Infrastructure Alert - June 6, 2013

by Cozen O'Connor
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Following the I-5 bridge collapse in Washington and the Baltimore train derailment, expect a medley of Congressional hearings, investigations and proposed legislation to address the shortcoming of the national infrastructure and what should be done to ameliorate deteriorating transportation systems. The Senate Committee on Appropriations is the first to schedule a hearing on the bridge collapse. Department of Transportation Under Secretary for Policy Polly Trottenberg and Federal Highway Administrator Victor Mendez will testify on June 13. Rep. Janice Hahn (D-Calif.) has requested the House Transportation and Infrastructure Committee, of which she is a member, to hold a hearing on bridge safety as well.

The Institute on Taxation and Economic Policy has found that since 2011, federal, state and local gas taxes as a share of total gas prices have remained static at about 14 percent. Despite this finding, polls show that voters believe higher taxes are driving total gasoline taxes up and not, as is truly the case, the cost of crude oil.

ON THE HILL

Sen. Frank Lautenberg (D-N.J.) passed away on Monday. Sen. Lautenberg was in his fifth term as senator, and became the 300th senator to die in office. He served on the Committee on Appropriations, the Committee on Commerce, Science, and Transportation, and the Committee on Environment and Public Works. He was the Chairman of the Commerce Subcommittee on Surface Transportation and Merchant Marine Infrastructure, Safety and Security.

H.R. 2217, the Department of Homeland Security Appropriations Act for FY2014, passed the House. The bill includes $38.9 billion in discretionary funding for the Department of Homeland Security (DHS), $617 million less than was enacted in FY2013 and $34.9 million less than the president requested. The bill would appropriate $5.6 billion for emergency disaster aid, $5.4 billion for Immigration and Customs Enforcement, $7.2 billion for the Transportation Security Administration, $9.9 billion for the Coast Guard, and $10.6 billion for Customs and Border Protection. The House Appropriations Committee passed the bill on May 22, and the Obama Administration issued a veto threat Monday. The Office of Management and Budget noted several areas of contention between the Obama Administration and House bill, but lauded the bill’s disaster relief spending, “including $595 million for base program activity and $5.6 billion provided as a disaster relief cap adjustment made pursuant to the Budget Control Act of 2011,” and cybersecurity funding, “including the EINSTEIN program and continuous monitoring of Federal networks for malicious cyber activity.” OMB objects to lack of additional Customs and Border Patrol officers, the use incremental funding for Coast Guard acquisition of National Security Cutter (NSC)-7 and NSC-8, and other provisions.

The House Transportation and Infrastructure Committee will hold a hearing titled “The Importance of the Northeast Corridor” tomorrow in New York. Amtrak President and CEO John Boardman, Regional Plan Association Executive Director Bob Yaro, New York Department of Transportation Commissioner Joan McDonald, and Drexel University President John Fry will testify. Later today, several members of the committee intend to ride Amtrak to New York for the hearing.

On May 30, the House Transportation and Infrastructure Committee’s Panel on 21st Century Freight Transportation held a hearing titled “How Southern California Freight Transportation Challenges Impact the Nation” in San Bernardino, Calif. Several witnesses requested that Congress create a trust fund to finance infrastructure improvements to causeways and rail lines in Southern California, using U.S. Customs revenue, Harbor Maintenance Trust Fund revenue or increased gasoline taxes. Witnesses justified the need for this influx of federal spending due to the large proportion of goods shipped through the Ports of Los Angeles and Long Beach and the toll that it takes on infrastructure.

Rep. John Delaney (D-Md.) has introduced H.R. 2084, the Partnership to Build America Act of 2013, along with 13 Republican and 13 Democrat cosponsors. The bill would create a $50 billion national infrastructure bank that would be funded by repatriated overseas tax income. The bank would sell 50 year bonds at a 1 percent interest rate, and American companies would be allowed to repatriate assets tax-free from overseas for every dollar invested in bonds.

Several aviation trade associations, including the U.S. Contract Tower Association, National Air Transportation Association, and Air Traffic Control Association, have written House Appropriations Chairman Hal Rogers (R-Ky.) requesting $150 million in dedicated funding for the contract tower program, including $10.35 million authorized for the continuation of the contract tower cost sharing program. While the FAA has received sufficient funding to continue funding contract towers for the remainder of the fiscal year, Congress has not passed any legislation to stem the effects of sequestration on the FAA Contract Tower Program in FY2014 and beyond.

Rep. Mark Sanford (R-S.C.), who recently won a special election, has been selected to fill the final vacancy on the House Committee on Transportation and Infrastructure.

AT THE AGENCIES

Amtrak CEO and President Joe Boardman has signed a two-year contract extension to continue leading Amtrak into 2015.

Transportation Secretary LaHood has stated that he will remain in office until Mayor Anthony Foxx’s confirmation is complete. Mayor Foxx had a mild confirmation hearing and is widely expected to be confirmed, but Sen. John Thune (R-S.D.), Ranking Member of the Commerce Committee, has requested that the FAA provide information with respect to further sequestration plans. The Department of Transportation submitted information to Sen. Thune Monday night, and he is weighing if it is satisfactory.

Secretary LaHood has named the members of the National Freight Advisory Committee. The Advisory Committee, created by the Moving Ahead for Progress in the 21st Century Act (MAP-21), comprise 47 voting members from outside the Department of Transportation. By statute, members serve two-year terms and meet at least three times per year. Notable members include Philadelphia Mayor Michael Nutter, former Deputy Secretary of Transportation Mort Downey, former NHTSA Administrator Joan Claybrook, and Teamsters General President James Hoffa. The National Freight Advisory Committee will provide recommendations to the Department of Transportation regarding national freight transportation programs and policy. The first meeting will be held on June 25.

The National Transportation Safety Board (NTSB) is currently investigating the I-5 bridge collapse. The NTSB investigation could take as long as a year to complete. The Federal Highway Administration had deemed the bridge “functionally obsolete” although not “structurally deficient.” This distinction indicates that the bridge does not conform to current design standards, but it was not considered unsafe.

On May 29, the Federal Transit Administration posted guidelines for nearly $4 billion in Hurricane Sandy relief in the Federal Register for the Metropolitan Transportation Authority, New Jersey Transit Corporation, the Port Authority of New York and New Jersey and the New York City Department of Transportation.

IN THE STATES

California: California’s long-awaited high-speed rail project is now expected to miss its July groundbreaking date due to eminent domain issues, prolonged contractor negotiations, and issues with a late application submitted to the federal Surface Transportation Board (STB). The STB has denied a request to extend the public comment period, and the California High-Speed Rail Authority is now awaiting the STB’s decision on its exemption request from STB jurisdiction. The California High-Speed Rail Authority is currently fighting a suit in Sacramento Superior Court that is seeking to end the project due over a year of delays and projected cost-overruns on the $69 billion project.

Maryland: Governor Martin O’Malley will nominate James T. Smith Jr. as the new transportation secretary. Smith is a former Baltimore County Executive, and the position has remained unfilled for nearly a year following the last transportation secretary’s resignation. As transportation secretary, Smith would implement the recently passed transportation law, which will bring increased revenue and higher gasoline taxes, and major transportation initiatives such as the Purple Line.

New York: The federal Department of Transportation is funding Amtrak $185 million in Hurricane Sandy relief to build an 800-foot concrete tunnel box. The project will serve as a groundwork for two future flood-resistant tunnels beneath the Hudson River between New York and New Jersey. The tunnels of this “gateway” project are estimated to cost nearly $15 billion and be completed in 2025, and add 25 train slots to Penn Station during peak hours.

District of Columbia:The D.C. Council has voted to eliminate the 23.5¢ per gallon gasoline tax in lieu of a new 8.3 percent wholesale gasoline and diesel tax. The change is aimed at protecting the District’s highway fund from market volatility and is estimated to be revenue neutral.

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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