The Trade Corridor Bulletin

Volume 14 – No. 2 | December 2019

CAGTC Board Member Erin Aleman Testifies Multimodal Freight Strategy Will Ensure Economic Competitiveness

House T&I Subcommittees Consider Surface Transportation Reauthorization

Erin Aleman

Chicago Metropolitan Agency for Planning (CMAP) Executive Director and CAGTC Board Member Erin Aleman testified before the House Subcommittees on Highways and Transit and Railroads, Pipelines, and Hazardous Materials on December 5, 2019. The hearing, titled “Where’s My Stuff? Examining the Economic, Environmental, and Societal Impacts of Freight Transportation,” addressed the critical need for increased freight funding in the Fixing America's Surface Transportation (FAST) Act’s upcoming reauthorization. In her testimony, Ms. Aleman recommended increased funding dedicated to multimodal freight and a comprehensive needs assessment to guide funding decisions.

During the hearing, Chair Norton (D-DC) noted that increased consumer demands will place a strain on already burdened freight transportation infrastructure. She noted insufficient planning and investment – across all freight modes – would lead to higher congestion rates and gridlock in urban areas. Ms. Aleman said that CMAP is studying the impacts of growing e-commerce demands, and the rise in freight volumes highlight the need for careful planning and investment to ensure that freight assets are up to the task.

Ms. Aleman called for increased funding dedicated to federal freight programs such as INFRA and the freight formula program, and she also recommended that Congress eliminate caps on non-highway spending under both programs. To reduce the gap between funding and investment needs, Ms. Aleman proposed a minimum annual investment of $12 billion dedicated to a multimodal freight competitive grant program.

Congressman Lowenthal (D-CA) called for improved award decision making transparency, noting his concern with the currently opaque selection process for programs such as BUILD and INFRA. Ms. Aleman recommended grants be evaluated through a set of merit-based criteria that prioritize national freight efficiency.

Ms. Aleman noted that regional partnership has moved one of the nation’s most significant freight projects forward. CREATE’s 75th Street Corridor Improvement Project (CIP) received $132 million in INFRA grant funding in 2018 and leveraged additional funding from local partners for a total of $472 million to advance the first phase of the project. Ms. Aleman noted, however, that this accounts for less than half of the total funds needed to complete the project.

To review a copy of Ms. Aleman’s testimony, please visit: https://transportation.house.gov/imo/media/doc/Testimony-Aleman.PDF

Other hearing witnesses included: Mr. Chuck Baker, President of the American Short Line and Regional Railroad Association; Ms. Anne Goodchild, Ph.D., Founding Director of the Supply Chain Transportation and Logistics Center at the University of Washington; Mr. Ian Jefferies, President & CEO of the Association of American Railroads; Mr. Jason Mathers, Director of Vehicles & Freight Strategy for the Environmental Defense Fund; and Mr. Jim Tymon, Executive Director of the American Association of State Highway and Transportation Officials.

Industry News

Congress Passes FY20 Appropriations; Here's What's Included for USDOT

Following months of negotiations and two short-term continuing resolutions, Congress passed an omnibus package containing eight appropriations bills for fiscal year 2020 (FY20), including the Transportation, Housing and Urban Development (THUD) bill. The legislation, providing funding through September 30, 2020, is expected to be signed by President Trump on December 20.

The bill provides $86.2 billion in total budgetary resources for USDOT, $324.9 million below FY19 appropriations. The BUILD grant program is funded at $1 billion, $100 above FY19 levels. Consistent with last year’s requirements, the bill calls for a 50-50 split in project selections between urban and rural areas, mandates that USDOT use the selection criteria as outlined in the 2017 notice of funding opportunity, and stipulates that USDOT not consider a project’s federal share or ability to generate non-federal revenue during the selection process. As in FY19, $15 million of BUILD funding is set aside for planning grants. While these grants were previously optional, the FY20 bill requires USDOT to award the reserved funds for planning grants. The explanatory statement notes that “the agreement does not include the requirement in the House report to refocus fiscal year 2020 awards on multimodal projects, but does continue to make these projects eligible for awards,” though the House recommendation seemed to advocate for investments in transit, passenger rail, and pedestrian improvement projects rather than multimodal freight.

The Port Infrastructure Development Program will receive $225 million, $67.7 million less than in 2019. Last year, roughly 30 percent of this program’s funds were reserved for grants toward the “15 coastal seaports that handled the greatest number of loaded foreign and domestic twenty-foot equivalent units of containerized cargo in 2016.” For FY20, MARAD is directed to award at least $200 million to coastal seaports or Great Lakes ports, and prioritize ports that “handled less than 10,000,000 short tons in 2017” for grant awards under $10 million. While the 2019 NOFO set $10 million as the minimum grant size, no minimum was specified in the FY19 appropriations legislation. This year, Congress included language listing the minimum award amount as $1 million. There are no maximum grant amount specifications.

The CRISI grant program will receive $325 million, $70 million above FY19 levels. The bill provides that $45 million of CRISI funds will be awarded to projects that “require the acquisition of rights-of-way, track, or track structure to support the development of new intercity passenger rail service routes.”

A total of $1.15 billion is made available for bridge replacement and rehabilitation investments, an large increase compared to the $475 million provided in FY19. The funds will be distributed based on the “percentage of total deck area of bridges classified as in poor condition.” States for which this number is below 5 percent will each receive $6 million for highway bridge replacement or rehabilitation projects. The remaining funds will be allocated to the states with higher percentages of bridges in poor condition. No single state may receive more than $50 million under this program.

Industry News

Dr. Rand Paul Introduces Plan to Provide More Funding for Kentucky’s Infrastructure Needs

Washington, D.C. On November 8, U.S. Senator Rand Paul introduced his Penny Plan to Enhance Infrastructure Act (S.2792), which will help prioritize funding for Kentucky's critical infrastructure projects by cutting just one percent from the federal government's non-infrastructure discretionary spending and directing that money to infrastructure.

Dr. Paul's bill would provide $12.3 billion for 2020 for new infrastructure spending, and it doesn't touch Medicare, Medicaid, or Social Security. Spending would be directed toward things such as Highway Infrastructure Programs; airport and airway improvement; railroad infrastructure; waterway improvements, including port infrastructure; military construction; safe and clean drinking water; and rural utility services.

Based on some estimates, this new funding alone could pay for between 2,500 and 6,200 miles of new 4-lane highways, 2,200 miles of 6-lane interstates, or resurface nearly 20,000 miles of existing 4-lane roads.

Read the full release here.

Member News

Port of Oakland names Danny Wan Executive Director

Source: Port of Oakland

Oakland, CA – Danny Wan, who has been serving as the Port of Oakland’s interim Executive Director since last summer, and was Port Attorney for six years before that, has been named permanent Port Executive Director. The Port’s governing Board selected Mr. Wan at a special meeting on November 14. He replaces Chris Lytle who retired in July after six years at the helm in Oakland. Today’s announcement caps a two-month, nationwide search.

Mr. Wan takes over at a key moment. The Port reported record revenue and operating income in Fiscal Year 2019. Its seaport reached an all-time high in cargo volume while Oakland International Airport neared record passenger levels. The Port is now reviewing its strategic direction heading into a new decade.

“It’s an honor to lead an organization that operates international transportation and shipping hubs and that generates tens of thousands of jobs,” said Mr. Wan. “I look forward to working with the Board and an excellent Port staff to plan for even greater efficiency in moving people and goods and to grow benefits for the state and the communities that surround the Port.”

Read the full release here.

Member News

Governor Desantis' Bolder, Brighter, Better Future Budget Proposes $9.9B in Funding for the Florida Department of Transportation

Tallahassee, FL –  On November 18, Governor Ron DeSantis unveiled his Bolder, Brighter, Better Future budget for Fiscal Year 2020-2021. The proposed budget provides $9.9 billion in funding for the Florida Department of Transportation (FDOT). The investment will enable the department to continue to deliver much needed transportation projects to meet the needs of a growing Florida for generations to come.

Governor DeSantis said, “my Bolder, Brighter, Better Future Budget will further allow the Florida Department of Transportation to create a modern transportation system for our residents and visitors. Safely reducing congestion on our roadways is a critical component of my vision for transportation in Florida. This budget will ensure FDOT can invest in improvements to facilitate increased mobility and keep people and goods moving throughout our state.”

Read the full release here.

Research News

FY 2019 Excise Tax Distributions to the Airport and Airway and Highway Trust Funds

U.S. Government Accountability Office

November 2019

The Airport and Airway and the Highway Trust Funds are the main funding sources for federal aviation and ground transportation programs. User taxes on airline tickets, aviation fuel, tires, or gasoline are their primary source of funding. The IRS is responsible for collecting those taxes and certifying the amounts distributed to the trust funds.

GAO performed agreed-upon procedures solely to assist the DOT OIG in ascertaining whether the net excise tax revenue distributed to the AATF and the HTF for the fiscal year ended September 30, 2019, is supported by underlying records. The DOT OIG is responsible for the sufficiency of these agreed-upon procedures to meet its objectives, and GAO makes no representation in that respect. The procedures GAO agreed to perform were related to (1) transactions that represent the underlying basis of amounts distributed from the General Fund to the AATF and the HTF during fiscal year 2019, (2) IRS's quarterly AATF and HTF excise tax receipt certifications prepared during fiscal year 2019, (3) OTA's estimates of excise tax amounts to be distributed to the AATF and the HTF for the fourth quarter of fiscal year 2019, and (4) the amount of net excise taxes to be distributed to the AATF and the HTF for fiscal year 2019.

Read the full report here.

Research News

A Conservative Case for Highway Tolling

Reason Foundation

December 2019

America’s highways are in trouble. Congestion on urban freeways has reached all-time highs, and the aging Interstate Highway System needs rebuilding and selective widening. Deferred maintenance for structurally deficient bridges and a teeming backlog of major projects lack funding. Most highway funding relies on gas taxes, which project declining revenues in coming decades due to the likely growth of more fuel-efficient and alternatively-powered vehicles. Yet increasing the gas tax is politically difficult, especially at the federal level.

The brief identifies various problems with 20th century tolling and introduces a 21st-century model called Value-Added Tolling that provides a genuine value proposition to highway customers, rather than treating them simply as highway users. The brief examines how this model would benefit all parties more than both the gas-tax system and 20th century tolling, and would better reflect conservative principles. The brief then explains how this model could finance the rebuilding and modernization of the aging Interstate Highway System.

Read the full report here.

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