During his State of the Union (SOTU) address, President Trump spoke of bipartisan support for infrastructure legislation in 2020.  He specifically highlighted Senator John Barrasso’s bill, “America’s Transportation Infrastructure Act“ (S.2302) currently awaiting Senate floor action.
BACKGROUND:

Highway programs would be authorized to receive $287 billion from fiscal 2021 through 2025 under S. 2302.  The measure includes provisions to address climate change and infrastructure resiliency to weather events and natural disasters. It would also modify regulatory oversight of projects. The legislation will form part of a larger measure to reauthorize surface transportation programs that expire after fiscal 2020. The Senate Environment and Public Works Committee approved it 21-0 on July 30.

The measure, called the “America’s Transportation Infrastructure Act,” doesn’t include policy changes to address the solvency of the Highway Trust Fund (HTF), which funds most major highway programs. [The Congressional Budget Office’s projects the fund will be insolvent after fiscal 2021]. However, the Senate Finance Committee would be responsible for proposing changes to the motor fuels tax, which is the fund’s main source of revenue and was last increased in 1993. The measure would express the sense of the Senate that the HTF’s solvency should be achieved through user fees.

Senate leaders haven’t announced “floor” plans to consider a surface transportation measure, which would also include transit provisions from the Banking, Housing, and Urban Affairs Committee, and safety and other provisions from the Commerce, Science, and Transportation Committee. None of the other committees with jurisdiction have acted on their provisions.

Funding

The bill’s federal-aid highway authorization would be $47.9 billion in fiscal 2021, increasing to $52 billion by fiscal 2025. That authorization funds state apportionments for federal highway construction and maintenance, as well as Surface Transportation Block Grants and other programs. The fiscal 2021 amount would be a 10% increase from the $43.4 billion authorized for fiscal 2020 under the last surface transportation authorization, known as the FAST Act (Public Law 114-94).  The funding would be provided as “contract authority” a unique budgeting method that allows the Federal Highway Administration to commit funds for a project before they have been appropriated. The measure also would set obligation ceilings on federal-aid highway programs, totaling $283.6 billion over the five-year period, limiting the amount of contract authority that can be obligated in a single fiscal year. The measure would repeal a $7.57 billion rescission in contract authority scheduled for July 1, 2020, under the FAST Act. The committee also approved a separate bill (S. 1992) to repeal the rescission.

Alternative Road User Fee: The bill would authorize $15 million annually from fiscal 2021 through 2025 for grants to states for pilot projects to test road usage fees and other alternative revenue mechanisms. Pilots could include a vehicle miles traveled tax, which would generate revenue from drivers of hybrid and electric vehicles, in addition to traditional vehicles. It would replace a similar program in the FAST Act that authorized as much as $20 million annually in grants for alternative funding demonstration projects. [The measure would also authorize $10 million annually for the Transportation Department to research a nationwide alternative roadway funding mechanism].

In addition, the measure would authorize other major highway programs and a number of new ones, including:
Bridge Investment: The measure would authorize $600 million from the general fund and $600 million from the HTF in fiscal 2021 for grants for bridge repair and replacement. The authorizations would increase to $700 million from both funds by fiscal 2025. Grants could be used for bridges in poor condition or that don’t meet current needs or standards.

Safety Programs: The measure would authorize $500 million from the HTF for each of fiscal 2021 through 2025 for formula safety incentive grants. The program would fund highway projects that would improve the safety of pedestrians and cyclists. It would also authorize $100 million annually from the HTF from fiscal 2021 through 2025 for a fatality reduction performance program. State and local governments would be eligible for grants if they’ve made significant progress in reducing serious injuries and fatalities, or have low rates of road fatalities and serious injuries. Grants would range from $5 million to $30 million and could be used for highway maintenance and improvements.

Pilot Programs: The measure would also authorize funding for several pilot programs, including for wildlife crossings, disaster relief mobilization, and community connectivity.

Climate Change and Alternative Vehicles: The bill includes a climate change subtitle for the first time in highway legislation; establishing several new climate-related grant programs, including:

Resiliency: The bill would authorize $786 million from the HTF for formula grants and $200 million for competitive grants in each of fiscal 2021 through 2025 as part of a Promoting Resilient Operations for Transformative, Efficient, and Cost-Saving Transportation (PROTECT) program. The program would fund improvements to make infrastructure more resilient to storms and natural disasters. [The measure would also allow the federal government to pay for 100% of general highway and bridge projects that add protective features to mitigate flooding and natural disasters].

Carbon Reduction: The measure would authorize $600 million annually from the HTF for each of fiscal 2021 through 2025 for a formula carbon reduction incentive program. Funds could be used for initiatives to reduce road-related carbon emissions, including pedestrian and bike infrastructure, energy-efficient street and traffic lights, and a carbon-reduction strategy. [It would also authorize $100 million annually from the HTF in fiscal 2021 through 2025 for a carbon reduction performance program. Grants would be available to state and local governments that have significantly reduced their transportation emissions, or that have lower emissions than most jurisdictions with similar characteristics. Grants would range from $5 million to $30 million and could be used for highway maintenance].

Charging and Refueling: The measure would authorize $100 million from the HTF in fiscal 2021 for charging and fueling grants. The authorization would increase to $300 million for fiscal 2024 and 2025. State, local, and tribal entities could use the grants to contract with companies to install alternative vehicle charging infrastructure.

Carbon Capture: The bill would establish competitive financial awards for work on direct air capture of carbon dioxide. It would authorize $35 million for the awards and related emissions work. The measure would also authorize $50 million for research projects on technologies that transform industrial carbon dioxide emissions into products of commercial value.

Diesel Emissions: The Diesel Emissions Reduction Program would be reauthorized through fiscal 2024. The program, which is administered by the Environmental Protection Agency, provides funding for grants and rebates to upgrade older diesel engines.

Regulatory Processes:

The bill would codify elements of the administration’s “one federal decision” policy that requires agencies to coordinate reviews and authorization decisions for major infrastructure projects. It also sets a goal for completing environmental reviews within two years. Under the bill, the lead agency would develop an environmental review schedule with the project sponsor that would be consistent with an agency average of not more than two years for major projects. It would specify conditions under which the schedule could be modified. All authorization decisions for construction of a major project would have to be completed within 90 days of the issuance of a record of decision for the project, although the lead agency could extend the deadline in some cases.

The Transportation Department would have to establish a performance accountability system to track each major project. The department would also have to provide other relevant agencies with a list of categorical exclusions under the National Environmental Policy Act that are applicable to highway projects and that would accelerate project delivery if available to those agencies. The agencies would initiate rulemakings to adopt them.

Other Provisions:

The bill would also

• Extend eligibility for Transportation Infrastructure Finance and Innovation Act (TIFIA) loans to airport projects and economic development projects related to rail stations, among other program changes. The measure would authorize $300 million annually for the program.
• Make several changes to the Infrastructure for Rebuilding America grant program, including directing at least 15% of funds, instead of 10%, toward smaller projects, and establishing set-asides for projects with a higher nonfederal match or that would address certain critical freight needs.
• Require the Transportation Department to provide notice and opportunity for comment before waiving Buy America requirements.
• Direct public entities in public-private partnerships that cost $100 million or more to review the private entity’s compliance with the terms of their agreement within three years of when the project opens to traffic.
• Authorize the Transportation Department to use alternative contracting methods — such as bundling or design-build contracting — on behalf of federal land management agencies and tribal governments.
• Authorize $180 million annually through fiscal 2025 for the Appalachian Regional Commission, which funds economic development projects.
• Establish a Balance Exchanges for Infrastructure Program, through which Appalachian states could return leftover funds intended for the Appalachian Development Highway System and receive an increase in contract authority in exchange.
• Reauthorize the State Infrastructure Bank Program through fiscal 2025.

Cost Estimate:

The projected shortfall in the Highway Trust Fund’s highway account would increase to a cumulative $80 billion at the end of fiscal 2025, according to a Nov. 12th CBO cost estimate. At currently authorized levels, the account will have a $53 billion shortfall by that date, the budget office estimated in May.

The measure would increase discretionary spending by $273.9 billion from fiscal 2020 through 2029, subject to appropriation. Of that amount, $266.9 billion would be for the federal-aid highway program obligation limit. Estimated discretionary outlays on other programs would increase by $7 billion over a decade, subject to appropriation, the budget office wrote. [Relative to its baseline projections, CBO said the bill would increase mandatory contract authority by $178.4 billion from fiscal 2020 through 2029. CBO’s baseline assumes contract authority would continue at the level authorized for fiscal 2020, taking into consideration the $7.57 billion rescission the bill would cancel]. Additionally, the balance exchange program would increase mandatory spending by $815 million, which would be spent from previously provided contract authority.

Only the provision reauthorizing the State Infrastructure Bank program would affect revenue. It would increase states’ use of tax-exempt bonds and therefore decrease federal revenue by $168 million through fiscal 2029,  according to CBO and the analysis from the Joint Committee on Taxation.