Infrastructure Alert - June 19, 2013

by Cozen O'Connor

New York State Comptroller Thomas P. DiNapoli released a report titled Private Financing of Public Infrastructure: Risks and Options for New York State, which chronicles the state’s public-private partnership progression and has the potential to serve as a roadmap for other states. The report details the success in design-build public-private partnerships, particularly with the Tappan Zee Bridge, and proper structuring of agreements to ensure taxpayer value. Additionally, the report encourages the state to allow for additional agencies to form public-private partnership agreements, and authorize the use of design-build-finance public-private partnerships.

With New York’s continued success in design-build agreements, both in-state and out-of-state contractors and agencies stand to benefit from the recommendations of the report to ensure sound public-private partnerships. The report details the necessity to create a specialized entity to oversee agreements, develop staff expertise to evaluate and manage agreements, require independent evaluations of cost-benefit analyses, require complete financing plans, require competitive bidding processes, require contract approval, prohibit unfunded future obligations, ensure responsible use of any financial benefit, and ensure full transparency and accountability for projects.

The three largest international shipping operators, Maersk Line, CMA-CGM, and MSC Mediterranean Shipping Company S.A. have formed the P3 Network to improve service operations and reduce fuel consumption. The P3 Network will be an independently operated network with 255 vessels and an operating capacity of 2.6 million containers.


Yesterday, the House Appropriations Committee released its $44.1 billion appropriations bill for the Department of Transportation and the Department of Housing and Urban Development, which the subcommittee will markup today. The bill appropriates $7.7 billion less than FY2013 levels, $13.9 billion less than the President’s budget proposal, and $4.4 less than the post-sequestration levels. The bill appropriates $41 billion for the Federal Highway program from the Highway Trust Fund, the full amount from the Moving Ahead for Progress in the 21st Century Act (MAP-21).

The bill includes $11.8 billion for the Federal Aviation Administration (FAA). Of the $11.8 billion, $9.5 billion is for operations, and over $2 billion for facilities and equipment. The bill funds $3.2 billion in Airport Improvement Program grants. The bill would appropriate $950 million for Amtrak, including $350 million in operating grants. The $600 million remainder is far less than the $950 million appropriated by the FY2013 continuing resolution and the $1.45 billion appropriation the committee passed last year. The bill funds the Federal Railroad Administration at $1.16 billion and the Federal Transit Administration at almost $2 billion. The bill includes $8.6 billion in transit funding from the Mass Transit Account of the Highway Trust Fund. The bill additionally includes $1.82 billion in Capital Investment grants. 

Today, the Senate Commerce, Science and Transportation Committee is holding a hearing on airline industry consolidation. Witnesses include Department of Transportation Assistant Secretary for Aviation and International Affairs Susan Kurland, Government Accountability Office Director of Civil Aviation Issues Dr. Gerald Dillingham, US Airways Group Chairman and CEO W. Douglas Parker, American Airlines Senior Vice President and General Counsel Gary Kennedy and Consumer Travel Alliance Director Charlie Leocha. Testimony will be available here. The major focus of the hearing is expected to be the $11 billion merger of US Airways and American Airlines.

Transportation Secretary nominee Mayor Anthony Foxx was unanimously approved by the Senate Commerce Committee last week.  The FAA has provided Ranking Member John Thune (R-S.D.) with relevant documents pertaining to sequestration implementation, and he has stated that he is expecting Mayor Foxx’s nomination floor vote to go smoothly

Yesterday, the House Appropriations Subcommittee on Energy and Water approved its FY2014 appropriations bill by a voice vote. Rep. Nita Lowey (D-N.Y.), the Ranking Member of the full committee, was present for the vote, stating that she intends to vote no on the bill due to its insufficient allocation for infrastructure spending.

Rep. Ed Whitfield (R-Ky.), Rep. Nick Rahall (D-W.Va.), Rep. William Enyart (D-Ill.), and Rep. David McKinley (R-W.Va.) have introduced H.R. 2351 that would repeal a provision of the Energy Independence and Security Act of 2007 that requires a reduction of fossil fuel energy in powering federal facilities. The Department of Energy has not issued a final rule to implement the provision.

Sen. Mark Warner (D-Va.) has assumed the chairmanship of the Senate Commerce Subcommittee on Surface Transportation and Merchant Marine Infrastructure, Safety, and Security following the passing of Sen. Frank Lautenberg (D-N.J.). Sen. Warner resigned his chairmanship of the Competiveness, Innovation and Export Promotion Subcommittee to take the post.

On January 1, 2014, commuter pretax spending benefits for public transportation will drop from $245 per month to $125 per month, whereas tax benefits for parking will remain at $245. In the Senate, Sen. Chuck Schumer has introduced S. 1116, the Commuter Benefit Equity Act of 2013. His bill would extend the benefits for both transit and parking, adjusted yearly to inflation. In the House, Rep. Earl Blumenauer (D-Ore.), Rep. Michael Grimm (R-N.Y.), Rep. Peter King (R-N.Y.), and Rep. James McGovern (D-Mass.) introduced the Transit Parity Act.  This bill would cap each benefit at $220 per month.

Senate Environment and Public Works Committee Chairwoman Barbara Boxer (D-Calif.) has stated that her committee will discuss S. 332, the Climate Protection Act of 2013, in a hearing in mid-July with the goal of bringing it to the floor sometime this summer. The CBO has estimated that the carbon tax bill would raise about $1.2 trillion in fees throughout the next 10 years. The bill would return 60 percent of revenue to citizens to offset higher energy costs.


The National Highway Traffic Safety Administration released a study, conducted by the University of Michigan Research Institute, that details the estimated economic benefits and safety improvements from widespread adoption of crash-avoidance technology that engages truck brakes automatically before an impending crash. The study found that such technology could prevent as many as 300 fatalities per annum and yield $3.1 billion in economic benefits. The study concluded that about 24 percent of collision deaths could be avoided with such collision mitigation system, and with improving technologies, perhaps as high as 57 percent. The systems would cost as much as $2,300-$2,500 per truck.

Transportation Secretary Ray LaHood announced that the Department of Transportation received 568 TIGER (Transportation Investment Generating Economic Recovery) applications for grants, totaling $9 billion. The TIGER program is currently funded at a reduced $474 million due to budget sequestration. This was the fifth round of TIGER grants.


California: Last week, the Surface Transportation Board (STB) approved the first 65-miles of California high-speed rail, Merced to Fresno, in a 2-1 vote.  The STB decision includes several environmental considerations, including the requirement that the California High-Speed Rail Authority to use the route determined by the Federal Rail Administration to have the least environmental impact.  Vice Chairwoman Ann Begeman voted against it, citing her concern over an overreliance on federal money and lack of public interest. House Transportation and Infrastructure Subcommittee on Railroads, Pipelines, and Hazardous Materials Chairman Jeff Denham (R-Calif.), a persistent opponent of the project, echoed Vice Chairwoman Begeman’s concerns.

Virginia: Del. Joe May and Del. Beverly Sherwood, both 20-year veterans of the House of Delegates, lost in their respective primaries to opponents who criticized their support of Gov. Bob McDonnell’s transportation bill. Two other Republican delegates survived a primary challenge. However, only four of the 34 Republican delegates drew primary challenges. Conservative anti-tax groups who opposed Gov. Bob McDonnell’s transportation package had warned of mass primary challenges.

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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