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With Highway Trust Fund Approaching Insolvency, Obama Delivers Surface Transportation Funding and Reform Legislation to Congress

Beveridge & Diamond, P.C., April 30, 2014

For the first time since taking office, President Obama has articulated in a legislative proposal his Administration’s vision for the short-term funding of surface transportation.  Unveiled yesterday, the “Grow America Act” (don’t ask us to recite all 18 words of the acronym) clearly reflects the multi-modal and funding priorities of the Obama Department of Transportation (“USDOT”).  The bill ignores, however, a long-term, sustainable source of transportation funding, as the two decade old 18.4 cent per gallon gasoline tax fails to keep up with a staggering list of national infrastructure demands.

The legislation’s central theme is perhaps best captured by the proposed change in nomenclature of the Highway Trust Fund to the “Transportation Trust Fund” (“TTF”).  This is truly a multi-modal bill, addressing an integrated network of passenger and freight rail services for the first time in the context of surface transportation legislation.  While the proposal raises spending across the board, transit and other transportation options are increased by an eye-popping 70% annually.  In other words, the Trust Fund isn’t just for highways any more.

Here are some of the bill’s key provisions with respect to project delivery, transportation planning, and funding:

Streamlined Environmental Reviews and Permitting

Both Congress and the Administration have increasingly recognized that the value of proposed infrastructure projects is compromised by circuitous, unpredictable, and indefinite review processes.  The transportation sector has taken perhaps the most meaningful steps to accelerate project delivery.  Indeed, the Moving Ahead for Progress in the 21st Century Act (“MAP-21”) contained several streamlining reforms, some already implemented through new regulations, and President Obama has since ordered federal agencies “to advance the goal of cutting aggregate timelines for major infrastructure projects in half.”

The draft bill makes no secret of the Administration’s desire to further this initiative, reflected by the placement of “Increasing Efficiency in Project Delivery” as the very first subtitle.  The proposal would institutionalize best practices such as concurrent reviews, early collaboration, and elimination of redundancy.  A new body, the “Infrastructure Permitting Improvement Center” to be housed within USDOT, would assume primary responsibility for mainstreaming these principles in agency activities.  The bill also fosters more accountability to stakeholders through continuous online reporting on the status of environmental reviews and permitting of transportation infrastructure, building on USDOT’s existing “Dashboard” tool.  Other project delivery highlights include:

  • Integration of the Section 106 and Section 4(f) processes for certain historic sites;
  • New Section 4(f) exemptions for rail, transit, and bridge activities;
  • Greater flexibility in considering potential navigability obstructions from bridge structures;
  • Expanded use of NEPA categorical exclusions for multi-modal projects; and
  • Permissible use of federal dollars for all modes to fund dedicated environmental review staff and resources at federal, state, and local agencies.

Transportation Planning Reform

The planning proposals are largely aimed at efforts to reform the planning process generally.  Specifically, the bill seeks to reduce the perceived bloat and bureaucracy of the current Metropolitan Planning Organization (“MPO”) system.  It would ban the creation of redundant geographic MPOs and would designate some existing MPOs as “high-performing,” based partially on their consolidation or cooperation with other neighboring or regional MPOs.  Financial incentives abound – designated high-performing MPOs will be rewarded with bigger chunks of various pots of money, including a 50% increase in dollars from the flexible Surface Transportation and Transportation Alternatives programs.  Other highlights of the planning reform proposals include:

  • Requiring climate change resiliency assessments as a component of state and MPO long-range planning;
  • Including public ports in the state and MPO transportation planning processes;
  • Funding for ten large MPOs to study and improve connectivity, with a focus on disadvantaged residents;
  • Requiring states and MPOs to make investment decisions using performance-based funding principles; and
  • Requiring states and MPOs to consider the stormwater impacts of proposed projects.

Funding

The bill’s policy initiatives are reflected in several key funding provisions.  The Administration proposes removing restrictions on the states’ ability to impose tolls on interstate highways, giving greater discretion for USDOT to decide where and how to direct certain funds, and focusing on the maintenance and improvement of infrastructure most urgently in need of repair.

How much?  Consistent with the Administration’s 2015 budget proposal, the bill would authorize $302 billion to cover fiscal years 2015-2018, approximately a 37% increase over MAP-21, the last transportation reauthorization law.  All told, the measure would increase federal highway investment by almost $10 billion per year and public transportation investment by nearly $7.5 billion annually over current spending levels.

To pay for the bill, the White House seeks both a one-time appropriation of $150 billion to the TTF, with $74.4 billion allocated to the Highway Account, $51.6 billion to the Mass Transit Account, $19.1 billion to the Rail Account, and $5 billion to the Multi-modal Account.  All surface transportation programs currently funded from the General Fund, such as the Transportation Investment Generating Economic Recovery (“TIGER”) program and the transit Capital Investment program, would be moved to the TTF.  Additionally, the proposal calls for transferring $150 billion in revenue to the TTF from a rewrite of the country’s corporate tax laws.

Click here for a summary of the significant funding provisions of the proposed legislation.

Click here for the bill itself and here for the Administration’s section-by-section analysis.

Roundtable Discussion

On May 13, Beveridge & Diamond, P.C. (B&D) will host an informal roundtable discussion on this proposal, expected responses from Capitol Hill, and prospects for passing a bill to rescue the Trust Fund.  Fred Wagner, the former Chief Counsel of the Federal Highway Administration (“FHWA”) from January 2011 to April 2014 and now Chair of B&D’s Natural Resources and Project Development practice, will lead the roundtable.  He will offer his unique perspectives on the proposal in light of his recent experience at FHWA.  The event will take place at B&D’s Washington, DC office at 1350 I Street, NW, Suite 700, at 4:00 PM.  If you are interested in attending, please contact Anna Hill at (202) 789-6105 or ahill@bdlaw.com.

About Beveridge & Diamond

B&D has a long history of advising public and private sector clients on major project development and the defense of projects in state and federal courts.  For more information on this bill and specific provisions that may impact the planning, permitting, environmental analysis, funding or construction of transportation infrastructure, please contact either Fred at (202) 789-6041 or fwagner@bdlaw.com; James Auslander at (202) 789-6009 or jauslander@bdlaw.com; or Gus Bauman at (202) 789-6013 or gbauman@bdlaw.com

Click here for a PDF of this news alert.

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