Infrastructure Alert - March 13, 2013

by Cozen O'Connor

Sequestration began on March 1, and federal agencies are still in the process of sending out furlough notifications and determining specific program cuts.  The continuing resolution authorizing current federal spending will expire March 27, and without legislation, a government shutdown would occur on March 31.  The House of Representatives passed their version of a new continuing resolution providing for funding through the end of the fiscal year, and the Senate is expected to take up its version this week.   

At a meeting of the President’s Export Council, President Obama revealed that the White House budget proposal will include investments in waterway maintenance, emphasizing the importance of strengthening the national port and waterway infrastructure, especially in light of last year’s major drought in the Mississippi River.


The House of Representatives passed a continuing resolution (CR), H.R. 933, on a vote of 267 – 151, with 50 Democrats voting in the affirmative.  The bill reduces transportation funding levels from the 2012 surface transportation reauthorization, Moving Ahead for Progress in the 21st Century Act (MAP-21), through September 30, 2013.  The bill cuts roughly $700 million from transportation programs – $555 million of cuts to highway funding, $48.5 million of cuts to highway safety funding, and $117 million of cuts for transit funding.  The CR extends FY 2012 funding levels, which cuts the increase authorized by MAP-21.  Sen. Barbara Boxer (D-Calif.), Chairwoman of the Senate Committee on Environment and Public Works, Sen. Jay Rockefeller (D-W.V.), Chairman of the Senate Committee on Banking, Housing, and Urban Affairs, and Sen. Tim Johnson (D-S.D.), Chairman of the Senate Committee on Commerce, Science, and Transportation, wrote Speaker John Boehner (R-Ohio) expressing their dismay that MAP-21 spending had been cut, considering it was “fully paid for” through the federal gasoline tax, fee increases and the closing of tax loopholes.

The Senate version of the continuing resolution does fund the level of spending authorized for highways and rail under MAP-21, but does not include a comprehensive transportation budget addressing the other components of MAP-21.  Senate Democrats want to avoid political fights that may disrupt passing the CR, such as the inclusion of California high-speed rail.  Both sides are expected to agree on the Senate version early next week to avoid a government shutdown.

Rep. Paul Ryan (R-Wis.), Chairman of the House Budget Committee, unveiled his budget plan yesterday.  The FY 2014 budget blueprint describes highways and transit programs as having “become distorted, leading to imprudent, irresponsible and often downright wasteful spending,” and that “however worthy some highway projects might be, their capacity as job creators has been vastly oversold.”  The document suggests high-speed rail and other heavily subsidized programs should only be pursed if they can be self-supporting.

Sen. Bob Casey (D-Pa.) has introduced S. 407, the Reinvesting in Vital Economic Rivers and Waterways Act of 2013.  If passed, the RIVER Act would increase the Inland Waterways User fee from 20¢ per gallon to 29¢ per gallon beginning in 2014.  Industry seems supportive of the bill despite increased user fees, as the American Waterways Operators and the Waterways Council have endorsed the bill.  The bill also includes project management process reforms and directs the Secretary of the Army and Inland Waterways Users Board to develop a capital investment program for inland waterways projects over the next 20 years. 

Rep. Nick Rahall (D-W.V.) has introduced H.R. 949, the Invest in American Jobs Act of 2013.  The bill strengthens existing “Buy American” provisions for investments in aviation, rail, highways and public transit to require that all of the steel, iron and manufactured goods used are produced in the United States.  The bill would extend the “Buy American” provisions to additional federal infrastructure and transportation loans, loan guarantees and grants, including Clean Water State Revolving Fund grants and Economic Development Administration grants.  The bill would also allow for waivers but requires the federal agency justify any proposed waiver through adequate public notice.

Sen. Jay Rockefeller (D-W.V.) and Sen. Frank Lautenberg (D-N.J.) have introduced the American Infrastructure Investment Fund Act of 2013, S. 387.  Upon enactment, the bill would create a national infrastructure fund within the Department of Transportation, funded at $5 billion a year over FY 2014-2015.  While the bill does not explicitly refer to the fund as a bank, the fund is essentially the national infrastructure bank that President Obama called for as part of his national infrastructure plan in the January State of the Union address.  The fund can utilize loans or loan guarantees and can be used to finance rail, port, pipeline, airport, highway, bridge and public transportation projects, amongst others.  The bill also authorizes a $600 million National Infrastructure Investment Grant program within the Department of Transportation funded over FY 2014-2015. 

Rep. Bill Shuster, Chairman of the House Committee on Transportation and Infrastructure, and Sen. John Thune, Ranking Member of the Senate Committee on Commerce, Science, and Transportation, continue to press Secretary of Transportation Ray LaHood in a letter requesting  more information on budget cuts due to sequestration.  Shuster and Thune have been vocal in their insistence that LaHood and FAA Administrator Michael Huerta’s insistence on massive furloughing is not necessary and are requesting details as to how budget cut decisions have been made.  Thune and Shuster similarly recommend cutting items such as consultants and the travel budget in lieu of furloughing employees or shutting down Air Traffic Control towers.


The Office of Management and Budget (OMB) has released its final numbers for budget cuts due to sequestration.  The Department of Transportation’s budget will be cut by $1.943 billion, including $637 million in cuts to the FAA, $396 million in cuts to the TSA, and $77 million in cuts to Amtrak. 

On March 11, the FAA released a list of 173 air traffic control towers it intends to close because of budget sequestration.  The FAA will not begin furloughing its employees or closing towers until April 7.  The FAA will release a final list of closures on March 18. 

The National Transportation Safety Board (NTSB) is continuing its probe into the lithium-ion battery fire on the Boeing 787 Dreamliner.  The NTSB is currently looking into its manufacturing process, how batteries are charged, and how charges are monitored.  The cause of the short circuit that caused the fire has not been discovered.

The Brookings Institution released a report on Amtrak ridership titled “A New Alignment: Strengthening America’s Commitment to Passenger Rail.” Eighty percent of its ridership occurs on 26 routes of short corridors of 400 miles or less, and short runs are responsible for nearly all of its 55 percent ridership gain since 1997.  The report also showed that 15 of Amtrak’s least-traveled routes, all over 750 miles, lost a total of $597.3 million in 2012.  The report also showed that the Acela and Northeast Regional routes have a positive operating cost of $205.4 million, including subsidy.

On March 6, the Department of Transportation released the first $390 million in aid for Hurricane Sandy affected areas.  By statute, $2 billion of the $60 billion Disaster Relief Appropriations Act must be released no later than March 30.  The aid package is subject to sequestration and will be reduced by $646 million – $545 million from transit relief and $101 million from highway relief.


Maryland: Governor Martin O’Malley introduced his transportation plan last week.  The proposal is expected to increase revenues by $3.4 billion over the next five years. The plan introduces a new wholesale tax on gasoline indexed to inflation and economic growth. Governor O’Malley is also advocating for cutting the existing 23.5¢ per gallon gasoline tax to 18.5¢ per gallon and supplementing lost revenue through the new 4 percent wholesale gasoline tax, resulting in motorists paying an estimated additional 2¢ per gallon at the pump.  Governor O’Malley’s proposal also echoes Virginia Governor Bob McDonnell’s proposal to assume federal legislative action allowing states to tax Internet transactions by 2015.  In O’Malley’s plan, if Congress fails to pass such a provision, the Maryland state wholesale gasoline tax increases from 4 percent to 6 percent.

New Hampshire: On March 6, the New Hampshire House of Representatives voted on a bill to increase the state gasoline tax by 15¢, an 83 percent increase, over the next four years by a vote of 207-163, with 15 Republicans and 192 Democrats voting in the affirmative and 10 Democrats and 153 Republicans voting in the negative.  As the bill involves state revenue, it must return to House Ways and Means Committee again, and be voted on a second time to pass.  In the Senate, Republicans hold 13 of the 24 seats.  Republicans attempted to defeat the bill through a series of procedural motions, first to suspend the rules, which passed, then to table the bill without debate, which failed, then to amend the bill to ban the state from funding state troopers and other non-transportation expenses from the highway fund, which also failed.

New York: Of the $390 million released by the Department of Transportation from the Disaster Relief Appropriations Act of 2013, the New York Metropolitan Transit Authority received $193 million for repair and restoration of the East River tunnels, the South Ferry/Whitehall station, the Rockaway line, rail yards, maintenance shops and heavy rail cars.  The Port Authority Trans-Hudson Corp. received $54 million for the World Trade Center Hub Project and $141 million to repair commuter rail service between New York and New Jersey.

Pennsylvania: Under the Disaster Relief Appropriations Act of 2013, the Southeastern Pennsylvania Transportation Authority (SEPTA) received a grant of $1.19 million from the Department of Transportation.

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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