In this issue:
The Trade Corridor Bulletin
Volume 13 – No. 4 | September 2019
Welcome Back Congress, Here’s Where We Left Off
Senate EPW Approved $294 Billion Surface Transportation Proposal on July 30
In the hours before the summer recess bell sounded, the Senate Environment and Public Works (EPW) Committee took an important first step towards passing a surface transportation reauthorization by introducing and approving their proposal in July 2019, more than a year before the existing authorization lapses. The current authorization, the Fixing America’s Surface Transportation (FAST) Act, will expire on September 30, 2020.
On July 30, 2019, the EPW Committee unanimously approved its new five-year authorization proposal, titled America’s Transportation Infrastructure Act (ATIA) of 2019. The bill would authorize nearly $294 billion in total funding over five years, with $287 coming from the Highway Trust Fund. It also repeals the rescission of $7.6 billion in unobligated balances of highway contract authority, which was mandated by the FAST Act to take effect July 1, 2020. Since the rescission is scheduled to take place prior to the expiration of the FAST Act, the EPW Committee also approved a stand-alone bill to repeal the rescission that could move forward separately from the authorization proposal.
Because the EPW Committee only has jurisdiction over certain aspects of surface transportation, their proposal is just one part of the equation. The Committees on Finance as well as Commerce, Science, and Transportation are among the committees that must also add their proposals to ensure the inclusion of safety and rail provisions–and perhaps most importantly, funding mechanisms. According to reports, the House of Representatives is working on their own proposal, to be released by the end of the year or early 2020.
The ATIA contains several provisions that would impact the goods movement industry. The National Highway Freight Program (the freight formula program created by the FAST Act) is funded at approximately $8.4 billion over five years, an increase from the FAST Act’s $6.3 billion. The proposal also increases the maximum number of miles states can designate as critical rural and urban freight corridors. Additionally, it increases the cap on funds eligible for multimodal projects from 10 percent to 30 percent or $2.5 billion over five years.
The bill makes a few key changes to the INFRA discretionary grant program, outlined in the table below.
The ATIA also sets aside $150 million in INFRA funding per year for a new state incentives pilot program for which the federal share of projects may not exceed 50 percent of total project costs. The bill also includes additional transparency requirements for USDOT in the INFRA application review and reporting process.
Outside of these freight-specific programs, there are a few new pilot and grant programs that stand to benefit goods movement in the EPW proposal, summarized in the table below.
As Fiscal Year Clock Runs Out, Senate Works to Pass Appropriations Package
House-passed THUD Package and Senate Proposal Both Include $1 Billion for BUILD
On September 17, 2019, the Senate Appropriations Subcommittee on Transportation, Housing and Urban Development (THUD) approved their fiscal year 2020 (FY20) THUD bill. The proposal would provide $86.6 billion in total budgetary resources for the U.S. Department of Transportation, a $167 million increase from fiscal year 2019 (FY19) enacted levels.
Included in the proposal is $1 billion for the Better Utilizing Investments to Leverage Development (BUILD) grant program (formerly known as TIGER), the same amount the House of Representatives provided in their appropriations minibus that passed in June. The BUILD program was funded at $900 million in FY19, so both legislative chambers proposed an increase to current funding. The bill also provides $255 million for Consolidated Rail Infrastructure and Safety Improvement (CRISI) grants, which is the same amount appropriated in FY19 but $95 million below the House’s appropriations bill. The proposal contains $91.6 million for the Port Infrastructure Development Program, a decrease from both FY19 levels and the House bill.
While both Chairwoman Susan Collins (R-ME) and Ranking Member Jack Reed (D-RI) issued press releases summarizing the Senate proposal, bill text was not published as of September 18. The full Senate Appropriations Committee will mark up the proposal on September 19. The federal government’s fiscal year runs from October 1 through September 30, leaving less than two weeks before FY2020 begins. In the event that Congress is unable to pass an appropriations package prior to the September 30 deadline, a continuing resolution will be necessary to avoid or delay a government shutdown.
FHWA Fiscal Year 2019 Redistribution of Funds
The Federal Highway Administration (FHWA) on July 10, 2019 approved the redistribution of unused formula funds for fiscal year 2019. FHWA announced that over $3.9 billion in funds will be divided up among state departments of transportation to go towards a variety of infrastructure projects. This is an annual process FHWA uses to redistribute remaining unobligated funds that would otherwise lapse at the end of the fiscal year.
In August, FHWA authorized states to begin using their additional funds, which must be obligated before the start of the new fiscal year on October 1.
Read the full release here.
USTR Announces Updates on Section 301 Tariffs
In August 2017, the United States Trade Representative (USTR) launched an investigation into China's policies on technology transfer, intellectual property, and innovation. As a result of its findings, USTR published four lists of Chinese imports subject to new tariffs.
On August 20, 2019, USTR announced a fourth list of products that will fall under a 10 percent tariff. This list included nearly every product not already covered by previous tariff lists under the Section 301 investigation and contains approximately $300 billion. It was divided into two separate lists to designate the effective start dates, the first going into effect on September 1, 2019, and the second on December 15, 2019.
In late August, USTR announced the implementation of a 15 percent tariff, instead of 10 percent for the fourth tariff list. They also proposed a tariff increase from 25 to 30 percent for products included on the first three tariff lists. USTR is seeking comments on this proposal by September 20, 2019. The proposed tariff increase was scheduled to go into effect October 1, 2019, but has since been extended to October 15, 2019.
For more information on Section 301 tariffs click here.
FRA Requests Applications for the CRISI Grant Program
The Federal Railroad Administration (FRA) has issued its notice of funding opportunity (NOFO) for the Consolidated Rail Infrastructure and Safety Improvements (CRISI) grant program. The notice announced that over $244 million in grant funding will be available for safety and infrastructure improvement projects to freight and passenger railroads.
In the NOFO, FRA indicated that they will give preference to projects focused on mitigating congestion challenges, highway-rail grade crossings, short-line railroad infrastructure upgrades, rail line relocation, intercity passenger rail capital assets improvement, and railroad safety technology. Additionally, they will prioritize projects for which the proposed federal share makes up 50 percent or less of total project costs. FRA also notes that at least 25 percent of the available grant funds will be awarded to projects in rural areas. CRISI grant applications are due October 18, 2019.
Read the full release here.
Intermodal Industry Honors Branscum and Wilson
CALVERTON, MD, August 6, 2019 – The Intermodal Association of North America announced that Steve Branscum, retired BNSF Railway executive, and Michael Wilson, chief executive officer, Consolidated Chassis Management, LLC will both be honored with a 2019 Silver Kingpin Award at this year’s Intermodal EXPO in Long Beach, California.
The Silver Kingpin, the industry’s most prestigious award, recognizes an individual’s long-term contributions to intermodalism. The award was initiated in 1977 by the National Piggyback Association. Wilson and Branscum will receive these awards during EXPO’s opening general session on Monday, Sept. 16.
Read full release here.
Caltrans Appoints Toks Omishakin as New Director
Toks Omishakin has been appointed director of the California Department of Transportation by Governor Gavin Newsom, who assumed office in January 2019. This position requires state Senate confirmation. Omishakin will be replacing Laurie Berman, who announced her retirement earlier in the year.
In 2011, Toks was appointed Assistant Commissioner and Chief of the Bureau of Environment and Planning at the Tennessee Department of Transportation (TDOT). In this position, he guided TDOT’s continued success in establishing transportation planning, policy, and performance and the necessary communication that is required with other governmental agencies, organizations, and the general public and legislative bodies.
During Toks’ tenure at TDOT, the U.S. Department of Transportation awarded over $71 million in INFRA funds to the agency to address a significant freight bottleneck in Memphis (US-78/SR 4/Lamar Avenue Corridor Improvements project).
Prior to joining TDOT, he served as the Director of Healthy Living Initiatives in the Office of Mayor – Karl Dean in Nashville, Tennessee. He was the Mayor’s liaison to several council’s and boards appointed to improve the built environment and livability of the city.
He holds a Master’s Degree in Urban and Regional Planning (MURP) with concentrations in transportation planning and urban design from Jackson State University, and a Bachelor of Science degree in Engineering Technology from Mississippi Valley State University.
Port Houston Sets Records on Container and Steel Volumes; Moves Forward on New Expansions
The planned expansion of the truck gate at Port Houston’s Barbours Cut Container Terminal is set to begin after approval of a contract for the work by the Port Commission.
The project consists of about 23 acres of new pavement at the existing Barbours Cut Terminal. Major components of work include demolition of existing pavement and structures, new pavement, construction of two new building and new electrical, drainage and utilities.
The Port Commission awarded a contract not to exceed $39.7 million to Archer Western Construction, the top-ranked proposer among four finalists. A total of 53 companies downloaded materials about the project.
Container volume overall at Port Houston continues to break records, up 12 percent for the year compared to last year, Executive Director Roger Guenther told the commission during its meeting. Port Houston facilities have handled nearly 1.5 Million TEU through the first half of 2019.
Read the full release here.
Erin Aleman named new Executive Director of the Chicago Metropolitan Agency for Planning
Concluding a national search, Chicago Metropolitan Agency for Planning’s (CMAP) Board unanimously selected Erin Aleman as its next executive director.
Aleman will be responsible for the operations of CMAP, the award-winning regional planning organization for the northeastern Illinois counties of Cook, DuPage, Kane, Kendall, Lake, McHenry, and Will. Among Aleman’s immediate priorities will be implementation of ON TO 2050, metropolitan Chicago’s long-range plan adopted in October 2018.
Aleman is an accomplished leader with extensive public sector experience implementing transportation and land use policies. She currently serves as vice president of Metro Strategies and previously served as director of the Office of Planning and Programming at the Illinois Department of Transportation (IDOT). There, she oversaw more than 150 employees and IDOT’s $2.2 billion annual budget for statewide infrastructure. She was instrumental in establishing IDOT’s performance-based initiatives to inform multimodal policy, planning, and programming of transportation resources across the state, and advancing public-private partnerships. Prior to IDOT, Aleman spent eight years at CMAP where she started as assistant planner and was ultimately promoted to principal planner. She was a key contributor to the agency’s first comprehensive plan for the region, GO TO 2040.
Read the full release here.
Funding and Financing Highways and Public Transportation
Congressional Research Service
June 7, 2019
For many years, federal surface transportation programs were funded almost entirely from taxes on motor fuels deposited in the Highway Trust Fund. The tax rates, which are fixed in terms of cents per gallon, have not been increased at the federal level since 1993. Meanwhile, motor fuel consumption is projected to decline due to improved fuel efficiency, increased use of electric vehicles, and slow growth in vehicle miles traveled. In consequence, revenue flowing into the Highway Trust Fund has been insufficient to support the surface transportation program authorized by Congress since 2008.
Congress has yet to address the surface transportation program’s fundamental revenue issues, and has given limited consideration to raising fuel taxes in recent years. Instead, since 2008 Congress has supported the federal surface transportation program by supplementing fuel tax revenues with transfers from the U.S. Treasury general fund. The most recent reauthorization act, the Fixing America’s Surface Transportation Act (FAST Act; P.L. 114-94), authorized spending on federal highway and public transportation programs through September 30, 2020. The act provided $70 billion in general fund transfers to the Highway Trust Fund from FY2016 through FY2020. This use of general fund transfers to supplement the Highway Trust Fund will have been the de facto funding policy for 12 years when the FAST Act expires. Congressional Budget Office (CBO) projections indicate that the Highway Trust Fund insufficiency relative to spending will reemerge following expiration of the FAST Act. The projections indicate a shortfall of $74.5 billion over the first five years following the FAST Act, and $97 billion over the first six years.
As the September 2020 expiration of the FAST Act approaches, Congress may again examine adjustments to the funding and financing of the federal role in surface transportation.
Read the full report here.
Freight Trains Are Getting Longer, and Additional Information Is Needed to Assess Their Impact
U.S. Government Accountability Office
July 1, 2019
Freight train length has increased in recent years, according to all seven Class I freight railroads. Data on train length are not publicly available; however data provided to GAO by two Class I railroads indicated that their average train length has increased by about 25 percent since 2008, with average lengths of 1.2 and 1.4 miles in 2017. Officials from all seven Class I railroads said they are currently operating longer than average trains on specific routes, although some said such trains are a small percentage of the trains they operate. One railroad said it runs a 3-mile-long train twice weekly. Officials identified increased efficiencies and economic benefits among the advantages of longer freight trains.
Stakeholders said that the arrangement of train cars and locomotives—known as “train makeup”—and the potential for blocking highway-railroad crossings are issues to consider to safely operate longer freight trains. To prevent derailment, stakeholders said it is important that longer trains are arranged appropriately and that crews are trained to operate them. While Class I railroads and others said that longer trains may decrease the frequency of blocked crossings, some state and local officials said these trains can prolong their duration, posing challenges for emergency responders unable to cross the tracks.
Read the full report here.