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Up to date information on major Federal infrastructure initiatives.
May 1, 2017 Interim Update
prepared by CATHY CONNOR - DIRECTOR OF FEDERAL GOVERNMENT AFFAIRS
This morning the House and Senate Appropriations Committees released the text of the final FY'17 funding/appropriations bill for US DOT and many other federal agencies. The THUD (US DOT) bill is part of a large multi-agency omnibus bill rather than a stand-alone bill. The goal is to pass the omnibus on the House and Senate floors this week before the latest short-term Continuing Resolution (CR) expires on Friday.
The THUD bill honors the FAST Act authorized funding levels for FY'17 and does not incorporate the spending cuts recommended by President Trump - at least not for FY'17 - FY'18 could be a different story.
Here are links to:
The text of the full omnibus bill - here- see Division K for the US DOT portion of the bill starting on page 1464 of the document
The explanatory statement for Division K - here
Additional details -
FHWA - the full FAST Act authorized level of $43.26B for the highway program. This includes the FAST Act authorized level of $850M for the popular FASTLANE discretionary grant program and full funding for TIFIA financing program.
FAA - the full authorized level of $3.35B for the construction-related Airport Improvement Program (AIP).
FRA - in addition to the $1.45B total for Amtrak (versus the FY'16 level of $1.39B), the bill also provides modest funding for the first time for three new FAST Act rail discretionary grant programs - $68M for the Consolidated Rail Infrastructure/Safety Grants (CRISI), $25M for the State of Good Repair Grants, and $5M for the Rail Restoration/Enhancement Grants.
TIGER - the same level of $500M as in FY'16. The bill decreases the maximum TIGER grant from $100M to $25M and also reduces the maximum share that can be awarded in a single state each year from 20 percent to 10 percent. As in FY'16, planning work is not eligible for TIGER grants.
FTA - the full FAST Act authorized level of $9.73B for transit formula grants, in addition to $2.41B (versus $2.17B in FY'16) for Capital Improvement Grants (CIG) - New Starts, Small Starts and Core Capacity Projects. The bill funds the full $199M in one-time funding for commuter rail implementation of Positive Train Control (PTC) and the full $150M for DC's WMATA transit system. The CIG funding is enough to fund all the transit projects with FFGAs (approximately $1.56B) as well as projects without an FFGA. The explanatory statement - see page 32 in the link above - lists the FFGA and non-FFGA projects eligible to be funded. They include 4 "New FFGA" projects, 3 "New Core Capacity Projects", and 10 Small Start projects. Project funding of note:
Maryland Purple Line - $125M
California CALTRAIN Electrification - $100M
New York Canarsie Power Improvement - $83.6M
Assuming the omnibus passes this week, which it is expected to do, and the President signs the bill, the big question remaining is how will US DOT implement the FY'17 appropriations given that President Trump has said he does not support funding for TIGER, the Amtrak long distance system, or CIG projects without FFGAs.
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Congress is back in session after a two-week recess. The most immediate concern they must address is that the current short-term Continuing Resolution (CR), which is funding the federal government, expires this Friday, April 28. As of this morning, there is no clear resolution in sight which raises the possibility of a government shutdown. The potential options Congress can take to avoid a shutdown include passing:
A year-long CR which would fund the government through the end of FY'17 - September 30, 2017 - but at generally lower FY'16 funding levels.
A number of actual FY'17 federal agency appropriations bills, including the THUD (US DOT) funding bill, as part of an omnibus package.
Passage of some actual FY'17 appropriations bills did not occur before the recess because of congressional concern - from many members of both parties - that the Trump Administration was insisting on attaching funding for construction of the Mexican border wall and additional DOD funding. However, as of yesterday, the Administration has somewhat backed off on the need for immediate funding for the wall which may allow an omnibus appropriations package to proceed.
There has been no additional information provided by the Administration on the timing of the release of its formal, detailed budget recommendations for FY'18. Previous statements by OMB Director Mick Mulvaney indicated a release by early to mid-May.
In several public statements last week, President Trump said he plans to make a major announcement tomorrow regarding his tax reform plan. However, many observers believe it is likely the announcement will be more of a broad statement of principles and less of a list of specific details. In addition, it is expected that the Administration's tax plan is likely to differ - perhaps substantially - from the tax blueprint which the House Republican leadership has been promoting. There have been no indications if the White House's tax plan will include funding or tax changes related to infrastructure.
There has been no further information released by the Administration about an infrastructure package. US DOT Secretary Chao previously indicated a plan might be released in mid-May, leading some to believe it could be unveiled during Infrastructure Week - the week of May 15, but more recently Chao was quoted as saying "this summer". The effort could be pushed back if the Administration decides to take another run at healthcare reform.
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Members of Congress have headed back home to their states and districts for a two-week spring recess. They will return to work on April 25. That is only a few days before April 28 when the current short-term Continuing Resolution (CR) which funds the government expires. While it is possible that this could result in a government shutdown, it appears that both parties want to avoid that outcome. It is likely that Congress will pass another very short-term CR - perhaps lasting a week or two - while they finalize a plan to fund the remainder of FY'17. As discussed at length in the March 28 Washington Update, Congress can opt to pass a year-long CR which would fund the government through September 30 at the FY'16 levels or pass some individual FY'17 funding bills, including the THUD (US DOT) bill, as part of an omnibus package of bills. Congress may opt to go with a year-long CR in order to avoid pressure from the White House to use an omnibus FY'17 appropriations bill as a vehicle for $1.4B in funding to build the border wall between the US and Mexico.
After the recess, congressional leaders will have to decide whether to try to bring up healthcare reform once again - perhaps using infrastructure funding as a "sweetener" per President Trump, move on to consider a major tax reform bill - which could incorporate a funding source for an infrastructure bill, or start to craft a stand-alone infrastructure bill.
In mid-March, the Trump Administration released a so-called "skinny" budget for FY'18 which begins on October 1, 2017. The limited budget focused primarily on programs recommended to be cut or eliminated. A full budget request is expected to be released in mid-May. In the meantime, Congress has begun its efforts to draft an FY'18 Budget Resolution and the 12 FY'18 federal agency funding bills.
While it is anticipated that Congress will not accept the Administration's recommendations to eliminate funding for such popular transportation and infrastructure programs as TIGER, transit Capital Improvement Grants (CIG) that don't have Full Funding Grants Agreements (FFGAs), and Amtrak service outside the Northeast Corridor, industry stakeholders and project sponsors are not taking any chances and have been voicing strong opposition.
Thirty three US Senators signed a letter to the leadership of the Appropriations Committee opposing cuts to the transit CIG program and over 90 House members wrote a similar letter to the House Appropriations Committee. Local elected officials and key business leaders are weighing in with Congress in support of funding for critical local projects.
While no plan has been unveiled yet for President Trump's $1T infrastructure proposal, both the President and US DOT Secretary Elaine Chao discussed various aspects of a potential plan on several occasions last week, particularly in a Trump interview with the New York Times and at a White House CEO Forum which both Trump and Chao spoke at.
Some key points they made are highlighted below:
President Trump -
Secretary Chao -
Administration Personnel News
Last week, the Senate Commerce Committee approved the nomination of Jeffrey Rosen to be US DOT Deputy Secretary. It was a close partisan vote of 15 to 12. Only one Democrat voted to approve Rosen. Senator Corey Booker (D-NJ) voted against the nomination because of "Rosen's lack of commitment to supporting funding for New Starts and other critical programs for our nation's infrastructure, including the Gateway Program." Here is a link to Rosen's bio.
The Administration has announced its intention to nominate Derek Kan to be the US DOT Under Secretary for Policy, the number 3 position at the Department. Based in Los Angeles, Kan is currently the General Manager of Lyft, the ride-sharing company. He was named by President Obama as a Republican nominee to the Amtrak Board and confirmed by the Senate in December 2015. He previously served as Director of Strategy at a biotech startup, Consultant at Bain & Company, Advisor at Elliott Management, Policy Advisor to Senate Republican Leader Mitch McConnell and the Chief Economist for the Senate Republican Policy Committee. He began his career as a Presidential Management Fellow at the White House Office of Management and Budget. He earned his BS from the University of Southern California, MSc from the London School of Economics, and MBA from the Stanford Graduate School of Business.
Russ Vought, formerly vice president of grassroots outreach for Heritage Action for America and a member of the Trump transition team, has been nominated to serve as deputy director of OMB, the White House announced Friday. Many of the cuts proposed for transportation, EPA, and other infrastructure programs in the Administration's FY'18 "skinny" budget were originally proposed by Heritage Action, a fiscally conservative think tank.
No other US DOT nominations have been announced to date including for the Administrators of FHWA, FTA, FRA, etc.
MPO Rulemaking - Following passage by the full Senate, the House T&I Committee has voted to repeal the December 2016 final rule from US DOT that would require many local metropolitan planning organizations (MPOs) in the same region to merge. The rule, "Metropolitan Planning Organization Coordination and Planning Area Reform", was broadly unpopular with MPOs and other stakeholders - during the public comment period, only 16 commenters supported the rule while 299 opposed it. The full House is expected to take up and pass the repeal (HR 1346) in May.
FAA Reauthorization -There has been no movement on a bill to reauthorize the FAA despite the fact that the short-term extension of aviation authorization expires on September 30, 2017. Controversy over House T&I Committee Chairman Bill Shuster's plan to privatize the Air Traffic Control (ATC) system has not abated. The Trump Administration included a recommendation to move the ATC out of the FAA in its FY'18 "skinny" budget, however, strong opposition to the plan continues. In related news, Rep. Peter DeFazio (D-OR), the senior Democrat on the House T&I Committee, has introduced a bill to increase the cap on the Passenger Facility Charge (PFC), which is used by airports to fund capital improvements.
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Last week was a very busy one for Congress and the Trump Administration - SCOTUS confirmation hearings, discussions on both the FY'17 and FY'18 budgets, and, of course, the decision to pull the healthcare reform bill. Many observers are concerned that other Trump legislative priorities, such as the $1T infrastructure initiative and the tax reform bill that is needed to fund such a plan, may be postponed indefinitely while congressional Republicans regroup and the White House finds its footing again. However, others believe that this is an opportune time for the President to work with Democrats to craft a bi-partisan infrastructure bill that could be a win for all sides.
FY'17 began on October 1, 2016 - over six months ago. Congress has not been able to pass any FY'17 federal agency appropriations bills. In the meantime, federal agencies are operating under a temporary Continuing Resolution (CR) which expires on April 28. Under the current CR, all US DOT and other infrastructure programs are funded at FY'16 funding levels. Since Congress will be on recess for two weeks in mid-April they will most likely have to act by April 7 in order to avoid a government shutdown.
Congress has two options. One is to pass a year-long CR which will fund the remainder of FY'17 (through September 30, 2017) at the typically lower FY'16 levels. However, there is a rumored possibility that a year-long CR might include an "anomaly" to fund Highway Trust Fund programs at the higher FY'17 FAST Act authorized levels. There may also be an "anomaly" to provide the $199M in FY'17 funding for Positive Train Control (PTC) implementation.
Or Congress can pass actual FY'17 appropriations bills which for most programs would provide higher levels of funding than in FY'16. Congressional staff has indicated that a FY'17 THUD (US DOT) appropriations bill has been reconciled and is ready to go, although the funding details have not been made public. It is now up to congressional leaders to decide whether to bring the bill to the floor - likely as part of a "omnibus" package with other agency bills - or simply extend the CR yet again. This decision will likely be made at the highest leadership levels based on national politics and legislative priorities, not on the merits of the individual bills.
However, to further complicate matters, late on Friday, the Trump Administration opted to send recommendations to Congress on cuts they want in FY'17 domestic discretionary programs. This is in addition to the FY'18 budget recommendations the Administration sent to Congress two weeks ago (see below). The Administration's proposed cuts for FY'17 are very, very unlikely to occur since, as noted above, Congress has generally already agreed on funding levels for FY'17. The Administration recommendations include "reduction options" for only two US DOT programs. First, it proposes to eliminate all FY'17 TIGER funding (FY'16 funding was $500M).
Second, the Administration recommends providing only $1.7B for transit Capital Improvement Grants (CIG) which is only enough to fund projects with existing Full Funding Grant Agreements (FFGAs). The CIG program (New Starts, Small Starts, and Core Capacity projects) is authorized in the FAST Act at $2.3B for FY'17. There are currently 55 projects at some point in the CIG pipeline. Perhaps more disturbing, the Administration proposes "to suspend additional projects from entering the program and believes localities should fund these localized projects". This language appears to say that the Administration will not sign any new FFGAs, including potentially for prominent CIG projects such as the Maryland Purple Line (a P3 project), CALTRAIN electrification (has implications for CAHSR), NJ/NY Gateway (a critical regional project), Indianapolis Red Line, Minneapolis SW line, and Dallas DART.
Despite the funding uncertainty, at this time, FTA staff is urging project sponsors to continue to work to move projects through the CIG pipeline. See more on CIG grants below.
The FY'18 fiscal year begins on October 1, 2017. The Trump Administration is not expected to release a full FY'18 budget recommendation until early May. In the meantime, two weeks ago it released a so-called "skinny" budget. The budget only references funding levels for a very limited number of programs with a focus on domestic discretionary programs. In the case of US DOT, there is no mention in the "skinny" budget of any so-called "mandatory" programs funded through the Highway Trust Fund, such as highway and transit formula programs, TIFIA, and FASTLANE grants. The assumption is that these programs will be recommended for full funding when the formal budget is released in May.
The "skinny" budget proposes to terminate FY'18 funding for TIGER grants, FTA Capital Improvement Grants (CIG) except for projects with existing Full Funding Grant Agreements (FFGAs), Amtrak's long distance service, and the Essential Air Service (EAS) program for rural airports. The budget also proposes significant cuts to federal agency personnel. Here is a link to a press release issued by US DOT Secretary Elaine Chao in support of the Administration's budget request.
However, the Administration can only recommend funding levels. It is up to Congress to determine actual funding. TIGER, CIG, Amtrak, and EAS are very popular programs with Congress. While many Republican members will want to support the President, many others will want to support their own funding priorities and protect popular local projects. House members, in particular, will be mindful that they need to get reelected in 2018.
Many observers have pointed out that there seems to be a disconnect between the recommended funding cuts and President Trump's promise of a $1T infrastructure bill. However, the Administration has indicated that it wants to cut what it views as inefficient and ineffective programs and use the savings to fund what it considers to be more valuable programs in a subsequent infrastructure proposal. The rationales given by the Administration for the cuts include: state and local governments should manage and fund these programs, the federal government should not be funding or subsidizing projects that don't have regional or national impacts, the private sector could more effectively deliver the programs, and the programs are duplicative of other programs i.e. TIGER and FASTLANE.
Industry associations and stakeholders, project sponsors, state and local elected officials, and supportive members of Congress have begun major lobbying efforts to protect and defend the CIG, TIGER, and Amtrak programs, in particular. Here is a link to a "Dear Colleague" letter that is being organized in the House by Rep. Earl Blumenauer (D-OR) to urge the appropriators not to cut funding for the CIG program.
Before the Obama Administration left office it issued FY'17 Notices of Funding Opportunities (NOFOs) for two discretionary grant programs - Positive Train Control (PTC) and FASTLANE. Applications were received for both programs, but grants were never announced. Until Congress approves funding for the entirety of FY'17, these grants cannot be released. It is generally expected that Congress will include the $199M authorized for the PTC program in whatever funding it passes for FY'17. It is anticipated that US DOT will announce the grants shortly thereafter because the selection criteria the Obama Administration used was based solely on the statute, only one year of funding was authorized, and the funding is for critical rail safety projects.
The FASTLANE grants also cannot be released until all the FY'17 funding has been appropriated - $850M was authorized for FY'17 in the FAST Act. FASTLANE grants are aimed at nationally and regionally significant multi-modal freight and highway projects. It is possible that the Trump Administration may opt to "rebrand" the program and establish new selection criteria more in line with its priorities (such as private sector participation) rather than the Obama Administration's priorities. It could opt to reissue the NOFO and request updated project information or even new or revised applications. The President's FY'18 "skinny" budget request does not address FY'18 funding for FASTLANE grants which are authorized in the FAST Act at $900M. FASTLANE grants are funded from the Highway Trust Fund, not with general funds, and therefore appear to be protected.
US DOT also cannot release FY'17 funding for the popular TIGER grants until a full years funding is in place. Despite the Trump Administration's recommendation to cut all funding for TIGER in both FY'17 and FY'18, we expect Congress to fund the program at approximately the same level as in FY'16 - $500M. Many key congressional leaders are big fans of the TIGER program since critical projects in their states/districts have previously won TIGER grants. The Obama Administration, which essentially created the TIGER program in the 2009 ARRA economic stimulus act, did not release a NOFO for FY'17 TIGER grants before it left office. It is likely that the Trump Administration, assuming they proceed with a TIGER NOFO, will want to rename this program and refocus the criteria towards its priorities, such as P3 projects, and away from Ladders of Opportunity and other Obama priorities.
Yesterday, Attorney General Jeff Sessions announced that the Justice Department will begin to implement a recent Trump Administration Executive Order by requiring local and state governments to comply with federal provisions regarding so-called sanctuary cities before those jurisdictions can receive or remain eligible for certain federal grants. He said the department would withhold, and potentially claw back, grants to sanctuary cities and other localities that are not in compliance with federal immigration law. It is unclear at this time if transportation or other infrastructure grant funds would be affected. It is also unclear how the program would be implemented since there is no formal definition of what comprises a sanctuary city and local designations vary greatly.
On March 29, the Senate Commerce Committee will hold a confirmation hearing on the nomination of Jeffrey Rosen to be the US DOT Deputy Secretary. No other US DOT nominations have been announced. Here is a link to Rosen's bio.
Last week, US DOT/FHWA postponed for a second time the effective dates of two final MAP 21/FAST Act performance management rules - for pavement and bridge condition and for freight movement, congestion mitigation and air quality. The rules, which were finalized in the last days of the Obama Administration, were initially postponed for 60 days (until March 21) under guidance from the Trump White House to freeze pending and new regulatory actions government-wide to allow new department heads to review them. This FHWA notice postpones the effective date for another 60 days, to May 20. The additional extension also applies to several other US DOT regulations, including rail and safety regulations, finalized by the Obama Administration.
Infrastructure Week - this year Infrastructure Week will be held the week of May 15. Here is a link to information about the schedule of events in DC and around the country as well as the list of over 184 organizations who are participating in the week's activities.
Recent publications of interest:
ASCE 2017 Infrastructure Report Card - link
APTA Industry Footprint - a breakdown of APTA members, including business members e.g. manufacturers and suppliers, by state and congressional districts, which can be used in efforts to educate members of Congress about local economic development impacts and job creation linked to CIG projects - link
Amtrak Report on the Economic Benefits of Investment in the (NY/NJ) Gateway Program - link
ARTBA 2017 Bridge Report - includes a state by state report on deficient bridges - link
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This morning, the Trump Administration released an initial outline of its FY'18 budget recommendations which call for significant cuts in domestic discretionary programs. Typically administrations submit their annual budget requests to Congress in early to mid-February. However, new administrations generally need extra time to develop their budget priorities. In this case, because of the major changes in spending priorities that the Trump Administration plans to propose, a detailed budget is not expected to be released until late April or early May. In the meantime, a so-called "skinny budget" is being released today.
It is important to keep in mind that the Administration can only recommend federal agency funding levels. It is up to Congress to pass an FY'18 budget resolution and the 12 annual federal agency appropriations bills. While the Republican majority in Congress will certainly want to support President Trump, it is very likely many Members of Congress, not just Democrats, will have their own budget priorities and will fight to protect local programs and projects. While it is too early to predict whether the Trump budget will be DOA, as many previous administration budgets have been, it is certain that Congress will not accept the recommendations without significant changes.
The programs that are taking the biggest hits in the Trump budget are those in the domestic discretionary program category with the deepest cuts proposed for environment, labor, agriculture, and foreign aid programs. Fortunately, at this time, mandatory programs, such as the highway and transit programs funded through the Highway Trust Fund as well as the Airport Improvement Program (AIP), are protected. In the transportation sector, the biggest cuts are proposed for those programs funded with general revenues, not through the HTF, such as Amtrak, FTA Capital Improvement Grants (CIG), and TIGER grants. CIG programs include New Starts, Small Starts and Core Capacity grants. The plan proposes to cut $2.4B from US DOT discretionary programs overall.
The budget proposes to limit CIG grants to only those projects with existing Full Funding Grant Agreements (FFGAs). Future investments in new transit projects would be funded "by the localities that use and benefit from these localized services". It proposes to eliminate federal funding for Amtrak's long distance trains. It eliminates funding for the highly popular TIGER discretionary grant program. TIGER was funded at $500M in FY'16. It supports legislation to authorize the highly controversial proposal to shift FAA's Air Traffic Control (ATC) function to the private sector.
Fortunately, the CIG and TIGER programs, in particular, and Amtrak to some degree, enjoy significant support in Congress from members whose districts/states are recipients of these grants.
Proposed cuts to critical transportation and other infrastructure programs seems to be a significant disconnect with President Trump's commitment for $1 Trillion for infrastructure investment.
Information about the funding proposals for other federal infrastructure programs will be sent out shortly.
Here is a link to the "skinny budget - "America First - A Budget Blueprint to Make America Great Again". See pages 35 and 36 for information about the proposed transportation budget. Here is the text of that section:
The Department of Transportation (DOT) is responsible for ensuring a fast, safe, efficient, accessible, and convenient transportation system that meets our vital national interests and enhances the quality of life of the American people today, and into the future. The Budget request reflects a streamlined DOT that is focused on performing vital Federal safety oversight functions and investing in nationally and regionally significant transportation infrastructure projects. The Budget reduces or eliminates programs that are either inefficient, duplicative of other Federal efforts, or that involve activities that are better delivered by States, localities, or the private sector.
The President's 2018 Budget requests $16.2 billion for DOT's discretionary budget, a $2.4 billion or 13 percent decrease from the 2017 annualized CR level.
The President's 2018 Budget:
Initiates a multi-year reauthorization proposal to shift the air traffic control function of the Federal Aviation Administration to an independent, non-governmental organization, making the system more efficient and innovative while maintaining safety. This would benefit the flying public and taxpayers overall.
Restructures and reduces Federal subsidies to Amtrak to focus resources on the parts of the passenger rail system that provide meaningful transportation options within regions. The Budget terminates Federal support for Amtrak's long distance train services, which have long been inefficient and incur the vast majority of Amtrak's operating losses. This would allow Amtrak to focus on better managing its State-supported and Northeast Corridor train services.
Limits funding for the Federal Transit Administration's Capital Investment Program (New Starts) to projects with existing full funding grant agreements only. Future investments in new transit projects would be funded by the localities that use and benefit from these localized projects.
Eliminates funding for the Essential Air Service (EAS) program, which was originally conceived of as a temporary program nearly 40 years ago to provide subsidized commercial air service to rural airports. EAS flights are not full and have high subsidy costs per passenger. Several EAS-eligible communities are relatively close to major airports, and communities that have EAS could be served by other existing modes of transportation. This proposal would result in a discretionary savings of $175 million from the 2017 annualized CR level.
Eliminates funding for the unauthorized TIGER discretionary grant program, which awards grants to projects that are generally eligible for funding under existing surface transportation formula programs, saving $499 million from the 2017 annualized CR level. Further, DOT's Nationally Significant Freight and Highway Projects grant program, authorized by the FAST Act of 2015, supports larger highway and multimodal freight projects with demonstrable national or regional benefits. This grant program is authorized at an annual average of $900 million through 2020.