It's not perfect. It could have been better. It could have been worse.
That's the consensus among stakeholders of the nation's infrastructure after President Obama last Friday signed into law a 27-month, $105-billion bill that, for the first time since 2005, provides long-term funding for U.S. surface transportation projects.
The bill, which ends nearly three years of interim stopgap measures to fund the nation's transport system, is seen as a good start towards putting the network on solid footing. But industry experts say there is still work to be done, and freight interests will be disappointed if the new law becomes the end of the story and not a means to a satisfactory end.
In the here-and-now, however, there is finally a multi-year transport funding law on the books. And for freight advocates who have struggled for years to get Congress' attention, it ended up being a productive process.
The Coalition for America's Gateways and Trade Corridors (CAGTC), a group of 60 public and private organizations dedicated to promoting intermodal transportation, said the law places "unprecedented emphasis on freight movement and its importance to the United States economy."
"[The bill] shows that Congress has been listening when we've made our case for supporting the systems that move our nation's goods," said Coalition Chairman Mort Downey. "We see this as a good platform upon which future steps can be taken to further improve this critical network and its infrastructure."
Janet F. Kavinoky, executive director, transportation & infrastructure, of the U.S. Chamber of Commerce, said the law is a milestone for advancing the role of freight in the national infrastructure discussion. Kavinoky, who for the past three years has taken a somewhat skeptical view of the process, said that while the bill isn't a cure-all, the "increased freight focus is welcome progress" given budgetary constraints and the election-year overhang.
THE ROLE OF THE STATES
The law establishes a national freight policy and requires the Department of Transportation (DOT) to develop a national freight strategic
plan and a "primary freight network" out of 27,000 miles of existing roadways designated as most critical to the movement of goods.
It also gives states financial incentives to develop freight-specific projects by increasing the federal government's role in paying for them.
Under the new law, if the physical path of a state's freight project is located on the interstate highway system, federal funding for the project increases to 95 percent from 90 percent. For projects not located on the interstate system, Washington's share of the payment rises to 90 percent from 80 percent.
The law does not contain a separate freight section or program that mandates federal funding. Rather, it leaves it up to the states to make the case to the DOT that a proposal has enough freight-generating potential to justify funding.
Freight-specific projects must meet certain eligibility standards, but the criteria are fairly broad. Eligible projects include railway-highway grade separation; geometric improvements to interchanges and ramps; truck-only lanes; improvements to intermodal connectors; and programs to ease truck bottlenecks, among others.
Leslie Blakey, CAGTC's executive director, said the provisions of the law incorporating more state involvement in freight will build a "substantial bridge to a comprehensive multi-modal freight program" that will be created in future infrastructure re-authorization cycles.
Blakey said few states today have the capabilities to plan and analyze initiatives that support the movement of goods. The bill provides the financial incentives for states to elevate freight's visibility and, ultimately, feed state projects into a national freight network, she said.
James H. Burnley IV, who served as Transportation Secretary in the Reagan Administration and today heads the transportation practice at Washington law firm Venable LLP, said in an e-mail that the bill "will enhance freight movements in the years to come."
Burnley said the legislation streamlines the multi-year process for project approvals, and exempts from a full environmental review requests to perform both routine and emergency road repairs. The bill's language will "make it easier for states to build and maintain highways that can accommodate the continuing growth in freight movements," he said.
GRATEFUL FOR PROGRESS
Stakeholders, who a couple of months ago were resigned to seeing no progress in 2012 on a long-term bill, were grateful that the needle had been
moved so dramatically in such a brief period. They even put aside concerns that a 27-month duration is too short a time for those involved in the
process, especially states with complex highway projects that often take years to complete. This could be especially true for freight projects, as
many states will have to climb a steep learning curve.
The House's original proposal called for a six-year timetable at a funding level of $230 billion. But that gave way to the shorter, less-expensive version pushed by the Senate.
"It has been 30 months since we have had a true, long-term highway funding bill," Bill Graves, president and CEO of the American Trucking Associations (ATA), said on Friday, "so today's bill signing is a good thing for trucking and for our national economy."
"While we would have preferred a bill covering a period longer than 27 months and with greater funding, this is a major step in the right direction," said Thomas J. Donohue, president and CEO of the U.S. Chamber.
WHERE WILL THE MONEY COME FROM?
Given that the program will come up for renewal in September 2014, the call has grown louder to find other sources of long-term
funding outside of the federal excise tax on motor fuels. So-called gas taxes haven't been raised since 1993, and the bill calls
for current levels to be maintained until 2015.
Over the years, vehicles of all types have become more fuel-efficient, and highway users are travelling longer between fill-ups. This means less revenue for the highway trust fund, which relies almost exclusively on fuel-tax receipts to fund highway projects. To maintain funding levels amid lower revenue levels, Congress has been forced over the past few years to redirect $35 billion of general funds into the trust fund.
To avoid a continuation of this scenario, the new law mandates the unusual step of setting aside $18.8 billion from general funds and deploying it to the trust fund at the start of the current 27-month cycle.
Donohue warned that fuel taxes alone can no longer fund the nation's long-term infrastructure needs. "The bigger challenge lies ahead—devising a predictable, sustainable, and growing source of dedicated, user-fee-based funding to ensure we have adequate resources to maintain the world's greatest infrastructure system for decades to come," he said.
Sen. Orrin Hatch (R-UT.), ranking member of the Senate Finance committee, voted against the package, saying the revenue provisions in the bill do nothing to resolve long-term funding issues. The bill is "nothing more than a short-term Band-Aid to the greater issue of how we fix highway program financing so we aren't back in this same position a year or two from now," Hatch said.
TRUCK SIZE AND WEIGHT LIMITS TABLED
The Association of American Railroads (AAR), representing an industry that has been riding high for several years, appeared pleased
that the bill did less to harm their interests than it did to promote them. In particular, AAR was happy that a nascent proposal
to increase truck size and weight limits on the nation's interstates never made it into the final version. Instead, it became
the subject of a two-year study by the Transportation Research Board to examine the impact of longer and heavier trucks on the
nation's infrastructure.
"Such a thorough review and assessment of the impact and associated costs of heavier trucks operating on our nation's roads and bridges is long overdue," the group said in a statement.
Rep. John L. Mica, (R-Fla.) chairman of the House Transportation and Infrastructure Committee, wanted to raise the per-vehicle weight limit to 97,000 pounds from 80,000 pounds, with the proviso that heavier trucks be equipped with a sixth axle for better braking and overall stability. That language was tabled by his own committee, however.
The committee did approve language allowing the nationwide use of twin, 33-foot-long trailers and permitting the deployment of triple trailers in states that currently don't allow them. But that provision fell by the wayside as the legislative process moved forward.
Opponents of hiking truck size and weight limits argued that because freight users only pay a portion of the actual cost of road repair, taxpayers would be on the hook for the rest, a number measured in billions of dollars. They also warned that bigger and heavier trucks on the highways would put the safety of the travelling public in jeopardy.
Supporters, including shippers and carriers, said the measure would dramatically increase supply chain productivity with little risk to harming the nation's infrastructure. The current limits have been in place for 30 years.
The shipper group National Shippers Strategic Transportation Council, or NASSTRAC, expressed dismay that the language was gutted. NASSTRAC argued that prior studies have shown that a modest boost in equipment size would not damage the nation's roads and bridges.
"By giving into fear-based misinformation, this bill unfortunately delays the deployment of some of the trucking industry's safest, most fuel-efficient trucks," said Michael P. Regan, CEO of Elmhurst Village, Ill.-based consultancy TranzAct Technologies Inc. and head of NASSTRAC's advocacy committee. "Past studies have shown time and again that modest increases in truck size and weight limits have a net positive effect on highway safety and maintenance."
Gartner, Inc.
