Infrastructure Alert - July 24, 2013

by Cozen O'Connor
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Tomorrow, President Obama will deliver a speech at the Jacksonville Port Authority. The speech is expected to involve remarks on the nation’s infrastructure and how the Administration will advance infrastructure investment. This is his second speech at a port this year. In March, President Obama announced his Partnership to Rebuild America four-year infrastructure plan at the Port of Miami.

On July 12, US Airways shareholders voted to approve the merger with American Airlines by a margin of 99.8 percent to 0.2 percent. The $12.8 billion merger still has several more hurdles to clear. The European Commission has announced that it will decide by August 6 whether it has approved the deal, after US Airways and American Airlines offered several concessions. The Department of Justice has been examining the deal for more than six months, and many state attorney generals have joined that investigation as well.

ON THE HILL

The House Transportation and Infrastructure Subcommittee on Highways and Transit held a hearing yesterday titled “How the Financial Status of the Highway Trust Fund Impacts Surface Transportation Programs.” Polly Trottenberg, the Under Secretary for Policy in the Department of Transportation, and Kim Cawlye, the Unit Chief in the Natural and Physical Resources Cost Estimates Unit of the Congressional Budget Office (CBO), testified. CBO has projected that the Highway Trust Fund annual deficit will near $100 billion by 2022.

Secretary Trottenberg discussed the modern history of the federal gasoline tax, noting that it had not been raised in 20 years, and the most recent two increases were done through bipartisan legislation. She added that, while the Obama Administration is proud of its increased CAFE standards, the accomplishment will reduce contributions to the Highway Trust Fund that need to be addressed. Chairman Thomas Petri (R-Wis.) asked what the Administration’s position was on funding the shortfall in the trust fund, to which Secretary Trottenberg replied that the Administration advocated that funds available from commitment drawdowns in Iraq and Afghanistan should be used to fund transportation programs at their current levels and to fund a new rail title as well. Rep. Nick Rahall (D-W.Va.), Ranking Member of the full committee, added that using the “peace dividend” would still be subject to a partisan congressional appropriation, and that it should be viewed as a “band-aid approach.” Rep. Donna Edwards (D-Md.) suggested raising the federal gasoline tax and indexing it to the consumer price index, but she was the only one to advocate a tax hike. Rep. Janice Hahn (D-Calif.) noted that because she has driven an electric automobile for the past two years, she personally has not paid federal gasoline taxes, and the law must adapt so that highway users such as herself will pay into the Highway Trust Fund somehow. While discussing alternative methods to fund the Highway Trust Fund, Secretary Trottenberg referenced the Oregon VMT (vehicle miles travelled) tax pilot program, and stated that while she was not advocating for its widespread adoption, she believed that innovative methods such as that should be considered.

Yesterday, the Senate voted to limit debate and proceed on S. 1243, the appropriations bill for the Department Transportation and the Department of Housing and Urban Development. The cloture vote was 73-26. Several Republican senators, including Appropriations Ranking Member Richard Shelby (R-Ala.), objected to the bill basing its budget on pre-sequestration amounts that exceed spending caps established by the Budget Control Act of 2011. The White House has threatened to veto the House bill, H.R. 2610, which is currently being considered in the House.

While the Senate bill is now expected to pass, the $54 billion Senate bill and the $44.1 billion House versions are so different that neither may pass before the new fiscal year. Notable differences include discrepancies between Amtrak and Transportation Investment Generating Economic Recovery (TIGER) grant funding. The Senate bill funds Amtrak at $1.45 billion, $137 million more than the FY2013 enacted level, whereas the House bill funds Amtrak at $950 million. The Senate bill funds TIGER grants at $550 million, whereas the House bill eliminates the program. Both the House and Senate bills fund the air traffic control contract towers through September. Both bills fully fund the Federal Transit Administration and federal highway program at the full Moving Ahead for Progress in the 21st Century (MAP-21) authorized levels. Both bills fund Airport Improvement Program grants at $3.35 billion.

On Monday, the House passed H.R. 2353, a bill that would permit the continued operation of trucks on the U.S. Route 41 corridor in Wisconsin when it becomes an interstate without regard to federal weight limitation requirements. The bill, introduced by Transportation and Infrastructure Subcommittee on Highways and Transit Chairman Thomas Petri (R-Wis.), would have no impact on the federal budget, according to the CBO. The exemption allows trucks that use the route to continue to do so without being subject to the stricter federal weight limit that federal interstate carry.

This morning, the Senate Committee on Environment and Public Works will hold a hearing titled “Oversight Hearing on the Implementation of MAP-21’s TIFIA Program Enhancements.” Notably, newly sworn-in Secretary of Transportation Anthony Foxx will testify for his first time representing the department as secretary. In the second panel, witnesses will include James Bass, Chief Financial Officer of the Texas Department of Transportation; Geoffrey Yarema, partner at Nossaman, LLP; Arthur T. Leahy, Chief Executive Officer of Granite Construction Incorporated; and D.J. Gribbin, Managing Director of Macquarie Capital. Testimony and video will be available here.

Rep. Bill Shuster (R-Pa.), Chairman of the House Committee on Transportation and Infrastructure, will face opposition in the Pennsylvania 9th District Republican primary. Shuster, who has won seven elections since his father, former Rep. Bud Shuster, resigned in 2001, has not faced a primary opponent since 2004. Art Halvorson, a businessman and Coast Guard veteran, and Travis Schooley, a farmer, are both challenging Rep. Shuster in the primary.

Rep. Peter DeFazio (D-Ore.) is the new Ranking Member of the House Committee on Natural Resources, after Rep. Raúl Grijalva (D-Ariz.) did not request a vote. In order to accept the new position, Rep. DeFazio resigned his chairmanship of the House Transportation and Infrastructure Subcommittee on Highways and Transit. Del. Eleanor Holmes Norton (D-D.C.) and Rep. Corrine Brown (D-Fla.) are both vying for the post. Del. Holmes Norton is the more senior of the two.

Rep. Matt Cartwright (D-Pa.) and six House Democrats have introduced H.R. 2730, the Safe and Fair Environment on Highways Achieved through Underwriting Levels (SAFE HAUL) Act. The bill would increase the truck insurance minimum from $750,000 to $4,422,000, and would allow the minimum to be adjusted annually to account for inflation relating to medical care. The minimum has not been changed in 30 years.

Senate Commerce Chairman Jay Rockefeller (D-W.Va.) has requested the Government Accountability Office to examine the impact of shale oil and gas development on existing transportation channels, including pipelines, rail, and highways, and potential new infrastructure.

Sen. Chuck Schumer (D-N.Y.) has requested that the Transportation Research Board and the National Transportation Safety Board investigate the impacts of extreme heat on the national rail infrastructure.

Sen. Ed Markey (D-Mass.) has joined the Senate Committee on Commerce, Science and Transportation.

H.R. 1848, a bill that would allow the FAA to create new certification process for small-plane manufacturers, passed the House by a vote of 411-0 on July 16. Mike Pompeo (R-Kan.) introduced the bill, and the bill enjoys a wide bipartisan support in the Senate as well. The bill aims to remedy the current certification process, which is considered to be both expensive and convoluted, through new FAA regulations by 2015.

AT THE AGENCIES

Janet Napolitano resigned as Secretary of Homeland Security on July 12 to become the President of the University of California system. President Obama has not yet nominated a successor.

The Department of Transportation Inspector General has initiated an audit of the Federal Highway Administration’s major projects. The audit will assess select projects to determine if FHWA oversight ensures that states prepare initial finance plans and project management plans that comply with FHWA guidance and update plans to address the actions needed to mitigate cost, schedule, and funding risk.

On July 15, the FAA released its final rule on second-in-command airline transport pilots. These pilots are now required to be at least 23 years of age and have accumulated 1,500 hours of total flight time as a pilot. The rule became effective July 15 and compliance is required by August 1, 2013.

IN THE STATES

Massachusetts: On Friday, July 19, Governor Deval Patrick vetoed the Massachusetts transportation financing bill. The governor had threatened to veto the transportation financing bill if the legislature did not include a gas tax provision that he requested, and despite his insistence, both the Senate and the House of Representatives passed the bill without it. Governor Patrick vetoed the bill, instructing that a provision be added to provide for an automatic increase in gasoline taxes if some tolls are removed on the western portion of the Massachusetts Turnpike, as is scheduled in 2017. The Senate, however, passed the bill by a 29-9 vote, a margin above the two-thirds required to overturn the governor’s vote, and the law is expected to pass over the governor’s veto by the end of the week. The bill will increase taxes by $500 million over the next 10 years to finance stalled transportation projects.Regardless of the governor’s requested provision, the bill increases the gasoline tax by 3¢ per gallon to 24¢ per gallon, would increase the cigarette tax by $1, and would impose the state sales tax on computer and software services.

North Carolina: Leadership in the North Carolina House and Senate have reached an agreement on a $20.6 billion budget deal. On the infrastructure front, the budget would overhaul the state Highway Trust Fund. The budget would use the Strategic Mobility Formula, which will consolidate funding streams and is designed to accelerate infrastructure projects at the state, regional and local level.

Virginia: The American Road and Transportation Builders Association (ARTBA) and the National Conference of State Legislatures (NCSL) have filed an amicus curiae brief in the Virginia public-private partnership (P3) case before the Supreme Court of Virginia. ARTBA and NCSL disagree with the lower court ruling that Virginia’s P3 law is unconstitutional because it allowed the Virginia Department of Transportation to set toll rates. ARTBA and NCSL also have expressed their concern that the ruling may discourage P3 laws and agreements in other states.

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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