Infrastructure Alert - December 11, 2012

by Cozen O'Connor

On November 27, President Obama signed S.1956, the European Union Emissions Trading Scheme Prohibition Act of 2011, into law.  The law allows the Department of Transportation to exempt U.S. airlines from the carbon tax imposed by the EU.  However, the EU has delayed the implementation of the emissions trading proposal that was the impetus of the bill.

On the Hill

On December 5, the House passed a resolution of concurrence with the Senate version of H.R. 2838, the Coast Guard and Maritime Transportation Act of 2012.  If enacted, the two-year bill authorizes $8.6 billion in FY2013 spending and $8.7 billion in FY2014 spending for the Coast Guard.  Additionally, the bill reduces regulatory burdens on the maritime industry and small businesses.  H.R. 2838 would allow $1.5 billion in Coast Guard annual acquisition spending, less than the $1.9 billion recommended by the Governmental Accountability Office.  The bill passed on a voice vote and now awaits consideration by the Senate.

On Friday, the White House submitted its $60.4 billion Hurricane Sandy disaster relief funding request to Congress.  The request includes $6.2 billion in recovery funds for transit, $30 million for FAA facilities and equipment, and $32 million for Amtrak repairs.  Under the White House request, Federal Emergency Management Agency (FEMA) would receive an additional $21.5 billion, including $9.7 billion to support the national flood insurance fund, and the Army Corps of Engineers would be eligible for as much as an additional $5.35 billion.  The White House proposal also requests that $55 billion be designated as emergency funds and be exempted from cost offsets.

Rep. Shuster (R-Pa.) will become the chairman of the House Transportation and Infrastructure Committee in the 113th Congress.  Reps. Chuck Fleischmann (R-Tenn.), James Lankford (R-Okla.), and Randy Hultgren (R-Ill.) have announced they will leave the committee in lieu of other committee appointments.  Rep. Jeff Landry (R-La.), who lost his re-election via a runoff vote on December 10, is also leaving the committee.

Sen. Jim DeMint (R-S.C.) resigned from the Senate last week.  DeMint, only two years into his second term, would have been the most senior Republican in the Commerce Committee and a possible choice for ranking member.  Upon his resignation, John Thune (R-S.D.) became the most senior Republican member of the committee.

At the Agencies

Secretary of Transportation Ray LaHood has announced that he intends to remain secretary at least through fiscal cliff negotiations.  LaHood has previously stated that if he were to remain secretary of Transportation in 2013, he will pursue a national texting-while-driving law.

On December 6, the Department of Transportation (DOT) released an additional $10 million to the state of New Jersey in emergency Hurricane Sandy relief.  DOT has now released a total of $20 million to New Jersey, $30 million to New York, $2 million to Connecticut, $3 million to Rhode Island and $4 million to North Carolina.

The U.S. Army Corps of Engineers has rejected the request of several members of Congress and shippers to increase flow to the Mississippi River by diverting tributaries to ensure adequate water levels for transportation.  In a December 6 letter to legislators, U.S. Army Assistant Secretary for Civil Works Jo-Ellen Darcy denied the request, citing a significant negative impact for the Missouri River if such a diversion were to occur. The Mississippi River is currently at its lowest point in 50 years due to drought, and companies are already reducing cargo shipments on the Mississippi.  The corps is fast-tracking work to remove rock pinnacles between St. Louis and Cairo, Ill., to compensate for low water levels.

Last week, the Department of Energy released its commissioned study on the effects of expanding natural gas exports.  The study, written by NERA Economic Consulting, projects net economic benefits from increasing natural gas exports despite projecting domestic price increases and lower real wage incomes in certain industries.  The Department of Energy was waiting for the release of the report before acting on 15 pending natural gas export applications.

According to the U.S. Energy Information Administration (EIA), domestic crude oil production reached a 15-year high in September.  In September, about 6.5 million barrels per day were produced.

The Environmental Protection Agency has announced that Christopher Grundler will become the director of the Office of Transportation and Air Quality (OTAQ).  Grundler currently leads the National Vehicle and Fuel Emissions Laboratory, and has served as the deputy director of the OTAQ since 1995.  The OTAQ oversees vehicle emissions and participates in setting Corporate Average Fuel Economy (CAFE) standards.

In the States

New York and New Jersey: Sen. Chuck Schumer (D-N.Y.) told a Senate Commerce panel that New York transportation infrastructure suffered $7.5 billion dollars in damage from Hurricane Sandy.  The lion’s share of damage comes from the New York Metro Transportation Authority (MTA).  The MTA, which operates New York City’s subway system, suffered roughly $5 billion in damages.  James Weinstein, executive director of NJ Transit, told the panel that New Jersey’s damages include $100 million to repair or replace rail equipment and another $300 million to fix and replace track, wires, signaling and equipment, as well as money to cover costs of supplemental bus and ferry services and lost revenue.  Additionally, Weinstein believes that his agency needs another $800 million to make improvements to the transit system to withstand storms like Sandy. 

Virginia: Gov. Bob McDonnell said earlier this month that raising Virginia’s gas tax, tying it to inflation or otherwise adjusting it are all potential options for addressing the state’s infrastructure funding problems.  Currently, the state gas tax is a flat 17.5 cents per gallon – almost six cents per gallon less than neighboring Maryland.  In an attempt to build support for the increase, McDonnell reasoned that “every other major tax in Virginia … fluctuate with economic activity because they’re a percentage.” 

Florida: The Tampa-Hillsborough County Expressway Authority (THCEA) has announced that it will sell $455 million as new credit.  Though the THCEA’s name is known in the bond market, in the past it has operated as an agency of the state with Florida's Division of Bond Finance selling bonds on its behalf.  However, in 2009 the Florida state legislature passed a bill that authorizes the THCEA to issue its own bonds.  A portion of the offering will provide new money to finance some capital projects, including a portion of a one-mile project called the Interstate 4 Connector.  Proceeds will also refinance all outstanding Series 2002 and 2005 bonds that were issued by the state on behalf of the Expressway Authority, repay a $49.2 million loan made by the Florida Department of Transportation from the state Infrastructure Bank, and repay a $7.4 million loan from the state Toll Facilities Revolving Trust Fund.

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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