Air Quality and Transportation Enhancement Provisions in the Intermodal Surface Transportation Efficiency Act of 1991

97-902 ENR

Updated June 10, 1998

CRS Report for Congress

Received through the CRS Web

Air Quality and Transportation Enhancement

Provisions in the Intermodal Surface

Transportation Efficiency Act of 1991

David M. Bearden

Environmental Information Analyst

Environment and Natural Resources Policy Division

Summary

Federal funding to assist states in addressing the environmental impacts of surface

transportation is a major issue for the second session of the 105th Congress. The

Intermodal Surface Transportation Efficiency Act (ISTEA) of 1991 (P.L. 102-240)

authorized a total of $155 billion for transportation projects from FY1992 to FY1997.

Of this amount, it reserved $6 billion for the Congestion Mitigation and Air Quality

Program (CMAQ) to assist states in complying with federal air quality standards by

funding transportation projects that lower emissions, and it set aside $2.4 billion for

transportation enhancements that are environmentally related. Funding authorized under

ISTEA expired on September 30, 1997. The Surface Transportation Extension Act of

1997 (P.L. 105-130) provided interim funding through May 1, 1998, while Congress

worked on a multiyear authorization. On May 22, 1998, the House and Senate passed

the conference report on H.R. 2400 (H.Rept. 105-550), the Transportation Equity Act

for the 21st Century (TEA 21). The President signed the bill on June 9, 1998 (P.L. 105178), authorizing significant increases in funding for CMAQ projects and enhancements

from FY1998 to FY2003. In addition to authorizing funding, the conference agreement

revises the funding formula for apportioning CMAQ funds to states, allows states to

transfer a limited portion of their funding for CMAQ projects and enhancements to other

highway programs, alters the matching funds requirement for enhancements, and creates

new categories of enhancement activities. It also includes numerous environmental

provisions, including language to codify the Administration's schedule for implementing

new air quality standards for ozone and fine particulates and regional haze requirements.

Introduction

The Intermodal Surface Transportation Efficiency Act (ISTEA) of 1991 (P.L. 102240) established two programs that set aside funding for environmental activities. The

Congestion Mitigation and Air Quality Program (CMAQ) funds transportation projects

Congressional Research Service ˜ The Library of Congress

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that lower emissions to assist states in complying with federal air quality standards under

the Clean Air Act. Under the Surface Transportation Program (STP), states have the

flexibility to pursue various projects but must reserve 10% of their funding for

transportation enhancements that are environmentally related. While CMAQ projects

focus on air quality, enhancements are broader and may address bicycle and pedestrian

travel, historic preservation, scenic easements, highway runoff, and other issues.1

ISTEA authorized a total of $155 billion from FY1992 to FY1997 to maintain and

improve the nation’s surface transportation network. Of this amount, it reserved $6

billion for the CMAQ program and $2.4 billion for enhancements.2 Funding for most

federal surface transportation programs, including CMAQ projects and enhancements,

comes from the Federal Highway Trust Fund. Federal taxes on gasoline and diesel fuels

generate most of the revenues for the trust fund. Each state receives an annual

apportionment of these funds according to formulas defined in ISTEA.

This report describes how the CMAQ and enhancement programs function, examines

the policy issues surrounding them, and summarizes relevant provisions in major

legislation to reauthorize ISTEA in the 105th Congress.

Congestion Mitigation and Air Quality Program

The CMAQ program funds transportation projects that lower emissions to assist

states in complying with federal air quality standards for carbon monoxide, ozone, and

particulate matter.3 The Clean Air Act requires the Environmental Protection Agency

(EPA) to develop safe standards for these pollutants.4 CMAQ projects attempt to lower

emissions by providing alternatives to conventional highway travel. The CMAQ program

is based on the concept that lowering the number of miles traveled by motor vehicles and

reducing congestion to make vehicles operate more efficiently can reduce pollutants and

assist states in complying with federal air quality standards.5

Most transportation control measures listed under Section 108 of the Clean Air Act

are eligible for CMAQ funds. However, ISTEA excludes measures that reduce emissions

in cold-start conditions and encourage the removal of pre-1980 vehicles. A CMAQ

project generally falls into one of the eight following categories: 1) public transit; 2)

1

For a discussion of other programs authorized under ISTEA, refer to CRS Report 97-194 E,

Highway and Transit Program Reauthorization: ISTEA Revisited, by John W. Fischer and

William A. Lipford.

2

For information on the amount of funding apportioned to each state under both programs and

a discussion of major funding trends, refer to CRS Report 97-967 ENR, Federal Highway

Funding for Air Quality Projects and Transportation Enhancements: How Much, To Whom, and

For What?, by David M. Bearden.

3

P.L. 102-240, Section 1008.

4

For further discussion, refer to CRS Issue Brief 97007, Clean Air Act Issues, by James E.

McCarthy.

5

For a discussion of the role of the CMAQ program in helping states attain the new air quality

standards, refer to CRS Report 97-1026 ENR, Highway Funding, the States, and New Air Quality

Standards, by David M. Bearden.

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traffic flow improvements; 3) rideshare programs; 4) traffic demand management

programs; 5) bicycle and pedestrian projects; 6) public education; 7) vehicle inspection

and maintenance programs; and 8) alternative fuel conversion programs.

ISTEA authorized approximately $1 billion annually for the CMAQ program from

FY1992 to FY1997 for a total authorization of $6 billion over 6 years.6 States with

nonattainment and maintenance areas receive funding according to a formula based on the

severity of air pollution in those areas and the population residing in them.7 States

without any nonattainment or maintenance areas receive 0.5% of the total annual CMAQ

apportionment and have the flexibility to use this amount in any locality for transportation

projects that are eligible under CMAQ or STP. Other sources of funding under ISTEA

are also available for transportation projects with air quality benefits. States have the

flexibility to spend funding under STP for most measures listed under Section 108 of the

Clean Air Act, and the Federal Transit Administration’s Capital Assistance Program is

another source of funding.

Transportation Enhancements

ISTEA requires each state to reserve 10% of its apportionment under STP for

enhancements that are environmentally related.8 Some categories of eligible activities do

not provide direct environmental benefits (such as reducing pollutants) but still qualify

as environmentally related. For example, a landscaping project could be eligible for

funding if it restores natural surroundings altered in the construction of a highway.

ISTEA requires an enhancement to fall into at least one of the 10 following categories to

be eligible for funding: 1) facilities for bicycles and pedestrians; 2) acquisition of scenic

easements and scenic or historic sites; 3) scenic or historic highway programs; 4)

landscaping and other scenic beautification; 5) historic preservation; 6) rehabilitation and

operation of historic transportation buildings, structures, or facilities; 7) preservation of

abandoned railway corridors; 8) control and removal of outdoor advertising; 9)

archaeological planning and research; and 10) mitigation of water pollution due to

highway runoff.

ISTEA authorized roughly $24 billion for STP from FY1992 to FY1997 and

reserved 10%, approximately $2.4 billion, for enhancements.9 The formula for STP is

based on percentages of funding apportioned to states in past years primarily for

maintaining bridges, national highways, and the interstate system. While the CMAQ

program apportions funding based on the level of air pollution in each state, funding for

6

P.L. 102-240, Section 1003(a)(4).

7

Nonattainment areas are locations that have exceeded the federal air quality standards for one

or more pollutants. Maintenance areas are locations that previously were in nonattainment status

but have since met the federal standards. Under the Clean Air Act, states must submit plans to

EPA that outline strategies to reduce emissions and comply with the federal standards in

nonattainment areas and to control emissions and sustain air quality in maintenance areas. The

National Highway System Designation Act of 1995 (P.L. 104-59) amended ISTEA to make

maintenance areas eligible for CMAQ funds.

8

P.L. 102-240, Section 1007.

9

P.L. 102-240, Section 1003(a)(3).

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enhancements is a fixed percentage of a state’s STP funds and is not linked to

environmental problems.

Selection Process

State and local authorities select CMAQ projects and enhancements subject to

federal oversight. Local sponsors develop proposals and submit them to state departments

of transportation and metropolitan planning organizations (MPOs) for evaluation.10

Examples of sponsors include transit operators, municipal environmental or public works

departments, and local transportation management agencies. States and MPOs select

proposals according to federal guidelines and include them in their Transportation

Improvement Plans (TIPs), which list all transportation projects selected for federal

funding. DOT evaluates each project in a state’s TIP for final approval and obligation of

federal funding. EPA participates in the review of CMAQ projects to evaluate their air

quality assessments.11

Matching Funds Requirement

Generally, the federal share of the cost to complete a CMAQ project or an

enhancement is 80%, and the local sponsor must match the remaining 20%.12 However,

CMAQ projects conducted on the interstate system can qualify for a federal share of up

to 90% of their costs, and certain types of CMAQ projects, such as traffic flow

signalization and certain commuting options, can qualify for full federal funding in

limited circumstances.13 Some states assist local sponsors in meeting the matching funds

requirement, while others require the sponsor to finance the full 20%. For both CMAQ

projects and enhancements, DOT does not award the federal share as a conventional grant

but provides the funds on a reimbursable basis. The department obligates funding after

approving the proposal for a CMAQ project or an enhancement but does not disburse the

obligated funding until the project is complete.

Policy Issues

Reserving revenues from the Federal Highway Trust Fund for environmental

activities is controversial. Some highway interest groups believe that federal funding for

surface transportation should be spent solely on maintaining infrastructure such as roads

and bridges. However, some states with pollution problems, local governments, and

10

Metropolitan planning organizations are regional councils or associations of government that

are responsible for coordinating programs and activities which benefit the public in areas with

populations of 50,000 or more.

11

The sponsor of a CMAQ project must conduct an air quality assessment to determine its

potential for reducing emissions. Federal guidance requires a quantitative analysis when

technically feasible but allows a qualitative analysis if the sponsor lacks the skills or equipment

necessary to measure emissions. A qualitative analysis explains how the project would lower

emissions without specifying the amount.

12

13

P.L. 102-240, Section 1021.

Department of Transportation. Federal Highway Administration and Federal Transit

Administration. Federal Register. March 7, 1996. p. 50900.

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environmental and community organizations disagree and claim that many localities

would not be able to mitigate the environmental impacts of surface transportation without

federal highway funding. Other critics also support the idea that environmental activities

should be eligible for funding but believe that states should have the flexibility to decide

whether to fund them rather than being required to set aside a specific amount. States

with few air quality problems argue that the CMAQ program is unfair in that it makes

states with clean air pay to reduce pollution in other states by awarding more highway

revenues to states with the worst air quality. However, states with air quality problems

claim that CMAQ funds are essential in helping them achieve and maintain federal air

quality standards and that other states benefit from their transportation networks.

Enhancements have received broad support from many states and local communities due

to the availability of funding for unconventional projects that can diversify their

transportation systems. However, some critics question whether certain projects funded

under the enhancements program have met the necessary criteria established in ISTEA.

Reauthorizing Legislation in the 105th Congress

Federal funding to assist states in addressing the environmental impacts of surface

transportation is a major issue for the second session of the 105th Congress. Funding for

CMAQ projects, enhancements, and other programs authorized under ISTEA expired on

September 30, 1997. The Surface Transportation Extension Act of 1997 (P.L. 105-130)

provided interim funding through May 1, 1998 while Congress worked on a multiyear

authorization. On April 1, 1998, the House passed H.R. 2400 as amended, the Building

Efficient Surface Transportation and Equity Act of 1998 (BESTEA), and on March 12,

1998, the Senate passed S. 1173 as amended, the Intermodal Surface Transportation

Efficiency Act of 1998 (ISTEA II).14 On May 22, 1998, the House and Senate passed the

conference report on H.R. 2400 (H.Rept. 105-550), renamed as the Transportation Equity

Act for the 21st Centruy (TEA 21). The President signed the bill on June 9, 1998 (P.L.

105-178), authorizing significant increases in the amount of funding for CMAQ projects,

enhancements, and other highway programs over the next 6 years from FY1998 to

FY2003. In addition, the House passed the TEA 21 Restoration Act (H.R. 3978) on June

3, 1998, which would correct technical errors in various provisions of the conference

report on H.R. 2400. However, major corrections to provisions affecting CMAQ projects

and enhancements were not necessary.

As signed by the President, the conference agreement authorizes an increase of $2.1

billion in funding for CMAQ projects from $6.0 billion to $8.1 billion over the next 6

years, roughly $1.9 billion less than the House's proposal of nearly $10.0 billion but about

$300 million more than the Senate's level of $7.8 billion. The conference agreement

includes the Senate's provision that revises the funding formula for the CMAQ program

to reflect submarginal nonattainment areas for ozone and maintenance areas for carbon

monoxide and ozone. However, it does not include the House's provision to add new

funding factors for nonattainment and maintenance areas for particulate matter. The

conference committee adopted the House's proposal that requires the National Academy

of Sciences to study the extent to which CMAQ projects have helped to improve air

14

For a discussion of major provisions in each bill, refer to CRS Report 97-516 E, ISTEA

Reauthorization: Highway Related Legislative Proposals in the 105th Congress, by John W.

Fischer.

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quality, and it modified a provision in the House bill that limits the amount of funding

that a state could transfer from its CMAQ apportionment to another highway program. As

proposed by both the House and Senate, the conference agreement allows measures that

reduce emissions under cold-start conditions to be eligible for CMAQ funds, and it

includes new language to clarify funding eligibility for alternative fuel projects and

measures to reduce traffic congestion.

The conference agreement authorizes an increase of $900 million in funding for

transportation enhancements from $2.4 billion to $3.3 billion over the next 6 years,

approximately $700 million less than the House's proposal of nearly $4.0 billion and

roughly $500 million less than the Senate's amount of $3.8 billion. As proposed by the

Senate, the conference agreement codifies the Administration's policy on administering

the matching funds requirement for enhancements, under which states have the flexibility

to calculate the non-federal share of funding based on individual projects, multiple

projects, or a programmatic level. However, the conference committee did not adopt the

Senate's language to change the amount set aside for enhancements under the Surface

Transportation Program from 10 to 8%. Similar to that for CMAQ projects, the

conference agreement includes a modified version of the House's provision that limits the

amount of funding that a state could transfer from the amount set aside for enhancements

to another highway program. As proposed by the House, the conference agreement

expands funding eligibility for enhancements to include measures that would reduce

vehicle-caused wildlife mortality, and as proposed by both the House and Senate, tourist

and welcome center facilities related to scenic or historic highway programs also are

eligible for enhancements funding. The conference committee also included new

language to make transportation museums eligible for funding. However, it rejected the

House's provision that would have allowed the removal of graffiti to become an eligible

activity.

The conference committee adopted several other environmental provisions as well.

As proposed by the Senate, the conference agreement requires EPA to follow its schedule

for implementing new air quality standards for ozone and fine particulates, but the

conference committee modified the Senate's provision to require that EPA designate

nonattainment areas under the new standard for fine particulates before requiring states

to comply with regional haze requirements. The conference agreement also includes the

Senate's proposal to authorize $150 million annually from FY1999 through FY2003 to

assist mass transit systems in purchasing low emission buses that operate on alternative

fuels, and it includes the Senate's proposal to authorize $50 million annually from

FY1999 through FY2003 to encourage and promote advanced vehicle technologies,

including environmental technologies. In addition, the conference committee adopted a

provision in the Senate's bill that establishes a research program to study numerous

aspects of environmental issues related to surface transportation. As proposed by the

House, the conference agreement permits low-emission vehicles with only one occupant

to operate in high occupancy vehicle (HOV) lanes. The conference committee also

adopted the House's provision that requires the General Accounting Office to study

various low and zero emission fuel technologies and recommend incentives to encourage

the use of these technologies for mass transit vehicles. As proposed by both the House

and Senate, the conference agreement establishes a coordinated environmental review

process to reduce the time required to approve transportation projects prior to

construction.