Infrastructure Alert - February 26, 2013

by Cozen O'Connor
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Following President Obama’s State of the Union call for a national infrastructure policy, the White House released this fact sheet, providing some details of the plan thus far.  The fact sheet outlines calls for cutting red tape, encouraging public-private partnerships, creating a national infrastructure bank, expanding the Transportation Infrastructure Finance and Innovation Act (TIFIA) loan guarantee program, and investing $50 billion in national transportation infrastructure, with 80 percent focused on existing repairs.  The only source of funding mentioned is a new America Fast Forward bonds program to attract private capital.  A more detailed outline of the plan is expected to be released in March as part of the President’s budget proposal.

ON THE HILL

Representative Bill Shuster (R-Pa.), Chairman of the House Transportation and Infrastructure Committee, has criticized the President’s plan for increasing investment in national infrastructure for being a “short-term” solution.  The President’s plan has not addressed the 18.34¢ per gallon federal gasoline tax that has been underfunding infrastructure and transportation spending for the past several years.  The most recent surface transportation bill, Moving Ahead for Progress in the 21st Century Act (MAP-21), authorizes spending of more than $50 billion per year, whereas the revenue from the gasoline tax provides only about $35 billion per year.  Representative Shuster considers the one-time infusion of infrastructure spending insufficient to solve long-term federal transportation funding issues.

Tomorrow, Wednesday, February 27, the House Committee on Transportation and Infrastructure Subcommittee on Aviation will hold a hearing titled “Implementation of the FAA Reauthorization and Reform Act: One Year Later.”  The hearing will focus on the implementation of passenger service improvements, Unmanned Aircraft Systems, the Next Generation Air Transportation System (NextGen), and general safety.  FAA Administrator Michael Huerta will testify, and his written testimony, once available, will be accessible here.

Senator Bob Casey (D-Pa.) is expected to introduce legislation focused on improving repair and modernization of the inland waterways system through greater federal investment, cost-efficient reform and prioritizing navigation projects.  According to an announcement from Senator Casey, the Reinvesting in Vital Economic Rivers and Waterways Act of 2013 (RIVER Act) would also increase the inland waterways fuel user fee from 20¢ per gallon to 26¢ per gallon.

American Airlines and US Airways have formally announced their merger plans. Senator Amy Klobuchar (D-Minn.), Chairwoman of the Senate Judiciary Committee’s Antitrust Subcommittee, has announced her intention to hold a hearing to consider the economic impact of the airline merger.

The Senate Committee on Commerce, Science, & Transportation finalized subcommittee leadership positions and memberships.  The Subcommittee on Aviation Operations, Safety, and Security will be chaired by Senator Maria Cantwell (D-Wash.) and Senator Kelly Ayotte (R-N.H.) will serve as the Ranking Member. The Subcommittee on Surface Transportation and Merchant Marine Infrastructure, Safety, and Security will be chaired by Senator Frank Lautenberg (D-N.J.) and Senator Roy Blunt (R-Mo.) will serve as the Ranking Member.  The Subcommittee on Oceans, Atmosphere, Fisheries, and Coast Guard will be chaired by Senator Mark Begich (D-Alaska) and Senator Marco Rubio (R-Fla.) will serve as Ranking Member.

AT THE AGENCIES

Secretary of Transportation Ray LaHood has some of the expected effects sequestration will have on the Department of Transportation, but has been stressing that cuts will not affect safety whatsoever, which remains the top priority of the department.  Unless legislative action is taken, the sequester will cut about $1 billion across-the-board in transportation funding, including about $600 million from the FAA.  FAA Administrator Michael Huerta is considering a furlough strategy for the majority of the 47,000 FAA employees, eliminating midnight shifts in more than 60 air traffic control towers, and/or closing 100 air traffic control towers to satisfy the necessary budgetary cuts the FAA would need to make under the sequester.  These changes could result in delays of up to 90 minutes for commercial flights, as well as longer security lines.  Senator John Thune (R-S.D.), Representative Bill Shuster (R-Pa.), and Representative Frank LoBiondo (R-N.J.) insist that the FAA could consider numerous other options, including cutting some of the $500 million the FAA spends on consultants, before resorting to furloughs.

The FAA is currently reviewing Boeing’s proposals for the 787 Dreamliner to return to the skies.  If the FAA accepts Boeing’s proposal, the Dreamliners would not be authorized to return to business as usual without completing an FAA recertification process that could last several months, if not longer. 

Secretary LaHood has announced the formation of the National Freight Advisory Committee.  The National Freight Advisory Committee will aid the Department of Transportation in its implementation of the National Freight Strategic Plan as mandated by MAP-21.  The National Freight Advisory Committee will also support the implementation of the Department of Transportation’s Freight Policy Council.  The Committee will comprise at least 25 voting members outside of the Department of Transportation and will meet at least three times per year.

IN THE STATES

New Hampshire: The House Public Works and Highways Committee has unanimously voted to recommend raising the state gasoline tax by 15¢ per gallon over the next four years.  The 15¢ tax increase would be spread over six years for diesel fuel to ease the increased costs to trucking companies.  The panel endorsed the 15¢ plan over an alternate plan to  increase vehicle registration fees by $15 and impose a 12¢ per gallon gasoline tax increase.  A bill in the New Hampshire Senate would use tax revenues from casinos to fund infrastructure improvements.

Virginia: The General Assembly passed Governor Bob McDonnell’s comprehensive transportation revenue bill, HB2313, this weekend.  The bill now awaits Governor McDonnell’s signature or potential amendments.  Once signed, the bill would slash the state gasoline tax, impose a new wholesale gasoline tax, a new diesel gasoline sales tax and a higher state sales tax.  To compensate for the reduced gasoline tax, the bill also includes $100 annual fees on electric, hybrid and other alternative fuels vehicles.  The collection of the projected $880 million of revenue for transportation projects is contingent on Virginia passing additional legislation, as well as Congress passing a bill that would allow states to collect state sales tax on online purchases.  While the bipartisan bill carried many of Governor McDonnell’s original proposals, his effort to eliminate the gasoline tax outright failed to gain enough traction to be included in the final bill.

Wyoming: On February 15, Governor Matt Mead signed a 10¢ per gallon gasoline tax hike into law.  The tax increase, which will raise about $70 million in its first year, will take effect on July 1, 2013.  The revenue raised by the tax will be divided by the Wyoming Department of Transportation and local governments, which will be allocated two-thirds and one-third respectively.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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