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Up to date information on major Federal infrastructure initiatives.
March 9, 2018
prepared by CATHY CONNOR - DIRECTOR OF FEDERAL GOVERNMENT AFFAIRS
On March 9, US DOT officially announced the awardees of the FY'17 TIGER competitive grants. The list of recipients and a description of the projects can be found here. A press release, issued by the Department, can be read here.
Although the Trump Administration has recommended eliminating the TIGER program, Congress saw fit to fund the program in FY'17 at $500M and is expected to do so again in the pending FY'18 US DOT appropriations bill.
US DOT selected 41 projects with more than 64% of the funds going to projects in rural areas.
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Late yesterday, the White House announced the nomination of Thelma Drake to be the FTA Administrator. She had been rumored to be in line for the FTA spot last summer/fall, but then nothing happened and some sources said she was no longer under consideration. She is a former Republican member of Congress from the Norfolk, VA area, a member of the VA House of Delegates, and the head of Virginia's Department of Rail and Public Transportation (DRPT). The nomination is subject to Senate confirmation. Here is a link to the White House statement.
Also late yesterday, the US Senate finally confirmed Ron Batory to be FRA Administrator. Senator Chuck Schumer (D-NY) and other Senators had a hold on Batory's nomination for many months in an effort to pressure US DOT to commit federal funding for the NJ/NY Gateway project. Batory is a retired Conrail executive. This is good timing for FRA because just last week, Heath Hall, the FRA Deputy Administrator, a political appointee, was forced to resign after it was discovered he continued to work and get paid as a PR consultant in his home state of Mississippi while on the job at US DOT.
In addition, yesterday the Senate confirmed two other US DOT nominees after a long delay - Raymond Martinez to lead the Federal Motor Carrier Safety Administration (FMCSA) and Adam Sullivan to be Assistant Secretary of Governmental Affairs. Martinez was previously the Chair of the New Jersey Motor Vehicles Commission, Chief Administrator of the NJ State Planning Commission, and Commissioner of the New York Department of Motor Vehicles. Sullivan previously worked for the Senate Appropriations Committee, two Republican House members, and was the Deputy Assistant Secretary for Congressional Affairs at the Department of Labor under Elaine Chao during the Bush Administration.
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This Update supplements the February 12 Update with additional information about the Trump Infrastructure Plan and the Administration's FY'19 budget request.
In addition to the new infrastructure programs that the Administration is proposing, the President's Infrastructure Plan provides a wide array of recommendations to help cut timelines for environmental reviews on infrastructure projects.
These streamlining principles vary from technical fixes to more sweeping changes that would significantly alter the way the federal government studies and approves infrastructure projects. Central to these sweeping changes is the "One Federal Decision" first introduced in an August 2017 Executive Order. The Infrastructure Plan reaffirms the idea of a single decision document that satisfies all federal requirements (NEPA, Clean Water Act, Endangered Species Act, etc.) and also proposes a 21-month deadline to complete NEPA with permits required three months following - establishing a 24-month timeline to complete all federal environmental requirements.
As with the rest of the plan, it is difficult to determine the feasibility of such an idea without seeing legislative language, but it does signal an aggressive stance by the White House to reduce project timelines significantly.
Here is a link to US DOT's "FY'19 Budget Highlights". This document outlines the budget requests by mode and includes details about funding rationales, key program components, and funding implications. Page 41 lists those transit Capital Improvement Grants (CIG) which are recommended for funding. See more about the CIG program below.
Here is a link to FTA's Annual Report on Funding Recommendations for FY'19 which was released yesterday. Consistent with the Administration's FY'19 budget recommendations, there is no request for funding for any new CIG projects. Only those projects that have existing Full Funding Grant Agreements (FFGAs) are recommended to be funded which includes eight New Start projects for a total of $835.7M and two Core Capacity projects for a total of $200M. No funding is requested for any Small Start projects.
The total CIG request, including $10.5M for oversight, is $1.046B. However, it is anticipated that Congress will increase funding for the CIG program when drafting the FY'19 THUD (USDOT) appropriations bill. For example, last year the Administration requested $1.23B for CIG. However, the pending FY'18 House appropriation bill includes $1.75B for CIG and the Senate bill includes $2.13B. The general expectation is that the final FY'18 number will be closer to the Senate number than the lower House number, particularly since the recent budget deal provided significantly more room under the budget caps for domestic discretionary spending in both FY'18 and FY'19.
See pages 11 through 15 of the report for a variety of tables which list the status and ratings for all projects, including Small Starts and New Starts without an FFGA, that are currently in the CIG pipeline.
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Today is a very busy day in DC with the release of the Administration's FY'19 budget request and the release of President Trump's long-awaited Infrastructure Plan. Additional information about both documents will be sent out as more details become available.
Attached to this email are several fact sheets about the White House plan - the "Legislative Outline for Rebuilding Infrastructure in America." In addition, here is a link to a more detailed 55-page summary. The plan is very similar to the "leaked" six-page draft reviewed in the January 23 Washington Update.
There are several important points to keep in mind when reviewing the plan: It will now to be up to Congress to decide how or whether to move forward with this plan. Congress could opt to ignore it, to significantly revise it, or to include the bulk of it in proposed legislation. As expected, the plan calls for $200B in direct federal funding over ten years to leverage at least $1.5T in total investment. However, no new source of federal funding is identified other than potentially "repurposing" existing funding, such as various transit and rail funds, which will be a non-starter for many Members of Congress. There is no new funding proposed in the plan for the Highway Trust Fund which is expected to be insolvent by 2020. And, the funding proposed is not just for transportation programs, but rather will potentially be spread out among many other types of infrastructure such as ports, waterways, flood risk management, drinking and waste water, hydropower, brownfields, broadband, power generation, etc.
The $200B over 10 years is divided between the following programs:
$100B for the Infrastructure Incentives Program, which will be made available for states and municipalities to invest in "a wide-ranging group of traditional government-owned asset classes." Federal funding is capped at 20 percent per project; the remaining 80 percent must come from state and local funds or private investment. USDOT, the Army Corps of Engineers and the Environmental Protection Agency are tasked with distributing funds, although the breakdown of how much each receives is not yet specified.
$50B would go to a Rural Infrastructure Program to "enable rural America to address its unique infrastructure challenges." Rural is defined as "populations of less than 50,000." 80 percent of that $50B will be made available through formula distribution; each state would receive no less than a specified statutory minimum and no more than a specified statutory maximum (as yet to be determined) and it would be up to each governor to determine how the funds would be allocated. The remaining 20 percent of funding would flow through a competitive grant program; States are listed as the eligible applicant in this instance.
$20B would be made available for a Transformative Projects Program to encourage bold, innovative, and transformative projects which would be managed by the Commerce Department.
$20B for the expansion of existing financing programs like TIFIA, RRIF, and WIFIA as well as expanding the eligibility of Private Activity Bonds (PABs).
$10B for the establishment of a mandatory Federal Capital Revolving Fund to finance purchases, construction or renovation of federally owned domestic property.
Additionally, the plan states that it incentivizes the removal of barriers to infrastructure development. For transportation, this includes: providing tolling flexibility, providing flexibility to commercialize interstate rest areas, authorizing the repayment of federal investment to "eliminate perpetual application of federal requirements," mandating the use of "value capture" on all new rail transit projects, and increasing the federal share of the FAST Act transit P3 pilot program to 50%.
The plan also includes significant permitting improvements in an effort to accelerate the federal environmental approval process down to two years or less. This includes streamlining the federal role, establishing "one agency, one decision", delegating environmental and permitting decisions to states, and eliminating certain redundant and inefficient provisions in environmental law.
As with the Infrastructure Plan, it will be up to Congress to determine the actual funding levels for federal programs as they develop the FY'19 appropriations bills for each federal agency. Although Congress is still working to finalize the FY'18 appropriations bills, the House and Senate Appropriations Committees disregarded many, if not most, of the similar proposed cuts recommended by the Administration last year.
The Presidents FY'19 Budget, related documents, and addendums can be found here. The US DOT proposed budget is summarized on pages 85 to 87 of the "An American Budget" document. The annual US DOT "Budget in Brief" document will be sent out as soon as it is available. In good news, the budget requests the full funding levels authorized in the FAST Act for programs funded through the Highway Trust Fund such as the highway and transit formula programs.
However, similar to last year's budget request from the Administration, discretionary programs funded through the General Fund don't fare as well. The FY'19 budget eliminates all funding for popular TIGER discretionary grant program. It also phases out FTA's Capital Improvement Grant (CIG) program by limiting funding only to projects with existing Full Funding Grant Agreements (FFGA) (a total of $1B versus the FAST Act authorized level of $2.3B). It also makes major cuts in the Amtrak budget ($737M versus the authorized level of $1.7B) and does not request any funding for the three FAST Act FRA rail discretionary grant programs. We anticipate that Congress will restore a significant amount of these cuts.
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The federal government did end up "shutting down" for a few hours last night as the House and Senate struggled to find enough votes to pass the massive budget deal - the Bipartisan Budget Act of 2018. However, very early this morning, both bodies voted to approve the bill and the President has signed it. The Senate passed the bill 71 to 28 and then the House passed it by a vote of 240 to 86. Here is a link to the Senate vote tally and a link to the House tally.
Among other provisions, the bill extends funding for all federal agencies until March 23 and increases the FY'18 and FY'19 budget caps for both defense and non-defense programs. The additional six weeks should give the appropriations committees enough time to finalize an omnibus, year-long FY'18 funding bill now that the budget caps have been increased enough to avoid sequestration and to accommodate the additional spending proposed in the pending FY'18 funding bills.
The budget bill also includes over $300B in additional budget authority over two years, including an extra $63B for non-defense/domestic programs in FY'18 (an 11% increase) and $67B in FY'19. Of that amount, approximately $20B is targeted to infrastructure (surface transportation, rural water, wastewater, drinking water, rural broadband, energy infrastructure) over the two years. The bump up for infrastructure is not in the statutory text, but is addressed in an accompanying memo which does not specify which programs should be funded. It will be up to the various appropriation subcommittees to allocate the additional budget authority as they finalize the FY'18 funding bill.
The bill also includes a wide variety of miscellaneous provisions including the suspension of the debt limit until March 2019, $84B for disaster relief (including $1.8B for US DOT emergency relief programs) related to last year's hurricanes and wildfires, extension of the popular Children's Health Insurance Program (CHIP) for an additional four years, and renewal of a variety of expired tax provisions. The expired tax provisions that were retroactively extended through 2017 include the short line railroad tax credit and the transit alternative fuels tax credit. However, the tax credits were not extended into 2018.