the state, each holding a separate regional election. The vote is all-or-nothing in each of the multi-county regions. If a majority in a region votes in favor of the referendum, it passes there — even if other regions defeat it. The metro Atlanta region has the most to gain by passing the referendum, as it stands to gain more than $8.4 billion between 2013 and 2022 to put towards infrastructure projects.
On Wednesday, July 25 at 10 a.m. the House Transportation and Infrastructure Committee’s Subcommittee on Water Resources and Environment will hold a hearing on “Integrated Planning and Permitting: An Opportunity for EPA to Provide Communities with Flexibility to Make Smart Investments in Water Quality.”
Last night the members of the Congressional Transportation Conference Committee agreed on a bicameral long term transportation reauthorization bill. House GOP leaders now have until Saturday at midnight to approve the bill prior to the expiration of the current financing measure. The two year bill, which would provide $8.4 billion in funding each year, is similar in structure to a bipartisan bill passed by the Senate earlier this year. Industry leaders have been particularly vocal in encouraging the passage of a multi-year bill as another short-term extension would leave many projects around the country in jeopardy. Additionally, the transportation legislation will include a one-year freeze for government subsidized student loan rates. Off the hill, the TSA allows an additional airport to hire private screeners and states continue to look for alternative solutions to meet infrastructure needs in a difficult economic climate.
On the Hill
Early this morning the conference committee released a new long term surface transportation bill. The bill (H.R. 4348) represents the first agreement on long-term transportation funding legislation since 2005. Transportation Committee Chairman John Mica (R-Fla.) said that this “tentative agreement establishes federal highway, transit and highway safety policy and keeps programs at current funding levels through the end of fiscal year 2014. Unlike the last transportation bill, which contained over 6,300 earmarks, this bill doesn’t include any earmarks. This bill also does not increase taxes.” Funding has been extended nine times over an almost four-year period since the expiration of the last federal highway bill. The agreement came together when Republicans agreed to drop controversial provisions from the legislation, such as approval for the Keystone XL pipeline and the blocking of government regulation of coal ash. In return, Democrats gave up on $1.4 billion for conservation and agreed to allow states more leeway in how they use money that was once mandated for landscaping, bike improvements and pedestrian walkways.
Capping off a particularly productive week for Congress, Senator Kyl (R-Ariz.) has said legislators agreed to put a one-year freeze on government subsidized student loan rates. It is believed the transportation and student loan bills may combined and presented and voted on as a package. If an agreement was not reached, federal Stafford student loans would have doubled on July 1.
Elsewhere, the House is continuing work on the fiscal 2013 Transportation, Housing and Urban Development and Related Agencies appropriations bill. A vote on the final bill is expected by the end of the week. It is possible that certain levels in the appropriations bill will change based on the authorization bill being worked out by the conference committee.
According to Greg DiLoreto, the president-elect of the American Society of Civil Engineers (ASCE), U.S. infrastructure projects will probably keep their near-failing grade with the ASCE issues its next report on U.S. public facilities in 2013. The current grade for our country’s infrastructure from the ASCE is a “D”.
At the Agencies
On June 22, Transportation Secretary LaHood announced that 47 transportation projects in 34 states and D.C. will receive a total of almost $500 million from the U.S. Department of Transportation’s TIGER (Transportation Investment Generating Economic Recovery) 2012 program. Applications for this most recent round of grants totaled $10.2 billion, far exceeding the $500 million set aside for the program.
On June 21 the Senate Commerce Committee questioned acting Federal Aviation Administration (FAA) Administrator, Michael Huerta, who was nominated to the position by President Obama. The hearing included many questions regarding FAA’s delayed safety rules and overwhelming number of whistleblower complaints. Unlike other high-level U.S. political appointees, who serve only as long as the president who nominated them is in office, the FAA job has a five-year term.
The Transportation Security Administration (TSA) has approved private airport security screeners for Orlando’s Sanford International Airport. A program allowing for airports to hire private security screeners was included in the $59 billion FAA Authorization bill approved earlier this year.
Earlier this month, U.S. Transportation Secretary Ray LaHood awarded $37.5 million to the King County Department of Transportation to build new bus rapid transit lines as part of greater-Seattle’s new six corridor rapid transit system. The new funding comes from the Federal Transit Administration’s Bus and Bus Facilities Grant Program.
In the States
Florida: On June 14 Florida Governor Rick Scott held a ceremonial bill signing at the Port of Miami for a package of transportation bills totaling more than $450 million and enabling the bonding of another $450 million. Florida's 14 seaports handled nearly $149 billion worth of goods in 2011 – 50.4 percent of which came from South and Central American – and it is expected that this number will rise as a result of the widening of the Panama Canal. $60 million is slated to go directly toward improving the ports while the majority of the funding is to improve Florida’s roadways.
New Jersey: Assembly Democrats are attempting to block Governor Chris Christie’s plan to borrow $260 million for transportation funding. Although Christie’s original transportation plan called for a reduction in borrowing, due to budget shortfalls – partly caused by a recently instituted tax cut – New Jersey is planning on borrowing even more in 2013 than it did in 2012. Assembly Democrats believe it is fiscally irresponsible to borrow money to pay for a tax cut the state might not be able to afford. Even if the bill is ultimately passed, it would put more pressure on the state’s Transportation Trust Fund, which has not been able to cover yearly payments on its existing debt.
New Jersey/Pennsylvania: New Jersey Transit has approved a rapid-transit bus route to connect heavily traveled southern New Jersey roads with downtown Philadelphia. The $46 million project would let buses travel on highway shoulder lanes and the median for part of the trip. The route could be in service as soon as 2020.
New York: Governor Andrew Cuomo announced that $4.4 million has been awarded to 10 companies, municipalities, and other entities to enable more than 325 new electric-vehicle (EV) charging stations to be installed across New York State. New York State's electric-vehicle charging stations are supported by a joint effort by the New York State Energy Research and Development Authority's Electric Vehicle Supply Equipment Demonstration Program and the U.S. Department of Energy. New York's transportation sector has considerable potential for energy efficiency. Transportation makes up about three-fourths of the state's oil consumption, and nearly 40 percent of the state's greenhouse gas emissions.
Last week New York City’s Department of Transportation announced a plan to open bidding for the management of 80,800 parking spots across all five boroughs. While some critics are already drawing parallels to the disastrous sale of Chicago’s parking meters in 2008, New York City intends to retain the power to set rates and enforce penalties. Further differentiating the plan from the Chicago plan is that NYC’s objective is not to structure an upfront payment. In Chicago, it is estimated that motorists may pay a Morgan Stanley-led partnership at least $11.6 billion to park at city meters over the next 75 years, 10 times what former Mayor Richard Daley got when he leased the system in 2008. NYCDOT’s request for qualifications is open through July 31.
Texas: Texas State Highway 130, which is currently under construction and will run between San Antonio and Austin, may become the first U.S. road to post a speed limit of 85-mph. Texas passed a law last year allowing speed limits of up to 85 mph on newly constructed highways deemed safe enough for such high speeds. Texas and Utah are the only states that even allow speed limits of 80-mph.
Virginia: Governor Bob McDonnell has recently recommitted to a series of public-private partnership projects, including the Hampton Roads Bridge-Tunnel, Interstate 64 on the Peninsula, Interstate 95, and possibly the Port of Virginia. McDonnell’s decision to rely so heavily on the private sector stems from frustration with the state’s legislature. The governor of Virginia has the power to circumvent the legislature pursuant to the Public-Private Transportation Act of 1995, which allows private entities to enter into agreements to construct, improve, maintain and operate transportation facilities. All in all, there are eight projects that are designated with "candidate" status for public-private partnerships and an additional 14 in the "conceptual" phase. Virginia is currently seeking public comment on these P3 projects.
Washington, D.C., continues to arm wrestle over transportation funding legislation, as the Senate and House work to move competing legislation. Last week saw support for the House bill crumble away, even as leaders tried to work out contentious provisions in their bill. Meanwhile, the Senate has compromised on a series of amendments and says they will finish work on their bipartisan bill by the end of this week. Despite the glacial pace on the Hill, there has been much activity and many funding announcements at the agencies and on the state level. Very noteworthy was Chicago’s announcement that it will create an Infrastructure Trust, which will leverage private investment to retrofit buildings in the city for greater energy efficiency.
On The Hill
This past week the Senate moved closer to passing a bipartisan transportation bill. The bill, combining work from the Senate Banking, Commerce, Finance and Environment and Public Works committees, would reauthorize transportation funding for two years at $109 billion.
After weeks of negotiations Senate Majority Leader Reid (D-Nev.) and Senate Minority Leader McConnell (R-Ky.) agreed to consider 30 amendments, 18 of which actually relate to provisions in the 1500 page bill. At the end of last week, senators had voted on nine of the amendments, passing four and rejecting five. Included in the rejected provisions were proposals to expedite the approval of the Keystone XL pipeline. The Senate resumes voting on the remaining amendments this week with a vote on final passage expected Tuesday.
On the other hand, the past two weeks saw the House of Representatives moving farther, and farther away from passing the House Republican Leaders’ original 5 year, $260 billion transportation reauthorization. In hopes of passing the bill, Rep. Boehner (R-Ohio) had restored dedicated transit funding but kept out many other provisions considered to be controversial, such as new revenues through expansion of domestic drilling and spending levels that many conservatives in his own party considered too high.
After failing to gather support for the original proposed five year legislation, Republican leaders also attempted to work with an 18 month bill, but it quickly became clear that a shorter, extension type bill would not pass the House either. As passage of the Senate bill looks likely, many believe that the House’s only option is to take up the two year Senate bill or draft its own legislation that is very similar.
In other Hill news, last Thursday the House Appropriations Subcommittee on Transportation held a hearing on the Department of Transportation’s Fiscal Year 2013, $74 billion budget request. Secretary Ray LaHood testified on funding needs for surface transportation and aviation. Subcommittee Chairman Rep. Tom Latham (R-Iowa) highlighted what he described as problems with the proposed budget. Latham said the administration's proposal would not be able to pass the House of Representatives.
At The Agencies
U.S. Department of Transportation Secretary LaHood announced that 12 cities and states will share $16.9 million to relocate, replace, and improve segments of railroad track under the Federal Railroad Administration (FRA)’s Rail Line Relocation and Improvement competitive grant program. The FRA received more than $67 million in state and local government requests for these funds, which will be used to enhance safety, livability, and economic development in American communities.
U.S. Department of Agriculture Secretary Tom Vilsack announced that rural electrical cooperative utilities in eight states will receive a share of almost $250 million in funding to install smart grid technologies and make improvements in generation and transmission facilities.
U.S. Department of Transportation Secretary LaHood announced the availability of $500 million in funding for transportation projects in the fourth round of the TIGER (Transportation Investment Generating Economic Recovery) Discretionary Grant program. TIGER grants are awarded to transportation projects that have a significant national or regional impact.
Last month Secretary LaHood also announced that the overwhelming demand for TIFIA (Transportation Infrastructure Finance and Innovation Act) program loans has greatly exceeded the dollars available. The Department of Transportation received 26 TIFIA letters of interest exceeding $13 billion. The high number of applicants for TIFIA credit assistance in response to a Notice of Funding Availability (NOFA) for 2012 follows the trend in recent years of overwhelming demand for the program. Requests in 2010 were more than $12 billion and more than $14 billion in 2011. In light of the increased demand, the president's FY 2013 budget proposes to increase the program's funding level to $500 million which will leverage into approximately $5 billion in TIFIA loans.
In The States
New York: New York Governor Andrew Cuomo has begun holding public hearings on the soon to be constructed new Tappan Zee Bridge. Some of the major issues thus far are mass transit and bus lanes, noise due to construction, and the aesthetics of the new bridge.
Illinois: Chicago Mayor Rahm Emanuel announced the creation of the Chicago Infrastructure Trust, which will leverage private investment for retrofits to help achieve greater energy efficiency. The private financing will be provided by five organizations: Citibank, Citi Infrastructure Investors, Macquarie Infrastructure and Real Assets Inc., J.P. Morgan Asset Management Infrastructure Investment Group and Ullico. The trust’s first project, Retrofit Chicago, will retrofit municipal buildings to reduce energy consumption by 20 percent. The mayor and his administration maintain that the program will create an estimated 2,000 jobs.
Kansas: U.S. Transportation Secretary Ray LaHood announced a $54.6 million loan to Kansas City Southern Railway Company for the purchase of 30 new General Electric locomotives. The loan is from the Federal Railroad Administration’s Railroad Rehabilitation and Improvement Financing (RRIF) Program. This program provides direct loans for eligible borrowers to acquire, improve, or rehabilitate rail and rail-related intermodal equipment and facilities. There is currently up to an aggregate of $35 billion available in the RRIF program for these types of projects.
Massachusetts: Massachusetts Governor Deval Patrick filed a $1.5 billion bond bill authorizing the state’s first infrastructure bank. The bank will leverage private investments to help fund transportation infrastructure. The bill includes $1 billion for statewide road and bridge improvements and $311 million for improvements to rail and transit infrastructure. Although the bill only provides funding for one year, Patrick intends to introduce a five-year bond bill to help finance long term transportation infrastructure projects.
Indiana/Kentucky: Indiana Governor Mitch Daniels and Kentucky Governor Steve Beshear have signed an agreement to finance the construction of the $2.6 billion Ohio River Bridges Project signed an agreement to finance the construction of the $2.6 billion Ohio River Bridges Project. The two states will evenly divide the financing and the construction of the project. Kentucky will use a design-build approach to construct a new Interstate 65 bridge and will finance the project through toll-revenue bonds. Indiana will construct an East End bridge between Utica, Indiana and Prospect, Kentucky and will use a private-sector team for financing, construction, and long-term maintenance.
Events This Week
On Thursday, March 15 at 9:00 a.m. the Senate Appropriations Committee will hold a hearing on the 2013 budget for the Department of Transportation.
On Wednesday, March 21 at 10:00 a.m. the House of Representative’s Transportation, Housing and Urban Development, and Related Agencies Subcommittee of the House Appropriations Committee will hold a hearing on appropriations for fiscal year 2013 for the Department of Transportation and HUD. Shaun Donovan the secretary of Housing and Urban Development will testify.
On Wednesday, March 21 at 10:00 a.m., the House Transportation and Infrastructure Committee Subcommittee on Water Resources and Environment will hold a series of hearings titled "Review of Innovative Financing Approaches for Community Water Infrastructure Projects."
On Thursday, March 22 at 10:00 a.m., the House of Representative’s Transportation, Housing and Urban Development, and Related Agencies Subcommittee of the House Appropriations Committee will hold a hearing on appropriations for fiscal year 2013 for Federal Aviation Administration, Federal Highway Administration, Federal Railroad Administration, and Federal Transit Administration. The heads of each administration will be present to testify.