Hot Button Blog: A Bipartisan Government Relations Firm

Sequestration began on March 1, and federal agencies are still in the process of sending out furlough notifications and determining specific program cuts.  The continuing resolution authorizing current federal spending will expire March 27, and without legislation, a government shutdown would occur on March 31.  The House of Representatives passed their version of a new continuing resolution providing for funding through the end of the fiscal year, and the Senate is expected to take up its version this week.   

At a meeting of the President’s Export Council, President Obama revealed that the White House budget proposal will include investments in waterway maintenance, emphasizing the importance of strengthening the national port and waterway infrastructure, especially in light of last year’s major drought in the Mississippi River.

ON THE HILL

The House of Representatives passed a continuing resolution (CR), H.R. 933, on a vote of 267 – 151, with 50 Democrats voting in the affirmative.  The bill reduces transportation funding levels from the 2012 surface transportation reauthorization, Moving Ahead for Progress in the 21st Century Act (MAP-21), through September 30, 2013.  The bill cuts roughly $700 million from transportation programs – $555 million of cuts to highway funding, $48.5 million of cuts to highway safety funding, and $117 million of cuts for transit funding.  The CR extends FY 2012 funding levels, which cuts the increase authorized by MAP-21.  Sen. Barbara Boxer (D-Calif.), Chairwoman of the Senate Committee on Environment and Public Works, Sen. Jay Rockefeller (D-W.V.), Chairman of the Senate Committee on Banking, Housing, and Urban Affairs, and Sen. Tim Johnson (D-S.D.), Chairman of the Senate Committee on Commerce, Science, and Transportation, wrote Speaker John Boehner (R-Ohio) expressing their dismay that MAP-21 spending had been cut, considering it was “fully paid for” through the federal gasoline tax, fee increases and the closing of tax loopholes.

The Senate version of the continuing resolution does fund the level of spending authorized for highways and rail under MAP-21, but does not include a comprehensive transportation budget addressing the other components of MAP-21.  Senate Democrats want to avoid political fights that may disrupt passing the CR, such as the inclusion of California high-speed rail.  Both sides are expected to agree on the Senate version early next week to avoid a government shutdown.

Rep. Paul Ryan (R-Wis.), Chairman of the House Budget Committee, unveiled his budget plan yesterday.  The FY 2014 budget blueprint describes highways and transit programs as having “become distorted, leading to imprudent, irresponsible and often downright wasteful spending,” and that “however worthy some highway projects might be, their capacity as job creators has been vastly oversold.”  The document suggests high-speed rail and other heavily subsidized programs should only be pursed if they can be self-supporting.

Sen. Bob Casey (D-Pa.) has introduced S. 407, the Reinvesting in Vital Economic Rivers and Waterways Act of 2013.  If passed, the RIVER Act would increase the Inland Waterways User fee from 20¢ per gallon to 29¢ per gallon beginning in 2014.  Industry seems supportive of the bill despite increased user fees, as the American Waterways Operators and the Waterways Council have endorsed the bill.  The bill also includes project management process reforms and directs the Secretary of the Army and Inland Waterways Users Board to develop a capital investment program for inland waterways projects over the next 20 years. 

Rep. Nick Rahall (D-W.V.) has introduced H.R. 949, the Invest in American Jobs Act of 2013.  The bill strengthens existing “Buy American” provisions for investments in aviation, rail, highways and public transit to require that all of the steel, iron and manufactured goods used are produced in the United States.  The bill would extend the “Buy American” provisions to additional federal infrastructure and transportation loans, loan guarantees and grants, including Clean Water State Revolving Fund grants and Economic Development Administration grants.  The bill would also allow for waivers but requires the federal agency justify any proposed waiver through adequate public notice.

Sen. Jay Rockefeller (D-W.V.) and Sen. Frank Lautenberg (D-N.J.) have introduced the American Infrastructure Investment Fund Act of 2013, S. 387.  Upon enactment, the bill would create a national infrastructure fund within the Department of Transportation, funded at $5 billion a year over FY 2014-2015.  While the bill does not explicitly refer to the fund as a bank, the fund is essentially the national infrastructure bank that President Obama called for as part of his national infrastructure plan in the January State of the Union address.  The fund can utilize loans or loan guarantees and can be used to finance rail, port, pipeline, airport, highway, bridge and public transportation projects, amongst others.  The bill also authorizes a $600 million National Infrastructure Investment Grant program within the Department of Transportation funded over FY 2014-2015. 

Rep. Bill Shuster, Chairman of the House Committee on Transportation and Infrastructure, and Sen. John Thune, Ranking Member of the Senate Committee on Commerce, Science, and Transportation, continue to press Secretary of Transportation Ray LaHood in a letter requesting  more information on budget cuts due to sequestration.  Shuster and Thune have been vocal in their insistence that LaHood and FAA Administrator Michael Huerta’s insistence on massive furloughing is not necessary and are requesting details as to how budget cut decisions have been made.  Thune and Shuster similarly recommend cutting items such as consultants and the travel budget in lieu of furloughing employees or shutting down Air Traffic Control towers.

AT THE AGENCIES

The Office of Management and Budget (OMB) has released its final numbers for budget cuts due to sequestration.  The Department of Transportation’s budget will be cut by $1.943 billion, including $637 million in cuts to the FAA, $396 million in cuts to the TSA, and $77 million in cuts to Amtrak. 

On March 11, the FAA released a list of 173 air traffic control towers it intends to close because of budget sequestration.  The FAA will not begin furloughing its employees or closing towers until April 7.  The FAA will release a final list of closures on March 18. 

The National Transportation Safety Board (NTSB) is continuing its probe into the lithium-ion battery fire on the Boeing 787 Dreamliner.  The NTSB is currently looking into its manufacturing process, how batteries are charged, and how charges are monitored.  The cause of the short circuit that caused the fire has not been discovered.

The Brookings Institution released a report on Amtrak ridership titled “A New Alignment: Strengthening America’s Commitment to Passenger Rail.” Eighty percent of its ridership occurs on 26 routes of short corridors of 400 miles or less, and short runs are responsible for nearly all of its 55 percent ridership gain since 1997.  The report also showed that 15 of Amtrak’s least-traveled routes, all over 750 miles, lost a total of $597.3 million in 2012.  The report also showed that the Acela and Northeast Regional routes have a positive operating cost of $205.4 million, including subsidy.

On March 6, the Department of Transportation released the first $390 million in aid for Hurricane Sandy affected areas.  By statute, $2 billion of the $60 billion Disaster Relief Appropriations Act must be released no later than March 30.  The aid package is subject to sequestration and will be reduced by $646 million – $545 million from transit relief and $101 million from highway relief.

IN THE STATES

Maryland: Governor Martin O’Malley introduced his transportation plan last week.  The proposal is expected to increase revenues by $3.4 billion over the next five years. The plan introduces a new wholesale tax on gasoline indexed to inflation and economic growth. Governor O’Malley is also advocating for cutting the existing 23.5¢ per gallon gasoline tax to 18.5¢ per gallon and supplementing lost revenue through the new 4 percent wholesale gasoline tax, resulting in motorists paying an estimated additional 2¢ per gallon at the pump.  Governor O’Malley’s proposal also echoes Virginia Governor Bob McDonnell’s proposal to assume federal legislative action allowing states to tax Internet transactions by 2015.  In O’Malley’s plan, if Congress fails to pass such a provision, the Maryland state wholesale gasoline tax increases from 4 percent to 6 percent.

New Hampshire: On March 6, the New Hampshire House of Representatives voted on a bill to increase the state gasoline tax by 15¢, an 83 percent increase, over the next four years by a vote of 207-163, with 15 Republicans and 192 Democrats voting in the affirmative and 10 Democrats and 153 Republicans voting in the negative.  As the bill involves state revenue, it must return to House Ways and Means Committee again, and be voted on a second time to pass.  In the Senate, Republicans hold 13 of the 24 seats.  Republicans attempted to defeat the bill through a series of procedural motions, first to suspend the rules, which passed, then to table the bill without debate, which failed, then to amend the bill to ban the state from funding state troopers and other non-transportation expenses from the highway fund, which also failed.

New York: Of the $390 million released by the Department of Transportation from the Disaster Relief Appropriations Act of 2013, the New York Metropolitan Transit Authority received $193 million for repair and restoration of the East River tunnels, the South Ferry/Whitehall station, the Rockaway line, rail yards, maintenance shops and heavy rail cars.  The Port Authority Trans-Hudson Corp. received $54 million for the World Trade Center Hub Project and $141 million to repair commuter rail service between New York and New Jersey.

Pennsylvania: Under the Disaster Relief Appropriations Act of 2013, the Southeastern Pennsylvania Transportation Authority (SEPTA) received a grant of $1.19 million from the Department of Transportation.

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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 21^st 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. 

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After failing to pass the Cybersecurity Act of 2012, Congress began its August recess on Friday with members of the House and Senate out of town until the second week of September. At the state level, Georgia voters shot down a one cent state sales tax that would have helped fund infrastructure improvements across the state.

On the Hill

On August 2, the Cybersecurity Act of 2012 failed to survive a cloture vote. The bill would have imposed stricter networking standards on American utilities to prevent fraudulent access or cyber-terrorism. Although the stricter measures on critical infrastructure such as railroads, water treatment facilities, and power plants were loosened from mandatory to voluntary, the bill’s critics cited privacy concerns and new costs to businesses in their opposition. President Obama had penned a rare op-ed stressing the necessity of the bill.

On July 25, Congress passed the Sequestration Transparency Act, which would require the Obama Administration to detail specifically the $1.2 trillion in budget cuts that are scheduled to take place on January 2, 2013. If President Obama signs the bill, the Office of Management and Budget (OMB) would have 30 days to report its future sequester cuts to Congress. While most federal programs will experience mandatory cuts, the Highway Trust Fund may be exempt depending on the OMB’s interpretation of the Budget Control Act of 2011.

Sen. Jim DeMint (R-SC) has blocked the nomination of Michael Huerta to Administrator of the Federal Aviation Administration, and indicated that he may object to approval of any nominations until next year. Huerta has been Acting Administrator of the FAA since last year. Sen. DeMint cited his desire to hold the vote after the election, as the nomination is to a five-year term.

In the seven months leading up to the August recess, Congress has considered a number of bills that impact infrastructure development, but only passed the Moving Ahead for Progress in the 21st Century Act, which reauthorizes surface transportation programs, leaving several infrastructure-related legislative priorities unresolved. While the House has passed H.R. 5972, the Transportation, Housing and Urban Development, and Related Agencies Appropriations Act, and H.R. 5325, the Energy and Water Development and Related Agencies Appropriations Act, the Senate has yet to vote on the equivalents. Additionally, neither body has acted on bills to reauthorize Coast Guard activities (H.R. 5887/S. 1665). Further, other infrastructure bills remain stalled, such as  H.R. 6026, the DREDGE Act, which would allow the Army Corps of Engineers to dredge the Mississippi River to accommodate larger vessels traveling from the expanded Panama Canal. It is very unlikely that Congress will complete work on any major infrastructure legislation with the limited time remaining in the legislative year. Action on appropriations is expected to come in a six month continuing resolution, setting overall spending levels at those authorized by the Budget Control Act. As such, additional funding and major authorization questions will remain until the new Congress convenes next year.

At the Agencies

The Transportation Security Administration (TSA) and the American Federation of Government Employees (AFGE) have reached a labor agreement for the representation of TSA’s 43,000 employees. The labor contract, which includes collective bargaining, will require a vote from TSA employees to go into effect. AFGE was elected by TSA employees in June and has been negotiating the terms of the labor agreement since. The terms of the agreement have not been released.

The National Petroleum Council (NPC), the federal advisory committee to the Secretary of Energy, released itsAdvancing Technology for America’s Transportation Future report. The report predicts that internal combustion fueled engines will still reign as the leading vehicular propulsion system in 2030. The NPC believes that vehicles powered by compressed natural gas, not electric batteries, will be the closest competitor to combustion engines, assuming the price of natural gas remains low. However, the report states that the lack of infrastructure supporting compressed natural gas engines would be a considerable barrier to their success.

In the States

New York: Governor Andrew Cuomo is considering a plan that will reallocate $47 million in funds intended for work on roads and bridges within Seneca Nation of Indians (SNI) territory if a resolution is not reached quickly to allow important transportation work to proceed. The project to reconstruct 11.5 miles of Interstate 86 stalled when SNI leaders demanded “exorbitant” new fees for work within the territory and failed to negotiate with New York state.  In an effort to solve this dispute, New York has proposed allowing the SNI to take its fee from the more than $400 million in revenue the Senecas still owe the state relating to its three Western New York casinos. The work scheduled for SNI territory has a combined cost of over $40 million and would create hundreds of construction jobs. 

Georgia:The proposed transportation sales tax that we discussed in our last alert was voted down in nine of twelve multi-county regions. The Transportation Special Purpose Local Option Sales Tax (T-SPLOST) was a one cent state sales tax that would have helped fund infrastructure improvements throughout Georgia. If passed, the tax would have provided $18 billion for road and transit projects in the state, including $6.1 billion going to the metro Atlanta area. Although advocates of the plan had hoped that the largely Democratic Atlanta region would provide a base of support for the tax, over 63 percent of voters voted against the referendum. 

Massachusetts: The Massachusetts Senate has passed a nearly $1.4 billion transportation bond bill to fund infrastructure projects throughout the state. The bill is aimed at maintaining and repairing the Commonwealth’s existing infrastructure and creating jobs throughout the state. 

Virginia: Gov. Bob McDonnell announced that Virginia has entered into a public-private partnership to construct 29 miles of HOV/HOT lanes on I-95. The construction will create 8,000 jobs and approximately $2 billion in economic activity. Two private companies have agreed to finance $854 million of the project’s estimated $925 million price tag in exchange for a 76 year concession period on the stretch of road. Virginia will maintain ownership of the infrastructure.  The construction will begin next month and is slated to be completed in 2014. 

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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 30^th in 2011 to 41^st 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 23^rd to 41^st. 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.

 Upcoming Events

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.”

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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.

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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.

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