The Trade Corridor Bulletin

Volume 12 – No. 6 | September 2018

What We're Watching in the 2018 Mid-Term Elections

How the November Elections Could Impact Freight Infrastructure, Both Nationally and Locally

The 2018 mid-term elections are fast approaching and with them, the inevitable shake up in D.C. The press and stakeholders are constantly speculating whether or not the House and the Senate will flip and the results of any change. Given the number of high-profile retirements, there is bound to be a shift on the Hill no matter what happens to the power structure. Outside of D.C., state ballots could impact transportation infrastructure investment at the local level, including ballot initiatives that would provide additional funding for infrastructure, increase local gas taxes or repeal measures already in place. With all of this swirling around, here is what CAGTC will be watching closely come November 6.

Each election cycle brings with it retirements and 2018’s is no different. Of note, key members of the leadership will be leaving their roles on the Hill, having announced they will not seek reelection. This includes House Transportation and Infrastructure Chairman Bill Shuster (R-PA). Earlier this year, Chairman Shuster published an infrastructure discussion draft that he hopes will remain after he has left the office, with the goal of having his proposals folded in to future infrastructure legislation. The Speaker of the House, Paul Ryan (R-WI), also announced his retirement ensuring that, no matter which party holds the majority in the House in 116th Congress, the leadership will change.

A number of states have transportation funding initiatives on their ballot this fall. In Maine, residents will have the opportunity to vote on a ballot measure that could provide increased funds for infrastructure throughout the state. Question 3 on the ballot this November will ask residents of Maine if they favor a $106,000,000 bond issue. $101,000,000 of that will be used for “construction, reconstruction and rehabilitation of highways and bridges and for facilities and equipment related to ports, piers, harbors, marine transportation, freight and passenger railroads, aviation, transit and bicycle and pedestrian trails.” The funds will combine with federal and private funds to complete such projects.

Missouri residents will vote on a motor fuel – including gas, diesel, kerosene, and blended fuels – tax increase to be phased in over four years. The measure, Proposition D, will also increase the tax on alternative fuels – including compressed natural gas, liquid natural gas, and propane – beginning January 2026. The majority of the funds from this tax increase will be used to “fund the Missouri State Highway Patrol’s enforcement and administration of motor vehicle laws and traffic regulations.” However, some will be used to create an Emergency State Freight Bottleneck Fund, dedicated to financing needed road improvement projects within the state.

In California, a measure previously signed into law is at risk come the November elections. Signed into law in April 2017, Senate Bill 1 (SB 1) increased California’s state gas tax by 12 cents per gallon and the state diesel tax by 20 cents per gallon. Together with other motor vehicle user fee increases, SB 1 was projected to raise more than $5.2 billion annually for transportation improvements in California. In recent months, opponents have launched an effort to repeal this measure. A petition gained enough signatures earlier this year to be included on the November ballot. Proposition 6 would repeal SB 1, including the gas and diesel tax increases it implemented, and would mandate that any future gas tax increases be approved by the voters, instead of passed through the state legislature. Should SB 1 be repealed, a significant source of funding for California’s transportation system will be eliminated.

Increased funding for infrastructure is surely a good thing and CAGTC applauds states that have made, or are hoping to make, moves in this direction. However, our freight focus shows us that movement does not end at state lines. Goods move across jurisdictional boundaries everyday and it is important that our transportation network is consistent across those boundaries as well, which necessitates the involvement of the federal government. The 116th Congress will have its work cut out for it prior to the December 2020 FAST Act expiration to ensure that the federal government does not fall further behind the nation’s funding needs. And the mid-term elections will shape how that process proceeds.

NAFTA Negotiation Update

With a congressional deadline approaching, negotiators are still working toward a renewed North American Free Trade Agreement (NAFTA). After the United States reached a tentative deal with Mexico in August, talks are now picking up again between the U.S. and Canada. Several key issues including dairy, auto tariffs, and dispute panels are still being discussed.

Canadian Prime Minister Trudeau and Foreign Minister Freeland have stated that their main priority is reaching an agreement that is good for Canada, even if that means missing another deadline. President Trump however, is willing to proceed with a deal including only Mexico if Canada continues to delay the agreement. It is unclear if Congress would support this, as Speaker Ryan and Minority Leader Pelosi, among others, have already called for Canada to be included.

The looming deadline of September 30 was set to ensure a deal could be reached before the current Mexican president leaves office in December. Thursday, September 20 was considered by many the deadline to publish a deal, which would have allowed enough time to draft the legal text. Since no deal has been reached, there are now four possible outcomes: 1) an agreement could still be made before the September 30 deadline; 2) talks could continue past the deadline and Mexico’s president-elect would be the one to sign the eventual agreement; 3) the U.S. could end negotiations and proceed without Canada; 4) or the U.S. could withdraw from the current NAFTA by providing the fellow signatories with six months’ notice.

Several freight industry organizations, including the American Trucking Associations and American Association of Port Authorities, have issued statements supporting a renegotiated NAFTA deal. During the week of September 10, 2018, the U.S. Chamber of Commerce, the Business Roundtable and the National Association of Manufacturers sent a joint letter to U.S. Trade Representative Robert Lighthizer, calling for a trilateral agreement.

Member Spotlight

USDOT Officials Tour the Ports of Los Angeles & Long Beach

In late-August, officials from the U.S. Department of Transportation (USDOT) headed west and were treated to a tour of the ports of Los Angeles and Long Beach.

In these photos, CAGTC Board members pose with USDOT officials following a tour of the ports of Los Angeles and Long Beach. Participating in the tour were USDOT Deputy Secretary Jeffrey Rosen, Deputy Assistant Secretary for Policy Grover Burthey, Senior Advisor to the Secretary for Infrastructure Jim Ray and Associate Director for Public Engagement Caryn Lund.

The port of Los Angles and Long Beach complex is the largest in the Western Hemisphere and handles 40 percent of our nation’s imports and 25 percent of exports with 16 percent of those goods traveling by freight trains through the Alameda Corridor-East rail corridor.

CAGTC members represented include:
Alameda Corridor-East Project, San Gabriel Valley Council of Governments
The Port of Los Angeles
The Port of Long Beach
The Southern California Association of Governments

Industry News

FRA Extends Deadline for CRISI Capital Project Applications

Due to Hurricane Florence, the Federal Railroad Administration (FRA) is extending the application deadline in the Fiscal Year 2018 Consolidated Rail Infrastructure and Safety Improvements (CRISI) Program, Notice of Funding Opportunity (NOFO) from September 17, 2018 at 5:00 p.m. EDT to October 12, 2018 at 5:00 p.m. EDT.

The FRA issued a NOFO for the CRISI Program originally on July 19, 2018 that includes more than $318 million in grant funding from the Consolidated Appropriations Act of 2018.

"The Notice of Funding Opportunity for the Consolidated Rail Infrastructure & Safety Improvements grant program seeks to collaborate with private, state and local investments to boost much-needed rail projects across the country, and we hope interested parties will apply by the stated deadline," said U.S. Transportation Secretary Elaine L. Chao.

This NOFO will assist in funding projects that improve intercity passenger and freight rail transportation safety, efficiency, and reliability. Funding for positive train control (PTC) systems deployment—$250 million—was provided under a separate NOFO published in May 2018.

Read the full release here: https://bit.ly/2IaPLEK

 

Industry News

USTR Finalizes Tariffs on $200 Billion of Chinese Imports in Response to China’s Unfair Trade Practices

As part of the United States’ continuing response to China’s theft of American intellectual property and forced transfer of American technology, the Office of the United States Trade Representative (USTR) released a list of approximately $200 billion worth of Chinese imports that will be subject to additional tariffs.  In accordance with the direction of President Trump, the additional tariffs will be effective starting September 24, 2018, and initially will be in the amount of 10 percent.  Starting January 1, 2019, the level of the additional tariffs will increase to 25 percent.

The list contains 5,745 full or partial lines of the original 6,031 tariff lines that were on a proposed list of Chinese imports announced on July 10, 2018.  Changes to the proposed list were made after USTR and the interagency Section 301 Committee sought and received comments over a six-week period and testimony during a six-day public hearing in August.  USTR engaged in a thorough process to rigorously examine the comments and testimony and, as a result, determined to fully or partially remove 297 tariff lines from the original proposed list.  Included among the products removed from the proposed list are certain consumer electronics products such as smart watches and Bluetooth devices; certain chemical inputs for manufactured goods, textiles and agriculture; certain health and safety products such as bicycle helmets, and child safety furniture such as car seats and playpens.

Read more here: https://bit.ly/2xuKv9U

 

Member News

SANDAG Board Hires New Executive Director

After a nationwide search, the San Diego Association of Governments Board of Directors announced Friday, September 14 that it has hired Hasan Ikhrata, the current executive director of the Southern California Association of Governments (SCAG), as the new leader of the regional agency.

“We’re bringing in a heavy hitter because we have some heavy lifting to do here at SANDAG,” Board Chair and Del Mar Councilmember Terry Sinnott said. “Hasan knows Southern California. He has the respect and the connections at the state and federal level to bring in funds to help us build infrastructure. He has the experience of running a large and complex organization. And, most of all, Hasan is a proven consensus builder who can help us work as a team to protect our quality of life while preserving our environment.”

The SANDAG Board voted on Friday to approve the terms of Ikhrata’s contract. After approval, the Board agreed to work on specific performance measures for Ikhrata before he starts on December 3.

Read the full release here: https://bit.ly/2xUNmtl

 

Member News

College of Charleston Wins EXPO Student Competition

An undergraduate team fielded by the College of Charleston won the Intermodal Association of North America's eighth Intermodal EXPO Academic Challenge in Long Beach, Calif. It was their first victory.

The students representing the College were Brenden Cornell, Ashley Markow and Alejandro Vega. Each of the participating teams responded to a case that focused on rail network optimization.

"Students from the College of Charleston were thrilled to participate in the Academic Competition at the 2018 EXPO," said Kent Gourdin, professor and director of the Global Logistics and Transportation Program at the institution’s School of Business. "The task exposed them to the incredibly complex world of managing day-to-day rail operations with the goal of lowering costs without adversely impacting customer satisfaction or profitability."

Read the full article here: https://bit.ly/2OKerGF

 

Research News

Ten Years of Highway Trust Fund Bankruptcy: Why Did It Happen, and What Have We Learned?

Eno Transportation Weekly | Jeff Davis |

September 5, 2018

Ten years ago today, the U.S. Department of Transportation made the stunning announcement that the federal Highway Trust Fund had run out of money and that state governments would no longer be guaranteed speedy reimbursement for the federal-aid highway expenses that the states had already incurred. The announcement prompted an immediate $8 billion bailout by Congress in the form of a transfer of moneys from the general fund of the Treasury to the Trust Fund.

In the decade since then, rather than put the Trust Fund back in a position where its spending levels more or less equal its dedicated excise tax receipt levels from year to year, Congress has instead provided another $135.6 billion in bailouts, for a total of $143.6 billion ($139.9 billion from the general fund and $3.7 billion from gasoline and diesel taxes originally deposited in a different trust fund).

How did the venerable Highway Trust Fund – the financial instrument that built the Interstate Highway System, which transformed American life – get in such dire straits? And are we any closer to being able to fix it?

Read more here: https://bit.ly/2xBZpfL

 

Research News

2018 Annual Fleet Fuel Study

North American Council for Freight Efficiency |

August 2018

The 2018 Annual Fleet Fuel Study report contains the results of a deep-dive investigation into the adoption of various products and practices for improving freight efficiency among 20 major North American fleets.  Twenty fleets operating more than 71,844 tractors and 236,292 trailers saved over $600 million in 2017 compared to the average trucks on the road.

Download the full report here: https://bit.ly/2xLZBbj