Infrastructure Alert - March 26, 2013

by Cozen O'Connor
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This Friday, President Obama will visit the Port of Miami. On July 19, 2012, President Obama put the Port of Miami on his “We Can’t Wait” list of expedited infrastructure projects to instruct the Army Corps of Engineers to deepen the federal navigation channel at the port from 42 feet to 50 feet.

The American Society of Civil Engineers released its 2013 Report Card for America’s Infrastructure, awarding a D+.  In 2012, the ASCE gave America’s Infrastructure a flat D.  This year, the ASCE added ports as a new category, which received a grade of C.

ON THE HILL

Yesterday, President Obama signed the continuing resolution (CR) that Congress passed last week, funding the government for the remaining six months of FY2013.  The final version mostly funds the Moving Ahead in Progress for the 21st Century Act (MAP-21).  Whereas the original CR passed by the House included cuts to transit, roads and transportation safety at MAP-21 levels, the CR fully funds those programs.  The Projects of National and Regional Significance Program, which was created by MAP-21 and authorized $500 million for the program, was eliminated in the continuing resolution. Federal aid for highways and transit formula grants are fully funded at MAP-21 levels under the CR.  

This past weekend, the Senate passed S.Con.Res 8, the Senate FY2014 budget bill, on a vote of 50-49.  The budget proposal includes $50 billion to repair the nation’s infrastructure, through fixing roads bridges and airports, updating transit systems, and making room for pedestrians and bicyclists.  The proposal also includes $10 billion for an infrastructure bank and $10 billion to repair dams and dredge ports.

Of the 500+ amendments proposed to the Senate budget, several were infrastructure-related.  Sen. Al Franken (D-Minn.)’s amendment to bring broadband infrastructure investments to rural areas was agreed to by unanimous consent.  Sen. Pat Toomey (R-Pa.)’s amendment to increase funding for the inland waterways system was also agreed to by unanimous consent.  Sen. Rand Paul (R-Ky.) proposed an amendment to fund $8 billion to repair deficient bridges and $8 billion to pay down the federal deficit, offset by $15 billion in cuts to foreign aid and $1 billion in cuts to the Department of Energy loan guarantee program.  The amendment failed by a vote of 26-72. 

Many of the infrastructure-related amendments did not receive a vote, including the following.  Sen. Paul introduced an amendment to privatize the Transportation Security Administration (TSA).  Several amendments were introduced to reverse the TSA’s ruling that some small knives would be permitted on flights.  Sen. Jim Inhofe (R-Okla.) introduced an amendment to modify the methodology of the Department of Transportation’s compliance, Safety, Accountability Program.  Sen. Inhofe also introduced an amendment to create a point of order against legislation that would impose a user fee with respect to general aviation.  Sen. David Vitter (R-La.) proposed an amendment aimed at improving the solvency of the Highway Trust Fund by imposing fees on federal agencies that fail to meet specified deadlines relating to surface transportation projects under the National Environmental Policy Act of 1969.  Sen. Vitter also introduced an amendment to improve the solvency of the Highway Trust Fund through net increase federal revenues from onshore and offshore domestic energy leasing on federal land.

Sen. Amy Klobuchar (D-Minn.), Chairwoman of the Senate Judiciary Committee’s Subcommittee on Antitrust, Competition Policy and Consumer Rights, and Sen. Vitter have introduced S. 638, the Railroad Antitrust Enforcement Act, to end the antitrust status of freight rail.  Shippers have lauded the bill, and the effects of ending railroad antitrust exemptions may save consumers an average of about $100 yearly.  The Association of American Railroads has castigated the bill, saying it unnecessarily complicates the law and undermines private investments made to America’s freight rail.

On March 20, the Senate Environment and Public Works Committee unanimously approved S. 601, the Water Resources Development Act of 2013 in a 15 minute markup.  The bill includes provisions to require new taxes collected for the Harbor Maintenance Trust Fund be exclusively spent on dredging and other port maintenance projects.  The bill, co-sponsored by Chairwoman Barbara Boxer (D-Calif.) and Ranking Member David Vitter (R-La.), would also streamline environmental reviews through requiring the Army Corps of Engineers to coordinate with other involved agencies and to simultaneous perform the environmental reviews.  Agencies that miss deadlines in the environmental permitting process will be penalized $10,000 to $20,000 per week, capped at 5 percent of the office’s yearly funding.  The bill also authorizes a two-year study on inland waterways revenue collection and more efficient ways to collect it.  The last Water Resources Development Act passed in 2007 over President Bush’s veto.

On March 13, Rep. Maxine Water (D-Calif.) introduced H.R. 1124, the TIGER Grants for Job Creation Act.  The bill would, upon enactment, provide an additional $1 billion to the Department of Transportation’s TIGER grant program, and exempt that money from budget sequestration.

Rep. Ed Whitfield (R-Ky.) and Rep. Daniel Lipinski (D-Ill.) introduced H.R. 1149, the Waterways are Vital for the Economy, Energy, Efficiency, and Environment Act of 2013 (WAVE 4).  If enacted, WAVE 4 will modernize the lock and dam infrastructure on the inland waterways system.  The bill would reform the U.S. Army Corps of Engineers’ internal project delivery process, prioritize essential construction and major rehabilitation projects, and revise current beneficiaries’ cost-sharing for these projects.  To fund improvements, the bill would impose a 30-45 percent increase in the existing user fee.

On March 14, a bipartisan coalition of Illinois legislators introduced the Water Infrastructure Now Public Private Partnership Act. Sen. Dick Durbin (D) and Sen. Mark Kirk (R) introduced S. 566, and Rep. Cheri Bustos (D) and Rep. Rodney Davis (R) introduced its companion bill, H.R. 1153.  The bill would create a pilot program to explore alternatives to traditional financing, planning, design, and construction models for the Army Corps of Engineers and encourage public-private partnerships.  If enacted, the bill would authorize the pilot program for five years to identify up to 15 previously authorized navigation, flood damage reduction, and hurricane and storm damage reduction projects for participation. 

AT THE AGENCIES

The Federal Aviation Administration (FAA) has reduced the number of air traffic control towers it will close from 179 to 149.  The FAA released a statement that the closures are necessary to pare the $600 million from its budget under sequestration.  Administrator Michael Huerta has reiterated that all sequestration-related budget cuts, including these tower closings, will be and have been made without compromising safety.  The FAA has cut its travel budget by 30 percent and canceled conference attendance for the rest of the calendar year.

Sen. Lisa Murkowski (R-Alaska) announced that she and the Department of the Interior have arrived at agreement, and Interior will take a “second look” at its decision to prevent the construction of a road through the Izembek National Wildlife Refuge in Alaska.  The Department of the Interior originally blocked the road because of an environmental impact study by the Fish and Wildlife Service, which they will revisit.  The road would provide those in the Aluetian village of King Cove with access to an all-weather airport in Cold Bay.  The deal comes in light of Sen. Murkowksi considering to hold Sally Jewel’s nomination to Secretary of Interior to force action on this issue.

The Environmental Protection Agency has stated that model year 2012 for cars and trucks has set the record for the highest real-world average fuel economy at about 23.8 miles per gallon.  The previous real world high was model year 2010, which was 1.2 miles per gallon lower.

On March 25, the beleaguered Boeing 787 Dreamliner embarked on the first of two scheduled test flights for its new battery.  The changes improve battery ventilation and insulation.  The FAA announced earlier this month that the proposed lithium battery redesign for the Dreamliner had been approved and would undergo extensive testing to ensure that the design is safe for aviation.  The FAA grounded the Dreamliner in mid-January following a battery fire.  Boeing has stated that it expects commercial flights of its 787 fleet to resume in weeks, not months.

IN THE STATES

On March 20, House Majority Leader Eric Cantor delivered a speech to the National Association of State Treasurers that he will support maintaining the tax exemption of interest paid by municipal bonds.  For the past two years, President Obama has suggested limiting the exemption to increase federal tax revenues. 

Maryland: The Maryland House of Delegates approved a bill to raise gasoline taxes to bolster the rapidly depleting state transportation fund.  The bill would phase in the higher gasoline taxes over several years, with the first increase of 4¢ occurring in July.  For the average motorist, the total cost of increased gasoline taxes would begin at $19 per annum at its first increase, and rise to $100 per annum once the maximum tax increase is enacted in mid-2016.  The measure passed the House of Delegates by a vote of 76-63.  All of the 76 delegates in favor were Democrats, and the other 22 Democrats voted in the negative. 

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.

Pennsylvania: Governor Tom Corbett and Amtrak have struck a deal to continue daily passenger service between Pittsburgh and Harrisburg.  The “Pennsylvanian” will also continue to run from Harrisburg to Philadelphia and New York.  Pennsylvania’s share for maintaining the Pennsylvanian route was going to rise to $6.5 million in October, but the deal lowers that expected share to $3.8 million annually. 

Wisconsin: Governor Scott Walker’s budget proposal would allow the state to borrow $994.2 million over two years to bolster the state transportation fund.  Wisconsin is anticipating a decrease of $21 million over the next two years in transportation aid from the federal government.  Included in the $994.2 million bond for transportation is $404 million for highways, $302 million for the Zoo Interchange, $200 million for the Hoan Bridge, and $60 million for rail.

Gov. Walker’s plan also includes about $445 million in spending from other sources.  His plan would take $94.4 million from the state’s main account, made up of income and sales taxes.  His plan would also move the cost of transit programs out of the transportation fund and into the general fund, saving the transportation fund $106.4 million in this budget, and more in years to come.  The transportation plan would use $44.5 million for roads from an account that draws on a 2¢ per gallon gasoline surcharge to clean leaking subterranean fuel tanks.  The Governor and the Republicans who control the Legislature have expressed staunch opposition to increasing the state’s 32.9¢ gasoline tax, which the Governor’s transportation plan does not alter.

Virginia: Governor Bob McDonnell has submitted his proposed changes to the transportation funding package passed by the General Assembly.  The regional funding proposals are the most contentious, and Gov. McDonnell has proposed an alteration to the formula that satisfies constitutional concerns and justifies a regional funding district to allow for districts other than Northern Virginia and Hampton Roads to qualify in the future.  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 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. 

Gov. McDonnell met with his state’s Congressional delegation to discuss federal legislation to permit states to collect state sales taxes on out-of-state Internet retailers.  Governor McDonnell’s bipartisan transportation plan (as well as the above Maryland transportation proposal) relies on federal government allowing states to collect this tax by the end of 2015, or else an automatic wholesale gasoline tax increase will be triggered at the onset of 2016.

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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