Infrastructure Alert - February 13, 2013

by Cozen O'Connor

President Obama called for increased infrastructure and transportation spending in last night’s State of the Union address, stressing the need to fix failing infrastructure first and utilizing public-private partnerships where appropriate. As details emerge of his national infrastructure plan and its funding, we will keep you updated.

On February 2, the International Longshoremen’s Association and the U.S. Maritime Alliance reached a six-year, tentative deal, averting the potential for a strike across 16 East and Gulf Coast ports.  The deal is still subject to ratification by both sides, and details have not been released.  The previous contract extension was scheduled to expire February 6. Both sides had been operating on two subsequent short-term extensions since September 2012.


Today, February 13, the House Committee on Transportation and Infrastructure will hold a hearing titled “The Federal Role in America’s Infrastructure.”  Thomas J. Donohue, president and CEO of the U.S. Chamber of Commerce, former Pennsylvania Governor Ed Rendell, co-chair of Building America’s Future, and Terry O’Sullivan, the general president of the Laborers’ International Union of North America are slated to testify.  Witness testimony, as it becomes available, will be posted here.

Last week, the Senate Committee on Environment and Public Works held an Oversight Hearing on the Implementation of Army Corps of Engineers Water Resources.  Assistant Secretary of the Army for Civil Works Jo-Ellen Darcy testified that the Army Corps of Engineers will pursue alternative financing mechanisms to bolster funding to improve the nation’s water resources infrastructure.  Darcy floated public-private partnerships and founding an infrastructure bank as examples of what alternative financing mechanisms the Army Corps of Engineers may pursue.  She testified that sequestration would cut funding for the corps by as much as 8.2 percent across-the-board in all programs, including dredging and flood protection.  During the hearing, Senators Frank Lautenberg (D-N.J.) and Tom Carper (D-Del.) lobbied for additional disaster relief funding for areas affected by Hurricane Sandy to be added to the upcoming Water Resources Development Act reauthorization.

On January 31, the Senate Committee on the Environment and Public Works held a hearing titled “The Harbor Maintenance Trust Fund and the Need to Invest in the Nation’s Ports.”  Chairwoman Barbara Boxer (D-Calif.) and Ranking Member David Vitter (R-La.) both voiced their support that the Harbor Maintenance Trust Fund (HMTF), which is at a surplus of about $8 billion, be drawn on to repair aging port infrastructure and provide needed funds for dredging and expansion.  Both indicated they intend to introduce and pursue legislation similar to H.R. 335, the Realize America’s Maritime Promise (RAMP) Act, a bipartisan bill in the House that would direct all user fees and current interest on the balance of the HMTF to be directed for appropriations. Any appropriations from the HMTF, however, would need to be offset.

Representatives Ted Poe (R-Texas) and Janice Hall (D-Calif.), the co-chairs of the Congressional PORTS Caucus, have requested the House Transportation and Infrastructure Committee hold a hearing on the HMTF as soon as possible.

Senator Amy Klobuchar (D-Minn.) will chair the Subcommittee on Antitrust, Competition Policy and Consumer Rights in the Senate Judiciary Committee.  The proposed merger between US Airways and American Airlines to form what would be the nation’s largest airline would fall under this subcommittee’s jurisdiction.  The merger will undergo an antitrust review by the Department of Justice.

Senator Lisa Murkowski (R-Alaska) is considering placing a procedural hold on the nomination of Sally Jewell to Secretary of the Interior.  Murkowski is considering the hold in light of the unwillingness of the Department of Interior to approve the construction of a road in Alaska. Proponents of the road consider its construction crucial to health care access for a remote village, but critics consider its construction and use to be harmful to the environment as it would travel through the Izembek National Wildlife refuge.


Secretary of Transportation Ray LaHood has reiterated he will step down in the coming months.  President Obama has not indicated whom he intends to name as his successor.  Steven Chu has officially resigned from his post as Secretary of Energy, and President Obama has not nominated a successor.

Boeing has now completed two test flights of the 787 Dreamliner without any battery incidents. The Federal Aviation Administration (FAA), which grounded the flight last month, approved the test flights last week but has not released a time frame for the return of the 787 to commercial flight status.  In light of the incident, the National Transportation Safety Board is questioning the adequacy of the FAA’s policy of self-certification which allowed Boeing to certify the safety of its own lithium-ion batteries, and the FAA is reviewing the policy as well.

Last week, the Federal Transit Authority (FTA) released $2 billion in emergency relief funds from the Disaster Relief Appropriations Act of 2013 for transit systems damaged by Hurricane Sandy.  By statute, the FTA must issue interim regulations before the remaining $8.9 billion can be released.


Illinois: The Chicago Infrastructure Trust has named retired Lt. Col. Stephen S. Beitler, a venture capitalist, to serve as its first CEO.  His first goal will be to form a strategic approach and study best practices in other regions with greater experience in private-public partnerships.  The Chicago Infrastructure Trust was formed to entice private investment in the city’s public projects.  The Infrastructure Trust, one of Mayor Rahm Emanuel’s signature initiatives, is a 501(c)3 chaired by James Bell, a former Boeing official.  The Infrastructure Trust’s first project will be updating the Board of Education’s buildings to make them more energy efficient, which is estimated to cost about $50 million and will involve a multiple bid process.

Michigan: Governor Rick Snyder’s transportation plan includes raising state taxes on gasoline and diesel fuel to 33¢ per gallon in an effort to raise $1.2 billion to ameliorate the conditions of Michigan’s highways.  Under this increase, the current 19¢ per gallon gasoline tax, static since 1997, would rise by almost 75 percent and the current 15¢ diesel tax, dating back to 1984, would rise by 120 percent.  The increase in the gas taxes would raise an additional $728 million in tax revenue, and Snyder is pursuing higher registration fees as well.

Pennsylvania: Governor Tom Corbett has elaborated on his state transportation plans.  Under the governor’s plan, the flat tax paid by consumers would be lowered, and the tax gas stations pay on fuel would be increased.  The plan would increase the taxes paid on gasoline about 5¢ per gallon over the next five years to fund a $1.8 billion increase in transportation funding.  Corbett has maintained his plan is not a tax increase, as his proposal phases down then removes the cap to the wholesale gasoline tax after the first $1.25 per gallon of gasoline.  Critics, however, contend that not only is it indeed a tax, but the burden will ultimately be shifted to the consumer.

Virginia: Governor Bob McDonnell continues to pursue his transportation funding plan to eliminate the gasoline tax, increase the sales tax, and supplement that with other fees and taxes, such as a yearly electric vehicle fee.  McDonnell’s plan would raise $3.1 billion over five years.  If the state highway construction fund does not receive any additional revenue, it will be depleted by 2017.  The state gasoline tax has remained static at 17.5¢ per gallon since 1987, about 37¢ per gallon in today’s dollars.

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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